Miami Condo News & Rumors
March 25, 2008
by: Lucas Lechuga
I’ve heard, saw and ascertained much on the street within the past couple of weeks regarding the Miami condo market but haven’t had the time to write an in-depth post about each item. I figured that something short and sweet is better than nothing at all. So here it is:
- As many of you have already heard, a construction crane fell this afternoon at around 1:45pm at Paramount Bay. 2 people were reported dead and 5 reported injured. My warmest regards goes out to all with family or friends involved in the accident. The crane fell through the roof of the home that belonged to Mary in the 1998 film Something About Mary. Though many of you have called and emailed, no, Mary was not harmed during the accident.
- This one goes into the “rumor” category. I’ve heard that BAP Development is on the brink of bankruptcy. BAP Development is the developer behind Onyx on the Bay. Closings for condos at Onyx on the Bay began on July 31, 2007. My February condo closing rate post revealed that Onyx on the Bay was able to close only 45.38 percent of its units at the time. Another rumor that I’ve heard, but haven’t been able to confirm, is that Continental, the property management company, walked out on Onyx on the Bay because the developer was unable to pay them any longer. Anyone hear anything regarding this?
- Another rumor here. A loyal reader revealed to me today, via email, that he heard today that Boca Developers “went belly up” . Boca Developers is the development company behind Peninsula I, Peninsula II and Biscayne Landing. He also stated that he was able to confirm that Boca Developers “cut loose” their sales staff for Peninsula II and Biscayne Landing. Has anyone else out there caught wind of this?
- Closings have begun at Continuum North Tower in South Beach. I’ll get my chance to tour the newest addition to South of Fifth this Thursday morning with some out-of-state clients. I will try to share what I see that day with readers of this blog at a later date.
- There’s going to be some great additions to Midtown Miami. This one I heard from a Midtown representative last week. The two parcels of land between the Midtown shops and the two condo buildings just east of it, Midtown 2 and 4, will be transformed into a very nice park within the next 3 months. However, there are plans for an IMAX Theater to go into the northern parcel of land within the next 2-3 years. Additionally, Midblock will house a Sushi Samba and Segafredo’s relatively soon. I was pretty pessimistic about Midtown about six months ago but I think this is going to be the place to be for 20-somethings in about 3 years. It may very well become what it was promised to be: a city within a city.
- Someone recently left a comment saying that, after 3 appraisals, they were unable to have their condo at 1060 Brickell appraise for the amount on their purchase contract. Any other contract holders at 1060 Brickell having this problem?
- Asking prices of condos in the “mortgage fraud” buildings in Brickell have come down BIG since November 2007. The last time I did a Brickell Condo Index was November 2007. Last Tuesday, I pulled some new data. I haven’t had the time to reveal a full-blown monthly Brickell Condo Index, but I will reveal what the asking prices for the following buildings with prevalent mortgage fraud have fallen since November 2007:
- The Club at Brickell Bay – The average asking price per square foot has fallen 22.86% since November 2007.
- Vue at Brickell – Average asking price per square foot has fallen 19.60% since November 2007.
- Jade at Brickell Bay – The average asking price per square foot has fallen 16.24% since November 2007.
Those are some large reductions in asking prices since November 2007. Only time will tell how much further the “fallen angels” will fall.
A realtor today also told me the Peninsula developer just went under… He is from a pretty big office and he said he just learned about it too….. I think he was trying to get me to think about buying in the near future….little does he know I read and post on this blog! BTW, my name’s not really even Tom!!! Also, so far the renting is nice and worry free….
We are experiencing very similar numbers as compared to this article. We have some great condos for sale in San Diego and they are not moving nearly as quickly as they did in a better real estate market. It’s interesting to see how other real estate markets are being affected. Thanks for the article!
CONGRATULATION’S …TOM..or (not sure) but Tom will do .You just got a free lunch with Lucas.Good going.Do you think we’ll see $150-175 a sq. foot soon??
One of the worst condo projects I’ve seen was by Boca Developers: the Marina Grande in Riviera Beach. It’s a McDonalds-colored (dark red and mustard yellow) waterfront building at the foot of the Blue Heron bridge (nice view, bad neighborhood).
People paid $500k or more (about a $4000/month holding cost) for condos that they now can’t rent for $1500/month. Almost 100% speculators, and tons of walk-aways on the deposits.
Right on the beach with direct east and south views with wrap around balcony, high floor but not too high. Brand new 1600+ s.f., 24×24 marble floors throughout, granite, stainless steal appliances, fully professionally decorated and furnished (all brand new, never used), parking, 100% turnkey with linens, dishes, nice beds, etc. … just a tad over $3K/month locked in for quite awhile unless I decide to move out (negotiated that clause in contract). I estimate I’m paying 1/2 the cash outlay (mortgage, taxes, HOA) with little moving in and out hassles (since its furnished) and I don’t have to worry about selling later, price declines, etc. Pretty much worry free…..why own right now? I’ll keep doing some research at my leisure so if I come across a good buy in a stable building, then I’ll buy, but no rush…….
By the way, this blog was big help in making a better educated decision! Thanks Lucas.
Renter Tom
That seems like a good rental deal, is it in South Beach?
Great post, Lucas.
I love the possibility of having a good (non-Starbucks) coffee bar at Midtown. But why can’t someone put in a Whole Foods???!!! Or a bookstore?
renter tom, what building?
My contacts are telling me that Onyx on the Bay ‘developers (ggm developers and bap developer) are both in near bunkrupcy. They have many loans oustandings (Corus Bank of Chicago, Kennedy funding,personal loans,etc.). Also somebody told me that they are trying to sell 10 units to a group from Mexico at $165 sq.ft. Do you think $165 sq.ft is a good deal for that building??.
Renter Tom: now you just have to tell us which building; please?
Onyx on the Bay: Avg. listing price per sqft is around $500 (so it’s like 33cents on a dollar for the mexican group)
That’s great news about Midtown. I really think it’s a great concept and a development with a good future. I go there relatively often myself, and I’m glad to hear there will soon be more reasons to go there.
Can anyone advise on One Miami? I am considering buying, but with all the fraud I am really scared. I have looked at several projects e.g. 1800 in downtown, south beach, and millionaires row, but every time I discover something wrong, too many foreclosures etc etc. Does anyone know about a safe project? By the way, do you think that 165 per sqft is really the bottom line? That would help with negotiations.
Thanks a lot!!!
Tortured potential buyer Ro
PS By the way I was offered an Onyx unit for half price, now I know why – thanks to you friends!
I’ve just get the information that the Attorney General in New York is ordering the Related Group to release the New York buyers from their contracts and return their deposits.
I don’t know what it will do for the other people seeking to recover their deposits but this is huge.
Best regards.
With all this good deals around, does anybody know what the market is in Key Biscayne?
It’s a new building in Sunny Isles… There are a lot of unfurnished units, but few professionally decorated and furnished. Supposedly it’s going to be in some upcoming magazine issue….so a lot better decorated than I could do myself!
They just openned a Segafredo in Brickell, and im not aware of a 3rd segafredo going to Midtown… I would verify that with either Lincoln or Brickell owners since its 2 different entities. By the way Star Lofts. The building next to Onyx is 80 to 90% empty, any news if they are going to auction? I saw the units and the space is nice even tough the finishes in the units are horrible. Nothing 30k cant fix, and the hall way colors are depresing.. But still would buy there if the price was right.
Sunny Isles, I just heard a rumor that over 70 people have walked away from closing in Trump Towers 1. And they are planning on turning Trump Tower 3 into a rental building… HMMM Jorge Should rethink his new projects pricing.
to make things even tougher the new guidelines are in for the new jumbo mkts and i just saw WAMU’s info regarding Miami-Dade, Maximum loan amt $ $423,750 not even close to the $730k max that was promised its going to be even harder for this area considering that mtgs are going to tougher and pricier to get, i don’t know if all the other banks are gong to follow but my guess is yes,
What do people think about Bel-Aire on the Ocean? What will be the end $/sq foot in that building, or on North Beach in general for new buildings? I love the views
searching
the jumbo loan amount wasn’t supposed to go to 700k+ down here. no one read the fine print – its 125% of the median sales price for the area, which for MDC is the 420k/430k figure. for certain parts of the country where the median sales price is astronomical, the jumbo amount could top out at 730k.
actually if you look, many parts of the country do make the $730k limit, and Miami is considered a Major City, and the $730k #’s allow for easier financing and better pricing. that would also boost the housing making financing readily available. there is wide gap between agency loans and non agency- with these disparities in major cities like miami could easily continue to be in a dark market where other markets may not feel the pain because there markets will have a soft landing.
