Contact Us

Beachfront Foreclosure "Steals" Just Aren't Happening in South Beach

Posted on

Bentley Hilton

I receive a number of phone calls each week from nonlocals looking to “steal” a condo in South Beach directly on the beach. I tell them every time that it’s just not happening. Beachfront property is still in very high demand.

Case in point is a foreclosure condo at Bentley Hilton that became available towards the beginning of February. It’s a 1 bedroom/1 bath with 620 square feet, fully furnished and listed at $379,900. I never posted about this foreclosure because I wanted my best clients to jump on this opportunity before other agents in town knew about it. I took a look at the condo and it was in prestine shape. Great views, plasma TVs in the living room and bedroom, stainless steel appliances and furniture that was in like-new condition. I submitted a few offers but I was told that 8 other offers were submitted and none of mine were the highest. One of my clients has contacted me a few times within the last couple of weeks, out of curiosity, to find out for how much the condo eventually closed. The foreclosure condo at Bentley Beach closed for $459,900 on March 26, 2008. Again, it was listed for $379,900. Someone bid through the asking price by $80,000!

This is not just one instance. I’ve been seeing a number of South Beach foreclosure and short-sale condos being bid through their offers.  As the old adage says, if it looks too good to be true then it usually is.



176 thoughts on “Beachfront Foreclosure "Steals" Just Aren't Happening in South Beach

  1. Lucas is this just an isolated incident that happened to sell over asking?? Or just another case of FRAUD.are you going to publish statistic’s of ALL Oceanfront condo’s SOLD last month?That will tell the tale.I have been watching and talking to many many people in town and everybody has the same view …that price’s on the Ocean or inland are not going UP but rather Down.I would like to get a true picture of what is really happening with Oceanfront Condo’s. Thank’s Lucas

  2. What about them? People always ask me about foreclosures in new buildings. They aren’t going to happen for a while. Why would someone who felt that they would have financial difficulties in the near future close on a condo? They would be better off just walking away and not having a foreclosure on their credit. They would also save themselves a good amount of money in closing costs.

  3. Not impressed with this story at all. Please refer to my comment posted in news and rumours about how impossible it is becoming to get a mortgage for a Miami highrise condo. So if only people with hard cash can bid for these units, their numbers are not enough to save all the tidal wave of foreclosures that are yet to hit the market in the next one year. Then we will see if this story holds up then.

  4. I disagree–The STEAL’S haven’t even hit the market yet.They are coming in the next WAVE of listings.It’s too soon to tell.Obviously there are owner’s that are still hanging on,paying through the nose with the hopes of a market turnaround.It isn’t going to happen….at least not for another 5-7 year’s.

  5. Lucas they are still closing because:

    1. They are not as smart as they think they are. If not they would not be speculating so recklessly in the first place.

    I am not a realtor. I do not have a degree in economics from Harvard or an MBA from Wharton. But I knew back in 2004 when the condo I bought in that summer was increasing by $10,000 a month, that something is just not right and disaster is waiting to happen soon. Anyone who bought in end of 05 or beginning 06 definitely did not use their brains.

    2. Walking away from a $100,000 deposit is not easy. It is a stomach churning thought. Some people without a guidance or proper educated guess thought that they could sell it for the contract price and at least recoup their deposit. Unfortunately they are not told or realized of the impending horror, one for example even qualified borrowers are getting rejected by the banks for a mortgage. Who then is going to rescue them? They will carry it for a year or two and then walk away from it. Sad. Very Very Sad indeed.

  6. AJ I think your 100% right on. Just because one condo sell’s for over asking…it is not a stat. that is typical of the current market condition.I wish it was.

  7. lucas
    i don’t agree with you often, but when you’re right, you’re right. at least in SOBE, on the beach side, i don’t think you’ll really see any so called steals, no matter how long it takes the market to correct. limited amount of buildings, with, after the finishing of continuum II, no more supply coming online any time soon. not to mention, the investor who bought in the il villaggios of the world, if that even happened on any large scale, i have to imagine, is a completely different financial beast compared to the morons who were plopping down cash on preconstruction in brickell. note, the condos i’m referrerring to are the buildings built in the last 15 years, starting with continuum and stopping at any building before the roney.

    an aside, lucsas, do you have a take on ios on the bay? a friend is looking there and said the units and location are nice (although the surrounding neighborhood ain’t exactly a work of art).

