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76 responses so far ↓

• 1 Joe Blow /Dec 30, 2009 at 8:54 pm  Vote:    

  WELCOME BACK LUCAS all the best for 2010

• 2 Renter Tom /Dec 31, 2009 at 3:10 am  Vote:    

  “Apartment renters win as vacancy rate climbs”

  “Christmas will stretch into 2010 for apartment renters, who are benefiting from an epic collapse in the rental market and generous concessions.
  Landlords are offering tenants up to six months of free rent, flat-screen TVs and new appliances. They’re also slashing monthly rates and easing application standards. ….”

  http://www.usatoday.com/money/economy/housing/2009-12-30-rent-bargains-discounts_N.htm?loc=interstitialskip

  Oh the joys of renting for half the price of owning……………….

• 3 Renter Tom /Dec 31, 2009 at 1:20 pm  Vote:    

  Nominal dollars versus real dollars….. and if you had a mortgage you paid a lot in interest costs!

  ?10 years…no gain in home prices

  By Les Christie, staff writerDecember 30, 2009: 4:19 PM ET

  NEW YORK (CNNMoney.com) — Taking into account inflation, home prices are actually lower than they were 10 years ago, according to a report from the National Association of Realtors released Wednesday.”

  http://money.cnn.com/2009/12/30/real_estate/prices_dropped_over_decade/index.htm?postversion=2009123016

• 4 Renter Tom /Dec 31, 2009 at 1:23 pm  Vote:    

  Happy New Decade!

  “3 reasons home prices are heading lower

  By Les Christie, staff writerDecember 31, 2009: 6:36 AM ET

  NEW YORK (CNNMoney.com) — After four months of gains, home prices flattened in October. Worse yet, industry insiders think that they’ll soon start to fall.

  Prices have risen more than 3% since May, according to S&P/Case-Shiller.”

  http://money.cnn.com/2009/12/31/real_estate/home_price_drop/index.htm

• 5 drerossin /Dec 31, 2009 at 4:56 pm  Vote:    

  Happy New Year to you,too!
  Happy blogging next year-will be on a look out for your blogs!

• 6 The Ace /Jan 1, 2010 at 11:22 am  Vote:    

  How is that “hope & change” working out for you.

  Don’t blame The Ace he voted for the American.

  Happy New Year

• 7 The Ace /Jan 1, 2010 at 11:25 am  Vote:    

  PS: Why is everyone spouting the end of the decade, we have one full year to go before this decade is over! That’s one full year of further price drops; 11% nationally and 30% to 50% in Miami.

• 8 Kramer /Jan 1, 2010 at 7:05 pm  Vote:    

  Happy New Year to all. Yesterday – New Years Eve Day I spent about an hour just hanging out at Pace Park across from AJ’s building 1800 Club. Haven’t been in the area in a while.On the south end there were two different sand volley ball games going on. Heading north there were about 25 kids with their parents in the enclosed playground with slides – swings etc. Next there was an open grassy lawn approx half a football field in size with about 10-15 dogs unleashed with their owners chatting and watching their dogs run and play with each other. Saw one dog poop – and the owner immediately rushed over with a plastic picker upper and disposed of properly. Next stop was a full regulation size soccer field with a very active game in play. A bit to the side of this was the full size basketball court with a very friendly game in progress. Then as i walked the path next to Biscayne Bay and a gorgeous view of Biscayne Bay were 3 or 4 people with families with the open air barbecue pits lit up having a picnic with hotdogs and hamburgers. From what i saw this is a great urban park right on the water.

• 9 The Ace /Jan 1, 2010 at 9:06 pm  Vote:    

  Post #8 must be talking about Mayberry not Miami because I’ve traveled the same route in Park Place and all I’ve seen is bums, drug dealers, hookers and squatters in the vacant Condo’s.

  How’s that hope and change working out for yee?

• 10 JL /Jan 1, 2010 at 10:04 pm  Vote:    

  Kramer, are you sure you weren’t in Aventura or Pinecrest? sounds like suburbia

• 11 Kramer /Jan 1, 2010 at 10:06 pm  Vote:    

  Ace is an effin LIAR! It’s Pace Park not “Park Place”. Your credibility is shot right there. If anyone who lives in Miami has any doubts about my post # 8 then take a ride down tomorrow or Sunday and see for yourself and enjoy the park. That’s if you can find a place to park your car near the park as many outsiders now come to enjoy this park. Go to Biscayne Blvd. and at 18 street head towards the bay.

• 12 Kramer /Jan 1, 2010 at 10:10 pm  Vote:    

  JL

  I know – it sounds like what happens in the great suburban parks, but this is smack dab in the center of Downtown Miami. check it out for yourself.

• 13 Illuminati /Jan 2, 2010 at 12:06 am  Vote:    

  Guys!!! This can be settled easily w/specifics on Pace Park.
  Kramer: What building would you be buying in??
  Ace: What building would you be a seller of???

• 14 AJ /Jan 2, 2010 at 4:05 am  Vote:    

  Hi Kramer, Happy New Year to you and all those good peeps out there. Thanks for the write up on pace park. Brought me back good memories especially while I am half a World away.

  I rang in the new years at Goa. Next stop Phuket, Thailand and maybe Bali, Indonesia too.

  I had one of my, No, let me correct it, the Best New Years ever at Goa. I was on the beach and for the first time, rang in the year in my flip flops and not in a suit. Firstly I was in North Goa and there is a strech of an absolutely gorgeous 10 kilometer long beach between Baga and Aguada, shaped like a cresent. The beach shacks were illuminated like magic and all kinds of incredible stuff was going on. The fire eaters, fire jugglers, dancers, night swimmers, it was crazy. The music was pumping from every shack. Then came the midnight and the fire works! The whole bay got lit up with a million shells. It lasted for half hour. Then I started bar/shack and club hopping on the beach. Each place was pumping its own music, mostly Trance as Indians seem to love trance and then others palying house, techno and Bollywood. Every 18-29 and mostly well to do kids from all over India were there to celebrate. There could be easily 150,000 revellers on the beach that day, making it easily the largest beach party in the World (unless something bigger happens at Copacabana, which I am not aware of). And to add to the excitement, it was a full moon party and the entire bay and the beach was dazzling. I was on the beach almost till sunrise.
  I refused many party invitations to be on the beach and it was the best decision ever. I hope I could go back to Goa on a NYE one day again. I will definitely put this as one of the top 10 places in the World to ring in the New Year alongside Times Sq, Miami beach or bayside, Sydney harbor etc.
  In 10 days I will be off to Thailand. I will try to drop by the blog if I can.