Miami could have benefited from a large loan amount.
bel aire is a great location, nice views but the units are nothing special. you’ll have to put a couple grand in your place to get it up to par.
jcrimes – Is there a better buy for the money than Bel Aire right now? Thats the important part for me.
Lucas, I just wanted to say that your blog is very helpful and informative. I agree with your comments about Midtown, I was first doubtful with the project but after visiting many times I’m amazed at how the developer had the vision for this area. I truly believe that Midtown will be a city within a city.
searching, you’re wrong, parts of california, ny and some parts of the northeast do not make “many parts of the country do make the 730k limit.”
as for miami, as i said before, the jumbo increase is tied to median price. the median price in miami isn’t high enough to hit the 730k. i’m not sure how miami would be better off if agencies and banks could go to 730k regardless of tying it to median. what you fail to grasp, as well as others, is that the current malaise is not attributable to a lack of credit, but rather, a fundamental suspicion of underlying asset values. if i don’t think the collateral you’re giving me is worth the paper it’s written on, i won’t lend you the cash. this is true whether joe schmoe is trying to take out a loan or a pension fund is being approached about a 100m slice of ABS. thus, even if you bumped up loan limits to 730k, the bank is only going to fund if it is confident that the underlying property is worth it. i don’t think this market inspires that confidence.
searching,
I think jcrimes is correct. I was under the impression that the new jumbo rate limits were dependent upon the median home price of the city. You can’t compare the new limit amounts to cities in California where median home prices are much larger.
night0wl-
Belaire in my opinion looks very nice from the outside, but the units are not well designed. The floor plans make and the bedrooms are small, this is the comment that I always get from my clients as well. I think the most important factor when buying a property is not thinking about how to get in there but how to get out of there, and that building is hard to sell. If you want oceanfront property, the best prices and negotiations right now is in Sunny Isles Beach.
It appears that if Eliot Spitzer was still Attorney General of New York, they would be sizing up Gourge Perez for a grey-bar condo. If one of Related’s buildings goes “tits up”, maybe they could use it as a jail and lock the crew up in there?
The Related Group Ordered to Make Condo Refunds
The New York attorney general directed The Related Group to cancel contracts and return deposits to some buyers solicited in the Empire State.
nightowl
i think it’s really driven by what type of unit you’re looking for. there’s some other buildings in that area that have good units (76 through 78 st on collins), although the views are not nearly as nice as bel aire. akoya is alright, and frankly, i like the units facing south (you get the ocean and city views which is really nice), however, the units and building are again, a little off compared to the price. have you looked at green/blue diamond?
Marcela, you are right to bring up Sunny Isles Beach as an option; it has many nice new condos and prices are coming down. But SIB doesn’t seem as pedestrian-friendly as North Beach. Collins Avenue is like 6 lanes wide up there, and grocers, restaurants and parks don’t seem to be walking distance from most condos. Other beach-front options in North Beach include The Collins, Canyon Ranch, La Gorce, Mei; bay-front options include Aqua, Regatta, NoBe Bay, Aquasol. What do people think about King Cole? Is Bel-Aire on the Bay still going foward?
Lucas, thanks for the kind words to the families of the construction workers killed in the crane accident. Many of us appreciate the hard work and risks involved in working at a construction site, and some of us realize the work is more dangerous than police officers and firefighters, whose deaths are much more honored and whose families are better compensated. I have nothing against those public servants, but I wonder how the construction workers’ families will be treated.
$$$ 165 a sq. ft.WOW….wait till next month and you’ll be able to buy those unit’s from the Mexican’s for $150.ROME wasn’t built in a day….only MIAMI was.Have patient’s my fellow man and you will be rewarded.There is only one way that real estate price’s are going in Miami…and that’s DOWN DOWN DOWN. ……….BUYER BEWARE
I’m sure more details are available now, but it was a piece of the crane that fell yesterday at Paramount Bay. It fell on the office and killed an Employee of Marsh (the insurance guys that insure against construction accidents etc.)
As for Avenue, a friend closed two weeks ago on at 1,200+ sq ft 2/2 for $420K without any appraisal issues whatsoever.
$165/sq.ft that’s a great price. I just do not think that it is realistic at this moment. Please if someone could describe this building. I think that it is right on the bay. Any opinions? I would buy for that price. What is the quantum? Some people like this term instead of the price for the unit.
Juan L,
Maybe I’m wrong, but I highly, highly doubt that you or anyone else will be buying condos at Onyx on the Bay for $150 per square foot. Bulk buyers may be afforded that opportunity, although I think their sales price will be closer to $200 per square foot, but I don’t ever think you’ll be buying the defaulted condos at Onyx from Mexicans, or any other bulk buyer, for anything less than $225 per square foot.
The Bulk Buyers are buying to hold so in a way they almost create a floor, since they get a bigger discount since they are buying a block usually know what they are getting into in terms of rental income and use an income approach for valuation and cap rates.
This may vary in case by case but it is my opinion that the bulk buyers can afford to hold for a couple of years by the time the market picks up again.
DO you really think the market will pick up in a couple of year’s….realistically?? Any comment’s would be appreciated.
$165/foot – Good luck! See you in 5 years again on this blog wishing you bought something or commenting that prices should go down to $50/foot and crying you keep throwing away money in rent and crying your landlord is pissed because you ruined his floors in the condo you rent and is holding your security deposit. Its funny most of the commentors on this blog think something priced at $300 per sq foot when most other new construction is priced for $500 per sq foot still expect that $300/ft to go down to $150/ft. Rediculous.
Samir…the one problem is that the avg person making the MEDIAN INCOME in Miami can only afford 150/sq. ft. How long have you been a realtor? Because I remember 150/sq ft. used to be considered a normal amount just 5 years ago. That’s what is happening to this market. It is returning back to NORMAL. $500/sq ft once bought you a house on the water…not a cookie cutter condo!
Nightowl–the hallways at Bellaire with 8 millions doors is enough to turn anyone off.
you can google historical data
real estate runs on 8 year cycles approximately.
last one began heating up in 1984 and in the early 1990-92 crashed
by 2000, the market heated up again and crashed in 2007
the miami real estate market will not turn the corner until 2014 or so
You want to talk about throwing away money…
1. Closing costs on a mortgage…origination fees, doc stamps…more bullsh*t fee’s….PMI insurance (if you don’t have the 20percent)
2. PAYING REAL ESTATE TAXES
3. PAYING INTEREST on a mortgage (even though its tax deductible…you still end up paying more than you save)
4. PAYING MAINTENANCE
5. Having your money tied up in a DEPRECIATING ASSET.
I think I’ve made my point…
Renting: NO TAXES, NO INTEREST, NO MAINTENANCE, NO RISK OF DEPRECIATION, ALL COSTS ARE FIXED, NO WORRIES, NO REPAIRS….
RENTING=NO PROBLEM
@au: Yes, I can tell you about the market on Key Biscayne. The high end is holding up better than most places in Miami. The low end is really puzzling. I always thought those condos would hold their value, because you cannot find a 2/2 condo a half-block to the beach, a 1/2 block to the supermarket, and with admission to an A-rated elementary school three or four blocks away. Plus it is so incredibly safe.
Here is my opinion – I think the market will come back. But not to the prices we saw in 2005. Bubbles bursting and fallout is a necessary part of the boom-bust cycle.
I was part of the dot.com boom/bust. I am a computer programmer who quadrupled his salary in the 5 years from 1995-2000, just to see most programmers unemployed in 2002 (I was a little luckier, I only took a $25k paycut). Other IT people including myself personally felt that this real estate boom was just like the dot.com boom, contrary to what everyone was saying. What I saw before and after I am seeing now. 5 years after the dot.com bust, this is what happened:
1) Quality companies hit some hard times during the fallout, but survived and are doing very well. Some companies failed and died out (I worked for one), people lost money, its just the way things are.
