On global scale, Miami luxury home prices puny
Miami is officially a first-class place to live now that it was named for the second consecutive year in Christie’s International Real Estate report detailing the top 10 luxury properties in the world for 2013.
And the company this city keeps is certainly impressive, featured along with Cote d’Azur, Hong Kong, London, Los Angeles, New York, Paris, San Francisco, Sydney and Toronto.
Yet realtors say Miami stands out on this list because its luxury properties have attributes second to none.
Homebuyers get more for their money in Miami with prices per square foot so much lower than the other luxury markets, said Ron Shuffield, president and CEO of EWM Realty International.
For example, Miami’s average square foot price for luxury homes was $559 in 2013 compared with $4,683 in London (the highest on the list) and $829 in San Francisco (the lowest of the ten markets profiled).
“Several things distinguish Miami from the other markets: our cultural offerings, the beautiful weather and the values we offer,” Mr. Shuffield said.
Luxury properties – defined by most Miami realtors at $2 million and higher – are aligned in value similar to fine art and high-end collectibles as opposed to the general housing market, he said.
Last year, EWM International sold a $1-million-plus condo or single-family home on average every 17 hours (totaling 532 properties), Mr. Shuffield said.
Miami is a multi-cultural community on a gorgeous coastline with beautiful weather year-round, said Adam G. Kutner, broker and co-owner of Grove Town Properties. “It is home to the best nightlife, beaches, sport teams and restaurants in the world, and we have no state income taxes. These factors appeal to individuals to live here and companies to headquarter here.”
Luxury residential homes in Miami (defined in Christie’s report as starting at $1 million) sold at a faster pace in 2013 than in 2011 and 2012.
In 2011, such properties were on the market 213 days, 175 in 2012 and 130 in 2013.
The people who are buying such luxurious housing are coming from Latin America as well as other parts of the US, Mr. Shuffield said, adding that people who can afford to live anywhere are coming to Miami.
“There are a growing number of people who want to be here because of our lifestyle, economic uncertainty in their countries and the strength of our currency and educational system,” he said. “The American buyer is returning to Miami for a number of reasons including our tax structure.”
Mr. Shuffield pointed out that Florida is one of only seven US states that do not levy income taxes.
It’s highly likely that Miami will continue to be one of the world’s top luxury residential markets, said realtor Riley Smith, president and founder of the Riley Smith Group.
“We are still growing into our own and on the upswing with our increased culture,” he said. “This trend will continue, especially as Miami is now on a radar as a luxury market on the coast rather than just a tourist destination.”
A life-long resident of Coconut Grove and residential realtor since 2002, Mr. Smith said his company sees prospective buyers from every country as well as up and down the East Coast who want to move to Miami.
“Our clients can’t believe what they can get for their money here,” he said in reference to Miami’s relatively low price per square foot for luxury residences.
At this point, Mr. Smith said there aren’t enough luxury condos and single-family homes to satisfy the demand.
“In the last boom, the condos that came on the market were not as high [quality] as what we’re seeing now, and there’s very little land available to build more luxury houses,” he said. “Until recently, Miami was not on the radar as a luxury market but was seen more as a tourist destination.”
He said he does not anticipate that prices will be forced up should there be more money than available property, resulting in a bubble.
Liquidity drove the market last time, whereas buyers in the luxury market now are predominantly paying with cash, he said.
Historically, the real estate market ebbs and flows, Mr. Smith said.
“There will always be dips here and there,” he said.
Roughly 1,000 single-family homes and 1,300 condos/townhouses for sale in Miami-Dade County are priced over $1 million, said Mr. Kutner.
“In Miami, we have the luxury of building huge high-rises and skyscrapers overlooking our oceans and bays,” he said. “As long as Miami continues to be an international destination city, developers will continue to satisfy the demand.”
Mr. Kutner sees the Miami market continuing to challenge the rest of the international cities on Christie’s list. “In North Miami Beach they are building a building that you can literally drive your car into an elevator that takes you directly into your living room,” he said. “How cool is that?”
Mr. Kutner said many the New York and other big city developers see Miami as a prime real estate market with plenty of growth to continue to entice the international buyer.
According to Christie’s report, the market momentum “can be attributed partially to substantial wealth creation in 2013, fueled by an improving global economy and surging stock market prices, resulting in more billionaires and millionaires than ever.”
As for the large number of people who don’t have $1 million – or more – to spend on housing, Mr. Kutner said appropriate residences are available for them.
“There is a great misconception that Miami is only for the rich and famous,” he said. “Miami is a very diverse city with many neighborhoods that offer plenty of wonderful communities for the middle- and modest-income American family to live.”
Moreover, Mr. Kutner said, “we’ve just come off an economic recession and every consumer has a computer in their pocket, so information is at their fingertips. Combine these factors and we’re seeing savvy homeowners who are educated and more aware then ever before about their real estate wants, needs and opportunities.”
Mr. Kutner said Grove Town Properties brokers are seeing many buyers choosing older, less-expensive fixer-uppers so they can design and customize to their dream-home wish list.
“We call it the ‘HGTV effect’ and it’s happening in every neighborhood in our city,” he said.
As for the specific neighborhoods, Mr. Kutner said it depends on what the buyer is seeking.
“For great schools and family-oriented neighborhoods, I’d recommend looking in Village of Palmetto Bay, The Falls or Coral Gables,” he said. “If you’re an art lover, I’d guide you to Wynwood or Coconut Grove. If you like beaches and coastline, there are plenty of opportunities in Miami Beach and North Beach that are well below $1 million.”