• 15 NJ Dave /Jan 2, 2010 at 11:41 am  Vote:    

  The beauty is you can post anything, true or false. Need to see things for yourself and I’ve had similar pleasant experiences at Pace Park as Kramer describes in #8. Sorry to disappoint RT, no poop, no hookers, no drug dealers. I did see 1 drunk sleeping under a tree on Sunday morning but this is the price of living in a city with a forgiving climate. Typically see far more in other warm sunny locations such as the waterfront parks in Santa Monica and Santa Barbara CA, but they are a little better dressed, perhaps they we just camping.

• 16 Bobby Here /Jan 2, 2010 at 12:18 pm  Vote:    

  From a former Park West resident. Kramer is right; the Ace is wrong.

  Rarely agree with AJ. Agree with him on Pace Park: it’s a hidden urban gem, except for the dog poop that gets away.

• 17 Joe Blow /Jan 2, 2010 at 3:18 pm  Vote:    

  HAIL……….to the “ACE”………HAIL…….to “RENTER TOM”……even though “ACE” was wrong@ $125 sq. ft……..Prices will drop BELOW that price point.What are we looking at NOW “ACE”???

• 18 900 Fan /Jan 2, 2010 at 3:44 pm  Vote:    

  The Ace – get your head out of your arse. Just based on your statement in #9 shows you clearly have not been to Miami in at least 5 years and the fact that people actually take you seriously on this blog and listen to your advice is laughable.

• 19 Angel /Jan 2, 2010 at 4:33 pm  Vote:    

  I have been living at 900 for over 6 months now and I agree with Kramer and AJ on the fact that Pace Park is not infested with hookers and drug dealers. I jog there every Sunday morning and it is quite pleasant. It is a far cry from the Pace Park of 5 years ago.

• 20 Brody /Jan 2, 2010 at 5:05 pm  Vote:    

  Pace Park is a beautiful, urban park and post #8 is spot on. Pace Park is always full of families that live in the nearby apartment buildings, people walking their dogs, joggers, picnics, sports teams, etc. Pace Park is truly a great urban park, just like South Pointe Park.

  I hope Bicentennial Park (Museum Park) proves to be a great success that Pace Park is. Speaking of which, does anyone know what’s going on with the Miami Circle Park in Brickell? The Miami Herald reported over Summer 2009, that they were starting to work on renovating it to conicide with Brickell Park next door. Anyone know?

• 21 Condo Hunter /Jan 2, 2010 at 5:30 pm  Vote:    

  900 Fan:

  I am one of those that listens to the Ace as his advice is worth its weight in gold. How many so called “experts” predicted as the Ace did that high end Miami condos could be bought for $125.00 or less……..NONE!

• 22 900 Fan /Jan 2, 2010 at 8:59 pm  Vote:    

  Condo Hunter – I don’t know what you consider “high end” Miami condos. But you still can not buy what I consider “high end” condos for less than $125.00 per sq ft and in this category you will never be able to buy it on a consistent basis. Good luck. And BTW you are clearly a troll. It’s easy for anyone to say condo prices will go down to $X per sq ft. And when you see one deal which is the only one that always gets reported (sensationalism) for that person to point out “look see what I said”. But I dare you and The Ace since you are the same person to show me when you see a building like 900 Biscayne which is what I would consider “high end” go to $125.00 per sq ft or less.

• 23 George /Jan 2, 2010 at 11:01 pm  Vote:    

  Mr Ace: What are you smoking?
  There have been enormous changes for the better in the nabe near Pace Park in recent years. From your statement I wonder when was the last time you really saw the area?

  I did TODAY and what a glorious scene it was echoing what Kramer stated!
  The city also recently completed regrading No Bayshore Drive hopefully eliminating the mini floods that occurred on the roadway and swamped cars parked on the east side of NBD.
  Also wider sidewalks and new palm trees add to the upscale look.
  Hey we do have what will be the priciest building in the area, the high end Paramount which is worthy of a Brickell address-also see the floorplans- at 20 st and bet the developer was involved in improving the livability of the street .
  Of course the next comment will be from one of the grand kvetches here betting how cheaply Paramount will go for.
  Ball is now in Starwood’s court as they took over bad loans from Tsourus -oops Corus Bank.

• 24 Condo Vulture /Jan 3, 2010 at 9:44 am  Vote:    

  You are wrong 900 Fan; it is now quite common for high end Condos to sell for far less than $125.00. This trend began last year with approximately 100 units at the Jade sold for $94.00 per square foot in a bulk sale. It won’t be long now before we see this price level at retail.

• 25 The Ace /Jan 3, 2010 at 10:05 am  Vote:    

  Miami: Nov. 26–As the year starts winding down, real-estate investors have begun closing on large blocks of South Florida condominium units — known as “bulk deals” — at a quickening pace.

  The burst of new activity indicates investors — mostly seasoned real-estate professionals from other markets and abroad — perceive the new construction market is nearing bottom, according to analysts.

  Since the end of October, investors have closed on five bulk transactions totaling 518 units and 710,500 square feet throughout Miami-Dade County.

  The combined purchase price for four of the five deals was $23 million.

  A fifth deal involved the purchase of the discounted construction note balance of $20.5 million that was secured by 244 unsold units at 900 Biscayne Bay, a project of Terra Group. The price for the note, which included $8 million in capitalized interest, was not disclosed.

  The figures come from Bal Harbour-based Condo Vultures, a brokerage and consulting firm that closely tracks sales of new condominiums in Miami-Dade.

  Enticing prices seem to have whetted investors’ interest.

  “If we’re not at the bottom, we’re close enough and they are coming in and buying assets for 30 to 50 percent less than replacement cost,” said Craig Studnicky, president of Aventura-based International Sales Group.

  Peter Zalewski, a principal with Condo Vultures, said the rapid fire sales pace was also the result of lenders slashing prices on inventory and delinquent notes. “Lenders feel that in the second half of 2010 commercial real estate is going to plummet, so this is a house-cleaning measure to shore up balance sheets in anticipation and preparation for the real drama that comes next year,” Zalewski said.

