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No way. I would hold for under $200/sf. Their maintenance cost its too high. Besides the worst its still yet to come.
lucas
how do you figure that this is a good price?
LUCAS: Let’s make a competition… First Person to drop a comment on your next post gets a FREE lunch with you….
Property: 218 SE 14 ST TS105
Sale Information:
Sale Date: 1/2007
Sale Amount: $950,000
Assessment Information:Year: 2007
Market Value: $455,800
Assessed Value: $455,800
Total Exemptions: $0
Taxable Value: $455,800
2007 Taxes $ 10326.19
Can anybody look up orginal sale price on MLS?
One 2/2 in 2006 went for 495,000, 1bed went for high 300,000. Cannot understand humongous difference in prices from one year. 2008 Unit 1208 a 1/1 826 sq. ft. sold for $700,000. Yet 2306 1/1 is listed at $299,000.
Way over priced………………..especially compared to other short sales in this particular building.
Lawsuit Charley,
What other short-sales are you referencing? This is the best priced 2 bedroom in the building and it’s a tower suite with a direct view of the bay. The even numbered units in the building don’t have a direct view of the bay. The one bedroom units that are listed have a horrible view.
Mr. Flamingo,
Deal! But if the next person to leave a comment resides in another state or country then you have to pay for their airfare. Deal?
Wild Bill,
The MLS doesn’t show the original sales price when it is sold through the developer. You’ll find that on the county website. It’ll take at least 2 hours to find that info though.
Original purchaser paid $536,600 on Sept. 2006. He found a cash buyer and sold it Feb. 2007 for $950,000. That’s ~185% return per annum on a 2007 sale. Now the unit is for sale for 47% less a year later.
Now that’s what I call timing! Let’s hear from that guy!
Could fraud have been involved here?
perez – If it was a “cash buyer”, then it wouldn’t be a short sale.
There are 2 mortgages on this:
OR 25374-1371 – $760,000
OR 25374-1398 – $190,000
TOTAL: $950,000
Yes – it looks like fraud to me. 2007 was already a crappy year for real estate sales. There is no way something would legitimately sell for more in 2007 than in 2006.
No wonder car sales are down. With all this fraud, a bet a LOT of money went to buy big expensive vehicles. Now that’s stopped.
Fraud written all over this puppy.. Cash? give me a break.. Do the math people, this is a clear example of fraud. Fraud on the way up and I am now wondering about fraud on the way down.
Waverly #704 had been listed for sale just above $500K.. All of a sudden the property was quit claimed to Resurrection Equities. Now the Management is telling me the unit was sold as a short sale just below $350K.
The unit was never offered on the open market at that price and the Lender would never allow this crap.
The unit is all of a sudden offered for rent at below market as well.
C’mon Miami Dade Fraud Task Force, get your heads out of your a$$ and start protecting consumers.
Remember the old days when you had to have a down payment and show where it came from. Guess “Underwriting” has been on vacation for a few years.
The owner of this unit looks like they were involved in a bunch of properties. They would buy a unit, finance it 100%, and then later quit-claim it (using a self-made quitclaim deed) to someone else.
What’s the idea behind the quitclaim deed? I’ve seen this in other mortgage fraud cases, but I didn’t understand it. What does that do for the owner of the property? I know it likely isn’t legal to deed property to someone else without paying off the mortgages (unless you’re adding or subtracting a name, like a marriage or divorce). Anyone have any insight on this?
BFG, thanks for correcting my mistake, it was not a cash deal. The owners last name was spelled differently on the mortgages than on the deed, and I didn’t find the mortgages.
This doesn’t appear to be a case of an unsophisticated buyer overpaying. This owner has about 5 other properties, and has been buying and selling for many years in the area.
This may be a good case study. Could someone check the MLS and see what the asking price was prior to the Feb. 2007 sale for $950,000?
I would speculate that someone using a quit claim deed does so in order to transfer the property without paying off the mortgage. Either both the seller and buyer are involved in fraud or just the seller with a really dumb buyer. I think this type of thing was mentioned recently in the Chicago Tribune. Needless to say, it can make the foreclosure process a bit more complicated with competing ownership interests, combine that with what company really holds the mortgage note and it could be a long drawn out affair. I am for putting these types of fraudsters in prison and make them work off their debt at $5 per hour.
I can give you a quit-claim deed for any property you want….even the Brooklyn Bridge….since I don’t warrant that I actually own any interest in it.
In the alternative, it could be, but doubt it, that X&Y were part of a Company. X is out so X quit-claims his interest, whatever it may be, to Y. Also used in divorce situations, etc.
It is a HUGE red flag however.
I recently looks at leasing a brand new $1.8M condo on the beach (listing price). I looked up the owner (who apparently live in South America). He was not the original owner of this brand new condo. X bought the condo and has a $1M mortgage. X quit-claimed his interest to Y but the mortgage remains (and the mortgagee (lender) may be unaware of the transaction) and Y would like to lease to me. I don’t think I am going to lease. I can lease it for $4K/month yet I am told it costs Y $14K per month. There could be private financing going on here, I don’t know. But it is a concern. I couldn’t find any other shady transactions with X and Y so it may just be a private arrangement?
Here’s what’s happened with the lender.
http://ml-implode.com/imploded/lender_HomefieldFinancial_2007-04-12.html
But I haven’t found the actual forclosure action, is it not in foreclosure?
Buyer Tom,
Check public records to see if they are paying their mortgage and are current with their HOA dues. If not, the unit could go to foreclosure, and people will be knocking on your door.
BUYER TOM…..I can smell drug money in that condo from here.
Hey – Where can I look that information up on? Link? Thanks.
I was looking at this one (unfurnished) where I’d have to buy furniture for the 2,500 s.f.+ unit but can lease at 1/3 the cash cost. Or a professionally decorated and furnished brand new 1,600 s.f.+ unit turnkey at 1/2 the cash cost. I’m supposed to sign a lease on the smaller one soon….but would really like the larger one, but I guess I don’t really need that much space and the later is turnkey with brand new dishes, linens, etc.
