Miami Condo Developers Slash Prices on Existing Inventory

March 16, 2009 by Lucas Lechuga

It’s no secret that most condo developers in Miami are still left with a large supply of unclosed condos.  These developers pretty much have three options: (1) Do nothing and continue to bleed money by paying interest on the outstanding debt, (2) Sell condos in bulk to a vulture fund at a very big discount, or (3) Slash prices to end users and pay the principal and interest on the outstanding debt over time.  Option number 3 was something that should have been done a long time ago.  Over the past year, sales agents working for various condo developers have made it known to real estate agents that “developer prices are negotiable” or that the developer is “willing to listen to any reasonable offer”.  However, with the exception of Groupe Pacific with Brickell of the River South, none of the Miami condo developers would go so far as to publicly reduce their prices.  It didn’t make sense to me.  The only logical explanation that I could come up with is that developers were afraid of the backlash from current condo owners.  The days of name calling and finger pointing are over.  That was so 2008.  It’s in everyone’s best interest, current condo owners included, that each condo development close as many condos as possible.  This has been especially true since Fannie Mae revised their guidelines for Florida condos.  Reaching the all-important 70 percent mark for closings is so critical in this market.

It seems that Miami condo developers are finally turning to option 3.  Over the weekend, two major condo developments announced large price reductions.

  • 500 Brickell – On Sunday, I received an email from a 500 Brickell sales agent announcing “much lower pricing” on all remaining developer condos and that “prices have dropped up to $100,000”.  The email revealed that one bedroom condos now start at $180,000 while two bedroom condos now start at $295,0000.  I think a good old-fashioned price reduction is a MUCH better idea than including a Mini Cooper with the purchase of a condo at 500 Brickell.  I think we’ll finally start to see a dramatic improvement in the closing rate of condos at 500 Brickell.  I’d love to see a price sheet of all of the remaining condos to see if the reductions were made across the board.
  • 1800 Club – I found out about this one on Saturday and actually visited several of the developer units on Sunday.  I can honestly say that 1800 Club now offers the best deals in Miami.  Where else can you find a condo with a water view for $173 per square foot in a recently constructed condo building in Miami?  Unit 1715 is a very large 2 bedroom/2 bath condo with 1,810 square feet of interior that is now priced at $314,000.  It doesn’t have a direct water view but it’s actually not bad, given the price.  Below, I’ve included a picture of the water view from within the condo.  As I was writing this, I received a text message saying that an offer was submitted to the developer today for unit 1715.  As of the February condo closing rate update, 1800 Club was able to close 68.59 percent of its overall units.  I think by the next update, we’ll see its closing rate push well past the 70 percent mark.

1800 Club unit 1715

Within the next couple of days, I’m going to publish a more in-depth post about 1800 Club and the deals that are now available, along with pictures of the units that I saw on Sunday.  It should be duly noted that the 2 bedroom condos facing direct east towards Biscayne Bay have not been reduced much from preconstruction prices, if at all.  For example, unit 3505 which is a 2 bedroom/2 bath with 1,222 square feet of interior is priced at $385,000.

Below is a list of the other condos that I viewed on Sunday.  As I said earlier, I will do a follow-up post within the next couple of days that will include pictures of these units as well as of the amenities and common areas.

  • Unit 1411 – $235,000 – 1 bedroom/1.5 bath with 1,095 square feet of interior facing South
  • Unit 1504 – $167,500 – 1 bedroom/1 bath with 822 square feet of interior facing West
  • Unit 1002 – $425,000 – 2 bedroom/2 bath two-story townhouse facing South (I need to find out the square footage of this one but it’s big and has two large terraces.

I guess time will tell if other Miami condo developers will follow suit by repricing their existing inventory and disclose those new prices to the public.  I think it’s a good step in the right direction.

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113 Comments on "Miami Condo Developers Slash Prices on Existing Inventory"