  As the job outlook remains dour for the near future, analysts predict commercial real-estate values will suffer, as businesses close, tenants fall behind on rents, and commercial borrowers default in greater numbers.

  TRANSACTIONS

  Among the bulk deal transactions recorded since the end of October, according to Condo Vultures:

  October 30 — An entity based in the Cayman Islands paid an undisclosed amount for the remaining balance of a $21 million construction loan for 244 units at the luxury 900 Biscayne Bay condo.

  November 6 — Italian investor Ciro Campagnoli paid $5.3 million for 62 units in 401 Blu on Miami Beach, a condo conversion project, for about $154 per square foot.

  November 8 — Investors from Ocala, Rudy Gram, Anthony Gram, and Beth Fisher with Sharon Hummerhielm, paid $5.4 million for 34 units in the luxury 3030 Aventura condo, at 3030 NE 188th St., for $158 per square foot, a 64 percent discount.

  November 9 — Canadian apartment operators and developers, Southwest Properties and Armco Capital, paid $17.9 million for the remaining 158 residential units at Downtown Dadeland, a seven-building mixed-use condominium community in Kendall for about $109 per square foot, a 57 percent discount.

  November 12 — Aventura-based investors David Garfinkle and Adam Pollock paid $4 million for 50 units in the Edgewater Lofts, a new condo tower at 2200 NE Fourth Ave., for $99 per square foot.

  Jay Steinman, an attorney who leads the commercial real estate and finance department with the Miami office of Carlton Fields, said the new deals can also be attributed to the growing prevalence of “package deals,” in which lenders offer the title to a property as well as the delinquent note.

  Package deals allow new buyers to avoid the cost and delays that come with having to file a foreclosure against a borrower who may also decide to file for bankruptcy. “With package deals, the litigation goes away and the new buyer has a project without any threat,” Steinman said.

• 26 The Ace /Jan 3, 2010 at 10:08 am  Vote:    

  High End enough for you 900 Fan.

  How’s that hope and change working out for yee?

  The Ace telling it like it is since 2006

• 27 Looking w/cash /Jan 3, 2010 at 11:40 am  Vote:    

  Ace – Good forcasting. As an individual I can’t operate as a bulk purchaser, just want one good one to live in. Some of the wild low pricing in good buildings have been for shoe boxes facing the city or a parking lot.

• 28 Bobby Here /Jan 3, 2010 at 3:35 pm  Vote:    

  The Ace was wrong on Pace Park but he has been right on almost everything else. More important: he has been right on the issues that matter.

  We need more properly capitalized posts from The Ace and fewer ALL CAPS POSTS from THE ACE. The properly capitalized posts hold the gems.

• 29 Joe Blow /Jan 3, 2010 at 4:29 pm  Vote:    

  ACE……can you tell me the 3 BEST deals for a Luxury Condo that is available right now.(around the $$125 a sq. ft. mark.)That would be gratefully appreciated. J.B.

• 30 Illuminati /Jan 3, 2010 at 5:15 pm  Vote:    

  BJ #29,
  Thank you. There’s too much unsubstantiated opinion and not enough analysis about specific condos/deals. I’m still waiting for a response to my #13. Lets talk units!!! (and y, I recognize the value of Ace #25)

• 31 My Generation /Jan 3, 2010 at 9:43 pm  Vote:    

  When the Ace speaks E F Hutton listens as does the NAR

• 32 Kramer /Jan 3, 2010 at 9:44 pm  Vote:    

  Lucas

  Your Blog is being hijacked and and corrupted by one person posing under different handles. The latest flat out lie is #24 stating that 100 units at Jade were sold for $94. per square foot. It is almost criminal what this person is doing to your site. Surely there must be a way you can block or we can block this person from ruining your good name after the years of time effort and money you have poured into this site. I wish everyone of the faithful honest posters in here would stand up and be heard with suggestions , otherwise i fear this blog will lose any and all credibility to readers who may not know what this sick person is doing with his false misleading misinformation.

• 33 Paolo di brazil For hir /Jan 3, 2010 at 11:45 pm  Vote:    

  I lok for work, rapido. Can buy condo horizontal at 80 percent over listing papel.
  Many freinds to buy from needi developer. Appreciative to introduce to. Sr. Perez or his friends. Felix Ano di Rio

• 34 900 Fan /Jan 4, 2010 at 12:25 am  Vote:    

  Condo Vulture – you are an idiot clearly. And NO – 100 units did not sell in Jade for that price. This just goes to show the nonsense you and “THE ACE” post on this blog. And as for 900 Biscayne Bay. Those units were not sold for anywhere near $125 per sq ft. Do your homework. Again I would not consider 401 Blu, Downtown Dadeland and Edgewater Lofts as Luxury Product. If you do you are delusional.

• 35 Dale /Jan 4, 2010 at 11:44 am  Vote:    

  Coming from someone who actually places bids on units, I can tell you all that developers are beginning to renegotiate with their lenders to assure prices will never drop to $125 a foot. This is especially true with the buildings with Corus loans, which are now in part owned by the US government, who I don’t think is in too much of a rush to sell condos at absurdly low prices. Expect developers to enforce a price floor above $200 sq foot and not let anything go for less than that.

  The numbers from this very website show that not a single developer unit in a decent building sold in November for less than $200 a foot. The average all November sales is almost $250 a foot!

  If you’re waiting around for prices to fall to $125 a foot, you should check out Cape Coral.

• 36 Bobby Here /Jan 4, 2010 at 12:16 pm  Vote:    

  Looks like the market pumpers are back again. As usual, they are “renegotiating” with facts and reality in order to prevent the sky from falling.

  Last year’s MarinaBlue bulk sale was below $200 per square foot. The so-called Home Affordable Foreclosure Alternatives (HAFA) program will dump tons of inventory on the market this year.

  As usual, the Ace will be proven right yet again. $125 psf, here we come.

• 37 Joe /Jan 4, 2010 at 5:39 pm  Vote:    

  Dale — Where on “this very website” are you finding listings of last month’s developer sales? Lucas has said, time and again, that his numbers *don’t* include developer sales.

• 38 Dale /Jan 4, 2010 at 6:20 pm  Vote:    

  JOE, I didn’t know that the list didn’t include developer units, my bad.