  8. I asked about Ten inparticluar because it started closing around June of last year and about 75% of the units closed. I figured we should see some foreclosure activity there soon. I do agree that beach property in general will be more difficult to get at a steal. Wow, just looked a that units maint $1000/month…ouch

  9. Juan L,

    I’m not sure who you’re talking to but oceanfront condos are still selling at premium prices. You are correct, however, that inland condo prices have dropped within recent years. Potential buyers of them condos are more apt to have financing difficulties. The buyers of oceanfront properties are mainly cash buyers. This past week, I closed on two oceanfront condos and neither previous owner took a loss. Prices are still holding strong there.

  10. The bentlen hilton is in a great location. It is opposite 112 prime and right next to club nikki and other nice restaurants including Devitos.

    I looked up a 640 sq.ft condo at the Bentley on zillow and saw that the price back in mid 2003 was in the High 200K range. Here is the URL to zillow price chart: http://www.zillow.com/Charts.htm?chartDuration=10years&zpid=63615999

    The condo that is listed above in the zillow site has an asking price of $825K. It is similar in square footage to the one that Lucas mentions in this blog posting. So it is going for a 50% discount if you compare asking price with actual sale price. AND we are probably less than half way into this bust cycle. I expect prices to drop even more.

    Folks, remember….when the stock market was crashing in 00-01-02, people were buying Yahoo all the way down from Over 200 to under 10 bucks. There are always people who are buying and selling when market is going up or down.

    I personally would buy a condo at the Bentley if it falls below 300K. I dont know if it will happen, but if it does, I will be a buyer. I will probably have to finance 30-40% of the condo, so it wont be too difficult to get a loan with a huge down payment.

    On a related note, does anyone know how condo sales are doing in Continuum II?

  11. Lucas, I agree with you again. I’ve always said just as you have that the beachfront will hold its value. Beachfront in Miami is Beachfront in Miami, I dont care what kind of recession we are in. there are still boatloads of people around the world with lots of money that buy these up. and as far as financing go’s, It may be harder but that just means that people are a)buying in cash or b) putting a bigger down payment. i know a few people that have put down 35-40% down and gotten financing without a problem. Inland is a whole different issue, but the beach is the beach.

  12. carbonblackcab,

    As far as Continuum II goes, I was there this past week and I was told that they weren’t expecting anything more than a 10 percent walk-away rate. I took some pictures and will share those with others within the next week. I was pretty impressed by what I saw but then again I was showing condos that were priced over $2M. For that kind of money, I better be impressed.

    I don’t agree with your assessment on the foreclosure condo at Bentley Hilton. As an owner, you have the right to place the condo in the condo-hotel program. In peak season, a condo like this gets $349-$599 per night with an 80-90% occupancy rate. In off-peak season, it gets $299-$549 per night with a 70-75% occupancy rate. Amenities here are great and the condo development is beachfront. I don’t think you’ll see prices falling below this foreclosure’s asking price.

  13. Last week, I spent a day with a client who had read an article in the Wall Street Journal about prices falling 30% in Miami within recent years. The problem was that he wanted to buy condos in South of Fifth in South Beach. I explained to him that Miami was a completely different market than Miami Beach (especially South Beach). I showed him about 6 condos that were priced from $1.5M to a little over $3M. He ended up making all-cash offers on 3 condos that were about 12-13% below asking price. None of them were accepted. The counteroffers were slightly below asking price.

  14. jcrimes,

    I don’t have much to say about Ios on the Bay. I think it’s a great concept but I don’t think it’ll hold much weight for about 3-5 years. It’s a great concept, and I think the architecture is great, but I think the location will hold it back from realizing its full potential. In time, however, it will prove to be a great development.

  15. Dear bull shit, I think you should leran to control yourself. If you are such a stand up guy, why are you hiding behind a crappy name?

    In any case this is a site for expessing honest opinion. Not expletives. I am glad that this site even exists. If you think a story is not right, say it so with out being abusive or even better, get lost. By being a child, you are putting this wonderful site in jeopardy. The fact that the moderator lets in such rants like yours is itself a testament to the integrity of this site and its owner(s)

  16. South Beach will probably hold up pretty well….but the days of 15% per year increases aren’t here anymore. I would expect some overall declines in SoBe going forward….but probably few “steals” even from those wannabes that go into foreclosure since there is still a good demand from people with $$$ and limited supply, not quite Central Park but close. But SoBe won’t be immune, it just won’t be.

