South Florida luxury homes and condos are selling so fast that eager buyers are snapping up those that are yet to be built.
From $1 million plus homes to a $15 million penthouse overlooking Fort Lauderdale beach, high end residences flew off the charts in the first quarter of this year, raising questions of how much longer the supplies will last.
Refugees from the usual Northeast cities aren’t the only buyers, brokers and analysts say. The tri-county region has become so attractive that it is drawing moneyed migrants from California, Chicago, Texa, and even Wyoming.
The pace and volume of home and condo sales for the first quarter of 2021 have stunned veteran brokers. The Keyes Co., a major Florida broker for decades, this week reported exponential increases in first quarter sales for the tri-county area compared with last year.
High-end single-family sales rose from 826 in the first quarter of 2020 to 1,786 this year, with the average sales prices increasing by 20.1%, from $2.55 million to $3.06 million. Cash sales more than doubled from 460 to 1,043.
The brokerage’s condo sales also more than doubled from 425 to 984, with the average sales prices rising from $2.23 million to $2.41 million. Cash sales rose from 303 to 725.
“It has been the perfect storm for South Florida’s luxury market since late last year,” said Mike Pappas, the president and CEO at Keyes. “All the converging trends, including domestic migration from high-tax states, a brutal winter around the nation and historically low interest rates, are resulting in an unprecedented high-end market.”
Off the charts
Craig Studnicky, the CEO of Miami-based Related/ISG, called the first quarter sales “nothing short of shocking and surprising for everybody.”
“We’re all thrilled with it, but the single-family home market is getting so tight that we declared it a sellers’ market probably six months ago,” he said. “I don’t think there was a house that sold at list price.”
Many are all-cash deals and regardless of price — whether it’s $150,000 to $50 million — they’re all selling.
Condos, he asserted, are different.
“It’s all about a million dollars and less … that’s what’s selling,” he said. “The high-end condo market is selling, but it’s not nearly as hot as [those] under a million.”
Condos, he added, “generally are outpacing single family-homes sales. Condos are leading the parade.”
“It’s our forecast that by the end of this year the condo pricing will be a sellers’ market — the inventory is dropping that fast,” Studnicky said. “There is a lot less inventory to choose from now.”
Many buyers are established professionals who undertook long searches before settling on a place that comports with their lifestyle.
J.J. Bunnett, a company CEO from Jackson Hole, Wyoming, is buying a waterfront condo at 160 Marina Bay in Las Olas Isles, a 16-unit project now under construction and scheduled for occupancy next year. He sees South Florida as an ideal retreat because he likes how Gov. Ron DeSantis managed the economy during the COVID-19 pandemic.
“The pandemic policies have been ones that lean more on individual freedom and risk assessment,” he said. “I think the governor has done an excellent job balancing all of that. And the tax code is attractive.”
Originally from Texas, he has lived in San Francisco and Chicago and finds Florida to be a more business friendly state than California or Illinois.
Joanne Intrieri and her husband, a retired Wall Street executive, are now living in Miami waiting for their luxury condo at the Four Seasons Private Residences Fort Lauderdale to be completed at the end of this year. She says the couple decided it was time to leave New York more than three years ago as tax rates took off and their children approached adulthood.
“We saw the advantage early on; everybody is catching up to us,” she said. “Everybody is like, ‘You are so ahead of the curve.’”
A real estate broker who once ran her own construction firm in New York, Intrieri said there was no reason to remain and pay New York’s higher taxes after her spouse became semi-retired and didn’t need to work in an office. She said they were among the first people to sign up at the Four Seasons.
“Getting in on the first end of it, we figured it would go up in value compared to buying something else in another building in Fort Lauderdale that was either new or already existing,” she said. “We figured while it was being built we would also build some equity. You always figure the Four Seasons is going to hold its value.”
Jennifer Pryor and her husband, a company CEO in Atlanta, said she and her spouse expect to close Tuesday on a single-family home in North Miami Beach — after spending months conducting a search that ranged from Lighthouse Point to Miami.