  Regardless, almost all new developments have begun closings, and units are still moving at 220+ a foot in decent buildings (axis, plaza, met, infinity, NOT ivy, the club, vue, etc). As someone actively looking for a condo at bargain price to actually LIVE in for many years to come, $220 a foot would be a steal in one of these buildings and I think anybody waiting for prices to drop below $150 will continue renting until they decide to move to Kendall.

• 39 Dale /Jan 4, 2010 at 6:25 pm  Vote:    

  THE WALL STREET JOURNAL
  * DECEMBER 30, 2009
  Miami Condo Project Acts as Test Case
  By JAMES R. HAGERTY

  MIAMI—The three-tower Icon Brickell condominium project is turning into a test case
  for how lenders should deal with distressed real estate.
  As they acquire control of more condo towers in Miami and other cities, banks face a
  dilemma: Should they sell whole buildings or large blocks of condos to big investors
  looking to acquire property on the cheap? Or sell condos one by one to individuals?
  Selling in bulk brings cash in quickly and avoids the risk that prices will keep falling. But
  investors interested in bulk purchases insist on steep discounts from the prices buyers of
  single units would be expected to pay.
  In the case of Icon Brickell, which features a 100-yard-long pool on a deck with Japanese
  blueberry trees and whose early residents include the singer Jennifer Lopez, lenders led
  by HSBC Holdings PLC, which effectively control the project since the developer ran
  into trouble over debt payments, have opted to sell more than 1,600 remaining condo
  units one by one. They are counting on lots of demand from Latin Americans able to pay
  cash and eager for a prestigious address in Miami. And they believe they can get a better
  price selling “retail” to end users rather than “wholesale” to investors, even if it means
  they must hold and manage the properties longer.
  “The distress opportunities may not be as great as we all expected” because banks aren’t
  being forced to sell huge quantities of condos in a hurry, said Manuel de Zárraga,
  executive managing director at Holliday Fenoglio Fowler LP, which advises real-estate
  developers and investors.
  That is partly because federal regulators have given banks some slack: In October,
  regulators issued guidelines that let banks keep loans on their books as “performing” even
  if the values of the underlying properties have fallen below the loan amount.
  The Icon Brickell will be competing for buyers with a group of investors led by Starwood
  Capital Group that has become the largest player in the Miami condo market. That group
  in October bought control of 14 condo buildings in Miami, Fort Lauderdale and Palm
  Beach, among other real estate, in a $2.77 billion purchase of construction loans made by
  Corus Bank of Chicago before regulators shut it down in September.
  Starwood Capital has indicated that it isn’t planning to dump its property back on the
  market.
  “In many cases, the best option will indeed be to be a long-term hold as there were many
  attractive properties in the Corus portfolio,” a Starwood spokesman said.
  But the slow-sell strategy could backfire if prices keep falling.
  Peter Zalewski, the owner of Condo Vultures Realty LLC in Miami, said lenders would
  be better off arranging a sale of one or two of the three Icon Brickell towers to investors.
  He believes that it will take too long, perhaps several years, to sell the units to individual
  buyers. Meanwhile, the lenders will have to cover tax and maintenance costs.
  Condo supply remains in a glut. In Miami-Dade County, 16,665 units were listed for sale
  at the end of November, or enough to last 18 months at the recent sales rate, according to
  Esslinger-Wooten-Maxwell Inc., or EWM, a real-estate brokerage in Miami. Still, that is
  down from a peak of 24,905 listings in May 2008. About a quarter of the condo listings
  are priced at $100,000 or less, a price category that barely existed three years ago.
  “Miami is 50% off,” said Ron Shuffield, president of EWM. “It’s just like having a sale at
  Macy’s.”
  If priced low enough, properties can move. Units at the 46-story building called Brickell
  on the River South sold out quickly after the developer, Groupe Pacific, cut prices last
  spring to a range of $175 to $225 per square foot from $325 a square foot in 2008, said
  Scott Wadler, an analyst at Holliday Fenoglio Fowler.
  But whether sales will go quickly at more expensive buildings, such as the Icon Brickell,
  remains unclear. The Icon Brickell is the marquee project of Related Group, a Miami
  condo developer. Related has invested about $1 billion in the three towers, including $15
  million for giant statues of heads that resemble those on Easter Island, according to the
  closely held company’s chairman, Jorge Perez. In a recent interview, Mr. Perez said loans
  secured by the three buildings total about $700 million.
  Most of the Icon Brickell was completed in 2008 and 2009. So far, 117 purchases have
  been completed. The average price was cut in October to $419 per square foot from a
  peak of about $650. A typical two-bedroom unit now would cost about $550,000.
  Mr. Zalewski, of Condo Vultures, said prices at Icon Brickell will have to come down
  further if the units are to be sold quickly. He said the typical market price in the
  neighborhood is now $200 to $215 per square foot, and Icon’s cachet can’t support more
  than a 35% premium to that.

• 40 Bobby Here /Jan 4, 2010 at 7:04 pm  Vote:    

  Anyone who expects the truth from the Wall Street Journal, the Miami Herald or any other mainstream newspaper deserves the eventual hit to their pocketbook.

  Dale, please join the other knife catchers. As I advised AJ before he bought his condo, you will not need to tell us how much you paid for your condo… a year from now, we will know that your purchase is under water and you paid too much.

• 41 Joe /Jan 4, 2010 at 9:26 pm  Vote:    

  I agree with “Bobby Here” above, but for people like Dale who say they’re looking for a place to buy *and* live in for the next few years, I can’t argue with finding the best possible deal now rather than waiting another year or two. I wouldn’t pay $4 million for a condo that might end up available at $2 million, but there are probably some very nice long-term residences available in the low six figures right now. (Yes, the buyer likely will be underwater a year from now, but if it’s a long-term hold, that’s not a huge deal.)

  IMO, the big red flag in the Miami condo market — and something that goes mostly ignored — are the long-term carrying costs of these condos, even if bought at what appears to be a great price. Most of the HOA fees seem outrageous already, and with amenity cutbacks becoming more and more common, HOA fees that will only rise, and Miami Dade property taxes that are also heading north, even most of the “great deals” trumpeted here haven’t seemed all that great to me.

