Florida luxury home market shows signs of wear

By Jim Loney

MIAMI (Reuters) - The surprisingly healthy market for oceanfront mansions and palatial condos in Florida, one of the most toxic states in America's housing meltdown, may finally be showing some cracks.

While many luxury properties are selling briskly thanks to Europeans and Canadians pouring their strong currencies into Florida, billionaire Donald Trump recently dropped the price on a Palm Beach mansion by 20 percent, and some market watchers say the U.S. housing woes have finally touched the wealthy.

At a recent luxury property auction in Fort Lauderdale, the auctioneer took home after home off the block within moments after opening the bidding when nobody made an offer.

On one high-rise condo in the Miami enclave of Williams Island, a 3,100 square foot penthouse previously listed at $5.6 million, he opened bidding at $5 million, lowered his price to $3.5 million, $3 million, $2.5 million, and then closed the auction, all within a minute.

"There's just not that much enthusiasm or activity in the luxury market," said Jack Winston, a real estate analyst with Goodkin Consulting in Miami.

After the local real estate market peaked two years ago, local brokers said high-end real estate was the only thing propping up the condo market in Miami, one of the most overbuilt and overpriced in the United States.

Sales figures from the Florida Association of Realtors supported that notion.

The median price of Miami condos gained 6 percent last year while price declines of 25 percent or more were seen elsewhere in the state amid the U.S. mortgage crisis, soaring property taxes and hurricane insurance woes.

Miami's vast Atlantic Ocean and Biscayne Bay shoreline offers thousands of water-view properties that have held their value better than cheaper houses and condos inland, where the foreclosure crisis has battered homeowners.

The Miami condo market finally had a bad month in December, when the median price fell 10 percent.

Auctioneers sold "north of 20" of the 50-plus properties on sale at the Fort Lauderdale auction, said SKY Sotheby's president, Chad Roffers. The event offered up an estimated $300 million in properties ranging from a $2.45 million, one-bedroom on ritzy Fisher Island, to mansions in the $15 million range.

"The high end is resilient," Roffers said. "Certainly the market has corrected since the peak of 2005. What we are seeing is that quality waterfront inventory is holding value."

But many properties were quickly pulled from the auction when no one bid. And bargain hunters had an open field.

One man, in short order, snapped up two bayfront houses in Miami Beach's pricey Venetian Islands, one for $500,000 and the other for $1 million. The homes sold for $2.75 million and $2 million respectively in mid-2005, according to county records.

Guido Teichner, a would-be buyer who said he attended the auction looking to make a killing, put in a $500,000 bid on a two-story, 4,000 square foot (370 square meter) penthouse condo in downtown Fort Lauderdale that had previously been listed at $3 million.