Miami Condo Market Highlighted by the Major Media

February 22, 2008 by Lucas Lechuga

Kevin Tomlinson, of the South Beach Condo Blog, hit a home run yesterday with his post entitled “All You Ever Wanted to Know About Miami & Miami Beach Real Estate: A Video Round-up“. The “Today Show” was in sunny Florida yesterday morning to report about the Miami and Miami Beach real estate market along with Barbara Corcoran, the queen of real estate. Barbara’s words are highly regarded in the real estate industry, so be sure to watch the video to the end to hear what she has to say.

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Miami has evolved over the years. It was once regarded by many as a flashy and dangerous place to visit. It still remains flashy but it is no longer considered dangerous. The following video portrays the new Miami:

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For a different take on the Miami condo market, CNBC also interviewed Ron Shuffield, President of EWM, standing in Met 1, a Miami condo development slated to begin closings within the next month.

Prices have come down 25-30% since late 2005 to early 2006. Recently, some foreclosures have been purchased at a 50 percent discount. I receive phone calls every day from investors and end-users who want to buy at 50 cents on the dollar. If they want to buy at a 50 percent discount from today’s prices then forget about it. That would amount to buying at 25 cents on the dollar from the height of the market. There are now opportunities to buy at 50 cents on the dollar from 2005/2006 prices.

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63 Comments on "Miami Condo Market Highlighted by the Major Media"


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Anonymous
IB
8 years 7 months ago

Uh.. Your math is off. 50% off a market already off 25% would be 37.5% of original.

Anonymous
Julian
8 years 7 months ago

I guess it’s all price at the end of the day. Miami Beach’s inventory would clear in months if prices fell – SoBe – $500 a sq ft, rest of the beach $300-$450 a sq ft.

Problem is Miami Dade would go broke, and round and round we go…

You flatline at best from these levels – nothing wrong with that – but no rush if you don’t NEED.

Anonymous
BFG
8 years 7 months ago
I think it is useless to try to guess what percentage prices will fall, and then use that to make a decision on whether to buy or not. Instead, how about using time-tested investment analysis to figure out whether the price makes sense? In the short run, the market can get out of whack from its fundamentals (see late-90’s stock market or 2000-2005’s real estate boom), but over the long run, prices always fall back in line with fundamentals. So, if the condo you’re looking to buy is twice as expensive to own as it is to rent, guess what:… Read more »
Anonymous
Julian
8 years 7 months ago
BFG – I agree. Just using zilbert.com to see recent sales prices on desired beachfront (so desired there’s 6 years of the stuff) versus offered prices and you can confirm your analysis. Mosaic – $576 a sq ft last transaction, lowest offer price $650, most at $700-$900. No wonder over a 1/3rd of building for sale. Peak 2005/06 pricing anyone? Similar at Akoya, Murano Grande etc Lucas (and Kevin) – why don’t people get it? There are transactions, but the bid/offer spread is too wide. Shouldn’t you as realtors (and more importantly your parent firms) first up say to a… Read more »
Anonymous
carbonblackcab
8 years 7 months ago
I recorded the today show in HD on my Vista Media center and saw the entire show this morning. It was good. They showed miami in a positive light, but they were very “gentle” when talking about the real estate prices. While the economy may not depend a lot on tourism, there is no industry in miami that will pay professionals six figure salaries (unless you are an exec for a bank or company HQed in miami). If you goto Chicago, you can easily get a six fig job in many industries from manufacturing to IT (if you are educated… Read more »
Anonymous
brian
8 years 7 months ago

Julian-
I agree with you on Mosaic. I was checking it out the other day.

Its a nice building, but what makes some of these people actually think their unit is worth $800-$1,100+ per sf?! Their agents are just wasting their time.