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Anonymous
jcrimes
7 years 6 months ago
Lucas I think you’ll see this work on the buildings that have manageable, outstanding debt. For those buildings that are now only in the beginning of closings, not sure if a price reduction will save the day. It bears mentioning that the lenders on these buildings had to agree to this reduction (based on the closed %s, there still had to be some amount of the loan outstanding). The 500 deal to me is particularly interesting – you can now get a unit at 500 that is nearly identical to an Icon unit across the street (minus the over the… Read more »
Anonymous
Renter Tom
7 years 6 months ago
Good article in Money magazine April 2009. Page 65 – When Will Home Prices Hit Bottom, Already? by Amanda Gengler. Cut to the chase……if all the govt action is successful, she predicts the Miami will hit bottom in 2-3 quarter of 2011 with an additional decline of 27.8%…..yes that is for all home prices and we know condos will fair worse than average. Yes, later part of 2011. Not unreasonable. What if the govt action is lukewarm or worse? Well, who knows. Fr. Lauderdale is in the same boat but with 24.4% declines instead. Still waiting on the sidelines to… Read more »
Anonymous
AJ
7 years 6 months ago
That is a good news. The developer of 1800 club absolutely ruled out any discounts. But in the interest of the building as a whole, it is the right thing to do. And let me give the devil its due. Unit 3505 is priced less than what I paid for, for my unit. I believe it is the only direct bay still available with the developer. I ask anyone with ready cash to jump on this offer. The last I knew a few months ago, the developer only had 2 direct bayview units. You might be tempted to haggle for… Read more »
Anonymous
Renter Tom
7 years 6 months ago

Another interesting stat….. Jan ’08 compared to Jan ’09 sales at Sake are down 24% while Wal-Mart is up 2%…. So much for the rich will keep spending. Well, there are 1/3 less rich now anyway…. With all “stupendous”ness aside, condos are a lot more money and upkeep than an overpriced handbag.

Anonymous
7 years 6 months ago

I agree with AJ about unit 1002. It’s an amazing unit if you’re the type of person who likes to have large get togethers. I’ll try to get more details about it tomorrow and will be sure to post the pictures I took soon.

Anonymous
AJ
7 years 6 months ago
gables, that 1715 would have been a great unit for you. $173/sf to get into 1800 club is not bad at all and the unit is humongous! Ok, Now some guys will jump in and say wait even more and the deals will get sweeter. May be or may be not. Choice units like 1715, 3505, 1002 will be snapped up in a jiffy. Units like 1411 with partial water view will be the next to go. Then those like 1504 with city views. It depends on what is your comfort level and what line you want. Mind you, of… Read more »
Anonymous
gables
7 years 6 months ago
AJ, You are correct that unit 1715 becomes of interest for somebody like myself. Once the prices fall below $200 sf, you get my attention in most buildings. At that point we are much closer to the bottom than the top. i dont need to buy at the bottom, just near to it. the major issue is $300k+ total cost. in today’s financing environment that is a major problem for most buyers, except rich cash buyers. i have some coin saved up, but not at that level. biggest problem with the unit is actually the size-its great but would probably… Read more »
Anonymous
gables
7 years 6 months ago

i had suggested developers sell their units at 10% below preconstruction-essentially minus the deposit that walked away. if they had done this a year ago, the buildings would have sold like wildfire and developers would not be holding the cost today. they did not do this, and will now sell for much less after over a year of holding cost. will individual sellers and banks continue on the same path?

Anonymous
GN
7 years 6 months ago
Anonymous
jcrimes
7 years 6 months ago
Gables absolutely. it’s not just the developers…it’s also the lenders (at all levels of the lending tree in the project). case in point – i was working on a project with a significant overhang of units over a year ago. my client was willing to credit a significant amount of the deposit amounts to new purchasers. senior lender was okay but then the two subordinated lenders would take a 50% haircut on their loans, and thus, refused to go along. went back to the senior and said share in the pain, at least a little bit. senior refused. subordinated lenders… Read more »
Anonymous
gables
7 years 6 months ago
GN, that is an interesting article. the idea is interesting, but should not be implemented. first, you thus allow somebody to simply buy residency status. second, one of the primary reasons the US is falling behind in science and engineering education is we are continuing to devalue the fields by allowing more immigrants to do the work-at substantially lower wages. i do not want to get into an immigration argument on a RE blog, and i am very much pro immigration in many regards, but our current policies are creating some of the problems we are experiencing now. our higher… Read more »
Anonymous
Hugo P
7 years 6 months ago
Great post Lucas. Completely agree on the pricing reductions, it is a must if you want to clear the market and get a few sales out there. However, one of the reasons that developers usually don’t like to post their reducd pricing or do it across the board is that it will effect the comprable sales and therefore eliminate the possibility of getting a few sales at a higher price (if there is such a thing). I have seen contracts where the developer agrees to a significant amount of buyer credits in order to keep the recorded sales price high.… Read more »
Anonymous
AJ
7 years 6 months ago
gables, regarding #7 and #8, yes, the HOA wil be an issue for a flat of that size. Unit #1411 would have been perfect for you except that it is a 1/1.5 albeit the largest 1 BR in the building with excellent water views if not direct water views. If I were in the market for a 1BR, I would absolutely go for line 11 in 1800 Club. It is the only 1 BR with water views. I have already raised this issue 1 year ago. I asked Why the developers cant price their units 10-15% lower (after all that… Read more »
Anonymous
Kramer
7 years 6 months ago