2) The get-rich-quick people were flushed out through a rise in standards. The industry is now open to only competent individuals.
3) Salaries are higher than ever and demand is strong, mostly due to a flight to quality people and lower supply.
As how this relates to real estate in Miami:
1) Companies will eventually see prices that are low enough to jump in and fix up buildings. These are most likely going to be saavy investment groups who have lots of cash and can hold out for a few years, take control and manage a building properly to protect their investments. They will eventually get the market back on track. Right now with the stock market in a negative trend, a 8-10% return is pretty good. However, I still feel some people will never get the money they paid at the boom.
2) All the crooked people in the industry are getting flushed out, and soon only serious people will be working in the industry. The standards are getting higher for professionals in the industry. In addition to that, the punishments are getting tougher.
3) Higher lending standards will only allow for serious purchasers. Flippers and speculators will be a thing of the past.
4)In 2010-11, I believe we will see prices back at decent levels. We need a few years to clean house, flush everything out.
I feel the basic investment principals always hold true, buy quality, and hold for the long term. I could have sold my unit in 2005 (I rented it instead to move into a second apartment I purchased in 2004), and I feel I will never see the prices I saw in 2005 (around $500 sq ft), but I am in it for the long term, so my tenants are paying down my mortgage, and I will make some of the lost profits back in a few years. Until then I am sitting tight and waiting and putting myself in a position to ride out the storm.
I think there are some great opportunities out there right now. I am hear some prices are back to 2001 levels, however, you need to be in a great position to take advantage of it (lots of cash), what you really need to do is study the area, read the building financials, meet with the board, and research the unit. I think most people buying in todays market will make money.
Well, if there’s one thing to be learned by the dot com implosion of 2000/2001, its that bubbles take many many years to recover. I think 2010/2011 is just too close if you want to use the dot com bubble as an analogy. The peak of dot com was 11500 I think, and the market didn’t recover to that level till May of 2006. Thats a valley spanning *6 years*. And get this, we’re only still currently at 12400 after all the gyrations. That means there’s a span of almost a decade before the bubble is worked through. I’ve heard that this is about par for the course when it comes to asset bubbles, I’d imagine real estate is no different. Think about Houston in 1998 or the Northeast in 1992. It took till 1998/1999 for Houston to recover as the Northeast. If we’re in for a decade of no/slow growth, I’d say this bubble doesn’t “work its way through” and we wont see 2005 prices till 2014.
Nightowl….it is better to use the peak of the Nasdaq market since most of the dot.com’s resided in that market. This market topped out at 5,000. As of today, we closed at 2,324.36…roughly half our value from the year 2000. So here we are 8 years later…and we haven’t ever recovered half of our losses (and this isn’t adjusted for inflation.
Did you know it took DOW 27 years to get above the previous high it set in 1929 (around 380) just before the crash (we bottomed out around 50)!!
Here are some historical charts of the Dow…
and this was the recovery….
Here is the Nasdaq….
You can also read up on the “Dutch Tulip Bubble of 1636″….the “South Sea Bubble of the 1720’s”… “the Mississippi Bubble”
What all bubbles have in common is their end is ALWAYS lower than the beginning point. If 2002-2003 marks the start to the Housing Bubble…it will settle below these prices before taking YEARS to crawl back up.
HISTORY REPEATS ITSELF….
Renter Tom, for god sakes tell us more than, “It’s a new building in Sunny Isles”
I just read in FT London several interviews from noted financial gurus in Hong Kong and London that Fannie Mae and Freddie Mac will be nationalized by the end of the year. Fannie Mae and Freddie Mac will be the next crisis, in addition to subprime crisis. This will push prices down more this year………
The recovery of the housing bubble will be slow and drawn out in miami if the current trend in population loss continues. If housing supply is increasing and population is decreasing, prices will not recover for a long time to come.
About the mexicans buying in bulk, that may be true, but does not by any means indicate that we have reached the bottom @ $165/sq ft. Prices are going to drop a lot lower. Check the pricing on SOBE condos around 2000-2003….lot of nice ocean view condos were available for $300-400K. I think that is the price point we are going to reach at some point with the exception of the ultra-luxury condo buildings.
On a related note, the commodeties bubble is going to burst. All the people who are making a killing right now on going to be hurting.
I am in Brussels this week for business and asked a few people about housing here. Brussels had about a 20% price appreciation in 2006 and prices here are in line with other EU cities now. They have a 17% “purchase tax” on housing. This tax was designed to keep housing prices stable to prevent people from flipping. But low interest rates and the fact that the EU and NATO are based here has drived up pricing for housing. The few people I talked to did not know any flippers and did not really understand the concept of flipping.
Correction in my previous post: I did not mean to imply that prices in sobe are going to drop to or below $165/sq ft. Prices downtown and other parts of miami will definately drop to those leves and lower, but not necessarily sobe.
great post Lucas — also, add this news to the list: New York Attorney General just declared that a bunch of Related Group buyers should get their deposits because condos were sold improperly in New York:
http://beckandlee.wordpress.com/2008/03/27/new-york-attorney-generals-office-orders-the-related-group-to-pay-back-buyers-florida-condo-deposits/
This is in response to Samir Patel and Mike K’s posts.
Both have a point. As per Samir You really cant expect $150 or less for these new buildings. Here is why: The construction cost of old buildings was less. The fixtures in the Kitchen/Bathrooms of the new buildings are chic and ultra modern. The new building lobbies and gym and pool are built like star hotels. All that costs money. So add inflation + fancy fittings + star hotel amenities to $150 and you should end up getting a sq.ft rate of somewhere between $150 and $300 for the newer buildings.
Yes I am in the market to snag one of these units for cheap. But $150/sqft is nothing but wishful thinking.
But at the same time These developers and resellers have the nerve to ask $450-$500/sq.ft for Quantum, Opera, 1800 Club and $600/sqft for Marina Blue, Ten Museum etc. Well, they would just be sitting and rotting. You must be totally insane to pay 775,000 for a unit in MB or TMP on a resale. If you do, you totally deserve what you get.
The people who closed on these units instead of walking away from their 100K deposits will be carrying them at a cost of unspeakable amount of money, lose their shirts and then walk away. You can then get one of these units for half price. It is just a matter of time. Unless a person who closes on these units to live in them, it is a lose lose situation. For these units to sell at 450-600/sf, the owners have to carry them along for at least 4 or 5 years which will bankrupt them. My bet is that they cannot even carry them for an year and will throw in the towel. By the end of the year, you can see the mayhem.
Having said that, I may not be able to buy these units for even half price as banks are refusing to lend money to any building which does not have an association formed and running for at least two years.
So I guess the only beneficiaries would be the Cloombians, Venezuelans or people with liquid cash.
I just want to add to my previous post.
I am like many others here hoping that the prices drop from these present obscene levels. But to what level? You have to be careful as to what you are wishing for. God forbid, if the economy tanks completely with no recovery in sight, massive job losses accross the country, failing banks and so on, YES you can have your wish of $150/sqft. or less for a new condo. But then what?
When prices hit that level for condos and a miami shores single family home starts selling for $100,000 or less, you basically have an apocalyptic Miami. You would not want to live in such a city. The beautiful Miami that you know as of now will no longer exist. Lincoln Road and Ocean Drive will be shuttered and boarded and deserted for lack of any tourists. Washington St. will be Muggers and Junkie paradise. Buildings will be dilapidated with lack of any maintenace. The beautiful pools will be drained and roped off. There will be mass exodus from a crime ridden city which cannot even afford to police itself.
That is why I wish for a healthy balance. You cannot wish and pray that the prices of condos tank completely, which can only happen if the economy goes down the tube totally.
What I wish for is that the speculators and greedy developers can no longer afford the carrying costs of these condos and start dumping them. Then we can see $600/sf going down to $300/sf. in park west and $450 going down to $250 in the margaret pace park area.
At that level, the buildings can still be maintained, city will still get its tax revenue and things will be manageable. At $150/sf or below, you are asking for trouble.