Anonymous
jcrimes
8 years 7 months ago
BFG there are legal/financial jobs (aside from traditional banks) that start off in the low six figures as well. still, limited pool of jobs and more importantly, a lot were driven by the real estate boom. BFG – you’re absolutely right. it reminds me of the heyday in the internet age when people were throwing financial fundamentals out the window…saying, revenues weren’t important, or or for that matter, profits, but instead, views on a webpage or other “synergies.” we know how that turned out. frankly, i think most of the speculators in internet stocks in the late 90’s/early 00 are… Read more »
Anonymous
Econ Reality
8 years 7 months ago
carbonblackcab: I agree with what you wrote, but want to point out that whether you own a condo to live in or are an investor or flipper you are screwed — out of fictitious gains if you bought before the bubble or out of “real money” if you bought during the bubble. It doesn’t matter WHY you bought, all prices are declining and will continue to do so until they are more in line with the long term fundamentals. Markets and gambling don’t care about the whys. The “catch a falling knife” argument cuts both ways….for buyers and sellers. If… Read more »
Anonymous
Econ Reality
8 years 7 months ago

Just watched the video — EWM is a joke if that joker is leading them. The economist is correct.

Anonymous
8 years 7 months ago
With real estate condominium developers finding themselves in severe financial difficulties triggered by the economy, a new breed of developers is feasting on the pioneers who led in the shaping of the Magic City. This new breed is the successor developer who is better described as the “clench developer.” The most infamous example is The Grand condo in Miami which, created by the genius of visionary developer Tibor Hollo, creator of the multi-use condo concept, wound up in the pockets of Québecois real estate promoter Pierre Heafey who made a deal with the banks that held title to this beautiful… Read more »
Anonymous
kim
8 years 7 months ago

Dr. Dinter,
At first blush, your posting seemed erratic and desultory at best — I thought you were kind of weird. I did follow your site, however, and am now keenly interested in your muck-raking endeavor against Tibor Hollo and Pierre Heafy. Very interesting indeed…

Anonymous
Hmmm
8 years 7 months ago
Dinter – Real estate can be ruthless. I know from personal experience. So, I had to learn how to be ruthless right back at the bullies. Condos and condo-hotels can be very very messy affairs. A lesson to learn is to not go into debt or at the very least know what you are getting into before jumping in. Condos, because of the common connections — you’re all in the same boat together, is like a big messy family with characters. etc. When these fights over control go to condo boards instead of just stocks, it gets emotional because it… Read more »
Anonymous
Hmmm
8 years 7 months ago

Also of interest is the larger push to market Miami outside of Miami’s local area. The locals are beyond tapped out, only a large media blitz can bring in some buyers…..however those are limited too. Once the media hype is over, who else can they market these too?

Anonymous
Julian
8 years 7 months ago
Words right out of my mouth Mr Economist..I guess the interesting thing is that because it is such a huge 2nd home market, it will be a new precedent to see what can really be sustained. In a deep recession there’s no reason that new property (at the margin, being built today) couldn’t sell for firesale prices (I.e. Beach at 2000 prices) Dinter – Your clench developers have another name in the UK – they are called Freeholders…only way to deal with this situation is to legislate their rights out of existence. Took 50 years or more to even get… Read more »
Anonymous
OVERSEER
8 years 7 months ago

RENT RENT RENT….forget about buying anything altogether for awhile.With price’s dropping like a lead balloon….why would a foreign investor with any brain’s buy in a market like this?You can rent for the few time’s and limited amount of time that they are going to use it.WAIT a few year’s ….and that’s when the bargain’s will be had.

Anonymous
8 years 7 months ago

I see a lot of talk here about the Mosaic, and am surprised because when I tried buying a unit there last year no one was selling for under $1.2 million, and there weren’t even too many of them on the market, how much lower are they today?

Mosaic is in a good neighborhood, of course, but pretty boring.

Anonymous
Charlie Lawsuit
8 years 7 months ago

another lawsuit coming?

Anonymous
8 years 7 months ago

I was showing units to my clients there today…. the interior units (not corners are hovering right around $1M (about 2ooK below what they originally paid).

Just the facts, man.

