Maryellen Healy and Vincent Cerniglia bought a home near the beach for $33,000.

Maryellen "Mel" Healy and her husband, Vincent Cerniglia, are lifelong musicians. Healy once fronted a band called Mel and the Meltdowns; Cerniglia recorded albums called Voodoo Blues and Doodyhead #1. Both now 58, they enjoy performing together as Mel and Vinnie. When they chanced upon a one-bedroom condo within walking distance of a beachside open microphone night in Lake Worth, Fla., they leaped to buy it. The price: $33,000.

"We just wanted to be able to walk to the ocean, and in a week we owned the condo," says Healy, a retired teacher.

Healy and Cerniglia's new digs are actually on the pricey side these days compared with many in southern Florida's age-restricted communities, where living in a style befitting an affluent retiree has become absurdly affordable. At Century Village, which has locations for those 55 and older in West Palm Beach and Boca Raton, basic one-bedroom units are going for as little as $8,500. Monthly fees of $250 or so pay for swimming pools, tennis courts and a golf course, a shuttle bus service to nearby malls and, of course, bingo and shuffleboard.

"What do I say to people who are thinking of retiring in Panama? I tell them, 'You don't know Florida,'" says Adam Raizin, a Realtor at the Corcoran Group in Palm Beach, Fla.

For high-tax-bracket retirees, the deals are sweet as well. In Pompano Beach an owner is asking $100,000 for a two-bedroom apartment near the water that listed for $240,000 six months ago. In Highland Beach the asking price has been cut 40% in a year to $550,000 on a two-bedroom town home with marble floors, granite countertops and ocean views.

Behind the bargains: the housing bust's carnage in the Sunbelt and the peculiarities of retirement-home economics.

In Boca Raton the median home sale price is just shy of $200,000--half the 2007 level. Numbers get even juicier (for buyers, anyway) as units get smaller: one-bedroom dwellings sell for $50,000, off 66% in three years. In Coconut Creek a one-bedroom goes for $40,000, in Deerfield Beach $25,000. At retirement communities like Century Village, where age restrictions limit demand, and 5% to 6% of one development's 5,700 units are unoccupied, discounts can be greater still.

Even if you're years from retiring, buying now can be appealing. Put $400,000 into five-year Treasurys and you'll earn 1.25%, or $5,000 a year, before federal taxes. Instead you might buy a Florida home near the beach. Assume a renter is willing to pay you $3,000 a month, or $36,000 a year, and taxes, insurance and upkeep cost you $10,000 annually. Your net rent would be $26,000, about one-third of it sheltered from income taxes by depreciation (if you sell, capital gains rates will apply to your sheltered income). The 6.5% cash-on-cash return on your future home equals today's junk bond yields.

Live in the home for two years and you could then sell it and claim a portion of the gain as tax-free, based on complex IRS rules. Better still, keep it the rest of your life; the cost basis will be stepped up and your kids will inherit it tax-free.

Before buying a stand-alone home, consider whether it's in a neighborhood where properties are likely to retain their values. With a retirement community, take a hard look at its financial condition. Most banks won't extend loans if the mortgage delinquencies for a given homeowners' association exceed 15% or if 25% or more of its units are empty.

"If you get to the point where you can only sell to a cash buyer, you eliminate 85% of your market," says Tara-Nicholle Nelson, an attorney and consumer educator for real estate researcher Trulia.com.

For low-end condos you'll probably have to pay cash anyway since banks rarely bother with loans below $50,000. Even then a spike in vacancies could drive up your maintenance costs, so make sure the community is financially healthy. Whether you plan to live in a property or rent it out, there's not much appeal to an empty swimming pool.