Sideliner – I didn’t get that impression from the realtor. There is a $1M mortgage note still and they had moved in their own furniture with wedding photos (the large unit) and were a bit distressed about not being able to get more than say $4K a month for it. But who knows?
My concern really is default. But who knows I could be naive.
Off Topic:
Allow me to share an email I just recieved from Mercedes Benz of Coral Gables…
Dear Valued Customer,
Due to a recent opportunity to purchase a select number of lease returns, Mercedes-Benz of Coral Gables is currently offering unprecedented specials on these Certified Preowned Mercedes-Benz automobiles (most of which have low mileage and are in perfect condition).
Additionally, in conjunction with Mercedes-Benz Financial, we are able to offer qualifying clients an interest rate as low as 1.9% on selected models (an all time low rate) as well as a Certified Preowned Warranty up to 100,000 miles.
This is a truly unique promotion that won’t last long. If you are interested in taking advantage of this special opportunity, please let me know as soon as you can because the situation will change as the inventory becomes depleted. Of course, this offer is based on approved credit and is offered to us for a limited time.
Wow…Looks like all this free money wasn’t free after all. So many “wannabees” in this town are finally getting back to reality.
Range Rover sent me an offer like this.
Mike K: Premium car sales are hurting and they are offering super deals right now. The 100K warrentny they are offering … well on my M3 convertible, it cost me $6K (warrenty + maintenance) to get that. The fact that they are offering super deals WITH warrenty and 1.9% financing is awesome. Too bad I am not in the market for a new car.
On a related note, I have friends in SOCAL who are waiting for hot deals on high end Mercs, bimmers and porsche. There are a lot of people who bought these cars using home equity and will have to sell or have them repossessed. I have been checking prices on eBay and I dont see any noticable reduction in prices.
A thought for all you of (fellow) conspiracy theorists. If I were a broker who wanted some time to have a no co-broker sale (and have no MLS commission share to pay) I’d misspell the condo name and scew up the zip code, too. This is all supposition, of course, and I’m making no allegations. But such a broker could tell the seller, truthfully, that the condo was listed on MLS for a month, and there was little or no interest. His/her Uncle Louie could then make a truly lowball offer. Again, I know nothing more than what I just read on the blog, but two mistakes put Lucas off the scent, and I can’t believe that a broker would miss both “typos”. Anyone could blow a zip code, but emerald is a common noun that any spellchecker should flag.
With 25,000 Miami Condos coming on line over the next two years, I don’t know about you lot but the smart money is holding out for $125.00 per foot.
According to a cnn.money.com article, “Wholesale Access has estimated that all these changes (in the mortgage market) mean 30% to 40% of borrowers who could have qualified for a CONVENTIONAL mortgage a year ago can no longer do so.” (emphasis added)
I don’t know about you, but that makes it very clear that many more people will go into foreclosure…..many many many more…. since people won’t be able to sell or refinance.
For all you guys with some free time, you can run circles around the Mortage Fraud Task Force.
perez is already doing some good work…
The following site will give you the current unit owner if you have an address you suspect:
Once you know the current owner you can look up how it was financed, previous owners, etc. here [I don’t know why it is currently down]:
Then you just play connect the dots. It’s amazing how quickly the patterns reveal themselves. In general, the most expensive flips in any given building are going to involve the same names.
No idea what the cops are up to…
And with respect to MCZ/Centrum on a recent post here. Googgle “builder bailout” then go snoop around the sales on their porperties in Aventura.
Since the Dade clerk’s site is down, feel free to play in Broward…it’s just as dirty…
Their website’s a little better; there are actually links from the results of a specific property search to historical deeds.
By the way, folks who are defrauding banks tend to make it a “best practice” to spell their names as many different ways as possible when recording documents. perez– not a shocker that the mortgage was not recorded with the exact same name.
Also, if properties are being flipped through LLCs, etc. you can usually get some info on the corps at sunbiz.org
…but you can’t put anyone in jail. D’oh!
BTW… all of you eggheads on here should be reading this blog:
http://calculatedrisk.blogspot.com/
again, unless you are a family that wants to LIVE in these properties or can afford to keep it as a 2nd home w/o having to rent them out – the best time to start buying any of these units is when you see 3 consecutive months of declining inventory due to sales, not properties being taken off the market. this is a very simple concept … but gets muddled up when you mix in human emotions and sales tactics on the masses.
there is such a lockdown right now in the credit markets that the only way you can buy properties is to be a ‘cash buyer’. even high credit quality right now is questioned.
back in the “VUE ON BRICKELL” topic that lucan posted, i mentioned (comment #48) to keep an eye on BEAR STEARNS. this was approx. 2 weeks ago and they would’ve gone bust on friday if not for the fed’s bailout. there is no reason to buy anything right now until things clear up. real estate is not bouncing anytime soon. having said this…there WILL be a great time to buy up everything…we’re just not there.
….one more thing to think about: if the markets are placing a tremendous risk premium on AAA rated municipal bonds, what shot does illiquid real estate have (again, from an ‘investors’ pt of view).
if a muni market can get locked up, you’d be nuts to buy any real estate…once liquidity returns to the liquid mkts…then maybe it’ll trickle into illiquid mkts…
What was the asking price in early ’07 of this unit which was purchased from developer for $536,600 in ’06, then resold in ’07 for $950,000?
Since lender who loaned 100% has gone out of business, who has authority to approve a short sale?
If this is a fraud, why hasn’t a foreclosure action been initiated, I find it hard to believe that the buyer has been dutifully paying this big mortgage payment on this way overpriced unit.
lucas
i don’t think you can establish that this is a “deal” in any sense of the word. if anything, this past friday’s events are just more steps toward a major shakeout which will not trickle down to the south florida real estate market, but instead, will drown it.