Lucas

Please include maintenance fees. Thanks

Anonymous
Kramer
7 years 6 months ago
Lucas suggested that unit unit # 3505 @1800 a 2/2 with direct east bayview has not been reduced much from pre-construction pricing if any at all, yet AJ contradicts this saying it is a $100.000-$125,000 haircut from what he paid for similar 2/2 direct east bayview. So bottom line – going back to an argument a few months back is that the floor price for good location waterfront buildings with direct east bayview apts is now about $300 per sq foot retail not including the bulk sales @ Marina Blue. Either way and like pulling teeth we have at long… Read more »
Anonymous
GN
7 years 6 months ago

gables,
I hope that article doesnt create an immigration debate, as that wasnt the intent. I posted it because certain parts of it bolsters AJ’s comment a while back that foreign buyers could help with some of the excess inventory. I seriously doubt that this plan will be implemented or even considered..

Anonymous
gables
7 years 6 months ago
AJ, good question regarding why the developer is discounting units at a site which he no longers carries the burden of a loan. perhaps he has found a better return on his money elsewhere and would like to put it to work. along those lines, the assumption could be either prices remain fixed but he can put the cash to work, even at low interest rate and increase profit. or perhaps he is concerned that in a year the prices will be down even more and thus lose capital. would be nice to know the developers position a bit more… Read more »
Anonymous
7 years 6 months ago

The maintenance fees for units at 1800 Club comes out to 42.5 cents per square foot. At least that’s what I’ve been told. AJ, can you confirm this? The fees include basic cable TV and high-speed Internet.

Anonymous
Steve
7 years 6 months ago

Hi Luis,

Will you be updating your listings on your “condo deals” and “property search” pages with this new pricing? Thanks for this new info. Your efforts are appreciated and I will likely contact you should anything peak my interest.

Steve

Anonymous
DJ
7 years 6 months ago
This is one of the best posts that Lucas has made in a while IMO. I’ve been waiting to see developers start cutting the prices on the remaining supply in an effort to get these units sold. I think we’ll also start seeing this happen in other buildings over the coming months, but for the time being I’m going to give 1800 and 500 a look. I put in an offer (at an undisclosed building) last month at $350,000 cash. The asking price was $540,000. While my offer was certainly low-ball, the asking price has not changed since pre-con, so… Read more »
Anonymous
Miami2009
7 years 6 months ago

Excellent post. Hope to see of this type. It is about time developers have started to realize that the bubble is over and they are finally adjusting prices to the market. Although there is probably more room for adjustment. This is a step in the right direction to get these units sold and more importantly occupied. I believe Gables said that under $200sqft would catch his attention…you got my attention as well. Happy hunting!

Anonymous
Dinosaur Jr
7 years 6 months ago

AJ, some advice please. I’m looking for a vacation home so please don’t judge. You said you also considered Quantum right? You said that these two buildings had the best looking women a few months ago. My question is, how is that possible? Wouldn’t they be even;y distributed across all buildings?

AJ, 1800 and Quantum is what I should tour for all around best quality buildings in Miami?

Anonymous
7 years 6 months ago

Unit 1004 has 1,700 square feet of interior. I just received the price sheet for the units at 500 Brickell.

Anonymous
AJ
7 years 6 months ago
Lucas, You are correct. The maintenance is 42.47 cents per sf. Includes Cable and High speed internet. Kramer, I only have to add one more thing to your post. B com Inc the developer of 1800 has very limited direct East view units. Some say it is as little as two flats. Most East view got sold out and closed. We will know when Lucas posts the available units for sale, if there are any more direct bayview available other than 3505. But here is my poser. What if the last remaining East units gets sold for such enticing price… Read more »
Anonymous
7 years 6 months ago

Here’s something to look forward to this weekend. Ultra Music Festival + NCAA Tournament at American Airlines Arena = massive traffic along Biscayne Blvd.

Anonymous
Angel
7 years 6 months ago

Lucas- Ultra is the following weekend not this one. March 27th & 28th.

