— Two years ago, tony, secluded Fisher Island was perched atop a lofty list: America's most expensive ZIP Code.
With a median home price of $3.85 million, 33109 grabbed the No. 1 spot on Forbes magazine's annual ranking — and plenty of glowing media attention.
That was then. Now a handful of homes on the 216-acre island have gone into foreclosure, 23 residents are still stinging from their brush with Ponzi schemer Bernie Madoff, and the median price of a unit has slid 15% since the Forbes list came out.
That No. 1 ranking? Gone.
When the latest Forbes list was released last fall, Fisher Island found itself demoted to No. 33.
But people on the island, separated from Miami Beach by a ribbon of water known as Government Cut, profess optimism, something that's easier to do when you've lost some net worth but remain very, very comfortable.
"Fisher Island has one big advantage. It is a finite supply and I'm convinced the demand will continuously exceed supply," said year-round resident Steven Neckman, a vintage jewelry dealer. "While prices have dropped from the high when they were crazy, I think it is still kind of the best place for the buck."
Real estate analyst David Dabby, president of Coral Gables-based Dabby Group, said it's a fact that luxury markets, like all markets, have been hurt by the housing bust. But not as much as the rest, he said. And, he added, as luxury real estate improves, typically the rest of the market follows.
"They're leading the market out," he said. "They're a leading indicator."
Surrounded by water and accessible only by yacht, helicopter or ferry from the MacArthur Causeway — and good luck getting on that ferry without prior clearance — Fisher Island has a unique feel. Peacocks roam the island and the preferred way of getting around is by golf cart.
The island has 1,500 residents sprinkled among 685 units, the vast majority of which are condos. Most people don't live there full time.
Owners are members of — and pay fees to — the Fisher Island Community Assn. and one of 22 condominium associations or homeowners associations. The island generates $35 million annually in property taxes but requires little in the way of municipal services.
Celebs including Oprah Winfrey, Mel Brooks, Sharon Gless and Florida First Lady Carole Crist have at various times called it home. Tennis legend Boris Becker once lived there. Andre Agassi wooed Steffi Graf on Fisher Island, sending her a huge batch of flowers and watching from afar to gauge her reaction, according to his autobiography. (She stowed them on her balcony — a bad sign, he thought at the time — but he eventually won her over and the two tennis stars later wed.)
The island is named after Miami Beach developer Carl Fisher, who reportedly traded it to William K. Vanderbilt II for a yacht. Vanderbilt built a lavish mansion, which remains the centerpiece of the club.
Unique as it is, the island has not been able to shield itself from the economic realities hitting the rest of South Florida and the country.
"Nobody is immune," said resident Jose Valdes-Fauli, a 57-year-old banker, pointing to diminished home values in other sumptuous enclaves such as the Hamptons in New York and Aspen, Colo. "But, at the end of the day, what matters is location, location, location — and that is what we have here."
Residents and real estate agents are hopeful that Fisher Island's privileged location, rigorous security, pristine beaches and endless views of water are the ultimate circuit breakers in the event of any financial meltdown.
While many condo communities have cut down on maintenance to ride out the economic storm, Fisher Islanders have splurged, approving a $60-million renovation project. The Fisher Island Hotel and Resort and the tennis courts have been renovated, the marina and nine-hole golf course upgraded and the swanky beach club redone.
Up next: the spa, which is getting its own face lift.
The challenge for Fisher Island, said analyst Peter Zalewski, is maintaining the cachet associated with its image even while some units currently there sell for less than $500,000.
One unit has even been listed for the unheard-of price of $190,000. It's a 450-square-foot postage stamp, but still awfully cheap for the island.
"It has great product," Zalewski said of Fisher Island. The problem at the moment, he said, is there "aren't enough buyers to absorb and acquire all the product that is available from people, many of whom paid too much."
Since the beginning of 2009, at least 17 units have entered foreclosure, many owned by speculators who invested in multiple properties in the go-go days. More than a dozen short sales — prospective deals in which the owner is willing to accept less than the amount owed — are listed.
According to a recent report from Web-based real estate services firm Zillow.com, 97% of units on the island saw their value drop since March of 2009.
Still, the island's master association says quality will not slip.
"Fisher Island Community Assn. is committed to maintaining the highest quality of living standards for its residents. As a matter of fact, even in these tough economic times, our delinquency rates for the homeowner's association dues are consistently below 5%," wrote Jose Cancela, whose firm handles media relations for the island.
Lean times, at least by Fisher Island standards, are forcing islanders to adjust to some new realities.
The Fisher Island Club, the social center with membership of about 760, recently sent notices to an elite few outside the island inviting them to become summer members — minimum price: $6,700. If that sounds steep, consider that an equity membership requires a $250,000 contribution with annual dues of nearly $20,000.
Club officials were tight-lipped about the effort, declining an interview request and releasing a statement that said: "The seasonal membership invitation was sent to a small group of select individuals, with the goal of attracting potential full-time equity members."
Unit owners are also having to make compromises. Semi-retired investment manager George Collins, who spends about six months every year on Fisher Island, sold one of his rental units for $1.1 million — about half what he paid for it.
His two other rentals are for sale, though he hasn't been getting many offers.
Unlike last year, at least they're being rented now.
"It's a 180-degree turnaround," he said.
He said once the backlog of properties with depressed values begins to clear, home prices should reach the right level again.
"When buyers look at what they should pay for properties, those lower prices certainly affect what's going on until they all clear out," said Collins, 69. "At some point, when they're all gone, maybe we'll get more stability or more upside."
Retired builder Arnold Schiller, who has homes on Fisher Island, in East Hampton and in the Canary Islands, said all those markets are suffering similar fates. His home in the Hamptons is down 30% in value; if he were to sell on Fisher Island — which he has no plans to do because he loves it there — he thinks his property would be down that much too.
"Of course, everybody is concerned because it's a big investment and you don't want to lose it," he said.
Phyllis Winick, director of sales at Fisher Island Real Estate, said 2008 and 2009 were difficult, but she sees improvement, especially in prices over the past quarter.
"Thank goodness, I think we're getting back slowly, gradually," she said.
The firm recently started a branch of the business listing off-island properties, a venture that is moving forward incrementally with plans for a bigger push at the end of the year. Winick said the effort was largely a way to help people sell their homes elsewhere so they can move onto the island — especially in time for a new residential building that is slated to break ground in 2011.
Besides, at least some experts say multiple homes are so 2006.
"When everything was great and people could afford it, when they could brag about having a third, fourth or fifth home, Fisher Island was the place to go," said Zalewski, a principal with the Bal Harbour-based consultancy Condo Vultures. "It's now becoming more in vogue to be kind of frugal."
And if there was ever a time for the "frugal" to buy on Fisher Island, this is it, said Winick.
"I don't know if prices are ever going to be this good again," she said.
Sampson writes for the Miami Herald.