BREAKING NEWS:
Bears Stearns gets acquired by JPMorgan Chase for $2 per share. Bear Stearns closed at $30 per share on Friday and was trading in the fifties Friday morning. This is a huge story.
http://money.cnn.com/2008/03/16/news/companies/jpmorgan_bear_stearns/index.htm?postversion=2008031619
Yep – Saw that, not a surprise except for the share price. It could have been worse, BS could have been a condo flipper that bought in 2006!
The bigger news is the Feds emergency rate cut. My concern has been that the Fed is a tad behind the curve. I would prefer that they be just ahead of it instead…
http://www.marketwatch.com/news/story/fed-cuts-discount-rate/story.aspx?guid=%7B3D168510%2D4A22%2D4F0B%2D9E52%2DECE3672E3E9F%7D
Buyer Tom,
The share price was a HUGE surprise to me. It traded as high as $159 per share last year. To me, this means that Bear Stearns went bust. Their name and their client-base is worth at least $2 per share, in my mind.
Another story below. Unsurprisingly after the latest cut in the discount rate and the fire sale of BSC, the US Dollar tumbles:
http://dailybriefing.blogs.fortune.cnn.com/2008/03/16/bear-sale-fed-moves-send-dollar-tumbling/
$2 is pretty surprising, but when you can’t meet your obligations….$2 is better than nothing. I’m glad I didn’t own any of it directly…. A lot of smart people can’t fix a bad balance sheet when there’s a run on the brokerage. This will cause real fear. We’re in for pretty nasty little recession that will clear out a lot of leveraged people and firms. No wonder gold has been going up and up….the real estate safe haven is gone and so is the strong dollar. I blame it all on the Realtors® (just kidding 🙂 ).
Well, our exports will go be going up………but do we make anything anymore? LOL
this isn’t really big news…bear was going down, it was just a matter of when. the price isn’t so much of a surprise when you consider bear is sitting on $30 billion of level 3 assets.
With more rate cuts to come and more Florida condo price reductions coming too, it will be a great time to buy in 2010! (yes, I know the Fed rates aren’t directly tied to long term mortgage rates….but the rate cuts are indicative of the global recession to come which will reduce commodity prices, etc. and with inflation down the rates will be lower for long term borrowing). Don’t try an catch that falling knife…….
BT
2010? try 2015. as for the fed doing more, i’m not sure what else they can do. lowering the discount rate and fed funds rate doesn’t do much when it’s no longer a liquidity issue but instead, a collateral issue. if people don’t have faith in the underlying collateral, then they won’t extend credit. i don’t really know how the fed can stabilize asset values when the market is insisting that they trend back to their fundamental values.
Crazy. 52 week high in excess of $150/share is one thing. But BSC had market cap of $6 BILLION on THURSDAY. This just turned into $236 million. Poof!
I’m glad I decided to rent…….
jcrimes – I agree, it could be 2015 by the time the real estate prices hit bottom…but I sure hope it doesn’t drag out that long….
A radio show this afternoon was talking about the price of gas. They were talking about why the price of gas has been going up. There hasn’t been a decrease in supply or an increase in demand so what’s going on? The answer is that the value of the US Dollar has been going down. It now costs US oil refineries more US Dollars to purchase the same amount of oil. Their increased cost gets passed onto consumers, hence the increase in prices at the pump.
Everything will eventually balance out in the long run, however. There will be more foreigners visiting the US because goods and services will be relatively cheap. People residing in the US will be less likely to travel abroad because goods and services abroad will seem very expensive. Foreign countries will increase imports from the US because our goods and services will be a bargain, in relative terms. The US will be less likely to import foreign goods because the prices will seem expensive.
The big negative, however, is that foreign countries, if they feel that the US Dollar will continue to drop, will be less likely to invest and open new businesses in the US. We do not want investment dollars in the US to dry up.
it’s actually frustrating. i want to buy but (1) i want a good deal and (2) i don’t want to get burned. problem is that the timing of these criteria look to be several years off. amazingly, i own an investment property but still can’t buy a primary residence.
Buyer Tom, I am usually in agreement with your posts but you are missing the point about long term interest rates. A falling dollar means only one thing for long term interest rates, that they will go higher. The “nightmare scenario” that many economists have predicted for quite some time is that if foreign governments lose interest in US dollar denominated assets and stop purchasing US treasuries, long term US interest rates will have to go up substantially to fund our deficits. What we are seeing now could be the beginning of that. So I don’t think anyone should expect lower long term interest rates anytime soon as long as the dollar is falling. We could see mortgage rates above 10% if this continues. Let’s see how that affects our little slice of heaven here in the miami condo markets.
All kidding aside, a crisis has developed in the value of the US $ tonight.
The US $ Index (DX) has slumped again to a new all-time low of 70.81 (!) as at 11:01 PM EST and plunging hard.
This is looking like capital flight, with the size of those red candle-sticks, someone’s are dumping huge amounts of $.
Which makes some kind of intervention (again) by CB’s to try to stem the plunge. They better hurry if that is the intention.
Jeremy – I don’t disagree with your assessment. My opinion is that while U.S. dollar has gone down, the other currencies will follow resulting in the dollar going back up in relation to what are now strong currencies such as the Euro….in other words we’re leading this downturn and they rest will follow. At least that is what I hope!
I sure hope this results in federal government spending reductions….
it’s not just oil that’s exploded because of the devalued dollar (thanks to the fed cuts) but it’s every dollar denominated commodity. nothing to do w/supply and demand so all the “china and indian consumers” people…please…
again, back to lucas’ “VUE ON BRICKELL” post…(comment 48), i mentioned that BEAR STEARNS and possibly a bank (washington mutual, wachovia, citi or bank america) are going to go bust. $2 was the price because no other bank other JPM (mkt cap of 120 bil) is in a strong position to buy anyone…they’re worried about cost cuts instead of going on a buying spree.
this will turn out big for JPM as they only bought them for $270 mil – their prime brokerage biz netted $566 mil last yr on 1.2 bil rev. so even if they jettison the rest of the garbage, it’s a huge win…JPM will net $1 bil their 1st yr from this purchase.
back to condos….sellers better start opening their eyes! problem is that most of them probably have no clue what’s going on in the mkts…which is exactly the problem – so now that liquidity is gone…good luck. shave 30% off these prices and there still won’t be much of a bid there … greed can kill pigs.
