Advice to Miami Condo Buyers
August 8, 2007 by Lucas Lechuga
I've always been more of a buyer's agent than a seller's agent. It's been that way ever since I started in this business. I've never been much of a salesman though. In fact, I initially didn't even want to become a real estate agent because I always analogized the phrase "real estate agent" to "sales person". The latter always made me cringe. Thoughts of "selling somebody" or "making a sale happen" didn't favor well with me.
I finally realized, however, that people will always have a need to buy housing and finding buyers the best deals is a niche within itself. I figured that with my financial background I could provide a unique perspective and a more in-depth analysis of the market than most agents. This blog is a natural extension of that mindset years ago.
Nowadays, it seems like everyone is looking for a deal and the right opportunity to buy in Miami. The million dollar question that I get from the people who contact me each day is "When will be the best time to buy a condo in Miami?".
The answer to that question depends on your objectives and knowledge of the Miami condo market. If you're an investor "looking to buy a condo in a good neighborhood of Miami at a significant discount" then the answer to that question is as vague as your objective - "Nobody knows!". That's like saying that you want to buy the best stock at the bottom of a bear market. Good luck!
Some of the people who contact me have only been to Miami once or twice in their life. Some haven't ever visited Miami, but have read about Miami and have seen the gorgeous palm trees and majestic waters in movies. For those of you, the opportunity to buy a Miami condo at the "best" time won't ever come. You need to have knowledge of what you want before you can ascertain the best time to buy it. A knowledgeable Realtor can't even point you in the right direction without first knowing which direction that might be.
Having an objective like wanting to buy a two bedroom condo at Ten Museum Park with a direct bay view on a high floor at a 20 percent discount of 2004 prices is much better. An opportunity like that may or may not present itself but at least you know what you want and a local Realtor will be much better equipped to help you find it.
Keep in mind that the "market bottom" for the Miami condo market might not necessarily be the best time to buy for people with such a pinpoint objective as the one above. These people might miss out on better opportunities that will have passed them by. For example, take the 2 bedroom condo going up for auction at Villa Regina that I mentioned in yesterday's post. That condo may very well sell for the best price per square foot of any condo at Villa Regina from here on out. Someone looking to buy a condo at Villa Regina, but is waiting for the condo market to bottom in Miami, might miss out on a fantastic opportunity. It may or may not end up being the best deal at Villa Regina but keep in mind that only one person will buy the bottom. Wouldn't you be happy though knowing that you bought at a 20 percent or 30 percent discount or whatever it may be?
My advice for those buyers who will be end-users is the same. Know what you want and the price point that will make you happy. Opportunities to buy condos in Miami at a discount with built-in equity are already present. Foreclosures, auctions and short sales all offer these opportunities. Being happy with the condo in which you will live should be the primary concern for end-users, not price. Having a cushion to weather the storm that lies ahead is an added bonus.
There is no doubt that condo prices will correct themselves from the highs that we experienced in 2005 and beginning of 2006. In my opinion, they already have. I feel that we're already back at 2004 prices. Every week I get a number of calls and emails from people who bought preconstruction condos as resales in 2005 and beginning of 2006. They want to know if there is any chance to break-even if they close on their preconstruction condo contracts and sell at current market prices. The answer is overwhelmingly "NO". The current market price is usually at or slightly below the amount of their deposit money, which the majority of the time is 20 percent. This tells me that we are already at least 20 percent off the highs.
The inventory problems of the Miami condo market is old news. Demand dried up over a year ago as a result of this news. The real estate market, however, is not as liquid and as efficient as the financial markets. Buyers have already processed the news about the Miami condo market. Sellers have begun to process the news but can't simply hit the best bid to get themselves out. Those selling existing condos can, however, lower their prices.
The fate of the preconstruction condo market is different though. The news came out over a year ago but we're all waiting for the condos to close to see where they will get priced. Nobody knows! It's like trading has been halted, due to news, and we're all standing around waiting for the market to reopen.
As a side-note to investors and second home buyers unfamiliar with Brickell, if you're looking to buy a newly constructed condo in a bayfront building within the next 7 months then you won't find any. Of the five developments scheduled for completion within the next 7 months in Brickell, none of them are bayfront buildings. Only two, Latitude on the River (which has begun closings) and Brickell on the River South, are waterfront buildings. They both, as their name implies, reside on the Miami River. Of the four developments scheduled for completion in 2009, only two, Icon Brickell and Epic, are bayfront developments. After those are completed only one bayfront parcel will be left in Brickell. Villa Magna was planned for development on that parcel but the project was recently canceled and the fate of that land is still up in the air.
As for the four buildings being developed in the Downtown Miami neighborhood known as Park West, none are bayfront but they might as well be. Ten Museum Park, Marina Blue, 900 Biscayne and Marquis each reside directly behind Biscayne Boulevard and what was formerly known as Bicentennial Park, both of which won't obstruct views of the bay as long as they are owned by the city of Miami.
Lucas – this is a fantastic. As a potential buyer I can easily find the properties that are good deals.
This is good advise, but I’d suggest South Beach or North Beach. The evenings and the weekends would be like mini-vacations. A bay view from Downtown or Brickell is nice, but doesn’t compare to a walk on Lincoln Rd or Ocean Dr. If you’d prefer a less hectic, roomier, and more family- and wallet-friendlier beach area, then a buyer should consider North Beach, with great new developments like Canyon Ranch, Regatta, NoBe Bay, and Bel-Aire on the Bay; definately more affordable than Apogee, Continuum, Setai, etc.
Through all my heavy research with local economists, residents and realtors, I’d keep my eyes set on downtown – especially Park West where you have buildings that offer Miami rolled-up at one central location. With emerging commerce, cultural and recreational activity steps away, I can’t see better current value with these luxury buildings facing right in front of the Bay & Ocean. Thanks Lucas for pointing out MarinaBlue and Ten Museum Park in your prior postings. I actually decided to take a unit on the 40th floor at MarinaBlue.
Perez – you are looking at a totally different market. If you want to spend $1200/sqft in sobe go ahead. Ben – great move on Park West. I’m bringing my clients to 50 Biscayne and definitely MarinaBlue all the way.
Brickell is tapped out and isn’t offering anything new and exciting. A lot of the condos on the beach are somewhat old and only a few are considered “skyscrapers” (at a very high premium). I think most of the action is going to happen in the core of downtown and parkwest. One Miami, 50 Biscayne, Everglades on the Bay, and Marina Blue should all do pretty well.
As for downtown, I think 50 Biscayne will do very well and is a much welcomed addition to the city skyline with its illuminating top. The building was very well priced given its location. The units on low floors facing west will have difficulty finding buyers but I think the rest of the building should do well. Park West is a hidden gem. I think Marina Blue, Ten Museum Park and 900 Biscayne will all hold their own in that neighborhood. I was actually in 900 Biscayne today and will release on my blog the photos and the short video… Read more »