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Price Increases Seen in the Sub-$250K Market

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This video introduces a 1 bedroom/1 bath condo foreclosure at Brickell on the River North which came onto the market yesterday.  It’s located on the 24th floor and faces west with a direct view of the Miami River.  The asking price is $128,700, or $170 per square foot.

The video also explains why we’ve been seeing prices rebound in the sub-$250K segment of the market.  Demand has increased due to the availability of financing in 2010 which had been pretty much nonexistent throughout 2009.  Each month we continue to see more and more buildings become Fannie Mae approved throughout Miami.  The common element in most of these newly approved buildings is that condos in the sub-$250K market are well represented. Furthermore, supply has decreased as evidenced by recent market reports showing large percentage increases in year-over-year closed sales as well as pending sales.  Arguments which point to remaining and future developer inventory hold very little water in this segment of the market.  Buildings such as 900 Biscayne Bay, Paramount Bay, Mint, Infinity at Brickell, Marquis and Icon Brickell have very little, if any, inventory in that price range.

6 thoughts on “Price Increases Seen in the Sub-$250K Market

  1. Peter Zalweski published a report that 83% of Downtown Miami sales were ALL CASH and that ones that were financed were mainly concentrated in a few buildings like 500 Brickell.

    If that data is correct, it should be enough to present some doubts to the argument that the “increased demand” from the availability of financing is driving sales and increasing pricing. Out of 700+ closings in 1Q 2010, only 100 were financed. This is still an all cash market.

    He also mentions that 3 out of 4 buyers are investors/speculators/vacation homes. Without having all the data, I have to believe that this is probably right. Seen it happen in a lot of buildings. I also bet that more than 50%-75% are international investors (South America, Europe) who are looking to get in to something. Real owners (those who live and work in the area, etc) don’t generally pay cash, especially in a recesionnary environment like this one.

    The reason why some prices have gone up is because investors are the one snapping these units as they see 50% discounts in some buildings and they don’t want to be “left out”. Like I have said many times on this blog, the economics on these deals (even all cash) don’t work. Period.

    This is not an end user demand driven market, just a small investor bubble again. The main difference is that it’s not financed, it’s all cash, so prices will probably remain

  2. So you must extremely busy with all these sales, right? How you find time in the day to sell so many units in this hot market and do videos and apps as well is beyond me.

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