Ah. So all those super smart people winking and nodding that EUR investors are coming in their droves. Well from just two weeks you’d be massively underwater in your currency bet, underwater in your illiquid real estate asset. Oh what fools. As I said at the time, don’t take us Europeans as idiots.
When the Fed buys masses of outstanding mortgage securities (i.e. the taxpayer bails out this mess) and the $ crashes – now THAT will be the time to buy. Not before.
in response to comment 15:
A quitclaim deed is a deed that simply disclaims *any* interest that 1 party (the Grantor or Seller) has in a piece of property and passes that claim of interest to another party (the Grantee or Buyer). There is no claim of warranty or any assurance that the Grantor’s interest in the property is unencumbered, or that any interest passes at all – it conveys whatever (if any) interest in the property.
“Legit” quitclaim deeds are used often enough for inter-family sales/gifts and by individuals looking to transfer property into real estate trusts, or small corporate entities – but I think it’s safe to presume these transactions are far from “legit!”
Most property transfers are done by warranty deed, a deed in which the Grantor/Seller warrants that he has clear title to the property and has the right to convey that property (the guarantee of clear title extends all the way back to the origin of the property).
psn – I know exactly what a quitclaim deed is. The question was how people use them to perpetuate a mortgage fraud. Haven’t had any detailed, satisfactory answers to that, yet.
Regarding Bear Stearns – this is indeed a big deal. One of the (formerly) most respected names on Wall Street went from almost $100/share earlier this year to basically zero overnight. Global stock markets tanked overnight in response to this.
If Bear Stearns can fail this spectacularly, who is next? Fear in the markets has to be higher than even in response to this. Any stock market rallies you see over the next week or so will simply be shorts covering – not investors being “encouraged” by Fed moves. Every move the Fed has made so far has failed. The Fed can’t fix this mess, but I’m sure they will try. So far, they’re striking out big time. It’s getting comical how panicked the Fed has become. They are scared, big-time.
By the way, Bear Stearns was not a bank – and yet the Fed just bailed them out of total bankrupcy to the tune of $30B. The Fed has not made a move like this since the Great Depression. Seems the sh@t is really starting to hit the fan. It will be an interesting year, that’s for sure.
there is nothing comical about how feds react. It is very worrysome. Yes they are trying to prevent domino effect. Noone knows exactly what to do.
Let’s elaborate a little bit about the upcoming auction. I would like to get some thoughts from you local guys. any predictions on competition and if prices are going to double -triple from the initial bids?
Does it worth even a try?
Thank you
Very interesting article today by Princeton economist Paul Krugman in Fortune.
http://money.cnn.com/2008/03/14/news/economy/krugman_subprime.fortune/index.htm
Here is what he says about home prices in miami and La……based on the difference between incomes, rental rates, and sales prices, which ultimately will come into balance. In places like Houston or Atlanta, where home prices have not risen much compared with underlying rents, the decline will be relatively small. In places like Miami or Los Angeles, you could be looking at 40% or 50% declines. What this means to the Miami condo market if he is correct…………as they say……”look out below”.
I’d like to know what KEVIN TOMLINSON has to say about that one Jeremy.He was telling someone I know that price’s are amazing now and NOW is the time to BUY.I guess that is just part of the pitch.In the meantime ..I think we should wait to see what happen’s next month.LOOK OUT BELOW.
as far as KEVIN – you can’t blame him for any of this because it’s the nature of sales itself. you can’t predict where markets go…this is why any sales related job has to be basically bullish…either short term or long term…whether it’s stocks/real estate, etc…
it’s always the right time to buy…whether it’s 1999, 2005 or now…the pitch is usually the same.
sometimes it works…sometimes it doesn’t…ultimately, the consumer has to smarten up and decide whether it’s the right time for him/her to buy … the salesperson will never talk you out of a sale. it’s dumb to think this …
Never in the history of the Realtor has it ever been a time “not to buy.” They just spin the reasons why. I think they have a chart based on how bad the market it, and a list of reasons why to buy. Its like a “roledex” of excuses that salespeople have to counter any answer.
brian – I thought that was a sworn secret among the Realtors®.
25% property tax cut will be on the November ballot:
http://www.nbc6.net/politics/15620228/detail.html?dl=headlineclick
That would be excellent if that goes through.
I don’t think a tax cut is very good idea right now. The consumer is already on the ropes and adding an additional 1% inflation to the total price of goods is not a good thing. It’s also harder to forecast a budget because a drop in consumer spending will directly lower revenues. The last thing this State needs is a large budget deficit…
Mike: So how did the state survive when Real Estate values doubled? The state will find new ways to spend money no matter what; I say we cut them off so they stop wasting money in programs that are not beneficial to us. If you disagree you can always pay more taxes yourself but don’t let those poor families or First Time buyers suffer.
Remember that the property tax cut will be offset with a one cent increase in sales tax. That is actually good, as it taxes consumption and replaces a regressive tax. The Florida tax system was unsustainable. It would ultimately result in much worse loss of value for properties generally and thereby lower the tax base to a critically low level. As to the Fed’s actions on Sunday the most important one was to open the fed discount window to the investment banks. Had that not happaned, Bear Stearns would have had lots of company on the distressed list. Lehman, for example, just missed the bullet as a result. The main immediate effect of lowering the interest rates is the depreciation of the Dollar.
Only bargain in Emerald I see is:
1/1 for $299K (or $349 per sqft) – MLS# M1198147
You guys have valid points (and I hate paying taxes as well). I just don’t think you can make quick adjustments to the system in hopes of staving off the inevitable. Bottom line is that lower taxes won’t help the first time home buyer. From here on out, a new home buyer will NEED 20% down, PERIOD. Home prices will continue to correct until the average JOE on the street can afford to put down 20percent and pay the monthly payment.