Anonymous
Ryan
8 years 7 months ago
A couple random comments: -I met a guy from Atlanta in fall of _2006_ that had to move from Atlanta into his condo in the Mosaic due to a lack of financial alternatives. -Miami (esp. Beach/Brickell) is enormously dependent on outside buyers – foreign, Northeast – if Fla. were to ever implement a state income tax, it would absolutely DESTROY the upper end of the market (ie – people pursuing income tax arbitrage who are “saving” themselves 7% NY State income tax {+City tax?} by having their primary residence in Florida) -The only paying jobs in Miami (to my knowledge… Read more »
Anonymous
Buyer Tom
8 years 7 months ago
Ryan – My biggest concern is the discretionary buyer market will run dry due to the falling prices and instant loss of equity if you buy today. Hence, if I buy today I could lose 20-30% which is something I am not willing to do at this point and would rent instead….although I’m not big on renting since I prefer to just own my own place even if it is a bit more than renting. I want to move to Florida to establish residency there since there is no income tax and the weather is nice (I’m lived up north… Read more »
Anonymous
Julian
8 years 7 months ago

So Kevin, People paid over $1000 a sq ft original contract price for this nice building in a have-to-drive everywhere for everything location?

That seems unlikely.

Anonymous
BFG
8 years 7 months ago
Based on that Today show puff-piece on the Miami real estate market, I predict the next wave of suckers to get slaughtered in this market will be these “smart-money” cash buyers who believe the lie about how you can “clean up in this market”. Let’s review: – There is an increasing supply of an already huge oversupply of Miami condos (supply problem is getting worse). – Florida has not done anything to solve the tax problem for new or recent buyers (reducing the number of potential buyers for years to come) – For years to come, banks are only going… Read more »
Anonymous
Econ Reality
8 years 7 months ago
Great post BFG “cheerleader Corcoran” has been on many shows on CNBC giving advice. While I think she is smart, we’re all smart in a rising market, she is more optimistic than what is currently warranted. And she is kinda hemmed in by her past statements recommending buying…I think she thinks this thing will just turn around and all will be rosy. Cheerleading is fun and people like that I suppose, they clap and cheer and run up and ask you for advice after the show. Although it is “smart” to not have bought at the peak, it is even… Read more »
Anonymous
8 years 7 months ago
the last 2 comments were very well written and i agree 100% with them. I see just a few solutions to solve the crisis, one is to pass a law for no property taxes in the state of florida, rising sales tax, and eliminating the taxes on the homeastead home. This will lower the cost of living in all this new buildings. and make rent maybe cover the mortgage expenses of the investors/owners. i still dont know what will developers do with all the units that they are not closing???? i wish there was a site with info of all… Read more »
Anonymous
brian
8 years 7 months ago

Those interior 2 bedrooms at Mosaic will finally move around $700k-$800k. The original owners unfortunately bought at boom 2004 prices. The should have bought at Setai or Continuum at those $1000+/sf prices back then.

I dont think the location is that bad, probably a $5 cab ride to Lincoln and not everyone wants to live in the middle of the tourist trap. The building doesn’t have much curb appeal though. The entrance is hidden along the side.

Anonymous
2cents
8 years 7 months ago
The pendulum swung, so it’s not surprising that this blog is often hijacked by pessimism. Despite all the rational financial argument being reiterated in this blog by a constant set of individuals about why these prices are still horrible and why doomsday is upon us, I do find it interesting that many of these same individuals have declared as “wanting to buy” and even “being able to afford current prices”, so Ms Corcoran seems to be right about “pent-up” demand in the works… if the passionate group of nay-say’ers in this blog can be considered a sample. The financials matter… Read more »
Anonymous
On-the-fence
8 years 7 months ago

Closing date is 3 weeks away and this post has been informative.

After visiting Miami each winter for the last 10 years we finally placed a 20% deposit on a bay-view 1B/1B at the end of ’03 with intentions for it to be a vacation get away. I’m not worried about me affording the unit but now I am concerned about the balance of the others in the building (Quantum), and the builder (Terra).