  At the risk of making AJ go berserk for the 75th time, I love Miami, but Miami’s shiny new veneer aside, Miami has the same systemic problems that it’s always had, and most of those problems are trending worse instead of better. Condos are great in theory, but they can become money pits in the blink of an eye (or the crash of a hurricane, or the implosion of local government, etc.).

• 42 Richard /Jan 4, 2010 at 9:46 pm  Vote:    

  Bulk buyers will have the votes to take complete control of many condo associations. At first glance it would seem to be negative but they have a 100 times more interest in getting the best price for services.

• 43 southbeachsand /Jan 4, 2010 at 10:33 pm  Vote:    

  Lol, Dubai had to rename the Burj Dubai tower after the Abu Dhabi ruler who bailed them out last month. How embarrassing.

• 44 Joe /Jan 4, 2010 at 11:04 pm  Vote:    

  Richard #42 — It could be good if the bulk buyers watch the bottom line, but it could also be bad if they cut amenities and/or turn the buildings into glorified rental buildings. You can also be sure any HOA that’s controlled by a bulk buyer will be underfunded from a reserve standpoint for as long as the bulk buyer controls it.

• 45 Wild Bill /Jan 5, 2010 at 12:56 am  Vote:    

  Bulk buyers are idiots. Unless they can flip those units immediately they will get slaughtered. Condominium rules don’t favor bulk buyers. Condo Vultures spends 99 percent of their time trying to get new suckers involved in this crap.
  Prices are being supported by the government through low interest rates, mortgage insurance and flood insurance. Real estate is such a terrible investment nobody even wants to insure this junk.
  Prices on some condominiums will move below $100 a sq. foot. Not all buildings will dip this low.

• 46 Cash Buyer For $100 sq. Ft /Jan 5, 2010 at 2:15 am  Vote:    

  I am a cash buyer on any newer condo in the Brickell area. Higher end buildings like Santa Maria cash price is $250, original purchase price in 1998

• 47 scrivener /Jan 5, 2010 at 7:35 am  Vote:    

  “Real estate is such a terrible investment nobody even wants to insure this junk.” – - Wild Bill

  You raise an interesting question. I agree with you that real estate, particularly condos, are a horrible investment. Better to sink your funds into the “Bank of Serta” or “The Bank if Sealy” (mattresses, for those that are wondering) than any of the condos in Miami (or South Florida) – - because, as I said earlier, neither condos or real estate pay interest or dividends. They are depreciating assets.

  But the question in my mind is this: what is the attraction for a group to come in and purchase, for example, 10 units in the Icon development in a bulk sale. Sure, they get a discount on the purchase price. Yes they get depreciation deductions and rental income (assuming they can rent out the units). They may even be able to treat the unit as business property.

  But once the sale closes, the bulk buyer is left with the costs/burdens of ownership (HOA fees, insurance, taxes, etc.) – - right? Eeeewwww!

  And it seems to me that the “flipping” market ain’t what it used to be.

  So what do you (or anyone) think the attraction is?

  Thoughts?

  scriv

• 48 Gixxer 1000 /Jan 5, 2010 at 11:22 am  Vote:    

  I think people on both sides of this argument are throwing out random opinions with no facts behind their argument.

  On one side you have people saying prices will drop to or below $125 sqft. Well that’s great, but what condo’s and in what markets? Who cares if Edgewater sells a bulk deal for $99 sqft. Edgewater has NO water views and again that’s a bulk deal. So please stop just saying condo’s in general and specify your market (luxury, water front, Brickell, Aventura, etc.). Second it seems to me that if the market is still demanding $150 sqft for bulk purchases (and in some cases units that aren’t even fully finished) then retail prices would still need to be higher.

  On the other side you have people who are saying prices seem to be stabilizing around $200 sqft. That bulk purchasers and government intervention will keep prices steady. Well government help can’t last forever and I’m sorry but I don’t see how these bulk purchasers are going to be able to hold prices at any set level. They are hedging their bets and their either going to be right or wrong. And no one is addressing the carrying costs. As prices go down HOA and taxes seem to be staying the same. So even if the condo’s price drops to an affordable range for a new market it still wont be affordable with the extra fees. What kind of buyer is going to but a condo for $250k and have a mortgage for $1,150 (after 20% down) and then turn around and pay another $1000+ on HOA and taxes???

  Given this latest debacle I think it’s fairly clear that their is no set value for real estate. It’s not like were adding up manufacturing costs and then adding profit. The value is what a buyer is willing to pay for it. So arguing that condo’s are $125 or $200 a sqft is a silly argument. Now arguing that in this given market considering unemployment, average incomes, access to capital, etc. that the average willing buyer can only afford $125 or $200 sqft in Brickell is a little more reasonable.

• 49 Dale /Jan 5, 2010 at 11:37 am  Vote:    

  Scriv- what many investors find appealing about the miami condo market, beyond just the numbers, is investing in a city in transformation. I remember five years ago when Brickell was a ghost town with a handful of restaurants and bars. The massive flood of condos has given birth to a self sustaining community where one doesn’t have to cross the bridge to South Beach to find a decent restaurant or party. And now that it is actually affordable, it will become THE center of Miami and the most attractive place to live. The infrastructure is in place, now lets just hope the people follow.

  Also, investors who buy without debt are probably aiming at around a 5% CAP, which isn’t bad for a low risk asset- and by low risk, I mean that if bought at a discount we can be sure it WILL NOT loose another 50% of its value, as might another more lucrative investment. The bulk buyers are probably looking to diversify from the millions more they have invested in other markets.

  From an investment standpoint, I don’t like ICON whatsoever. Its 1800 units of cookie-cutter split floorplans, no different from any other Related building except double the price, and once that place fills up the pool is going to feel like Sunday the the Hard Rock in Vegas.

  Cash Buyer- good luck finding something in the Santa Maria for $100 a foot.

• 50 DJ /Jan 5, 2010 at 12:05 pm  Vote:    

  I’m gonna agree with Gixxer’s last post. You can’t make the blanket statement that we’re gonna see the bottom of the miami market at $200/sq.foot, $125/sq. foot, or any other number higher or lower. Individual neighborhoods and individual buildings perform at their own pace. Some are doing well and some aren’t. Certainly, some of the lower quality buildings in less desireable neighborhoods are already trading at less than $100/sq. foot. Then again, the so-called luxury buildings in good nieghborhoods are still comanding prices in the $300+ sq. foot range and above. So to make these blanket statements that prices will fall to whatever level is misleading. They already are at that level in some buildings; some buildings haven’t seen sales in over a year even at prices of less than $100/sq. foot; still others are showing fairly constant sales at much higher prices.

