Just about every grown-up who owns property in South florida knows how the tale starts. Flashback to 2005, when sellers were king, their property values skyrocketing seemingly by the week, and buyers engaged in bidding wars over those properties. Buyers were in pretty good shape, too; they didn’t exactly need to be flush with cash, since banks were practically handing out mortgages to unqualified buyers like promotional toasters to anyone opening a new savings account. Everybody was happy, especially Realtors, who were raking in commissions like there was no tomorrow. Speculators started doing what they do best: speculating: When will the “bubble” burst?

Fast-forward to January 2009. The headlines vary from day to day, but basically say the same thing: Foreclosure filings at an all-time high. (Even as far back as November 1, 2007, MSNBC.com featured a headline story entitled “Foreclosures jump 30 percent in 3rd quarter.”) Properties are upside-down—homes that once rose in value by 50 percent over the course of a year are now worth less than what’s owed on the mortgage. With unemployment at its highest rate in decades, homeowners are in peril of losing their houses and facing foreclosures at an alarming rate. It’s a great time to buy, but banks aren’t lending. Where and how will it all shake out? And what is really happening as we enter the second quarter of 2009 in South Florida?

According to Scott Patterson, a Realtor with Esslinger Wooten Maxwell in Aventura, the appeal of the South Florida lifestyle is still attracting buyers, and that’s what he is selling to his clients: a lifestyle. “There are Canadians, many South Americans, Europeans, Asians and Australians who are coming here for the lifestyle. Plus, we’re seeing historically low interest rates. It’s never been a better time to buy.”

That’s also because with inventory up, the highest in history, homes are extremely well priced today. So if you have cash to put down—and you do need the cash to put down—you’re looking at some very attractive deals. “No seller can complain right now,” Patterson says. “They had it good for such a long time, but now it’s the buyer’s turn. In April 2005, we were down to approximately two months’ supply of inventory in both Broward and Miami-Dade counties. That’s why properties were increasing by 30 to 40 percent per year or even less, and the sellers were laughing all the way to the bank. Now, that inventory is dropping, which is a good sign, but there is still too much inventory today. That means it’s becoming more affordable and the median price homes have gone from approximately $388,000 to below $200,000. We pushed the middle class out of the market in 2005, and that’s not healthy. Even in places like Aventura, we need to have affordable homes so that service people—valets, hotel staff, restaurant workers—can live in the area as well.”

Aventura in particular hasn’t felt the same level of pain as many other municipalities in South Florida, for several reasons, according to Clifford Schulman, an attorney with Greenberg Traurig and chairman of the board of the Aventura Marketing Council. “For one, there were very few properties left to develop in Aventura because the city is mostly built out, so a slowdown in development of new housing in other parts of Miami-Dade county does not really affect Aventura,” he points out. “Second, I would venture to say that due to the stability of Aventura—i.e., most of the development has been there for years—there are fewer foreclosures. Because of the residents’ stability and income being relatively higher, most people are able to make their payments in timely fashion.”

Although it’s fairly new, Canyon Ranch Living in Miami Beach, a condominium community focused on a lifestyle based on wellness, health and stress management, has closed more than 200 units and is finding sales to be consistent so far this year. “In November and December, it was a little rough,” says Eric Sheppard, a principal of Canyon Ranch. “But since January it’s been a lot better. We’re different because we have a hotel component; people stay there every day. Once they stay there, they get an idea of what our whole lifestyle is about and they feel comfortable. It’s a high-end brand and a good product; when you have that, people buy. And these are end users, not investors.” Sheppard points out that Canyon Ranch has doctors, nutritionists and physiologists on staff, a major bonus in these trying economic times. “How you cope with stress is by living in an environment that caters to managing it,” he says.

THE BANKS & FORECLOSURES
When homeowners do get into a situation where payments become unmanageable, the worst thing they can do is wait. Action should be taken as quickly as possible if there is any chance of remaining in the home or coming up with a solution. Real estate attorney Robert Rosenwasser has been practicing in the field since 1992 and doing foreclosure defense for two years now. “Primarily, we help clients decide what’s right for their situation, not just when it comes to foreclosures, but also if they own investment properties that cost more than they’re making, if they’re living in homes that cost too much but they don’t want to lose, or if their house is not as valuable as what’s left on the mortgage.” He cites three viable options: loan modification, which lowers the payment on the loan but not the principal; a short sale, which allows a homeowner to get out of debt because the bank accepts the current market value of the house; and foreclosure defense, which allows the foreclosure action to be disputed for up to two years, thereby keeping the homeowner in his or her home until there is an improvement in his or her financial situation.