  17. The last sale price on that unit was $900,000 in Nov 2005. That’s a 48% drop in value.

    I think it is important to note that just because prices have been slow to come down in the beachfront markets, doesn’t mean that they aren’t due for a large correction.

    I’m sure the buyer of this unit thought he was getting a good deal because he bought it for half what the last owner did. I’m also sure there are enough of these people out there that we will continue to see things like this. But there won’t be enough of them to ultimately save this market.

    I doubt you could satisfactorily explain how the prices on these Bentley units went from the $300k’s (as carbonblackcab noted) to $900k in a period of 3 years other than pure, rampant speculation.

    Any price gains caused by speculation will be erased (and then some). See 90′s NASDAQ bubble if you need an example of this same sort of craziness. Like another poster said, plenty of people bought Yahoo at the “bargain” price of $200/share. The same sort of thing is happening in the condo market – people buying because they think a certain % off the previous price makes something a bargain.

  18. rentertom….the condo being discussed in this blog entry sold for 48% below what is sold for previously (number from BFG). So prices are not holding up well at all. If we are seeing a 48% drop now, what will we see a year or two from now.

    The credit crunch is about to hit the credit-card and auto loan market. That credit crunch is going to be felt by normal everyday people (not just bankers or investment banks).

    Also, the myth that all buyer south of 5th are wealthy south americans, that myth is false. I know a lot of professionls like myself who own places in sobe. Divorce, Job loss, job transfer, etc are main reasons why people sell condos and when they have to sell in a down market, prices will come down significantly.

    Also note that brazilian economy is weakening and so will the other economies in latin america as the US recession progresses. So the pool of rich south american buyers is going to be shrinking.

    Also note that the HOA fee for this condo is 1K/month and the tax is about 900/month. So the carrying cost with mortgage is about 4K per month. 4K per month is a lot of money to drop on a super small 1 bedroom condo. For 3K/month (bought in 04), i have a nice 3 bedroom townhouse in the grove 2 blocks from cocowalk. I am about 15 min from sobe. Ofcourse, it is not the same as living on the beach, but when you do the math, the 15 min drive makes more financial sense. :-)

    Sooner or later the “value” of money will be seen in a rational way and when that happens, people are not going to be dropping big bucks on these condos. It does not make financial sense.

  19. ok guys, it IS a bit ridiculous to think that EVERY seller is in financial distress and that every buyer in the mkt is a moron.

    if someone lives in london or another major foreign city (lets not forget the ridiculous money in moscow, middle east etc..), $450k for a beachfront getaway is nothing! so don’t jump on every single sale that happens. i can understand some (including me) that think things are slowing and getting worse, etc…but for many buyers, esp foreign, these prices are cheap!

    southern france and spain doesn’t offer beaches as nice as miami (though those spots are much nicer in other ways) and if you take into consideration the currency swap, some of these places are cheap for them…

    lucas, it would be interesting to know if you’re finding more foreign buyers within the past 9 months or so… keep up the good info…

  20. South Beach is a different market. I am not saying that foreclosures can’t happen there, but south of fifth condos are very desirable and unique. This week I was showing a property for a foreign buyer at continuum II and my client loved it. The unit is over $2M and he believes the price for those views are a steal.

    I did find out about a unit that was appraised at $2.6M and the owner is asking around $2M, so there are different options.

  21. Maybe the deals are a little further north on the Beach. I think the cheapest pre-construction Canyon Ranch unit was $800,000, now I see there are a few under those ’05 prices, and unit 309S is going for $545,000.

  22. Buying foreclosure’s does not always equate with being a good deal. Only way for the Realtor to get paid is to have a winning bid. That means bending the truth to scare their client offer more.

    A condo/hotel is just that. You might also be forced to renovate your unit every couple of years to meet hotel standards. This is a bad financial decision. It’s too small to rent to a porn production company. This will cut into your profit potential.

    South of Fifth is a second tier area. The city will be working on it’s second capital improvement project in a decade. The first one left it slightly better, but not worth the millions some condo owners owners pay. Has anyone walked this area? I mean all of it, not just driven through it.

    I would have offered $900,000. Why? Because I had a lobotomy last year and I want to be able to walk across the street to a steak house. I also like sitting on the balcony listening to chatter from the club next door.