• 51 Miami Skeptic /Jan 5, 2010 at 12:09 pm  Vote:    

  Scrivener, the bulk buyers are largely trying to flip just like the developers and speculators before them. Their model is to swoop in, buy up a block of units at a steep discount, rent for a few years around the break even point in carrying costs and sell them when the market turns.

  This model works if:

  1. The units are purchased at a steep enough discount

  2. The market improves sufficiently within their investment window (usually 5 years or less) to sell for a sufficient profit.

  3. Carrying costs don’t rise steeply. Buildings with large developer/bulk buyer interest will keep the HOAs down as much as possible, in spite of what this will do to the buildings $$ reserves in the long term.

  4. Rents don’t plummet

  If any one of these 4 factors falls short, the investment will not payoff. A bit oversimplified, but basically covers the situation.

  Like Wild Bill above, I believe that many of these bulk buyers will be slaughtered as factors #2 and #4 above are simply not in their favor.

  Given the huge amount of vacant inventory in Brickell/Downtown I am not sure how anyone can expect rents to be stable or how prices can appreciate in any significant way (if at all) in the near term.

  Anyone contemplating being a condo landlord or owner just needs to take a drive by Icon and Everglades on the Bay at night. All of those dark units will be your competition for years to come. There are 2500 units in those 2 complexes alone, with very few currently occupied. Rental prices will be in a race to the bottom for a few more years until we reach some kind of equilibrium.

  If the bulk buyers figured in the coming declines in rent into their asset pricing models they will be fine, but I think they will just be another wave of knife catchers.

• 52 scrivener /Jan 5, 2010 at 1:13 pm  Vote:    

  Thanks for the explanation – - I agree with you that it is a risky bet and the majority of these bulk buyers will get slaughtered (unless they are farming losses to offset other gains and treating any rental income as gravey – - note the possible impact of 26 USC Section 469’s passive loss rules of course).

  scriv

• 53 Renter Tom /Jan 5, 2010 at 1:28 pm  Vote:    

  Gixxer 1000 – How are the bulk buyers “hedging their bets”??? They are all in and gambling one way that they can sell at a higher price. There is no hedging.

• 54 Gixxer 1000 /Jan 5, 2010 at 1:50 pm  Vote:    

  Renter Tom – You are correct. I was typing fast and typed the first thing that came to mind. I simply meant to imply that they were betting the market would turn and not hedging against another bet.

  I also sometimes say irregardless sometimes when I should say regardless. Nice to know the phrase police is out there.

• 55 gables /Jan 5, 2010 at 2:02 pm  Vote:    

  At a discounted price of $200k for a 2B, the cost of capital is around $12k a year for interest equivalent (loan or cash at 5%), plus $9k per year in HOA and $6k a year in taxes. Total of $27k per year or $2.2k per month to cover costs. How many units can be bought at that low price and rented at that high price? If you own and it sits dormant for two years, you have lost a quarter of the value of your home in carrying costs. Not many jobs out there which can afford $2.2k per month in housing in this economy.

• 56 Seanjohn /Jan 5, 2010 at 3:06 pm  Vote:    

  Looks like ~60/70 units closed in December at Metropolitan Miami, 300 S Biscayne. Was that a bulk deal or just a block of initial pre construction buyers? Seems to be all in the low to mid $200’s a square foot.

• 57 Miami Skeptic /Jan 5, 2010 at 3:54 pm  Vote:    

  Sean Jean, I saw that data as well, pretty interesting. That address is for Met1. The building has been open for some time and is about 50% occupied so seems unlikely that dozens of pre-construction buyers suddenly closed on the same day in December.

  I would guess that this is either a shuffle from one legal entity to another or a bulk buy. Met1 has been quietly leasing a couple of developer units each month, but has not been swamping the market the way other buildings had.

  When looking at possible rentals last year I was shown one of the units on the list. It was definitely a developer owned unit and still shows as available on MLS. Maybe Lucas has heard something?

• 58 Gixxer 1000 /Jan 5, 2010 at 3:59 pm  Vote:    

  Again I wish people would stop over generalizing.

  Where is it a fact that someone investing in this market is doing so and will need to liquidate in 5 years. By that logic stocks are terrible investments given the Dow Jones was around 8000 in ‘03 and 7000 in ‘09. The great depression even wiped out 30 years worth of gains.

  Fact: in 2020 some investors will have accumulated massive amounts of wealth from purchases today.

  Fact: in 2020 some investors will have lost massive amounts of wealth from purchases today.

  It seems most people here keep trying to determine the value of condo’s as an investment to flip in a short amount of time. That’s what got us into this problem. If were going to reach the bottom it’s going to be at a price where people can afford to buy and live in the home for an extended period. Obviously some people feel that price will be higher sometime in the future give their investment needs may it be 5, 10, 15, 20 years in the future, hence the bulk deals.

  As gables detailed the carrying cost seem to be the biggest obstacles. But I would not count on rents “plummeting”. Maybe a 5-10% in forms of free rent. As I recall the majority of apartments were converted to Condo’s pushing renters out and prices up. As rents decrease slightly renters will be enticed back in by new buildings and amenities. All the places that I’ve read (ULI, RERC) still indicated apartments as good investments.

  By how much are people really expecting rents to decrease???

• 59 andi /Jan 5, 2010 at 7:36 pm  Vote:    

  without govt intervention, sofla condos and most other US assets (stocks/junk bonds/MBS) would be closer to the bottom and finally we would have been able to gather ourselves up for a stable uptrend in assets..construction industry would be finally be building as most inventories are absorbed by local+overseas investors…
  obama w/ his nincompoop financial advisors like bernanke+geithner inhibited that cleansing yet necessary free market schumpeterian process and we have added on extra mess w/ nothing of substance addressed yet.. Things outside US is even more scary w/ hyper RE bubble in UK/china/india/dubai et all all staring in the face. That in the aftermath of so called great recession tells you how bad situation is going to be in 1-2 yrs..