Speculators, who would have just lost 80K or 100K deposits if they simply walked away, now will lose, deposit + Mort + Maint. + Taxes for all the time they decided to hold with useless hope that someone is coming along to buy their pad and rescue them. I feel bad for them but they brought it upon themselves. Sorry.
Alejandro,
What do you think cap rates are in Miami and South Beach in particular? I looked closely at a few units about a month ago, and it’s that analysis that turned me off. The implied cap rates looked to be in the 2-2.5% range which is madness! Also, do you know what going in cap rates investors are looking for? Obviously, I think there is significant downside in condos in Miami. That being said, we must be getting close to replacement cost, even in Miami Beach, no?
carbonblackcab,
How do you check historical sales prices? Which buildings on the beach in SOBE were trading at $300-400K?
AJ – Your last two posts were a logical balanced perspective on the market. Thanks for contributing.
Please eamail me [email protected]
I must say this is a very informative blog! Thanks to all who post here. I know no one has a crystal ball, but what do you predict will be the cost $/sf in Park West six months from now? In particular Ten Museum, Marina Blue or 900.
This MIA condo market will take at least ten years to recover. There’s no rush to buy whatsoever. There’s no need to try and time the bottom, because the bottom will last for a long long time. So relax.
Yes, prior bubbles took only a few years to recover. But this one is absolutely positively different. The run up on prices dwarfs anything we’ve ever seen — ever. Just glance at the Case/Schiller housing index. That’s your “come to jesus” momemt right there.
$150/sq ft. is absolutely realistic in some of these buildings. Anyone who denies it is either a panicked condo owner or a deluded RE agent. It’s just numbers — economics always wins.
Do yourself a favor. Go take a look at downtown Miami, folks. Those towers haven’t even OPENED yet. Then go to the grociery store and price milk and eggs. Then take a look at gas prices. Then look at jobs numbers. Then consider the rediculously tight credit market.
Then snap out of it. The realtors and the speculators and the developers were all unequivocally wrong. Housing doesn’t always go up. Sometimes it comes crashing down.
Mike K,
” Renting = No problem”
I’ll tell you what else it equals; No Money.
if you buy a good unit, in a good location, at a good price then in the long run you’ll make your money back. If you are talking about buying as an investment then don’t buy, i agree. but if your buying to live in it then there are many good deals out there. and if i had the cash i would buy and not rent and throw my money away every month. because i know that when i go to sell in like 10yrs. i WILL make some money off of it.
Thank you Au for your feed back, I agree this area is completely safe and a lot is happening. Publix is going in steps away from the building.
Can anyone tell me what they think the price per sq. ft. for a condo at Bentley Bay should be based on the market. What would make for a resonable offer? I agree that the price per sq. ft. is now way out of line but I also agree with AJ. I don’t think anyone who has experienced the magic of Miami after revitalization began years ago would want to see the city crumble in order to steal from the developer. We all should remember without developers we would not have any growth, we would still be living in jungles. I believe some are not as greedy as others. I feel the fairness goes both ways. I think the pre construction pricing at 300k was correct.
Raffi,
“I’ll tell you what else it equals”
-Very funny!
It’s unclear what relationship construction costs have to selling existing condos. Maybe it provides a bottom for prices? Actually, new home construction causes competition to existing homes and often causes the used homes to have to lower their prices to compete with new construction. As the overheated construction costs continue to cool off, new construction will probably put pressure to lower the prices. Overall, the pricing of existing homes is subject to supply and demand…construction costs can have not effect in a vastly distorted market….right now new home builders are having trouble even building a home and making any profit because of the oversupply….hence construction costs are higher than what you can buy a home for and aren’t providing a pricing floor. Look at the Detroit area where you can buy a newer construction home for far less than the cost to have it built today.
Went to the newer WalMart on 163rd St about 2 miles west of Sunny Isles. That place is bordering on mayhem. Anyone know if that is an unsafe place? I saw shoplifting, long lines with few cashiers, police in the parking lot, swearing in the parking lot, etc.
Timely video of disappearing homebuilder profits (because of oversupply):
http://money.cnn.com/video/#/video/news/2008/03/27/news.harlow.032708.homes.cnnmoney
Also…..Detroit and other midwest cities in the rust belt are giving away homes……one city just announced the new $1 home program. Yes, $1. I bet there may be some closing items that make if less than $0…… So yes, there are free homes, even if you have to buy your own lunch.
Raffi – you seem to be forgetting about the money that you are saving by renting vs. owning.
Any money that is saved by renting over the next several years can be put into an interest-bearing investment.
At the end of that period, I guarantee you the renter will have more money than the buyer. Renting is not “throwing money away” – buying is.
Selling the unit for more than you paid for it in 10 years does not mean that you came out ahead. You have to subtract from that “profit” the additional money if cost you to own that unit during the same period vs. renting it and putting the savings into a guaranteed-return investment.
In the past, renting might have been “throwing money away”. That was when appreciation was positive, and the cost to own was at least comparable or even less than renting. Landlords typically bought properties with a positive cash flow. Only during the craziest years of the boom did people forget about that.
However, in this environment, where it can cost half as much to rent vs own, the renter will have more “equity” in the bank than the owner.
It’s simply nonsense to suggest otherwise.
—————
AJ – your “apocalyptic Miami” scenario is absurd. If prices were significantly lower, you would have exactly the opposite effect. You’d have MORE people moving here because they could actually afford to buy these condos. A bunch of banks and idiot condo flippers would get burned – but that should be the least of people’s worries. We don’t need more “investors” – we need people that are actually going to live and work here. The appeal of Miami does not lessen as it gets more affordable – it INCREASES. To suggest that we should hope that prices stay high to avoid some “apocalpse” where people would not want to come to Miami makes no sense at all.
BFG – lowered home values and and will have an impact to society, in a post-apocalyptic way. Do you recall the inner city of the late 80s? That loss of revenue for the city/local areas due to federal cuts and recession forced huge cutbacks on public services like parks & recreation, police & fire, prisons. I remember watching tv news publish how they were out and out releasing THOUSANDS of criminals from the jails due to overcrowding(small time and drug be they), but that image mentally carred many residents. The downtowns ended up becomming blighted and homeless were roaming. No one wanted to ever go into the city centers. Inner cities deteriorated all the way through I’d say the mid-90s. Blight was the norm in most downtowns, and it really didn’t turn around till the late 90s and early 2000s when people started going back into downtown areas to play…and eventually to live.
I wouldn’t discount how bad this will get, particularly for areas so dependent on low paying service jobs…real estate was the only game in town for the average joe looking to better themselves in S. Florida.
People shouldn’t get too caught up in silly arguments of what is cheap or expensive right now. The real estate market like every other market is driven by supply and demand. The people that make money in any market are those that time it correctly and buy on the cheap side. Don’t let anyone tell you you can’t time the market. You cannot call the absolute bottom of any market, but you sure can make money timing it within reason. Just like the stock market, the concept of “buy and hold” has been proven not to work. I bought my first house in Miami’s Pinecrest area in 1992 right after Andrew and it did not appreciate one bit for 8 years. Then in 2001, someone came knocking on my door and paid me twice what I paid for it and I took it knowing that the return on investment far exceeded the historical norm. I then used the profits (tax free I may add) to buy my present house in Coral Gables at the end of 2001. 2 years ago my neighbor told me I could double my money selling it and I had no interest. Today I am sure I could still sell it at a 50% gain. The point of all this is that if you buy close to the bottom, you really don’t have to worry much about the price cycle. If you bought at or near the top, forget about recovering your money…you won’t. If you find a good buy in the housing market today, you will probably make money in the foreseeable future, even if you did not “buy at the bottom”. My own take on the market is that we are approaching bottom but are not there yet. Not because prices are not reasonable but because the overall economy is still nowhere near the bottom of the current recession. Consequently, buy now or in 6-12 months and you can be sure you bought “pretty close to the bottom”. Just make sure you buy quality…remember…”location, location, loccation” still works.
nightowl –
I don’t remember apocalyptic scenes in Miami in 1999 before prices went through the roof. Sorry – your argument doesn’t hold much water. How did Miami survive on the pre-boom tax revenues? The extra revenues that the city and local governments got during the boom was simply a windfall – nothing more. What would they have done if there was no real estate boom? All we’re talking about here is going back to pre-boom prices, adjusted for inflation. Miami isn’t any less desirable now than it was 2 years ago.
