Migrations during interest rate hikes could be 'huge buffer' for luxury real estate: Broker

Luxe Living Realty Founder and Broker Dora Puig joins Yahoo Finance Live to discuss the outlook of the real estate market in Miami-Dade County, Florida, luxury real estate trends, and investments inn commercial real estate by asset management firms.

Video Transcript

DAVE BRIGGS: Housing prices cooling across the country as the Fed chair seeks a, quote, "difficult correction" to bring supply and demand back into balance. But there are exceptions to that rule, notably South Florida. That's where you'll find Dora Puig, principal broker and founder of Luke's Living Realty. Dora has over $4 billion in career sales. Nice to see you. So this morning, we get new data from the Case-Shiller Index, showing Miami prices up 32% year over year. What are you seeing in the Miami market?

DORA PUIG: I'm seeing a little bit of a slowdown over the summer, but this is typical of our market because of the seasonality. It was low season for the first time in three years since the pandemic. So everyone went to travel. Travel bans were lifted. No masks so, we were back to our low season. But we've definitely seen an uptick in traffic in the last two weeks, as we're getting ready to start our high season again.

DAVE BRIGGS: Redfin showed us some numbers earlier that luxury market across the country down 28%. That's the largest they've ever seen on record and far outpacing the lower level. You deal with primarily the luxury market in Miami. Are you seeing a dramatic impact of mortgage rates double where they were from a year ago?

DORA PUIG: I'm seeing a bit of an impact in the $5 million market and under. That's typically the buyer that needs a mortgage. We're starting to see prices drop a little bit and inventory creep up a little bit in that market because I believe that market is the market that's getting most affected in Miami Dade County, where I work in the million plus market.

In the high end, when I start to think of 6 million plus market, it's typically cash deals. And I don't believe they're going to be as affected. Our trophy residential market, I think, will absolutely not be touched. And that would be north of $20 million.

DAVE BRIGGS: The Citadel CEO Ken Griffin recently moved his company to Miami from Chicago. Who are the buyers? Are you seeing potential people move from New York, from Chicago? Are they moving from within? Are they international? If you could paint a picture of the typical luxury buyer there in Miami.

DORA PUIG: The luxury buyer, I always say, has been good, ol' USA, red, white, and blue since 2015. This has been New York, Chicago, California, all the winter climates, lots of Toronto and Canada. I've seen the international market has been very light because the dollar has been so strong overseas. We're still seeing a huge influx of New York, New Jersey, and the Northeast Corridor consistently purchasing in our luxury residential market.

I think Ken Griffin's Citadel move, which is slowly starting to flicker in, is going to be a huge buffer for our luxury market. So if all these interest rate hikes and the conversation about a more narrow landing to a recession does hit Miami-Dade County, I think 1,000 families moving to South Florida from Citadel is going to be a huge buffer for our luxury market.

DAVE BRIGGS: He himself threw down $100 million on, I think, the biggest purchase there. The people who might come from Citadel and some of the people you mentioned earlier really invest in the market. Are you seeing a pullback in buyers because of where the stock market has gone in recent weeks? And are you also seeing fewer real estate investors that really drove those prices up?

DORA PUIG: We've predominantly been in an end user market. It hasn't been a huge investment market in the residential business. Maybe commercial's seen a lot of investors, commercial real estate. Residential here is really end users, turnkey, move in. They're worried about schools. They're worried about location and area, that they're going to live here.

So I don't believe it's so much investment, as we used to see in the old days with the Latin Americans. We-- so Ken Griffin's going to be moving also possibly to Star Island, where he bought a 4 and 1/2, 5 lot parcel to build a home. So all of these Citadel people that are starting to flicker in are pretty much the top end of the market. I haven't seen yet the lower end start to create sales because of his move. There are also huge amount of other investment banks coming-- Goldman Sachs, the Apollo Group, all of them are opening offices between Palm Beach and Miami-Dade County.

DAVE BRIGGS: All attracted to those tax rates. The inventory has been the real backstop nationwide that prevents a big crash in prices. What's the inventory story in Miami?

DORA PUIG: Well, we're still very, very low on luxury residential inventory, which is what I think is going to give us a huge buffer this winter. When we start our high season, November 1, November 15, I expect all of the luxury inventory that's kind of coming out in the market right now to get absorbed. So I'm still bullish on Miami. I don't believe it's going to be a total frenzy as it was the last 20 months. But I do believe we're going to have a very solid winter selling season.

DAVE BRIGGS: Yeah, that type of frenzy is certainly unsustainable, even for Miami. Dora Puig, great to have you on Yahoo Finance. Thanks so much. Appreciate it.