We just recently had tax reform and now we are asking for more? It’s time we stop throwing “gimmicks” at the housing market in hopes of a recovery. Let the market adjust (without any major changes to the fundamentals) and I think we will all be better off in the long run.
Just my humble opinion…
If the banks are waiting for people to save 20% then the market will never recover. Atleast not with the salaries they pay in Miami.
I think that Property taxes have climbed up on assed property values that have to do with the real estate bubble in Miami therefore they need to drop, maybe not in a percentage standpoint as that has been constant but the should re appraise the property values to more realistic property values even if you bought at the peak since your condo is not worth that anymore.
I’d rather see a tax cut than a tax “swap”.
Assessed values will come down as prices come down, resulting in lower tax bills. By swapping out those artificially high property taxes and replacing them with a sales tax, they’re effectively “locking in” the higher tax revenues.
The “super exemption” was a MUCH better plan than the one they passed. Don’t know why they don’t revisit that. Supposedly it was struck down as being “too confusing” to voters. The homestead portability is ten times harder to compute than the simple “super exemption”. Don’t know what the big deal was.
Buy now! Real estate in Florida will surge. 50% gains in one year guaranteed!*
*Actual results may vary. One tax will be replaced with another. Cost of living will remain high. Chances are if you neighbor wants a Prada handbag they will pay for this before paying their condo maintenance fee. Proceed to the nearest exist in case of emergency. If you own a high floor unit at Emerald you may jump instead of using stairs.
The goal of government is to grow. It is an institution that will not willingly give up money or shink. It keeps on growing until voters force the issue. I think we are at the point in FL. State and Local Governments have been spending like crazy and a lot of $$$ are being wasted.
I personally am in favor of a consumption tax. Eliminate property tax completely and create a higher sales tax. That will be more fair than the system we have now.
No matter what, housing has a lot of unwinding to do in Miami. Prop tax reform will be a slight help, but prices have to come down to reasonable levels and insurance rates have to drop.
Insurance is going to drop as we have not had any major storms recently. Warren Buffet in his annual report said “party for insurance industry is over”. It takes time for the party to be over and rates to drop, but I think in a year or two, rates will be significantly lower than they are now.
does someone know if FL is a recourse or non-recourse state ? in case you walk away from your investment property or 2nd home?
Lucas –
Whats the story with unit #4606 at 10 Museum Park? I see it just listed, but says “Going to Auction March 28th”.
Overpriced as usual at $760/sf – ($1.9 million).
CA – I’m pretty sure FL is a recourse state, unlike CA…..
Florida is recourse.
Regarding a “consumption tax” completely replacing property tax, is there any state that has this arrangement? Seems like that would be hard to implement. You would have to have different local tax rates, since some counties spend a lot more money than others. A simple state sales tax increase wouldn’t work. I also wonder what effect this kind of tax would have on businesses in Florida.
STORM,
what do you mean by ‘recover’? it has to adjust to market value – we will not see insanity like we did for at least 10 yrs…it will just get re-invented in some other manner….what it needs a stabilization….it’s not recovering for at least a decade.
what the city needs is SERIOUS job growth…even from 2000-2005 it was all speculation…nothing real underneath (like industy w/jobs). until the morons running the city realize this…it’s going to always be a boom and bust city.
tax incentives to large corporations (especially foreign based ones that want to expand into the US) – this will spawn a real job market…not just a bunch of hustlers and jack of all trade clowns that the city is so full of!
jobs and employees need to be lured w/solid industry…how can this be SO difficult?? you have a no-income tax state and great weather and decent infrastructure.
when the imbeciles running things realize that you can’t just keep hoping for foreigners, maybe they’ll implement a 5 yr plan or something…which i doubt – inept gvmt leads to busts (take a good look at our federal gvmt which has not done ONE thing right since the chimp won twice).
We probably won’t see a run up in home prices like this for many decades. The pain and cost of this nonsense will be felt for a long time and I would expect banks will be more prudent as the secondary market for MBS will be very limited and ultra cautious…..
Regarding jobs… apparently part of the problem is that it is hard to entice people to move here with the high cost of housing. I think that’s why you’re seeing such job growth in the lower-cost areas like Georgia, Texas, and the Carolinas. People can get a mansion there for what it costs to buy a small condo here.
Argue how nice the beach in Miami is all you want, but the bottom line is, people are leaving Florida in droves to move to these supposedly “less desirable” areas.
That seems the be the trend, in general. The high cost of living areas are losing workers to the lower cost of living areas. It’s basic economics, really. How competitive can a company stay if it has to pay its employees significantly more money than another company in the same industry who doesn’t have to pay the same high salary because it is located in a lower cost area?
I just spoke to a realestate Lawyer …that claim’s that he think’s REALESTATE will drop another 30-40% before the bottom hit’s.Does anybody agree with that statement???Just an ordinary JOE here looking for a condo to use in Miami 2-3 month’s a year.Should I leave my 300K in the bank and rent??WAIT and see…or rent?? I’m sure there are a few other’s like myself out there.
MR. CLEAN – I’m in the same boat but was looking to spend $500K-$1M. I just signed a lease. There are TONS of places to lease at 50% or less of the cost of ownership (not including the fall in prices). RENT RENT RENT. I think we’re about halfway through the price declines. So, another 25% drop isn’t unreasonable. So, if you but a place for $300K today in a few years it’ll be worth $225K or less…. Once the bottom is reach prices will stay flat for quite a while….
Thank you RENTER TOM that’s exactly what my lawyer say’s WAIT WAIT WAIT.We haven’t seen the bargain’s yet.I’ve alraedy seen price’s drop like crazy in the last few month’s.SCARY……what I was willing to pay in January already dropped 10-15%. Thank’s TOM I’ll wait a bit.
MR. CLEAN – The analogy is we had the pre-Christmas sales, now we’re in the post Christmas sales but haven’t gotten to the clearance season yet…. My prediction has been a big drop during the later part of the hurricane season…. I just signed a 12 month lease with an option to renew….right on the beach, brand new place. 1/2 the price per month if I had bought it.