Anonymous
Econ Reality
8 years 7 months ago
2cents – That is a fair opinion. One thing to point out is the optimism (or even the frenzy) that prices would go up, real estate was a safe investment, etc. that created a false demand….a demand that housing was an investment, not a shelter. The run up was historic, now we’re left with a historic over supply….years and years and years worth. The investment component isn’t waiting on the sidelines, it is simply is gone. No one wants to invest in a non-liquid asset that is declining in value every day with no end in sight and at the… Read more »
Anonymous
8 years 7 months ago

With another 25,000 units coming on the market the bottom will not occur for another year or so.
When it happens 70% off peak prices will be reality.

Anonymous
Econ Reality
8 years 7 months ago
For example, one unit I was reviewing was marked down $100K, then another $100K and now can be leased fully furnished (very well furnished I might add) and recently remodeled with high end finishes for $2500/month right on the beach. This was a unit that listed at $900K just a few months ago and probably would have been listed at $1.2+ during the bubble. The $2500/month just covers the taxes and HOA dues. If you can’t sell, you can’t lease, and you’re not the one living there, you could be in serious trouble or at the very least made one… Read more »
Anonymous
brian
8 years 7 months ago

2 Cents –
People are not going to buy when the know that dozens of new empty condos are about to hit the market here in 2008 and 2009. Downtown Miami and Sunny Isles/Aventura are about to see a huge leap in supply, which will further reduce prices.

Anonymous
Juan Carlos
8 years 7 months ago

I am looking to buy a condo in downtown miami and hold it for at least 10 years. i will be buying all cash.

i just saw the building poll and saw that:
Avenue at Brickell 20% (48 votes) is the number one choice for now…

i will go ahead and review that particular building this week.

any comments on this?

thank you.

Anonymous
Julian
8 years 7 months ago
BFG/Econ Reality. I agree with much of what you are writing, and I think people need to differentiate the lifestyle purchase element with the cost of carry. Let’s be honest, there are cash buyers who may or may not want to spend $1m on a condo. What they will not do is spend $35k – $40k a year on taxes, utility bills and HOA. It simply doesn’t make sense, and I, for one, would rather be enjoying myself around the world than tied to such a costly asset. To be honest at $700-$1000 a sq ft (or $1000-$1500 tax equalised),… Read more »
Anonymous
Julian
8 years 7 months ago

Incidentally, what was South Beach and Mid Beach oceanfront price per sq ft in 2000, 2001, 2002 and 2003 for low end (Roney), mid end and high end?

I am guessing 2001 – Roney – $250, Mid End -$350, South Beach High end – $450?

or I am way too high?

Anonymous
Bendoc
8 years 7 months ago
Julian, I agree with you completely as I am the exact example of what you describe. I am Canadian and as I saw the value of the Canadian dollar begin to rise vs the USD around 2004, I became very interested in owning a beachfront condo in the Miami area. I have followed the market very closely, made several visits to Miami to see some units and even made some lowball bids on units in One Bal Harbor, which were refused. Even though prices have dropped and I am still willing to spend up to 1.2 million, what holds me… Read more »
Anonymous
8 years 7 months ago

Juan Carlos – I would suggest Quantum on the Bay. If you are buying to hold for 10 years I would buy a condo with a direct bay view or ocean view. This will yield you the highest return in the future.

Anonymous
brian
8 years 7 months ago

Samir – don’t you own and live in Quantum?? Full disclosure! haha :)

Anonymous
8 years 7 months ago

Yes full disclosure – I do own a unit in Quantum. But you have to admit it is the best new building in the area and only affordable new construction with bayviews.

Anonymous
Cyrus
8 years 7 months ago

Lucas,

in your post you mentioned that several buildings/units are now at 50% discount to 2005/06 prices. could you post which buildings or units this has occured in? i think this would be of great interst and if you posted them in your “deals” section, it would be visited more often. thanks…keep up the great work.

Anonymous
Reminder
8 years 7 months ago

Just a reminder: I still think the Opera Tower sucks since it was over priced and poorly managed by that Tibor Hollo guy. Just thought I’d remind everybody of my opinion on matter.