  23. Hey, I live in Texas, I just returned from South Beach. I looked at 13 Condos in three days and made 3 offers, One short sale, already approved by seller and at the bank, then two others. All offers where 20% or so less than asking. I am told that I should be ready to close on one or maybe two units. Average price $400 foot, all within one block from water and views. I planned to go and stay 3 or 4 months annually. I think that it is a great deal. ven with a 1.8% real estate Tax. here is Texas the tax is 3%.

  24. Lechuga does a very good job here ..but his prognosis of south beach real estate future (or even coral gables/aventura etc) is patently optimistic.
    No doubt, these strongholds will keel over the last, but when they do it would surely be impressive.
    Rich folks would be staring down asset deflation that is coming in the next 2-3 yrs…in fact i would think that the lower 2 quintiles will stabilize first. The uppermost quintile will stabilize last.
    Welcome to The Grand Deflation. Worldwide Reset on the Asset Prices.

  25. Wait until fannie mae and fredie mac are nationalized later this year. Beach front is beach front, HOWEVER even this is not moving in this market. By the way, to be fair why don’t you address the insurance crisis and rates on the beach. One strong hurricane can wipe out the market.
    Spain is in a real estate crisis now, and so is England. When the rest of the Europeans stop buying who is going to pickup the market? This is a consumer driven market, that produces very little now, with rising energy prices and devalued dollar. you would have to be partly brain dead or a gambler who loves the thrill of going for broke to buy now.

  26. Sam, see if you can get out of your contract. I believe you have 3 business days to recend a contract in Florida. 400 dollars a foot is too much by not being on the ocean. Also you have to be careful with short sales. There are short sales on mortgage fraud units, that will be short sales foreever, because they are way over priced. 20 percent is not off much in this market. I wonder who your agent is? Becareful agents here in Florida are very scummy, even worse in bad times. Remember they are on commission only, worse than a stock broker on commission, because they are selling you something VERY expensive. Try to find a buyers agent, whom only works for you, not an agent who works both sides of the fence. Agents don’t even need to be a high school graduate here…………

  27. If the U.S. economy is hurting, the rest of the world is going to be hurting. I don’t care what people say that foreigners will come to the U.S. and buy property. It will not happen. The U.S. has a very strong holding in the world economy, VERY STRONG. The citizens of the U.S. are forced to work 40 hours a week and on top of that, we are taxed. We have very strong industrialized economy with the typical, “American Dream” to further make us work to achieve that goal.

  28. The steals in south beach will be coming (perhaps not right on the beach) but i saw a flamingo 2/2 for $360,000 and you get $180,000 in equity; from the bank-Im not sure how you would rate that?

  29. several of you are missing the point lucas is trying to make here…south beach, directly on the beach, there won’t be any “steals.” you might get a price that knocks off the appreciation gains of ’04/’05 (as is the case here with the nov ’05 sale price being patently absurd), but frankly, those were false gains in the first place. sobe in the interior, and to a lesser extent, on the bay, that’s a different story.

    and for the guy who mentioned freddie and fannie being nationalized…come on, that’s not even remotely a possibility.

  30. Thankyou BFG/Carbonblack

    Lucas – you should work for Tony Blair. The spin is extraordinary.

    The real message, if the information above is correct, is

    1. That this unit is selling for nearly 50% less than its peak price at the end of November 2005.

    2. Listing prices at Bentley Beach still hover in the $1000-$1500 a range. I.e. the mind set is still November 2005.

    3. The new price has been set at $725 a sq ft. There’s clearly demand at this price point, rightly or wrongly, and there clearly isn’t at the list prices for the rest in the building which appear to have been on the market from between 3 months and 9 months. I’ll accept that foreclosure prices might not always set the price for other units in the building as a matter of intuition, but it’s a strong pointer.

    4. We talk about Brickell, Downtown etc being off 50% from its peak or more – and so it seems with at least one, prime unit on the beach.

    The fact that there were offers above the asking price is a reflection of how difficult real estate is to value precisely, and how, at the moment, the accepted price is clearly the market clearing price.

    So it begs the question for something like Mosaic and Bath Club, which are better buildings but worse locations.

    1. What were the prices on closing and in what year?

    2. What were the prices of transactions in late 2005/early 2006?

    3. We know that most recent transactions at Mosaic are around $575 per sq ft.

  31. Jcrimes is right on the money with what I meant with this post. Most bargain hunters don’t care if prices have come down 30 percent in recent years. Investors are looking for 10-30 percent discounts from TODAY’S prices. You might be able to find that in a condo in South Beach located inland or on the bay but “stealing” a condo directly on the beach for those types of discounts just isn’t happening.

