Florida luxury home market shows signs of wear

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MIAMI (Reuters) - The surprisingly healthy market for
oceanfront mansions and palatial condos in Florida, one of the
most toxic states in America's housing meltdown, may finally be
showing some cracks.
While many luxury properties are selling briskly thanks to
Europeans and Canadians pouring their strong currencies into
Florida, billionaire Donald Trump recently dropped the price on
a Palm Beach mansion

MIAMI (Reuters) - The surprisingly healthy market for

oceanfront mansions and palatial condos in Florida, one of the

most toxic states in America's housing meltdown, may finally be

showing some cracks.

While many luxury properties are selling briskly thanks to

Europeans and Canadians pouring their strong currencies into

Florida, billionaire Donald Trump recently dropped the price on

a Palm Beach mansion by 20 percent, and some market watchers

say the U.S. housing woes have finally touched the wealthy.

At a recent luxury property auction in Fort Lauderdale, the

auctioneer took home after home off the block within moments

after opening the bidding when nobody made an offer.

On one high-rise condo in the Miami enclave of Williams

Island, a 3,100 square foot penthouse previously listed at $5.6

million, he opened bidding at $5 million, lowered his price to

$3.5 million, $3 million, $2.5 million, and then closed the

auction, all within a minute.

"There's just not that much enthusiasm or activity in the

luxury market," said Jack Winston, a real estate analyst with

Goodkin Consulting in Miami.

After the local real estate market peaked two years ago,

local brokers said high-end real estate was the only thing

propping up the condo market in Miami, one of the most

overbuilt and overpriced in the United States.

Sales figures from the Florida Association of Realtors

supported that notion.

The median price of Miami condos gained 6 percent last year

while price declines of 25 percent or more were seen elsewhere

in the state amid the U.S. mortgage crisis, soaring property

taxes and hurricane insurance woes.

Miami's vast Atlantic Ocean and Biscayne Bay shoreline

offers thousands of water-view properties that have held their

value better than cheaper houses and condos inland, where the

foreclosure crisis has battered homeowners.

The Miami condo market finally had a bad month in December,

when the median price fell 10 percent.

Auctioneers sold "north of 20" of the 50-plus properties on

sale at the Fort Lauderdale auction, said SKY Sotheby's

president, Chad Roffers. The event offered up an estimated $300

million in properties ranging from a $2.45 million, one-bedroom

on ritzy Fisher Island, to mansions in the $15 million range.

"The high end is resilient," Roffers said. "Certainly the

market has corrected since the peak of 2005. What we are seeing

is that quality waterfront inventory is holding value."

But many properties were quickly pulled from the auction

when no one bid. And bargain hunters had an open field.

One man, in short order, snapped up two bayfront houses in

Miami Beach's pricey Venetian Islands, one for $500,000 and the

other for $1 million. The homes sold for $2.75 million and $2

million respectively in mid-2005, according to county records.

Guido Teichner, a would-be buyer who said he attended the

auction looking to make a killing, put in a $500,000 bid on a

two-story, 4,000 square foot (370 square meter) penthouse condo

in downtown Fort Lauderdale that had previously been listed at

$3 million.

"At that price I'd be thrilled. That would be a killing,"

he said of the bid, which was accepted at auction but still

awaited seller approval because it was below the minimum bid.

"Fifty cents on the dollar is not good enough in this

market," he said. "I don't think we've hit bottom yet so you've

got to get a real steal to allow for a little remaining

downside."

There were signs of both strength and weakness in Florida's

luxury market.

In Palm Beach, one of the priciest postal codes in the

United States, the average price of a single-family home

climbed to $5.11 million in 2007, up $618,000, according to The

Evans Report, a closely watched monitor of the town's market.

An oceanfront estate owned by philanthropist Sidney Kimmel

sold this month for $81.5 million, the full asking price,

broker Dana Koch of Corcoran Group said. He would not reveal

the buyer, but a local newspaper identified him as John

Thornton, former president of Goldman Sachs.

"We had a lot of people through the house. Sports team

owners, athletes, captains of industry, a Saudi prince," Koch

said. "It might be the highest sale of a single-family home on

the east coast.

Trump's Palm Beach mansion could top that, if he gets his

price for the 6 acre (2.4 hectare) property, which includes

82,000 square feet of buildings and 475 feet of Atlantic Ocean

front.

He dropped the asking price by $25 million after two years

on the market, but still wants $100 million for a home he

bought for $43.3 million four years ago.

Another property, Canyon Ranch Miami Beach, a massive

oceanfront condo-hotel, is doing well, just a few months before

completion, but its developer, Eric Sheppard, said he would not

start another big Miami project in current market conditions.

Sixty-five of 100 units closed in the first six weeks they

were on offer, Sheppard, chief executive of WSG Development,

said.

"We're thrilled. There's only about 3 percent that just

don't have the funds to close, and we've already resold most of

those units," he said.

But analyst Winston warns a "disaster" is coming soon, when

thousands of new apartments in Miami receive their certificates

of occupancy.

"The disaster is really going to start to show its ugly

head in the middle to end of this year," he said. "As higher

priced units come to closing, we think you will start to see 30

to 40 percent defaults."

(Editing by Michael Christie, and Eddie Evans)

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