Anonymous
Mikel
8 years 7 months ago

One Bal Harbour is very nice

Anonymous
SNOWMAN
8 years 7 months ago

I’m sticking with BENDOC….those Canadian’s really know what there doing up there.They don’t call them “SNOWBIRD’S” for nothing.BENDOC is 100% right ….wait it out and see what happen’s.What’s the RUSH.The same condo’s are going to be there next year…and the year after that….only CHEAPER.

Anonymous
8 years 7 months ago
ECON REALTY AND BFG With regard to market-timing, there is a whole heck of a lot of hullabullu in here. There wasn’t any of this kinda talk late 2004/early 2005. I would CLEARLY feel more comfortable purchasing now as opposed to then. Cheerleading aside, it may not be the ULTIMATE best time to buy but: 1. it depends on where/what you are buying. I just sold a unit at Apogee and the flippers are still making money hand over fist, same goes for Canyon Ranch. Clearly the best product in the best location in the best buildings are still doing… Read more »
Anonymous
The Real Reality
8 years 7 months ago
Kevin Tomlinson – Are you a Realtor® or someone with a vested interest in real estate transactions? I bet you are. Of course it is better to buy now at a lower price than in late 2004/early 2005 when prices were higher…just as it will be beter to buy in late 2008/early 2009 than in early 2008. Likewise, better to buy in 2010. The simple fact is the home price declines and inventory numbers are increasing…in some areas at an accelerating rate! The investor-buyers are pretty much gone unless they aren’t too bright and are buying at false bottoms (have… Read more »
Anonymous
The Real Reality
8 years 7 months ago

And you should become a condo flipper and so you can join in “making money hand over fist”… Yep, why don’t you jump in and buy up a bunch now.

Anonymous
The Real Reality
8 years 7 months ago
My guess is KT like Realtors® were telling people in late 2004/early 2005 that the prices weren’t high, we’re not in a bubble, real estate holds its value even in a recession, buy now before prices go higher, this is a unique property,….etc. The market signs are certain that real estate is in a recession if not a depression in many areas. For goodness sake, even the Federal Government is trying to intervene to slow the foreclosure rate (they can’t). According to one post, brand new high-end Trump beachfront is going for $420/s.f. Sub $400 s.f. is around the corner… Read more »
Anonymous
Raffi
8 years 7 months ago
I think everyone has forgotten that the local economy has never been what keeps miami going. money from south america and central america have always been a driving force of the condo market. Now that the dollar is so weak the europeans and canadians will start to buy up some condos. 350 sq ft may seem expensive for a local for a condo near the beach but for foreigners that pay MUCH higher prices in their countries for real estate it will still look like a baragin for them. especially since they keep their properties 10yrs +. Don’t fool yourselfs… Read more »
Anonymous
SNOWMAN
8 years 7 months ago

Yes that’s right TRUMP CONDO’S for UNDER $400 sq. ft. and probably going down even lower.I don’t know what all the hype’s about WAIT WAIT thing’s are going down even lower.

Anonymous
Julian
8 years 7 months ago
And yet again the realtor contributors won’t explain why there is six years plus inventory in Miami Beach. At least explain it, we might not agree, we might not share the view, but denying it exists makes people who make a living out of selling real estate foolish. No one doubts that in any real estate market, there are transactions and people make money. But please don’t use 2 examples when we have 34 at Bath Club and 34 at Mosaic which tell otherwise (i.e. 1/3rd to 1/2 of units for sale). So let’s go back to a debate based… Read more »
Anonymous
Raffi
8 years 7 months ago
Julian, I agree with you about the yearly fees, I think HOA is ridiculous at these new buildings and we all know Florida has a real estate tax problem. but the HOA will get fixed once people fill up these buildings, managment will get the money they need to maintain the building because 85% of building will be paying for HOA instead of the 35% of the building that is paying now, and the tax system will get fixed because people have been complaining about it for a long time and the florida government is starting to listen. just last… Read more »
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