June 12, 2012 -- Miami luxury real estate market is a crystal-chandeliered world of multi-million-dollar condo deals, where prospective buyers roll up to open houses in Lamborghinis or on 70-foot-long yachts. It's not only booming, say its mavens, it may be passed peak.
A few years ago, multi-million-dollar condo deals were unheard of in the United States because the luxury market had gone bust with the rest of the country. But now, real estate experts say the market is turning around and astronomical listings are popping up in small real estate bubbles from coast to coast. Unlike the subprime mortgage scandals, almost all of Miami's expensive real estate is bought and paid for with cash, mostly by foreigners.
Danny Hertzberg , a member of Forbes magazine's real estate "30 Under 30" list, gave up being a lawyer to become a real estate agent for Coldwell Banker in Miami. The 29-year-old said real estate in this tropical mainland paradise keeps getting more expensive, especially in the last couple of months.
"Top buildings are selling now, per foot, at the height of the market," Hertzberg said. "There was a lot of inventory, maybe, 18 months ago, and then all of a sudden, there was a lot of foreign investment to the Miami market, people coming in from Brazil, Venezuela, Argentina, a lot of Russian buyers, specifically on the high end luxury."
According to the city of Miami, the luxury condo market is hotter than at any point in history. Nearly 20 percent more million-dollar condos were sold in 2011 than in the previous peak year of 2006.
This is an "other world," where the rest of America's real estate metrics don't really apply. Most of the country is still creaking into recovery, where home ownership is at a 15-year low and property values are expected to stagnate the rest of the year after prices have been plummeting for the past four years. But for the super wealthy, the mega-rich "1 percent-ers," a luxury condo bidding war has replaced the recession, not just in Miami, but also in New York and Los Angeles.
The multi-million-dollar luxury market has become so hot, Bravo made a reality TV show about it called "Million Dollar Listings," which started in L.A. and then was exported to New York.
In L.A., a stadium-sized manor recently sold for $85 million. In New York, a Russian billionaire who made his fortune in fertilizer bought an $88 million condo, reportedly for his daughter to use as a crash pad. He was outdone two months later when an anonymous buyer snapped up an unfinished penthouse for $90 million, now the most expensive home in Manhattan.
Most of the lavish Miami properties "Nightline" toured were empty, used as owner's second homes, and many foreign buyers often send a representative to do the purchasing. Alejandro Diaz Bazan, a real estate agent in the Miami area, said he scouts properties for clients and 80 percent of his deals are done in cash.
"There are people from Venezuela, Russia, all buying cash on the luxury market," he said. "There is very few deals left."
Just three years ago, Bazan said he made a fortune selling some of the biggest foreclosure deals in the Miami area's epic housing bust. Now buyers like him are gobbling up nearly anything they can get their hands on.
"If 10 people want it I want to come in cash and be a little higher," he said.
Here, Hertzberg said buyers are looking for prime marquee addresses, unbelievable views and a little style in extravagant turn-key condos.
"We see that often people come in and they just bring their toothbrush," Hertzberg said.
These homes are stocked with hand-crafted spiral staircases, infinity pools, German marble and French faucet handles. Hertzberg said one three-floor, three-bedroom, furnished condo overlooking the Atlantic in the southern tip of Miami Beach listed at $19.5 million was considered a "really good value."
So is this just a repeat of what happened during the 2008 housing crash, only on an accelerated level? Jonathan Miller, the president and CEO of Miller Samuel, a real estate appraising and consulting firm, said that's not the case because luxury condos only make up a "tiny sliver" of the entire housing market.
"It's a fraction of a percent and it's disconnected from the market in general," he said. "Any time you have a pick-up in activity in real estate, you're influencing the local economy, from goods and services to taxes being paid, it's a win for the local economy."