If anything, this will be a good thing. Government spending has gotten out of control – some major belt-tightening is needed badly. And it doesn’t have to involve cutting the necessary services – just a lot of government fat. Worst case scenario, if the taxing authorities need to change the millage rates to avoid the “apocalypse” you speak of, they will.
i’m not saying it would happen, but suggestions on this board that $150 or lower can’t happen is wrong. any developer that doesn’t have a strong cash reserve to weather the storm is in for a tough run. any cash purchaser who can’t cover the carry and needs to get out is looking at a big hit (see the two 1267 sq ft units at parc lofts for low 300s. i know this group sold another similar unit in the building for under 300k already – that’s a little above 200 sq ft). any regional bank that’s carrying a ton of REO is looking to dump this stuff before it kills the reserves any further.
seriously, we’re in the second year of a real estate bust and already are in/or beginning a recession. how much more fuel needs to be added on this fire for $150 or less to be realized? come on…it’s not that far fetched.
i’ll go out on a limb…we’ll see $150 or lower in miami river buildings by next june.
what i forgot to add….things get sold below cost all the time. why should real estate, at all levels (i.e., from the developer, purchaser or bank) be any different?
the “apocalypse” scenario presented is too much but the area’s degeneration definitively does happen. maybe some here moved to miami in the past 10 yrs…but in the mid to late 80s…you couldn’t even go to SOBE because excessive crime/drugs. ocean drive hotels used to have rows and rows of old people sitting on foldout chairs all day long. in the 40s…SOBE used to be the spot for the world’s jetset…eventually deteriorated to what it became in the mid to late 80s. only time i went there was to watch miami vice episodes being filmed.
while i owned a house in 2000, i built a townhouse in a community i wanted my family to move to. eventually sold my house when the townhouse was done. unknowingly the townhome community was mostly bought out by ‘investors’. many units were rented out to transients that didn’t care much about the area…so the pool would be full of trash in the mornings…parties in many units where losers would come and go without care to the common areas…loud noises at late hrs..etc etc
unfortunately, this may happen in many of the newer miami condos. until the ‘investor’ eventually sells to someone who wants to own and live in the bldg. this may take 1 or 2 levels of sales until this happens.
again, the city NEEDS to be run well by competent people and lure in large corporate businesses. until this happens….it will never become a NY/DC/LA or any other real city…just more booms and busts.
BFG,
“renting it and putting the savings into a guaranteed-return investment.”
can you please send me those guaranteed investments please? other than the crap 3% you may get by tying your money with a 1-year CD.
listen I’m not saying that renting is not a good idea, but if you are looking for a nice condo in a nice location that you can live in for the next 10yrs. then why wait. there are good deals out there and trying to guess the bottom is always a losing bet. just ask all the people tha have lost boat loads of money in the stock market lately.
Raffi – I think you’re sounding like a NAR promo announcement! What we’re saying is that in 10 years, properties will only recover to 2005 levels, if that. There are many many strategies that are near risk free to get 5-6% returns right now, guaranteed. Some are even tax advantaged (Muni Bonds, Preferred Dividend Stocks, etc), so that 3% statement of a 1 year CD is uncalled for. Take a look here: http://www.fatwallet.com/forums/messageview.php?catid=52&threadid=682884
1 year cd’s are yielding 4.4% APR and 5 years are around 5 or 6% (depending on how aggressive you are). Combined with high quality Muni Bonds, TIPS, tax advantaged preferred stock etc…you could get 6-7% returns on what would be your downpayment money and be laughing all the way to the bank.
Now the story changes if you can negotiate 50% or less of 2005 prices, because then you’re buying even below what prices should have been if there were no bubble at all. There are opportunities. There is a rental I am looking at in Boynton Beach…2005 price sold for $180k. It just closed (another investorn sniped it from me) for $75k. Cash flow positive on DAY ONE.
In Bel-Aire, the complex I like, prices for 1 bedrooms are only 90% of 2005 prices so far…*IF THAT* at all. We have a long way to go.
Mark (comment # 58). I use zillow.com and look at prices of buildings in sobe.
goto zillow.com. Goto 15th & ocean (1500 ocean drive address) and look at any condo for sale. You will have the option to look at a 5-10 year price trend.
Anyone know if there are issues with Neo Wind on Brickell. The building is coming to completion but no real closings have taken place.
Just an FYI, JMA the prime construction co. for TRG payed close to 70 Million for Ocean 4 in Sunny isles. So the numbers on units and you should get an average Construction cost per unit. Also Trump Towers 220 Mill to build completely, that is also with C.O. that an and will happen. Thats 70 Mil per tower. Cost to build. plus 4 to 6% C.O. Change orders. fpr un seen issues. That could give you a comparison on construction to Sale prices. Trump towers unit went for 6000k to over 1 mill. And the Penthouse are nothing but a regular unit with Higher ceilings, very disappointing.
Raffi –
Even at ZERO percent interest – stuffing money under your mattress – you will still come out ahead by renting if it’s costing you half as much to rent as to buy. And if 3% is the best you really think you could safely do, then you might want to stay out of investing altogether. But again, no interest at all is neccessary for renting to still come out way ahead.
If the unit you are looking to buy could be cash-flow positive, by all means, feel free to buy it. I haven’t seen too many properties that pass that test. And even being cash-flow positive doesn’t insure you that the value won’t go down further. Oversupply could easily make prices overshoot their fundamentals on the downside, just like they overshot the fundamentals on the upside during the boom.
Now – keep in mind – I obviously don’t imply that today’s benefit to rent will hold over 10 years. Prices will keep coming down until the benefit to renting is erased. However, until that happens, and as long as prices are flat or going down, you are literally throwing money away by buying – even if prices don’t go down at all from this point (which they surely will).
We’re not even half way through this mess. Why the hurry? There is no downside to sitting on the sidelines right now. There is a TON of potential downside to jumping into a purchase right now. Why take the downside risk?
People who say things like “I’m in it for the long term, so it doesn’t matter” don’t have a basic understanding of finance. Condos are not stocks. There IS a big holding cost associated with owning them. Buying something now just because “some day” it will be worth more than it is today shows a complete lack of understanding of basic finance. You have to account for the opportunity costs of buying now vs renting until it makes sense.
It may be hard to time the top in a market, but it’s not that hard to call a bottom. In almost every bust, a bottom doesn’t happen until prices return to their long-term trends. And in Miami’s case, we will have to see a return to normal supply levels before we call a “bottom” to this market. We’re nowhere near that point yet.
Boca Developers negotiating with lendersSouth Florida Business Journal – by Brian Bandell and Oscar Pedro Musibay
Boca Developers is negotiating with its lenders to resolve debt issues on several projects that could include Peninsula II in Aventura, according to several sources.
As a result, Deerfield Beach-based Boca Developers may end up relinquishing several projects to the lender, the sources said.
The sales staff at Peninsula II has already been let go, a source said. A call to the number listed for the sales center was answered by a recording.
Calls to Boca Developers principal Brian Street were not immediately returned.
Boca Developers has several residential projects in the works throughout South Florida, including Townsend Place, Mizner Grand and Aragon in Boca Raton; Orchid Beach in Deerfield Beach; New River Las Olas in Fort Lauderdale; Hamptons South and Peninsula I and II in Aventura; Marina Grande North Miami Beach and Biscayne Landing in North Miami.
Biscayne Landing, its largest project, would not be affected, according to a source.
As of August, the company recorded 80 deeds for the 230-unit Peninsula II project. In October 2005, Boca Developers signed a $162.9 million mortgage with Key Bank National Association for Peninsula II.
Hello BFG,
Ok. Apocalypse may be an extreme word that I used. But by no means is it absurd. And please dont compare to Miami 2 years ago. I am comparing to the blighted Miami in the 80’s.
The only way we can get to the “Apocalyptic” scenario is if the country goes into a great deppression like the one in 1929-1932. That is when the downtown bayfront & southbeach condos will start selling for under $150/sf (or may be even for food!) and a Miami Shores home will sell for 100K or less.