“We can work from anywhere,” she said. Her husband, a “huge boater,” wanted to be near an inlet. “We’re going to be popping down to the Keys and going to the Bahamas,” she said.
Under the guidance of Keyes broker Les Waites, they hit more than 20 homes — most of them under contract — before deciding on their luxury house in North Miami-Dade. They cinched a deal after a previous offer from another would-be buyer fell through.
What buyers want
Louise Sunshine, strategic adviser for the Four Seasons, said sales “have been very strong in the past four months, especially the larger residences at a higher price point.” The pandemic, she asserted, has wielded a heavy influence over the buyer’s home preferences.
The project’s units start at $3.95 million. One of its penthouses sold last week for $15 million; another is available for $15.9 million.
“They are expecting much more from their homes,” Sunshine said. “They want larger homes; they want more services. They want to work and play from home. They want kitchens where they really can cook, where the family can gather, where they can make chocolate chip cookies and play chess and checkers. They want rooms where they can do their work and watch movies and have home offices.”
“They are expecting much more space and many more items in the homes like Peloton bikes and certain gym equipment,” she said.
Nonetheless, they also want outdoor space. Sunshine said the Four Seasons can deliver that, too, as the project’s landscape architect will design the unit’s exteriors to the liking of each resident.
Down the road on A1A, Kolter’s 26-story, twin-tower Selene Oceanfront Residents project launched sales of 204 residences starting at $900,000. Penthouse units reach into an unspecified million-dollar-plus range. A number of people put down deposits.
Among the visitors was a Boca Raton couple who think their Mizner Park area neighborhood is getting too crowded.
“They were looking to move to Fort Lauderdale beach,” a project spokeswoman said. “They wanted direct access to the beach. They wanted to be on the top floor with unobstructed views.”
For those looking for an island, the 16-unit waterfront 160 Marina Bay project is under construction on Las Olas Isles.
Ron Krongold, managing co-partner of Gold Krown Investments, the developer, said out-of-state buyers like Bunnett are seeking large units. So, the project’s condos all exceed 3,000 square feet, ranging in price from $2 million to $3 million. Each block of four units has its own elevator. On the waterfront, 14 boat slips will serve owners’ vessels.
“We’re the last island that has no apartments in the front of us when facing east,” Krongold said. “Our units start on the second level. All of our units look over the houses as you look toward the ocean.”
Inquiries are rolling in from New York, Philadelphia, Baltimore and Chicago, Krongold said. “They’re coming down to Florida because the state’s open for business.”
How long the surge?
Analysts and brokers figure that as COVID-19 vaccines become more prevalent and would-be sellers become more comfortable with the idea of placing their homes on the market, more homes will become available for hungry buyers.
George Ratiu, senior economist at realtor.com, sees a tight supply running into 2022 as buyers use real estate as a hedge against a potential rise in inflation and builders fight to close a U.S. home shortage that has failed to keep pace with demand over the last decade.
Laura Brady, CEO of Concierge Auctions, the national firm that helped sell the Fort Lauderdale estate of the late billionaire H. Wayne Huizenga, sees no immediate slowdown of buyer interest in sight.
“Our volume has been strong and continued to increase in the last 12 months. Especially through 2020 [Florida] was one of the hottest states,” Brady said. “Unit-wise we had six sales already this year [in Florida], which is very strong.”
“We think we still have quite a ways to go in these powerful markets, especially in Florida and Texas where there is inherit economic strength,” she added.
Mike Pappas of Keyes is closely watching the shrinking number of homes and still rising sales on his company’s books.
In South Florida, business owners, many of them billionaires riding the wave of a strong stock market and recovering economy, are buying homes as permanent residences, not second homes.
“You’ve got more money chasing limited uber properties,” he said. “Usually the luxury market has more inventory. Until we get to more inventory, I don’t see this [buyer] urgency slowing down any time soon.”