• 60 MLS#1 /Jan 5, 2010 at 7:58 pm  Vote:    

  Real estate market in Miami is undoubtedly far closer to the bottom than to the top. When prices in third-world hellholes like Mumbai are selling at twice the prevailing price of Miami, you know something is just terribly wrong with this whole picture.
  Add to that an overwhelmingly bearish sentiment with regard to all things real estate (exemplified by many posts on this site and generally a contrarian indicator), historically low real estate/stocks and real estate/gold ratios, almost complete halt of residential construction in Florida (down by some 90% from 2007), frisky commodities appreciation (it takes materials to build buildings), weak US Dollar which makes US assets more attractive to foreigners, and Miami is clearly a cheap market.
  With no more inventory flooding the market, the existing one will dissipate pretty fast.
  Grievances about high HOA are also mostly mispalced. By my calculations, paying for pool, security, parking, mintenance, water, internet/cable, groundskeeping, insurance, etc, would cost one the same amount of money, whether living in a condo or a detached dwelling. In a condo the approach to those things is much more disciplined, but on a plus side all the headaches are outsourced to dedicated stuff. If you are serious about regular maintenance, a house or a condo costs are about the same.
  For those in high tax brackets who itemize their deductions, not only mortgage interest is tax-deductible, but property taxes as well, making buying already 10%-20% cheaper than renting.
  As for $99/sqft Edgewater price for bulk purchase, people should reread the whole article. I might be wrong, but it seems like in addition to $4 million paid for those 50 units, buyers assumed $12.3 million balance on a construction loan. That makes an effective price way, way higher than $300/sqft.

• 61 Joe /Jan 5, 2010 at 8:16 pm  Vote:    

  Gixxer 1000 — How could the two “facts” in your post #58 possibly be true within the context of the Miami condo market? Are you claiming that over a whopping 10-year period, some market segments will accrue massive gains while other segments will be even further in the red than they are today? For someone allegedly so opposed to generalizations, that claim seems ludicrous on its face.

  I could understand saying that luxury buyers will gain 30% while lower-tier buyers will make 10% or break even, but how could housing returns in the same city be so disparate over a 10-YEAR PERIOD that some people will get rich while others will be broke? It doesn’t make any sense. It’s not like some people are buying ICON for $200/sf while others are buying Continuum for $200/sf.

  The Miami r.e. market is still massively over-saturated in all market segments, and unless there are deals happening off the books that none of us know about, I haven’t seen many clear deals get struck by anyone.

• 62 Joe /Jan 5, 2010 at 8:20 pm  Vote:    

  MLS#1 — Let me guess, you sell r.e. for a living, right?

  Almost every segment of the Miami r.e. market has at least 3 years’ of inventory at the current absorption rate while the old norm was 6 months. If this is your idea of a “pretty fast” dissipation of inventory, you’re a much bigger optimist than most of us around here.

  Look at the Miami foreclosure numbers and then look at Lucas’ numbers here on the site. Lucas’ latest post today says there were just 59 distressed sales in Miami last month, which is two units per day in a city that has thousands of units in some stage of distress. That is not, by any definition, a “pretty fast” dissipation of inventory.

• 63 MLS#1 /Jan 5, 2010 at 8:48 pm  Vote:    

  Joe, no, I just bought a place in your town (if you are from Miami). Guess walking the walk it’s called.
  As for your point of view, I respect it, although “current absorption rates” seem to be abnormally low to me.
  US population is growing by 3 million people a year, and that implies need for 1.5 million new homes annually.
  Today only 500k is being built, so demand is clearly building up.
  Unless you believe that Fla population will continue declining while the rest of the country is adding people, your extrapolation of current trends does not make much sense.
  I certainly don’t believe it.
  Anyway, we’ll see who was right only a year from now.

• 64 Renter Tom /Jan 5, 2010 at 8:48 pm  Vote:    

  Gixxer 1000 – Don’t let it happen again!!! LOL

• 65 Renter Tom /Jan 5, 2010 at 8:58 pm  Vote:    

  MLS#1 – You are misguided. Incomes drive real estate not just population numbers. During the real estate bubble you had TONS of single people buying large homes and condos in their 20’s. Never has that been the case before…..they are expensive and a lot of work. Young single moms were buying homes when they would be much better off in an apartment….well, back they go now. Also, I am renting for about HALF the price of owning, not accounting for price declines or appreciation as the case may be. The second half of 2010 may be the time to buy as the market realities force properties to get unloaded from the banks. Keep your powder dry…

• 66 MLS#1 /Jan 5, 2010 at 9:09 pm  Vote:    

  Renter Tom, incomes drive not only real estate, but oil, gold, stocks, and everything else. Since other assets are enjoying good bounce, there is no reason for real estate to keep tanking.
  The cost of building is already higher than buying, and you probably know that it can’t last long.
  I’m not calling for an absoulute bottom. All I am saying is that the current situation was good enough for me personally.

• 67 Joe /Jan 5, 2010 at 10:10 pm  Vote:    

  MLS#1 — You don’t seem to know much about Miami. If Miami couldn’t sell out the new condos during the r.e. boom, then I have no clue how you believe there will be sufficient demand to absorb over 3 years’ worth of inventory over the next year, which is what you seem to be predicting. Where are all these people who can afford $2,000 or $3,000 (or more!) per month for a cookie-cutter Miami condo?

  The only real hope for the Miami r.e. market over the next few years is if money starts pouring in from overseas. Otherwise, there aren’t enough good jobs in Miami to support tens of thousands of new condo buyers. We’ve had this discussion here a hundred times, and it’s just as true today as it was the first time we had it.

• 68 MLS#1 /Jan 5, 2010 at 11:17 pm  Vote:    

  Joe, your question of “Where are all those people who can afford Miami condo?” is probably rhetorical…
  Anyhow, since you claim some unusually keen grasp of Miami real estate market, could you please enlighten me on how many condos in $2000-$3000/mo price range (presumably 2-3 and more bedrooms) do you believe to be languishing right now in developers’ and banks’ inventories?
  I think there are about 3000-4000 of them waiting to be sold in Miami at this point, out of 7000 or so total.
  If you disagree, feel free to provide better info (a link would be appreciated) with no earlier than December 2009 data.
  Otherwise, do you really think it’s hard to sell this number of condos, particularly after more than 50% fall in prices (to below replacement cost), with record-low interest rates, almost no new construction, and with 3 million new people arriving on the scene every year in America?
  I’m not even talking about Canadians, Europeans and South Americans.