But hoping that we can avoid a depression or stagflation for a prolonged period and this recession thing goes away quickly, we can see prices settling down at $250-300 levels for the fancy new buildings and SOBE condos. It might take 1-2 years for that to happen and probably stay there for another 2-3 years before starting to rise again.
When you argue that at $150 levels, it becomes attractive to a Metro Rail driver to be able to buy a unit at Cite/Opera etc. you are forgetting that he/she would never be able to afford the outrageous monthly maintenance and taxes on these units. So much for your advocacy for middle and lower middle class to move in to these buildings. I did the numbers for that $444,000 unit in the Floridian and decided not even to bid for it. Even if I can afford to buy it, I will be extremely stretched to pay the $900 monthly HOA dues and $11,000 taxes. Why the hell in the world would it take $900 freakin’ dollars as monthly contribution for one unit towards the running of the building which has 400 units? Does it cost $300,000 a month to run 2 pools a gym, security and other sundry? It makes me sick. And What in the world is the Govt. thinking charging nearly $1000 a month in taxes to own a 1100 sqft hole in one of these places? Everyone is out to rape a homeowner. So I dont care where these per sqft prices will eventually settle down. The fact of the matter is unless there is a rationalization in the HOA dues, and Taxes, no Middle class person can ever afford a unit in Park West, UES, SOBE etc.
Mike K – to answer your question – 3 years in the biz. Over 10 years as an investor.
Lucas – your blog has unfortunately become a circus. I hope it is at least bringing you a few serious clients.
Samir……..”what is the circus part” your thinking of? I think there are many insightful comments posted here. Not right for you to run down this blog. If you don’t like it don’t post here. just start your own blog (hard work). instead of piggy backing on this great blog as a real estate agent and trying to steal Lucas’s potential clientle. Also, Lucas is not all about sales, he is an expert and his opinion is free to all. Free expertise and unbiased opinions are rare today, especially with a investigative touch.
More than just a few. I’ve never been busier even when the market was hot.
Samir, by the way I went to yur website. It really sucks, no wonder your blogging on this one. You don’t have one shred of information posted there, just “FOR SALE”. Lucas works his ass off on this website and it shows. He has hits all over the world. I met people in manhattan at a coffee shop and we start discussing real estate. The first thing they mention is this website. This has happened to me more than once.
AJ – I’m not one of the $150/sq ft people. I doubt you’ll see prices that low on new waterfront condos. That said – I won’t be shocked if some of them do go that low, either. Anything is possible.
I just think that a lot of the problems you mentioned from Miami’s past were not necessarily related to real estate prices.
I’m not one of the people thinking that we’re going to have the “Great Depression II”, either. I think we are already in a recession, and that it will be longer and deeper than our past couple of recessions. However, I think we’ll be okay.
I just think that we’re not near a bottom yet in real estate prices, and I don’t think that prices coming down is a bad thing.
Lucas you are doing a great job. Thank you for this blog is very informative and it allows us to see things from different perspectives. just because you don’t agree with some of the comments here, doesn’t mean this blog has become a circus. its actually serving its purpose. which is to allow all these people to express their points of view.
BFG, I guess that is a fair assessment.
The topic usually I have an issue with is when someone suggests that eventually these luxury condos will be in reach of middle class. I will argue that it is never going to happen as long as there are killer HOA dues and Crippling taxes.
I had an interesting observation. One day I spent an hour at Waverly and saw four different persons carrying home food from Pollo Loco. For those who dont know Pollo Loco is a chain where you can eat for as little as $2. The particular Pollo Loco on Alton street is a bit shady. You have some very poor and even homeless people in the line waiting to order. Outside there are some beggars who want you to give them a dollar so that they can buy some food there.
That made me wonder, why do people living in one of the Luxurious buildings such as Waverly had to eat in such places. Well, Maybe I’m wrong but I have a theory; When you have to clean out your wallet every month to pay 4 or 5 thousand dollars in Mort + Maint + Taxes and if you are not rich, the only thing you can live on is Love and Fresh Air. Is it also the reason why buildings such as these have such a high turnover? Maybe once someone scratches the itch of wanting to live there and after a year or two, it finally dawns that this is just not the way to live, not having a dollar to your name at the end of the day.
Can a single person making under 50K afford a 1BR in Wav/Flor. Can a couple with a kid or two making under 80K afford a 2BR in the same? I would like to hear from anyone reading this blog who might be in such a situation and how they deal with it.
And finally, I hope I did not trigger the “Circus” comment from Samir. I love the lively and colorful discussion here. I hope it continues with out inhibitions. Or you can have a few RE agents talking shop on this blog. Yawn…
AJ – House rich, cash poor….happens all the time. People take on too much house and then dedicate all of their time to it, can’t afford a getaway vacation, no more new cars, etc. With this housing bubble a lot of people took on much more house(s) then they can afford, esp. if they take a hit somewhere such as a job loss. So far, I’m enjoying being a renter, esp. since I will use the place just a little over 50% of the time…. No worries. 🙂
P.S. Or maybe the food is good? I’ll have to try it and see I guess.
Hi Lucas I hust bought a unit in Midtown thinking the same thing you were saying and that their challenge to build a city within a city is on the verge of becoming reality…they need more press,,,more people settling in and a clean up of some parts (like the installed parks ) and whenever the entertainment block will open you will see it come alive.
As far as onyx i was hearing rumors of bankruptcy too but i also heard it was selling between 225 and 275 $ a sqfoot in London with bulk buyers.. i saw some of their proposal and the whole pricing is pretty cheap all things considered after all people living in 2 bedrooms in Cite right now all paid around 420k for a 1200 sqfoot .. pricin g should hold…very surprised to hear about 150$
as far as midtown dont expect to buy anything under 300 $ in the towers it s all sold out or selling at much higher levels..
the right thing to do now for miami is cancel/reduce sharply real estate tax for people to be able to hold their purchases /their lifestyle.
i believe they ll do it or rents will go quickly very high.
Mark my words, a news article will be written in which it is revealed that Boca Developer halts project, and faces millions in liens.
My analysis shows the article will be available at the following link:
Laurent- I saw the London bulk offer as well and while I did not participate, I know of 8 people who did. They were able to buy at around $250/sq ft. I went to visit the building and thought that it looked like a great deal given the units and the views. They still need to tidy up the landscaping and some of the detailed finishing. I do know that the Buyers are happy with the deal. They inform me that the Mexican buyers are supposedly the equity partners in the developer BAP/GGM and they are buying the lower units and 3 beds for approx $220/sq ft. I’m holding out to buy one of the units in Star Lofts as I think that the location is identical to Onyx but they’re in much worse shape than the Onyx developer. I was also told that the Buyers and the Mexicans fired the management company as it was not meeting targets. They replaced the management company with BAP and fees are now expected to drop to around $0.40/sq ft. I was holding out for the $150 sq ft mark but I now think that I may have missed the boat, at least with Onyx.
And another news publication will also write about Boca.
http://southflorida.bizjournals.com/southflorida/stories/2008/03/24/daily42.html
Lucas, what’s up with this? Do these reporters troll your site for material to write about? You scooped them!!
onyx was great deal to get in….
midtown will be a better investment on the long run…because everyone will want to live there..and fo now ….only 2 towers..and they re gonna play that card for a few years developing more commercial more shops, more restaurants more galleries, more buisnesses, a hotel until the whole thing calls for more residential more offices by its own self sustained activity…rents will rise
I agree with Laurent in regards to Midtown. But if you can get a good deal at onyx as it has been mentioned here…go for it, great deal you will never loose the view.
Lucas, I just wanted to reinforce my comments that your blog is amazing. I’m broker myself and I love how we can discuss different topics on your blog. So ignore negative comments because you have a lot of supporters.
Grant said: “I may have missed the boat”
No, you didn’t. One thing you don’t need to worry about in this market is “missing the boat”.
You can keep a dog down…Grant/BFG:
On the London Bulk deal – you have to take in context of a $2:£1 FX rate and property prices/incomes in London which means that anything, anywhere (except Monaco) looks cheap.
What I am saying is that London-based investors are in a very biased position to judge fundamental, $ value propositions in Miami property.