I’m renting for around 1/2 the price if the place was 100% mortgaged, taxes, condo fees. Even a better deal when you take into account the price declines. And, yes, I did check to make sure the LL owns it, paid up taxes and no other legal filings….
Off-topic, but just came across this:
Miami is the “cleanest” metro area in the country:
http://promo.realestate.yahoo.com/cleanest-cities.html
Cyrus
i disagree with you – the bush tax cuts are fine by me.
BFG …one of the biggest problem Miami has with regards to attracting jobs is the lack of real diversity. Miami is latin diverse, but not diverse when it comes to other ethnic groups. If you goto any major metro area in the country, you see just about every ethnic group represented.
A lot of my colleagues who come over from Seattle for business meetings to Miami and they all mention stories of how they asked some airport employee for information and the person could not speak english.
There is a perception that Miami is a city to party and hang out on vacation, but not really a city where you would set up your business. They think that the city lacks an educated english speaking workforce.
On a personal note, I love miami because I dont feel like a minority here. I am not latin and I speak with an accent. I blend in here and feel more comfortable here than anywhere else. I have lived in Milwaukee, Seattle, Santa monica, Boston, Chicago, San Juan (PR) and orlando. I cant imagine living anywhere else.
Hey Renter Tom—Julian et al
I wouldn’t be so quick to dismiss my opinions: I am re-posting my comment from a previous post on March 8th: Enjoy! Comment #33 –notice the comment about the banking industry :
>>33 Kevin Tomlinson // Mar 8, 2008 at 12:45 am
Buyer Tom
Sorry, guy. The bubble burst in 4/2005. It blew open AND you missed it.
This is just the messy aftermath. All analysis goes back to 4/2005.
Can you believe you missed it? The thing that you live for the most and have look forward to with such great anticipation. IT ALREADY happened. We’ve been in the midst of the BURST bubble for almost THREE years. Where have you been? What are you gonna do?
You won’t risk financial ruin, Buyer Tom. You SAY you are going to rent. You will be the beneficiary of all this. Rent, rent, rent!
How will this mess ruin you?
P.S. I don’t “do” rentals. Can’t wait til all the people in the banking industry lose their jobs…then all of us Realtors ® will be enjoying that one.
Fair is fair!
I had to do it. Pretty good, huh?
I know it’s anecdotal, (Bear Stearn collapse) but I was right on —!
jcrimes,
a BIG part of the financial mess we’re in is DUE to big tax cuts, especially while taking us to a war (1st admin ever to go to war and cut taxes..). the reason no other prez has done this is because it causes massive deficits. you don’t borrow huge and spend it and then think everything will be fine down the road. go borrow 100k on your credit card and then go live large…is that real or is it a pipe dream? well….welcome we’re now slowly starting to experience the repercussions.
same thing happened in the late 80s…and then we paid hard at the end of the 80s/early 90s for the moronic economic policies. again, the chimp hasn’t improved ONE single thing in almost 8 yrs…not ONE.
ok…back to condo talk…
KT – Ummmm….I think you and EVERYONE knew a big bank or brokerage would fail. It has been a concern since last August when I starting making sure my cash was fully FDIC insured…had to set up a bunch of new accounts, POD CD’s…etc. It was a HUGE pain. And I AM THE ONE who said people would be ruined…ask a Bear Sterns employee who was heavily invested in BS stock? Some guy with $20M in stock was down to $500K…..ouch.
Cyrus – I think the bigger issue is the deficit spending of Americans more so than the deficit spending of the government. But I completely agree that the federal government MUST cut spending big time once we’re out of this downturn. During the downturn the government needs to spend on bridges (the war even) etc. to keep things moving BUT it must learn to cut spending during the good times……
Are todays events going to influence the market in a positive or negative direction? ie. stock market uptick and lowering of prime
But I’m not in banking—forget real estate….I don’t even follow the banking industry.
This is huge! Bigger than this or that story on what someone predicts will be the doomsday of real estate here in Miami.
Who cares who predicts what. It’s pretty scary that a bank sold for LESS than what the Bear Stearns building is worth!!!
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=2787
The strengthening of the dollar is also happening. So in that sense it will hurt RE sales to foreigners a bit. Even if lower mortgage rates occur (and they are coming down a bit) the new loan standards are still going to make this a buyers market for a long long time. So, Big Gun Investor, I would say the actions over the last few days are better for investors in stocks than for real estate investors since there isn’t much that can be done to prevent the housing price slide.
The building was just ONE asset of BS, their other liabilities were huge!
OK so ur bullish on the Dollar? You SO make me chuckle.
Big Gun
Here’s what I KNOW. I remember like two years ago all I would take were calls about the “bubble.”
Now, all I take are calls about “We think now may be a good time to buy.”
Add that to cheap money (if you can get it) the prospect of lower taxes (big reductions this time) and declining property values.
Draw your OWN conclusions.
I would say the dollar has pretty much bottomed.
But note…I’m not a currency trader or arbitrager.
Renter Tom
This is classic! I CAN’T believe you wrote this.
We are heading for a “D”epression.
Kevin – If we’re heading for a Depression, then what do you tell prospective purchasers? Note I said the dollar has pretty much bottomed compared to other currencies….I did not say anything about the current recession or how long and nasty it may be. Those are two different matters.
The real estate market and our ECONOMY are two different debates.
I don’t TELL my clients anything. If they are interested in buying then THEY make that decision. I don’t make any case for buying now or later. I’m a conduit of information.
Kevin Tomlinson
This is classic! I CAN*T believe you wrote this.
You’re a conduit of information but shut down the information pipe with respect to economic information when people are making one of the largest asset purchases of their life? Don’t you have a fiduciary duty to look after the best interests of your client??? Oh, I forgot, you’re a Realtor@.
oppps… Realtor® Yes, I know how to type the ®….
My clients are very, very wealthy.
I find it rude and condescending to think that anyone would “tell” me anything.
Don’t give me that fiduciary cr*p. No one gives it straighter than me.
I would be more concerned about putting my cash in a savings account than real estate!