• 69 Joe /Jan 6, 2010 at 2:29 am  Vote:    

  MLS#1 — How long have you been following the Miami r.e. market? As of last month, as detailed in several posts on this site, there was over a 3-year inventory in EVERY SEGMENT of Miami’s condo market — entry, mid, luxury, etc. — with another year or so of estimated shadow inventory and with foreclosures still being filed at a record pace.

  The fact prices have dropped 50% doesn’t mean diddly poo. Obviously, the condos weren’t remotely worth those prices, so they’re irrelevant.

  I’m not trying to give you a hard time here, but for you to roll onto this site all of a sudden and claim Miami’s condo market will be back to normal in a year’s time just seems silly. As I asked before, who do you believe will be buying these condos? Miami built 40,000 or 50,000 new (and mostly high-end, at least in terms of price) condo units over the past 5-7 years. Did 40,000 or 50,000 good jobs come to Miami in the same time period? No. Not even close.

• 70 Gixxer 1000 /Jan 6, 2010 at 12:18 pm  Vote:    

  Joe #61 – Again you seem to be generalizing.

  “Are you claiming that over a whopping 10-year period, some market segments will accrue massive gains while other segments will be even further in the red than they are today? For someone allegedly so opposed to generalizations, that claim seems ludicrous on its face.”

  Some buildings are doing fine today while others are in the red today.

  Not every deal is going to happen at the same rate. Not every building is going to perform at the same rate. You seem to think in a vacuum. Some deals are being done at $99, $110, $150 sqft, etc. Do you really think every single one of these buildings is going to increase at the same percentage. Maybe Brickell does take off but the the Arts District doesn’t. No one knows for sure. Not every market is the same. Not every building within each market is the same. And not every deal is the same. The specifics will determine whether someone is successful or not. In every market there are going to be winners and losers.

  Just before the depression Junior Rockefeller was trying to diversify the business from just oil and started planning for what is now Rockefeller center. During the depression Metropolitan Opera (which was the major anchor) backed out. Junior has so much invested that he had to move forward with the project. He couldn’t get financing so he had to commit then $100M and personally back any loan with his own collateral. Most all “experts” predicted failure. It was complete in ‘33 (30 Rock) and didn’t turn a profit until ‘38. The entire project was complete in ‘39. Junior was bought out by his five sons in ‘48. Anyone willing to invest in the project before it even turned a profit in ‘38 would have be well rewarded within a span of 10 years. But in the same period many people investing in Manhattan in the same market (only 12 miles long) were crushed.

• 71 Joe /Jan 6, 2010 at 1:28 pm  Vote:    

  Gixxer 1000 — You’ve totally lost me with your logic. Please explain how, over the next 10 years, one segment of Miami’s r.e. market can post massive gains, while another segment can post massive losses. It’s simply not possible, unless 100,000 millionaires move into Miami while all the poor people move out (or vice versa) — i.e., a scenario that just totally changes Miami from top to bottom.

  I understand your point that some specific buildings will do well while others will struggle or even fail, but that’s always been true. But as I said above, there’s still a premium factored into every segment of Miami’s market. It’s not like some people are buying (i.e., betting on) Brickell at $200/sf while others are betting on SoFi at $200/sf. All of the current prices seem to be in proportion to the rest of the market — i.e., SoFi is priced higher than SoBe which is priced higher than downtown. It doesn’t seem like there are any big inefficiencies in the pricing right now that anyone can exploit for massive long-term gains. (I guess it’s possible a hurricane could wipe SoBe off the map, which might create huge demand for downtown, but other than a catastrophe, the demographics and economics of Miami seem fairly well entrenched.)

• 72 AJ /Jan 7, 2010 at 10:50 am  Vote:    

  Came back from a trip to Bombay and Delhi. Then I read Renter Toms statement: Incomes drive real estate not just population numbers.

  The annual income of a person in Bombay or Delhi is $3000.
  A decent flat in Bombay is costing between $1500 to $2000 per sq. feet. The buildings are dumps. Miami low end buildings are like heaven compared to these and buildings like 1800 Club or Continuum do not exist If they do, they will probably cost $4000/sf.

  In Delhi it is $1000 to $2000 per Sq. ft.

  On My last visit to Goa in 2005, I had a chance to buy a flat for $25000. Now it is worth $120,000 and no signs of slowing down even after the recession and the RE meltdown. some guy (Andi?) used India and China in the same breath as UK and Dubai. Naive. There are no people in the later two.

• 73 AJ /Jan 7, 2010 at 10:53 am  Vote:    

  Bobby here,
  I do not recollect you advising me a couple of years ago when I declared my intention to buy a flat in Miami. The only guy who told me not to buy is Renter Tom. Are you Renter Tom?

• 74 AJ /Jan 7, 2010 at 11:00 am  Vote:    

  And Oh, BTW, it has been 2 years and no one bought a comparable water view flat for less than what I paid as I got a deal and a half. Some came close but none beat it. All those sympathizers who cried buckets that I will be underwater in a year….
  And did I mention that I am extremely happy with my decision, the building, the Pace Park and the Arts District in Particular?
  While I appreciated your good intentions, Please be happy for me.

• 75 andi /Jan 10, 2010 at 12:40 pm  Vote:    

  AJ:some guy (Andi?) used India and China in the same breath as UK and Dubai. Naive. There are no people in the later two….

  Chindia always had massive population and w/ that logic you can rationalize any price..The upper end malls in many indian cities show what happens when CRE bubble kicks in..The luxury malls are in a bad sitution while street vendors outside doing brisk business selling same stuff at 1/10th of the price…
  Both along w/ many other show all symptons of extreme excesses due to easy money..”free” market did intend to correct these, but CBs around the world intervened in utopian dreams of preventing ‘em. But all will pay the price inevitably few yrs down the road and perhaps w/ even worse conseqences..It could by this yr end or more likely by 2011-2012..

  A global Bust is coming. It is only a matter of time.

• 76 places for rent in ocala /Jan 22, 2010 at 5:34 pm  Vote:    

  There are so many great investment properties in Florida right now! Miami, Gainesville and Ocala are all great places to live and invest into real estate.

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