Quoting AJ: “I did the numbers for that $444,000 unit in the Floridian and decided not even to bid for it. Even if I can afford to buy it, I will be extremely stretched to pay the $900 monthly HOA dues and $11,000 taxes. Why the hell in the world would it take $900 freakin’ dollars as monthly contribution for one unit towards the running of the building which has 400 units? Does it cost $300,000 a month to run 2 pools a gym, security and other sundry? It makes me sick. ”
Not as sick as it would make you if you owned a unit in this dump (I rent). They NEVER finish any maintainence project ever started AND unless they ordered to start one, they don’t.
Seen hallways where numerous light burned out and were left dark for days. Painting of door trim started last year….NEVER FINISHED. Refurbishment of locker rooms…NEVER FINISHED. On, and on, and on….
I have heard that so many “owners” are not paying the HO fees that they have lawyers chasing them.
I would not spend $444,000 for a unit here if it was a double-penthouse.
Lucas does anybody know what the unit at the FLORIDAN actually ended up selling for???I thought there were multiple offer’s on that unit.At least there was a whole lot of EXCITEMENT about it when it came on the market.Please see if you can find out for us. Thank’s LUCAS and keep up the good work your doing for us around the WORLD.There are a lot of us that really appreciate you.
Condo Flipper Bleeding To Death – You’re partially right – i’m not in the talking about real estate business. I’m in the SELLING real estate business! I don’t know you but judging by your handle on this blog, sounds like you made an uneducated decision about your condo purchase. Maybe your Realtor didn’t have your best intentions on top of his mind. Not everyone buying today is making a mistake or misguided. As for this blog – yes I even think Lucas has done a great job but over and over again we get off of the current topic and that is the circus I am talking about.
Samir Patel….in your honest opinion.Where are we headed price wise…what do YOU expect the average price per sq. ft. to be in 6 month’s….and also ..what do you think of the DEAL that was recently available at the FLORIDAN?? Thank you .
Short Seller,
I’m not sure. It is still pending. I’ll keep an eye on it to see when it closes and for how much it actually sold. The Montclair Lofts and Meridian Lofts foreclosures recently went pending.
Juan L. – I’ve never really liked those older buildings in South Beach. I always prefer the newest buildings as I feel they are lower maintenance in the long run. + Buyers of your unit in the future are going to be shocked by rediculously high maintanance charges which become a barrier to buying. Over the last 3 years 95% of my buyers always ask me to show them only the newest buildings because the newest buildings have all the bells and whistles and for the most part you do not have to think of major infrastructure problems on the building for at least 20-30 years. As far as the Floridian – Any 3 bedroom in South Beach for under $450,000 sounds like a deal at first. However I have not been inside this unit which is important to note. You do not know the physical condition this unit is in unless you personally tour and inspect. $450,000 but $150,000 to upgrade would be a problem. I think overall prices are heading down in a majority of new construction projects in Downtown. But NOT ALL. When you see a majority of projects priced for $450-$550 per sq ft and also new product priced for $300-$330 per sq ft do you think the $300 is going to $165? I don’t think so. I would expect many of these buildings to be forced to retreat on the pricing to $300-$350 per sq ft but you will see a stablization of the market. Waterfront is waterfront and you can’t take that away from some of these buildings. The smart money is still buying although transactions may be slow they are taking place. I don’t believe in the average price per sq ft when talking about this market. I think more importantly there should be a separation in the discussion about what waterfront + new buildings should be worth and then the rest (inland properties). Remember your WSJ and NYTimes numbers are always about the masses. Many buyers know what they want – they have been keeping track of this market and specific buildings. If they have their heart set on purchasing in the Marina Blue then they are not just going to jump on a deal in TMP. They will wait til they are comfortable with pricing on Marina Blue.
I just received this from a Loan Manager.
(BankAmerica just called her to tell her that they can not do her loan because its in a
high-rise condo and they’ve now suspended all lending in high rise condos
… she was looking to get a $200,000 loan on a $539,000 appraisal ….
just 37% loan-to-value, she has perfect credit history, verifiable income,
waterfront property and she can’t get a loan!)
Could this be?
Sounds like a scam. She was probably the first person BOFA ever had that didn’t ask for a No Doc interest-only loan on a South Florida Condo.
The bank probably thought they were getting set up, and rightly so… You are trying to tell me somebody in South Florida is actually willing to put down 339K on a 539K property? Come on, that only happens in Red States. In MIA, it’s all about putting 0 down, living it up for 2 years, going bust, screwing up your FICO and leaving other people holding the bag while you run away and another high school dropout moves in to take your place.
Mr Waverly,
That sounds rather strange to me because my client just closed on a condo through Bank of America today. It was at One Bal Harbour, which is a high-rise condo building, and his LTV was slightly less than 80 percent.
JL, it is not a scam and Lucas, it is not strange.
Here we go:
I already have an investment condo in SOBE with a partner. It is bringing decent rent. We applied for a $400,000 mortgage with HSBC (80K down and 320,000 loan). Both our FICO scores are 800+
We get the mortgage approved but with a stipulation that it is only good for a single family home. I spoke all the way up the top boss at the mortgage division and he said, they will not do a highrise or a condo. One reason he gave is all the usual blah about the market and he also said that as we already have a unit in SOBE, we cannot buy another condo in 50 miles radius as it would become a investment property!! WHATEVER. I am pissed. My partner says that we can get another bank to approve us but that is not the point.
So the moral of the story: If someone with a super excellent credit wants to put down 20% and is asking for a mortgage and is being turned down………….all those units close to 25% in each building such as Wav/Flor/Mirador etc will be sitting there for 2-3 years before anyone can come and buy them. It is really sad.
Have you read this story in M Herald about out of work realtors working as foreclosure process servers? How Ironic is that? Evicting people from the homes they helped put them in the first place. Another startling statistic: Miami is no.1 in nations foreclosures among all metro cities; 4.4% to the national average of 2.8%
Whether it’s on the gritty streets of Bunche Park or in the marbled lobbies of condos on Brickell Avenue, everyone seems to know Seth Gissen — or at least his kind.
Grim and focused, he is known by the stack of papers under his arm, the way he peers in windows, jots down tag numbers, and queries neighbors or the concierge. When he knocks on the door, it is loud, brisk and authoritative.
He is a process server, a sworn court officer called upon to deliver official notices to homeowners that their lenders have filed foreclosure. As the mortgage meltdown hits a critical mass in South Florida, it seems that his presence in neighborhoods throughout the region is becoming almost as common as that of the mail carrier or meter reader.
”Foreclosure?” asks a young man, watching from the street as Gissen knocks on the door of a duplex in Liberty City one recent evening. In the neighborhood surrounding the property in the 700 block of 75th Street, more than 28 homes are either owned by the bank or in the foreclosure process.
”Yeah,” Gissen responds curtly. He says it is best to tell the neighbors what he’s doing. That way, he says, they are less likely to blurt out to homeowners that a process server came around, since that would mean delivering the embarrassing news themselves. Also, Gissen needs their help in tracing the owner’s whereabouts.
Does the young man know if owner Gamalyah Israelion lives in the duplex? At that moment, the tenant from the upstairs unit emerges on the lawn. Michael Ruffin is also served, as the law dictates. He has a cellphone number for Israelion, too, which puts Gissen a step closer to finding his man.
Attempts to reach Israelion by phone are unsuccessful.
As Gissen jumps into his car en route to his next stop, a $1.4 million condo in the Jade building near Brickell Avenue, the young spectator asks about his neighbor’s home: “Is there a sale date on it?”
BUSINESS GROWS
Gissen, 40, has been a process server since he opened his own company 17 years ago. A decade ago, he partnered with a college friend, Sean Zawyer, to open Gissen & Zawyer. The firm has steadily become one of the largest process-service firms among several hundred in Florida, delivering notices in civil cases, including divorce and personal injury.
About a year ago, business from foreclosures started to pick up. In the last two or three months, it has become a deluge.
Last month, 7,499 foreclosure actions were filed in Miami-Dade and Broward counties alone.
Last June, Gissen and his partner added a new division dedicated to serving foreclosure papers — to about 5,000 people a month, including tenants, spouses, and homeowner and condo associations, in addition to property owners. All of them, by law, must be notified when a home is headed for the auction block.