😉
Renter Tom,
you don’t need a stronger dollar to make it tough on europeans and asia. their economies are slowing DUE to the weak dollar, especially for asian countries that heavily export to the US….and if you read about most european countries, they’re slowly down very fast…BECAUSE of the weakened dollar. not only has the weakened $ hurt us is most ways (our trade deficit #s are nowhere close to reparation considering how much the $ has depreciated), but it’s crushed other countries’ exports.
Give me a bar of gold anyday!
Who thinks I’m nuts?
WOW!
“I would be more concerned about putting my cash in a savings account than real estate!”
That is THE quote of the year! When prices decline another 15%-25% I’ll bring out my cash that was in “savings” and I’ll laugh all the way from the bank. I guess you don’t think you have to live up to fiduciary duties eh?
Cyrus,
Exactly, with the dollar so weak, the other factors such as exports, buying U.S. real estate, money spent on U.S. travel, etc. will cause the other currencies to weaken which is U.S. Dollar strengthening. Hence I think the U.S. Dollar has pretty much bottom here.
Yes, Kevin I think you’re nuts w.r.t. gold. Once Realtors® start talking about buying gold, then you know it is a “bubble” LOL.
You have no idea what you are speaking about with regard to fiduciary duties. None. Nada. Zip.
Old- schoolers hide behind that rant when they have no where else to go.
Quiz EVERYONE of my clients and ask them of the value that I brought to the transaction.
I am not a salesman, sorry Renter Tom.
Nope – didn’t ask for a kickback! But did get 22.5% off the rental listing price on the MLS though. The unit is very well decorated and all brand new…. As I said, I would like to buy but I just can’t put peg a price on most of the stuff that I would consider to buy. So, I’ll wait…my dollars had better be worth something! I hope!
lol! As we all do. I’m sure Lucas is spinning a web of deceit right now to get you to “buy, ” “now is the right time” crap, NO?
This blogs key asset over many of the others – sensible, reasoned opinions has sadly gone out the window in the last couple of weeks. It has deteriorated rapidly and frankly, it’s a great big bore now.
I don’t think it’s only here – as times get more stressful, there’s more speculation, slanging matches, I’m smarter than you talk, etc etc. Lucas – your blog was different, and now it isn’t anymore.
Good luck to all in their chosen professions and I hope whichever view you take, it brings you health, wealth and happiness.
Cheers.
Lucas,
Julian’s correct, and he’s not alone. A couple of other people have made the exact same comment to me to about your blog. Kevin Tomlinson and Buyer Tom or Renter Tom (whichever Tom) have hijacked your site. Some bloggers would be best served if a few of your posters just e-mailed each other, instead of posting their boring and childish messages here for the world to see. It just has become way too self-serving for a few. Their comment lack substance, are repetitive, and circular. Maybe you should start screening or set up rules. A great rule would be that any comment posted be directly and substantialy related to the original post. This blog should not serve as the platform of a select and uninteresting few. This is supposed to be a place to share info and provide insights, not the KT vs. RT Showdown. Good luck.
There’s really not an efficient way of monitoring the comments left here. I’d have to sit in front of the computer all day. If anyone has any good ideas of how to monitor the comments better then let me know.
I think Julian and GT3 just did. Kevin already has his own blog…Tom feel free to do the same.
You guys can then go on and post your witty barbs on each other’s sites.
Looking forward to this site getting back to the insightful commentary on the Miami RE market it was built on.
I won’t get baited again…I promise.
Headline: “Gold futures plunged on Wednesday, as the dollar continued to advance one day after the Federal Reserve cut interest rates by 75 basis points”
As I had posted, I do think the dollar has bottom. That has ramifications for the Miami real estate market, specifically, foreign buyers will be less eager to buy….foreign buyers were really the last hope for many in the real estate business. I’m not saying the foreign buyer is going away, just that the last cheerleading issue has passed. Speculators are gone, flippers are gone, fraud is mostly gone, mortgage lending has pulled way way back, foreign buyers are declining, HELOC’s are mostly gone, etc. The money and buyers that fueled the run up are gone. In my opinion, the slide in prices will continue and continue since there is nothing to stop it now that the dollar has mostly bottomed. I will be very interested to see the inventory and defaults for March in a few weeks. 2008 will be an uglier year than 2007 for Miami real estate prices.
Isn’t a blog for posting info. and looking for information?I see no problem with anything posted on this site so far. Keep up the good work and let’s see those comment’s coming SS
I will admit I got into the tit for tat thing which I should have ignored. Won’t happen again…I hope….even though I’ve been right 99.99% of the time. LOL
Anyway, will have my feet on the ground there next week and will be interesting to see how things go over the next year as I scope out a place to buy. Maybe KT will help me buy one! Who knows. LOL At current pricing, maybe I’ll just stay a renter!
Renter Tom – I would think that a bottomming dollar would be a good thing for foreign investors. If they bought a few months ago, they would have already lost money due to the continuing decline in the dollar. However, if they feel a bottom is in, they may feel more comfortable buying, just like people in general would feel more comfortable buying real estate if they felt a bottom in prices had been reached.
Now, if the dollar rallies significantly against other currencies, that may make the market less attractive to additional foreign investors as the dollar bounces back. But if it simply bottoms and holds the current exchange rates, I would think that would invite more foreign buyers.
Keep in mind, too, that the dollar could rise against the Euro but still fall against other currencies. I do agree that the dollar is oversold vs. the Euro. But against Asian currencies, I’m not sure. As long as Bernanke keeps cutting rates, you can expect downward pressure on the dollar.
I’m not a believer in the “foreigners saving the market” idea, obviously, but I don’t think that a bottoming dollar will discourage them. Only if it rallies back significantly.
BFG – I don’t think the U.S. dollar will languish at the bottom for long. Hence, my belief that foreign buyers’ interest will lessen. I do think housing prices will languish at the bottom for a while though.
Isn’t this post about Emerald at Brickell??????
Kevin, even Lucas himself was posting about the weakness of the dollar, Bear Stearns, and other loosely-related topics in the posts above.
