(Bloomberg News) Joshua Bahoff bought a three-bedroom luxury condominium in Naples, Fla., in December for $235,000, about one-third of the price that the seller paid near the height of the U.S. housing boom.
"It was a great deal," said Bahoff, 59, a Philadelphia dentist who plans to spend one week a month every winter in the 2,700-square-foot (250-square-meter) property in Fiddler's Creek, a residential and golf development south of the city's downtown historic district on the Gulf of Mexico. "We can't see this market going down any lower."
While much of Florida's real estate market remains depressed by foreclosures, buyers seeking a second home in the state's affluent vacation enclaves are "finally getting off the fence," Karen Van Arsdale, an agent at Premier Sotheby's International Realty in Naples, said in a telephone interview.
Sales in the Naples area last year rose 10%, the first annual increase in at least five years, while the median price for homes listed at $300,000 or more gained 4% to $544,000, according to data compiled by the Naples Area Board of Realtors. About half of the properties in the market are second homes, and discounts from 2006 peak prices average about 25%, said Brenda Fioretti, president of the group.
"Wealth determines housing, and the good places pick up first," Karl Case, 64, a professor emeritus in economics at Wellesley College in Massachusetts who has been visiting Naples since a family vacation took him there when he was 13, said in a telephone interview. "For people with deep pockets, it's generally a flight to quality."
Resort towns on Florida's Atlantic coast are starting to follow the lead of Naples, said Patricia Fitzgerald, president of the Florida Realtors. Sales in Boca Raton, Jupiter and West Palm Beach rose 32% for existing houses and 40% for condos in February from a year earlier, according to the group.
Rising stock prices and the decision by President Barack Obama and Congress not to increase tax rates in 2011 contributed to the surge in deals, according to Van Arsdale. Record cold temperatures in parts of the Midwest and Northeast this winter "nudged people" to make real estate purchases they'd been putting off, she said.
Home values in South Florida markets may show a "surprise upward" trend while U.S. prices remain flat this year, according to Lawrence Yun, chief economist in Washington for the National Association of Realtors.
"Given that they are historical vacation destinations for the wealthy, and the stock market having risen so much, it's possible that they get a nice snap back even though I'm calling for no change nationwide," Yun said.