While county sheriff’s offices have their own staff of servers, law firms hire private companies such as Gissen & Zawyer for the same reasons that people go with FedEx or UPS over the U.S. Postal Service — it’s faster.
In Miami-Dade County, 122 people were newly certified as process servers in January, up from an average of 30 or 40 in entire years previously, said Walter Cordle, coordinator for the county’s certified civil process server program. He attributes the bigger number to the glut of foreclosure cases.
As the workload grows, the Gissen & Zawyer firm must hire. Since last year, it has doubled the number of employees to 25 in the office and 30 process servers who work throughout Florida. Most of them are private contractors. That makes the firm huge, according to a competitor. Most private firms have one or two employees.
Revenue at the firm has doubled in the last year, Zawyer said, without giving figures. ”It’s a dream. . . . Unfortunately, it comes at the expense of people being foreclosed on, which is not the greatest,” Zawyer said.
Still, the firm is glad to be in a position to hire. Many recent employees have come from the real-estate industry — agents, mortgage brokers, appraisers and support-staff members driven out of work by the slowdown.
”We have people that were without jobs for six, seven months,” Zawyer said. “They were dying. I feel like a few of them almost cried when we offered them a job. They were so happy.”
A day at the firm starts with a staff member making the rounds to pick up new cases from local law firms that file foreclosure actions on behalf of lenders. The staff member takes the cases to the clerk of courts, waiting for hours, often the whole day, to ensure that they get filed.
”We have people scanning cases all day long,” Zawyer said. “People finding people all day long. People putting papers into the system all day long.”
A large map hangs on the office wall, with the names of servers scrawled over their respective areas. More cases are dropped into the mail for servers covering other parts of the state.
TIME-SENSITIVE CASES
Time is of the essence, Zawyer said. Working quickly and diligently to find property owners is key because clients want cases turned around in a day or two — although nowadays, less than 10 days is considered excellent.
”The longer the individual is not found and not served, the longer the bank that is holding that mortgage is not getting paid,” Zawyer said.
Gissen and Zawyer often serve notices themselves, on their way home or sometimes together. They share stories, like the time a businessman who was being served at his office sprayed them with Lysol.
”Most of them aren’t surprised,” Zawyer said. “Most of the time, they’ve already been sent letters or been contacted by the banks and I guess they know it’s coming, or know it’s inevitable.”
That’s when the firm actually serves a homeowner, which has become increasingly hard to do in recent months.
In eight addresses that Gissen visited Thursday night, three tenants were served, but not a single homeowner. A few of the properties seemed vacant.
Tenants, Gissen says, “are the innocent victims of foreclosure.”
Census figures show that Miami-Dade County had among the highest home vacancy rates of major U.S. metropolitan areas at the end of last year — about 4.4 percent, up from 1.6 percent in 2001. The national average is 2.8 percent.
A lot of that is perhaps due to new construction.
”Some of the people are walking away from their houses — they’re upside down,” Zawyer says, referring to homeowners who owe more on their property than it can be sold for on the market. “A lot of them were investors.”
BEING PERSISTENT
When he steps into the lobby of Jade, a luxury condo building at 1331 Brickell Bay Dr., Gissen says he is not optimistic about serving Raul Reina, who owes $1 million on a unit.
Reina’s listed phone number in New Jersey was disconnected.
”This is about the eighth time we’ve come here,” Gissen says. “The people in this building, they’re never here. Everyone we’ve done here has been an investor.”
The concierge knows the routine; he answers no questions. The security guard, Yoel Estrada, also knows the routine. He escorts process servers through the building about twice a week. The man who works the 7 a.m. to 3 p.m. shift does, too. He takes Gissen to the 45th floor. Gissen knocks. Nothing.
”It sounds empty. It sounds hollow,” Gissen says.
Estrada nods. ”These people think they can live a lavish lifestyle, but they can’t even pay the maintenance fees,” Estrada says.
Gissen glances at the service papers. The party behind the foreclosure: Bear Stearns, a giant investment bank itself badly wounded by the national mortgage crisis and rescued by a federal bailout this month.
This article is so exagerated and the comments this Gissen guy has made are aweful, its like he really enjoys his job.
He makes fun of these investors saying people think they can live a lavish lifestyle but the lenders are to blame as they should know the prices of the collateral they were getting for the loan as well as the clients ability to pay the loan
Alejandro – everyone’s fault. everyone was guilty of greed and stupidity. Not fair to exonerate the poor investor/homeowner/2nd homeowner nor to exonerate the lenders. Fraudulent appraisers, stupid lenders, greedy buyers, ill-to-do realtors, structural problems (title insurance and no lawyers required – that’s gonna change).
Take your pick, but don’t just point the finger at one group.
alejandro/julian
not to sound glib, but pointing the finger at lenders doesn’t make much sense to me. they took a risk, miscalculated and now they’re getting hit on the back end. they’re capitalists and have no obligation to do the “right” thing. rather, they owe their shareholders an obligation to increase firm value. to the extent they screwed up, this is the group they need to be held accountable to and no one else.
frankly, what did the lenders do in your eyes that makes them responsible for any of this? considering that most of this stuff gets securitized and bought by smart money (our parents aren’t buying ABS), why wouldn’t the age old adage of caveat emptor apply?
It is a bad idea for lenders to lend money to one person to buy two properties within 50 miles of each other. After a hurricane hits both units could be damaged and cause defaults on loan and condo fees.
Wild Bill,
I don’t think hurricanes have anything to do with it. If that were the case, then buyers in California would have a very tough time obtaining a mortgage. California has earthquakes, mudslides, sinkholes and wild fires. I think it has more to do with banks that have overextended themselves in Miami within the past 3 years.
What ever be the reason, the bottomline is that:
1. Speculators have disappeared on their own.
2. Responsible Investors like me cannot invest anymore as banks have a knee jerk reaction now. (Is it my fault that they lent to people with ‘0’ down and burnt their fingers and are punishing people like me with excellent credit and willing to pay 20% down?)
3. That leaves only foreign buyers and some domestic buyers with pristine credit and plenty of down payment cah at hand.
This mess is not going to resolve for a very long time until this credit squeeze is gone. Unfortunately I dont see that happening anytime soon.
yep agree it sucks the city of miami need to do sthg on its own they cannot wait for the overall credi squeeze to abate.. It needs to lower or even cancel real estate taxes. once they do so people will buy come live there and generate businesses and new activities..They must do it if they are to succeed
Three uses for the six year supply of inventory in the new towers. #1 casinos, #2 government housing and #3 diving platform for killing yourself after buying and realizing you made the biggest mistake of your life.
We all know at least one of these will happen.
From Miami BizJournal:
Related markets rentals at Condo.com
South Florida Business Journal
Condo.com announced Thursday that TRG Management, a Related Group company, is now featuring rental properties on the marketplace Web site.
Web site visitors can view available units for rent, along with floor plans and other available media, for Related’s 50 Biscayne, The Loft 2 and The New Harbour House – all recently completed projects.
According to a press release, Related Group and TRG have established a rental business to capitalize on unsold inventory and the increased number of renters during this period of market normalization.
“We are happy to partner with one of the premier developers in the country to help market their excess condo inventory as rentals” said Richard Swerdlow, chief executive officer of Condo.com.
Based in Miami, Condo.com calls itself the world’s largest condominium marketplace, with more than 600,000 listings from the U.S. and more than 70 countries with inventory valued at more than $150 billion.
THEY SHOULD HAVE A ENDLESS SUPPLY FOR YEARS TO COME!
Onix, It’s a known fact that Onix it’s developer has not paid construction cost to it’s subcontractors,
In addition BAP Hired our firm to do remedial work at a condo in miami known as the Aston and has also failed to pay it’s bills for work they contracted.
These property have multiple construction liens.
Beware.
Even if you get a good price on a nice condo now, even if you steal it, there is another danger that you can’t know right now with these new buildings.
As the market drops you don’t know what kind of tenants it will have say 5 years from now. You don’t know who will be managing it or if the building will be maintained properly. Half occupied buildings won’t cover the costs to maintain these buildings. It will be interesting to see what these glamourous buildings will look like in a few years. They are not cheap to maintain. There is no guarantee you maint fees will be used properly.