    There are very, very few condo foreclosures in South Beach that are located directly on the beach. Most nonlocal investors don’t truly know the market in South Beach. They would consider themselves foolish for bidding full price or through the offer even if the condo was worth $200K more. It’s almost as if they have a preset notion that they’ll be able to get a big discount before they even take a look at the condo or the comps.

  32. Lucas , I have been reading your blog for a while, a great place to see the trends , to a point,, but i t appears that at times, the blind is leading the blind. A case in point:

    Umer Ahmed said:

    “The steals in south beach will be coming (perhaps not right on the beach) but i saw a flamingo 2/2 for $360,000 and you get $180,000 in equity; from the bank”-

    Wake up, you do not get 180k equity from the bank. (dumbest thing I have heard today) there is zero equity . 360k is the value not a penny more ,
    Why you ask, let me tell you,
    because 360k is the highest value based on the highest bid.
    A lot of the problem in real estate as in any financial instrument, is first understanding it’s terminology the terms, Equity is defined as the difference between market and liability , If the equity was 180k, then you should be able to sell for the range of 540k, Why can’t you?? People are buying with the perception, and that is all it is “perception” that they are getting immediate equity…that will cause them a liability .. wait ’til they need to sell!

  33. A 48% drop is significant.

    There is a big trend of setting foreclosures at super low prices just to start a bidding war (although still a huge drop from previous prices).

    Prices are coming down in south beach.

    Look at Icon. 1 bedrooms in the $400k’s. 2 bedrooms in the $800,000′s. Those are big drops from 2 years ago.

    Beachfront is always stronger, but there are maybe only 4-5 buildings worth considering.

  34. The first big drop on the beach will be the converted apts. like The Collins and the buildings on West. How long will an investor kick in $2,000 mo. to make up what the rent doesn’t cover.

  35. Guys – maybe this is a post in itself, but I’m curious as to why people buying would buy downtown instead of on the beach if they were planning on living in their purchase?

    Reasons like “I want to be in a new highrise and the beach is too much $$,” “I want to be close to my office in Brickell,” “The only thing I can afford on the beach is a shoebox in a building from 1929,” “I really, REALLY like the burgers at 5 guys.”

    I’m just curious. I don’t see a reason to live in the Miami area unless you live in Miami Beach, South Beach to be more specific. The traffic alone out side of the beach is enough to make you want to move somewhere else.

  36. Kevin,

    ” I don’t see a reason to live in Miami area unless you live in Miami Beach”

    are you serious?? is that even a question? First of all maintenance alone is more expensive, insurance on the condo, taxes are higher on the beach, even gas for the car costs more on the beach. another reason could be that alot of people are not single…wow what a concept. the beach isn’t really family friendly. I would no way in hell raise my kid in Miami Beach, i would like them to have morals and values and not see crackheads and sluts everytime they go outside. don’t get me wrong, the beach is beautiful in some parts and south of 5th is impressive but the majority of people that live on the beach dont live south of 5th. take a drive through the real miami beach and then you can answer your own ignorant question. I find it offensive that someone would ask why would anyone live in Miami unless you live on the beach.

  37. Kevin. While SOBE area is great, it is not the only good area to live in Miami. There are some really good places to live in including parts of coconut grove, parts of Coral Gables, parts of Ft. Lauderdale, etc.

    About traffic, it is not too bad when you compare it to other metro areas. I moved to Miami from Santa Monica, CA (‘burb of LA) and traffic there was far worse than miami.

    I actually lived in south beach for a few months back in 2006 at a friends condo (he was in china for 6 months). I was super excited for the first couple of weeks and would goto beach EVERYDAY. After the 2nd month, I stopped going to the beach and actually got tired of the constant traffic and people 24-7. Dont get me wrong…I am still looking to buy a condo in sobe…but it would be to crash on weekends, not to actually live in 7 days a week.

    SOBE is a great place. As it is right now, most people are priced out of that area. When you depend on foreigners and super rich, you are at the mercy of the trends that the super rich follow. The “hot spots” for the super rich change from time to time. Today it may be sobe, next year it may be monte carlo and the year after may be a place in the carribean.

  38. Raffi – I definitely would have agreed with you a few years ago. I’ve lived on the beach for 5 years now. I had the same take on Miami Beach – not family friendly, dirty, and the whole concept of don’t sleep where you shit. We can go on and on. We all know that people come to Miami Beach to abuse it and leave.

