The MSN article like many such articles are great reading but in many cases do not really always reflect the reality on the ground.
The answer is..... It depends. What I have noticed (as a broker who is involved in transactions at all price points throughout South Florida) is that certain price points and areas are showing some buoyancy or stability while other areas and price points still show the tell tale signs of not having found a bottom.
Within the 33149 market you have seen a less steep drop in value compared to its closest neighbor 33129 and 33130 and 33131 better known as Brickell and Downtown Miami. Those areas have become something of a ground zero with small pockets of opportunity on older buildings and banks finally taking the initiative or ownership in some cases and forcing prices down on new projects to pump life back into them. There are some interesting deals in Key Biscayne right now so the question really becomes what are you looking for? Lots are at historical lows but naturally higher than most other areas of Miami. There are some other deals on the condo side to be had but they require some legwork.
With that said, It is interesting to note that you will have another ARM (Adjustable rate mortgage) reset taking place soon and there still exists a tremendous glut of properties in the foreclosure pipeline within the court system here in Miami.
The automated foreclosure system hasn't really produced major results to resolve the bottleneck either since the lowest price a bank will accept is still higher than what most cash investors will pay at auction. So, there is a wait and see attitude there.
More to the point. If Key Biscayne is your main choice the real question becomes knowing what you want and having a strategy to capitalize on it.
Having lived on the island for many years I can attest to the value of the community. It's a wonderful place. But, it suffers from the fallout of overbuilding in areas off the island and so prices here have gone down and may still have some room to move. I believe though that these distressed properties will not dominate the Island but rather be those great opportunities we all look for.
Hope that helped! If you have some other specific questions feel free to contact me.