Anonymous
Un-Related
7 years 6 months ago
Lucas stated: “500 Brickell – On Sunday, I received an email from a 500 Brickell sales agent announcing “much lower pricing” on all remaining developer condos and that “prices have dropped up to $100,000″. The email revealed that one bedroom condos now start at $180,000 while two bedroom condos now start at $295,0000. I think a good old-fashioned price reduction is a MUCH better idea than including a Mini Cooper with the purchase of a condo at 500 Brickell. I think we’ll finally start to see a dramatic improvement in the closing rate of condos at 500 Brickell. I’d love… Read more »
Anonymous
Renter Tom
7 years 6 months ago

GN – Interesting, but the article was written by: “Mr. LeFrak is chairman and CEO of LeFrak Organization, a real estate builder and developer. Mr. Shilling, an economic consultant and investment adviser, is president of A. Gary Shilling & Co.” A little bit of self interest by the authors. Next we’ll hear from car makers that if someone buys two GM cars they get citizenship. Of course, they’d have to have “advanced skills and education”…. There is no nexus with housing and foreign buyers aren’t banging down the doors to buy, those that wanted to buy have…and not just one.

Anonymous
Renter Tom
7 years 6 months ago

Everyone has to realize that the main factor in marketing real estate is to creating a sense of urgency, exclusivity, and/or you’ll miss out. Whether that is a private showing before a home is listed, pre-construction pricing, friends and family discounts, or listing one unit at a time in any particular line at a discount. It is that sense of urgency that some discounts may be given on a limited number of units…..to create a false sense of scarcity. I’ll wait for them to really hit a wall and to stop playing games like that one developer did recently.

Anonymous
Can't Be Serious
7 years 6 months ago

The $0.42/sf maintenance on that 1,700 sq. foot unit is $721.99/month!!!

I suppose that is why you refer to it in square feet (like it is some kind of friggin’ commercial property) instead of the total amount. At some level even you realize what a lousy investment it is.

Anonymous
DJ
7 years 6 months ago

Can’t Be Serious….combine the maintenance fees with taxes and you’re nearing probably $2,000/month in carrying costs (and that’s assuming you paid cash for the unit and have no mortgage).

Anonymous
makes me think
7 years 6 months ago
Krame, don’t hold your breath on RT ever, ever, ever buying one of those condos. If he is paying 3K/month to rent, I am willing to bet money he is not going go dig deep for 500k-1M (cash, because he probably won’t be able to get a bank to finance him in this environment). If you factor in the holding cost alone (HOA and Taxes) on a unit in that price range is going to run about half of his current monthly rent then you consider him having to plunk down that much money. I am sure he would rather… Read more »
Anonymous
Muir
7 years 6 months ago
Un-Related, Can’t Be Serious, DJ, makes me think, Let them buy. Seriously. Think about it. The upside to Bears would be tremendous if a bunch of “investors” were flushed out now, as opposed to, lets say, 2 years from now. Your powder will be dry, theirs, well, they will not have any powder, wet or dry. __ If all of us agree, we can start amongst ourselves a “buy now prices will never be lower campaign.” I’m for it if you guys are, we’ll post every day about what a great market this is. Our posts will rival AJs! RT… Read more »
Anonymous
Muir
7 years 6 months ago
Here’s an example: Guys, if prices do fall a bit more, which they might, why make life so difficult!? Get the premium units today. Does anybody seriously think that Miami will lose it’s appeal? There is something magical about Miami, people do love it, you see people having fun from all over the World. They could go elsewhere, but they choose to come here with us. Will that change next year, or the following? Come on! So let’s compare REAL prices: $300psqf for a beachfront condo? Where else on Earth. Miami is a REAL bargain, if you are sophisticated in… Read more »
Anonymous
Muir
7 years 6 months ago

Ok, fine, it needs work.
It was my first attempt.

Muir

Anonymous
7 years 6 months ago
Very interesting discussion, and I believe strongly in the potential of 1800 Club, as well as Quantum’s. A question for you readers on this blog: is it better to buy a premium unit with Bay views at 20% more than the bottom price, or wait more and buy a city views unit, less desirable, at bottom prices ? When the market comes back, and it will eventually come back, even in 2099 like RenterTom thinks, which unit would you like to own at this time ? And even more, in which unit would you like to LIVE during this time… Read more »
Anonymous
AJ
7 years 6 months ago
I know you guys always say anything coming out of a RE guys mouth is a spiel. But this line of thinking I subscribe to also. As e-mailed by Dan Maza: “Condo Sales Increase 10% in the last three months. A large surge of South American and European buyers are making the most of the low Miami Real Estate Market Prices. As a vast majority of US real estate buyers sit on the sideline and wait for the economy to show signs of a rebound, International buyer are coming to take full advantage of the opportunities which now exist in… Read more »
Anonymous
7 years 6 months ago

Amen AJ, amen.

I suspect that this $260,000 condo instead of $700,000+ was at the Waverly in South Beach.

