Miami housing: The power of cheap

To her amazement, she found she could have her pick of condos in the trendy Brickell neighborhood for less than the $1,200 she was paying to rent in nearby Doral. She bought a $99,000 pad that had been in foreclosure but needed little more than a paint job. The same condo sold for nearly $185,000 a few years ago.

“It was such a great opportunity. I didn’t think twice,” said Castillo, 24, who owns a marketing agency. “I’m getting more for my buck.”

Castillo is among the thousands of people scooping up homes and condos in the Miami area, where properties are selling for a fraction of what they were just a few years ago.

It wasn’t too long ago that the Miami housing market was one of the hottest in the country. Cranes filled the skies as developers rushed to cash in. Home values shot up 75% over three years, and some of the most desirable addresses doubled in price.

The market peaked in late 2005, and then it crashed hard.

As foreclosures soared, South Florida housing prices fell an average of 36%. The foreclosure rate hit 8.9% in February, up from 3.8% a year ago, according to First American CoreLogic. That compares to 1.7% for the rest of the country. Sales ground to a standstill.

But in recent months, low prices and low interest rates have been luring buyers. First-timers are finally finding homes they can afford, while investors say that for the first time in years they can negotiate deals that make sense.

The sales numbers are dramatic. In February alone, condo purchases skyrocketed 71% from a year earlier, while home sales soared 68%, according to the Florida Association of Realtors.

“I’m busier now than I was at the height of the market,” said Ron Platt, an agent with Keller Williams Realty.

Miami isn’t the only area experiencing a resurgence. Sales are up throughout Florida, as they are in other hard-hit markets, such as California. What’s driving the spike? Bargain basement prices on foreclosed homes.