Almost everything in this thread is in some way related to the Miami condo market. You can’t expect posts not to drift a bit, especially after 130 comments.
On other “big time” blogs comments are to be kept on topic.
Any ideas, on why the Condo market in Florida is in such disarray, and what I mean by that is that the owning versus rent doesn’t make economic sense. But if you take a different market like New York, the numbers (own versus rent) they are sound. There is a discrepancy, but after the tax incentives they are close to break-even. Does this mean that markets like NYC are going to be immune to such price volatility? Or that the market will be less prone to price swings? I know that the Miami market can not be compared to the NY condo market (supply/demand), but I’m looking more at a Macro view rather then a Micro view, to try to see if the real estate market will bottom here with all the effort and work that the FED has done to minimize and lessen the fall, could it be that the worst is over that Miami bottoms here and NY never really bottoms just stays flat at these levels over a period of time?
i don’t think NY is immune…that market just hasn’t been exposed the way miami has been. let’s see how wall street bonuses play out coupled with a slowdown in wealth appreciation of foreigners (assuming there is a global slowdown). people forget, that in the 90s, real estate market in NY took a beating.
as for miami, the disarray is simply attibutable to the rampant speculation plus easy credit terms at both the developer and purchaser levels. as for correcting it, don’t care what the fed does, at the end of the day, the only way this market rights itself is when home values swing back to their fundamental value and move away from their speculative value. lowering the fed funds rate isn’t going to change this one iota nor will making it easier to get a loan (isn’t that how we got into this mess in the first place?). real estate, historically has been tied to income levels and/or the carrying cost/rent decision. in 2003-2005, we moved away from these fundamentals and instead, looked at real estate solely for appreciation even though it would operationally lose money. frankly, isn’t that akin to most internet stocks back in the heyday? we know how that turned out (see the movie startup.com)
I agree, but if you look at the rental rates in NY and the price to own versus rent, they are in proportion; do I think that the rental rate is going to go down in NY? Honestly, NO, and that’s because the demand is there, the vacancy rate in NY is 1% for rentals. I agree that in the 90’s the NYC R/E market was dead, and I dread saying that the market is different now, but is it? I believe that the values will be closely related to break-even #’s on the rent versus own model, and obviously Miami is not there yet, but NY is, does that mean that areas (cities) that don’t meet the criteria will decrease over time to that model, and the ones that do meet the criteria their prices will stabilize?
searching – I would want to know how many homes are actually occupied in order to make an assessment. You said there is a 1% vacancy rate, but not sure what that means exactly. I have heard that there was a higher proportionate # of people that bought in NYC with good credit and reasonable down payments. That would make a lot of difference in any assessment. With that said, this is a national downturn in home prices and I doubt that NYC would be totally immune.
New York may be better off than Miami, but if you think there’s no bubble there, have a look at these charts:
http://www.burbed.com/wp-content/uploads/graph-ny.png
http://mysite.verizon.net/vodkajim/housingbubble/new_york.png
There was a bubble there in the late 80’s that burst (Trump went bankrupt because of it, remember?), and there is a bubble there now, which will also deflate.
They even have their own “bubble blog”:
http://nychousingbubble.blogspot.com/
again..the difference between NYC and Miami is that NYC is the top city in the world in regards to almost any industry…no matter WHAT industry you work in…it’s center is in NYC…and i mean any industry in the world…not just US.
as for miami…no real industry (other than tourism which spins off low paying jobs). there’s NO comparison between the 2. like comparing charlize theron with lindsay lohan.
Why not use Britney as a comparison? I’ll be just as beautiful as Charlize when I’m her age. I’ve actually been thinking about buying a house on Star Island within the next year. Are there good deals there?
heheh!
Probably too early to say anything about NYC. Banking layoffs and sharp declines in financial stocks have probably changed the game quite a bit for a lot of buyers. Guys who still have their jobs have still seen a lot of their wealth evaporate.
These effects will take a while to be felt in the real estate market.
Also, bonuses fuel a lot of buying activity in Q1. 2008 bonuses are likely to be significantly off vs 2007 (just look at depressed m&a activity, lower volumes of debt financing, etc.).
People are scared.
I have been following the Miami condo market through a few different websites due to a desire to own a winter home.
A couple of observations:-
1/ For those commenting about the state of the macro economic situation, I am in what one might call “the hedge fund” game. And I can tell you that CASH is absolutely KING right now! For instance, Bear Sterns owns a building worth 1.2 billion usd, yet had to sell for 200 odd million due to a lack of cash to fund margins.
2/ For the realtor who is apparently NOT a salesperson (LOL!!!), good luck with money in property rather than cash. Your view might be sound in a long term scenario, but it fails to recognise the liquidity crisis presently seizing up the economy at this point in time.
3/ I just went to an open house last weekend at 81 wooster (check it out on http://www.nytimes.com). It was a 4000 sq ft SOHO apartment offered at 900 per square foot and the realtor felt that a cash buyer in the vicinity of 800 per square foot would get the deal closed. And I have seen numerous offers hit the NYC mrket in tha last year. NYC will NOT be immune to the coming downturn, its a matter of degrees.
3/ Has anyone ever heard a realtor say anything other than “now is the right time.” This is true of London as well (where I spend 3 mths of the year for business reasons.)
I shall continue to follow this blog, it is by far the most candid/honest of the bunch.
I completely agree with NYC. Cash is king right now – especially in the FL market.
Cash is definitely King!!! I am a foreclosure investor out of Miami and, boy I tell ya…
I have never had more foreclosure leads in these last three months than all of last 2 years combined.
I was thinking of renting on Brickell. The 2 buildings I was looking at were 50 Brickell and the Emerald.
50 Brickell was asking for a 2 bedroom 2 bath 2 months ago $ 2500 brand new.
Also the Emerald, which an owner has listed for $600,000( 2 B2B) but can’t sell now and would rent. I was wondering what would be the lowest offer for either at thios time. Has been on the market over a year.