Luxury Real Estate

Courtesy of: Ben Moss of The Campins Company

Katrina Campins, of The Campins Company and star on Season 1 of The Apprentice, was recently featured on Bloomberg TV’s “Inside Track” discussing the current real estate market of the Miami, Florida area. To see the video, visit Katrina’s website, www.thecampinscompany.com, or click here!

Katrina had the following insights about the current market:

Tone of the luxury real estate market:

Since October of last year, it seems like someone flipped on the light switch—that activity has continued into 2010. There was much less activity during the first 3 quarters of 2009, as well as the end of 2008.

Volume in 2008 and 2009 was very similar, and about 30% lower than from 2006 & 2007. I'd say in the last two quarters, we're getting back to the volume we have been missing, which to me is quite remarkable, considering the breadth of this recession.

Inventory levels are down across the board by about 25% from their peak. We still have a ways to go obviously, before we are back in equilibrium (typically 6 months is what we consider to be equilibrium). Therefore, it is very much a buyer's market and should continue to be for the next couple years or so.

I don't predict any real appreciation in the market, and I actually believe we may still have more declines in store. However, we really are back at 2002 price levels at this point and I do think we've seen the lion's share of the price declines. With no wage growth, high unemployment and an eventual rise in interest rates, I don't see how we can see any appreciation in the market anytime soon.

The premier, best-located properties (especially large condominium units in premier buildings) have really held onto their value much better than the rest of the market.

I think many wealthy buyers decided that along with the price declines of houses/condos, a strong stock market and more confidence that we're getting through this recession, they felt comfortable getting into the real estate market.

Many buyers are not as instinctive as they once were, and are taking longer to make decisions as well as make their purchases with less emotion involved.

Majority of buyers in luxury market are foreign buyers (Europe and Latin America) as well as some from the Northeast United States (we have a very strong NY connection here in South Florida).

A high percentage of luxury buyers pay cash or put down large down payments. Another large percentage take out a secured loan against other assets. Appraisals have posed the biggest challenge to getting transactions closed.

Banks are also trying to bring in more deposits by offering home loans on the condition that a borrower bring over a savings account.

Katrina’s advice is as follows:

Be a long-term buyer. If you are not prepared to be in your house for the next five years, you may be better suited as a renter. This can be a great time to buy (low rates, prices have really fallen, lots of inventory to choose from). However, be prepared for continued softness in prices while the economy puts itself back together - which could easily take another year or two.

Luxury Real Estate Statistics:

- Miami-Dade County Houses over $1.5 MM: 933 on market vs. 273 sold in last year (3.5 year supply). Average Sale Price/SF = $456. LP/SP: -18%

- Miami-Dade County Condos over $1.5 MM: 831 on market vs. 214 sold in last year (3.8 year supply). Average Sale Price/SF = $715. LP/SP: -16%

- Broward County Houses over $1.5 MM: 577 on market vs. 146 sold in last year (3.9 year supply). Average Sale Price/SF = $400. LP/SP: -18%

- Broward County Condos over $1.5 MM: 177 on market vs. 36 sold in last year (4.9 year supply). Average Sale Price/SF =$476. LP/SP: -24%

- Palm Beach County Houses over $1.5 MM: 1,366 on market vs. 333 sold in last year (4.1 year supply). Average Sale Price/SF = $499. LP/SP: -19%

- Palm Beach County Condos over $1.5 MM: 284 on market vs. 70 sold in last year (4.0 year supply). Average Sale Price/SF = $634. LP/SP: -17%