Miami Beach Luxury Real Estate Gets Cheaper as Short Sales Abound
Finding a "cheap" mansion on Miami Beach has become easier in the last few years due to the yo-yo-ing real estate market. That is, if you consider $3 million to be cheap. A few years ago, many of the properties on millionaire-row streets like North Bay Road and Palm Avenue were untouchable by many well-to-do buyers. Now those priced at $12 million and $13 million have dropped to $9 million, while those at $6 million are now priced at $3 million.
Ironically, wealthy all-cash buyers may ultimately rescue the deeply depressed local housing market.
"We definitely see affordable mansions happening all over, but especially in our waterfront properties, where the most desirable mansions are located," says Esther Percal, a Realtor with Esslinger, Wooten, Maxwell who has made a career of selling luxury real estate on Miami Beach.
She's referring specifically to North Bay Road where unobstructed, bay-front homes range near 14,000 square feet, with 80 feet of waterfront.
These lower prices are a 40 percent reduction from what these homes cost when the market was booming. Taking advantage of the affordability are interested buyers who had been hovering around Miami Beach looking for a home, but were unable to purchase. Now is their time. In the centrally located Venetian Islands, which are walking distance to South Beach, homes can be bought for between $1 million and $1.5 million, an affordable price considering that most are 10,500 square feet with 65 feet of waterfront.
Celebrities are not immune to these lower prices, with NBA Star Shaquille O'Neal taking a hit on his two-story Star Island home. He originally purchased the 20,000-square-foot, eight-bed, nine-and-half-bath house for $18.8 million in 2004 and sold it to a Russian buyer in June of 2009 for $16 million. He had originally put the two-acre parcel at 26 Star Island Drive on the market for $32 million, and he got a higher offer at first. But O'Neal ended up with a loss while the European got a sweet deal.
With Miami being a playground for the rich, most of the buyers -- some 60 percent of them -- are part-time residents (mostly Europeans and Northerners) and they're buying with all cash. "These folks have wanted a piece of the beach for a while but a few years ago even non-waterfront property was $1 million and now that's down to $500,000, meaning we are no longer untouchable as we once were," Percal says. Besides, dealing with the banks and any kind of financing is a nightmare, since everything is down in appraisals and banks. The all-cash deals are not subject to financing.
All these facts and figures are indicators of a possible slight turnaround in the market. Sales have been so strong in the past two years that good deals are getting harder to find. "Turning the market around is a matter of absorption and we're seeing that. Where once we had an 18-month inventory it's now down to a 14-month inventory, so there's market absorption," she said.
So it may be that, in the long run, these cash buyers will be partly responsible for rescuing the housing market.
Wouldn't that be something?