Amen to that. At least it is not one of us Real Estate professionals lying here 😉

Regards.

FD

Anonymous
AJ
7 years 6 months ago
FD, you answered your own question. Go back and read your post, it shows that you really want a premium unit. Always the RE mantra from the country I came from is this: “Buy the highest floor, the largest flat with the best line (In respect of views etc) that your money will permit” I ignored that rule twice, once when I was 24 and once when I was 26 by buying substandard second home properties because that is all what I could afford . I have sold them and learned my lesson. I could have begged, borrowed and bought… Read more »
Anonymous
DJ
7 years 6 months ago

AJ, that Dan Maza dude is trying to sell condos, plain and simple. He’s a salesman and is telling potential buyers what they want to hear.

Anonymous
jcrimes
7 years 6 months ago

i’m curious…when people say “when the real estate market comes back” what exactly is meant by “come back”? certainly you all don’t mean the boom period growth in pricing. that was a fantasy not to return for a few decades. hell, 2005pricing won’t be seen for at least another ten/twelve years after this debacle runs its course.

Anonymous
Un-Related
7 years 6 months ago

AJ babbled: “Finally I say hats off to Kramer, he summed it up best. You do not have to buy at the bottom. You can be within 20% of the bottom and still be OK. I never thought about it that way!”

I have some bad news for you. Kramer was talking about the equities markets, NOT about buying condos…………

By the end of the year, Big Gorge may have to head for the banko court and six months after that you might begin to see the bottom…………..

Anonymous
Miami2009
7 years 6 months ago

One comment that is somewhat troubling about the article by Dan Maza:

“Deals like these come around once in a life time. By the time the rest of the public gains confidence in these LOW prices, the best properties will be gone.”

I have been hearing this since ’06 when 650sqft units in Neo Vertika were sellng for 300K+. I do agree that you can certainly find great opportunities in Miami in this market, however the best are yet to come. Although the opportunities will be for end users not investors in the condo market.

Anonymous
Renter Tom
7 years 6 months ago
AJ – You can dollar cost average into equities over time if you don’t want to attempt to time the market in some way. You can’t really do that with condos as physical units to own. Moreover, give me one example of a property that you considered or in any building you own that went up “20 times”. The bottom in real estate will be here for a very long time….even studies of equities have shown that you can wait for the bottom in equities and buy even 10% above bottom and do almost as well as dollar cost averaging… Read more »
Anonymous
7 years 6 months ago

“Mr. Silivio from Rome, who purchased four condos in the past four months made it clear he will not wait to hear about the market upturn”

LOL. Was going to say something but the snippet speaks for itself.

Anonymous
Kramer
7 years 6 months ago
Lucas needs to change to name of his website from Miami Condo Investments to something like Miami Condo End Users as ALL Condo Board of Directors will eventually have to realize that the new Fannie Mae guidelines changed how this game is played. The only way to make your building STABLE is for the board to restrict rentals to no more than 30% or preferably 20% so that new buyers can get a mortgage. Which leaves 70 to 80% as either end users or second home buyers who will be restricted from renting their units out unless under the boards… Read more »
Anonymous
7 years 6 months ago

Mr. Silvio from Rome scoffs at Condo Boards and their silly requirements.

Anonymous
Muir
7 years 6 months ago

Within a couple a years you guys will be kicking yourselves for not buying in the South FL Real Estate market now.
You can still find excellent units around $200 today.
But you suckers will wait until you see $600 psqf again in Brickell, but by then, it will be too late.

Anonymous
makes me think
7 years 6 months ago
‘what exactly is meant by “come back”? ‘ JCrimes, that is an excellent qustion. I have asked that question in the past. I remember reading somewhere that less than 5000 condos were built in Miami since th e 1970’s to early 2000 but in the past few years 25000 were built. I have to ask what is considered a return to “normal” the 5k built over the 3 decades or the 25K built in the past few years. I don’t know how accurate those statistics are so maybe someone will be able to enlighten me. I also recall AJ saying… Read more »
Anonymous
AJ
7 years 6 months ago
jcrimes, In my dictionary, market coming back means when it is not bleeding prices anymore and any growth is either equal to inflation or upto inflation +3% per year. Neither me nor anyone else is hoping for the ridiculous 5% increase a month you saw in Summer 2005. RT, 20 times appreciation on a prop since 1996 is not in this country. In any case unfortunately I am not the beneficiary of such a good fortune. The miserable prop that I picked up, I got rid off in 2005 for just 3 times the value I paid in 1996. DJ,… Read more »
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