    The problem with your reasons for disliking Miami Beach are that they’re really reasons for disliking Southeast Florida. Everything is more expensive here. Gas may be a few pennies more on the beach, insurance a bit higher, drinks a little more pricey and a little more watered down, and everything is a little louder. But have you looked around? Drugs and crime are everywhere. I would even say violent crime is much more prevalent off the beach – and downtown is a mess for at least a few more years – though I hope it gets cleaned up and Miami becomes respected in terms of a proper city. Have you driven through Kendall and witnessed the $60k H2 in the driveway of a $100k house? What values is that teaching? To max your home equity out and put your family’s welfare at risk? Morals and values are taught by parents, not by where you live.

    You know, I’m sure it’s hard to find hookers on the corner in Gables by the Sea, but let’s not look at extremes. I’m talking general locations where normal people reside.

    But yeah, I used to share your opinion. Then I got married. And stayed on the beach. And moved from Collins to West. And you know what? There’s nothing wrong it. Married life on the beach is awesome. Frankly, there’s no place better for getting out and enjoying life with your woman. In terms of kids, did you know South Pointe Elementary school is one of the best in the state? A public school on Miami Beach, one of the best? Remarkable.

    How do those kids learn to read with all the crackheads peering in the windows?

  39. Sorry Mr Flamingo. Years and years of inventory of Miami Beach. Big big yawn – people should given up the spin that Miami and Miami Beach are different. The numbers don’t support that assertion to any relevant degree.

  40. SAM I hope you have an oil well in your backyard.ARE you thinking about what your doing??? Or do you just have so much money …you don’t know what to do with.Take the advice you were given and CANCEL you have 3 day’s.Don’t be another fool buying NOW.RENT or WAIT a bit.I promise you’ll thank me later. GOOD LUCK

  41. “Also on another note. Today I was in Sheraton in Manhattan for the Real Estate Auction for NY and NJ properties(similar to the one that’s going to be in Miami in April 13). Investors are still there or I should say the desire to buy Real Estate is there”

    How would one reconcile that with the disaster Sotheby’s (non) auction that took place for Hi-End South Florida Real Estate on March 28. Does it pretty much signify the obvious? Wage earners in the NE can set a floor for high end primary residential RE, while the South FL high end market is much more discretionary and will have a harder time finding a floor as it is a luxury that people can do without and is not supported by the local economy? I think a better title for the blog post would be: “Hi End South Beach RE hasn’t shown as much weakness as the rest of the South Florida market YET.”

    re: Sotheby’s March 28 auction from Herald Tribune:

    “By the time it was over, 67 of the 99 properties on the block had no bids.”
    “This was a disaster,” said Fort Lauderdale broker Paul Merlesena as he stood near the door following the auction. “They’re basically going to have to give them away now.”

    “A six-bedroom, six-bath home in Fort Lauderdale’s Coral Ridge County Club previously listed at $5.9 million couldn’t fetch a bid for $3.5 million. A 3,100-square-foot penthouse on Williams Island in Aventura was listed for $5.6 million and did not even get anyone willing to start bidding at $2.5 million.”

    Part of the original Press Release for the auction:
    FT. LAUDERDALE, Fla., March 10 /PRNewswire/ –

    Sol Sotheby’s
    International Realty and Nestler Poletto Sotheby’s International Realty
    today announced they will hold their first luxury property auction for
    Miami-Dade, Broward and Palm Beach Counties on March 28, with more than
    $200 million in extraordinary properties for sale…

    The upcoming auction in Fort Lauderdale will benefit from a
    comprehensive multi-million dollar global marketing and advertising
    campaign designed to draw maximum exposure to the properties from local,
    national and international buyers.

  42. Best place to live in Miami is Midtown. You can sell your car to pay your mortgage and walk to Target and Marshalls. More money saved to pay your mortgage.
    Second best place is Miami Beach during Memorial Day weekend. Party on!

  43. I just saw a fellow co-worker loose his job today. There goes his mortage, too. We will see who will win this ridiculous house market price.

  44. I think the ONLY one’s to win are the realestate salespeople.It dosen’t matter if it sell’s for 300K 400k 650K or a Million+++ they still make their cut no matter what.It dosen’t make a difference if the vendor is making or losing……the salesperson is still making and MAKING BIG TIME.No offence to the many realestate friend’s we all have……but think about it ?????

  45. If you think the weak dollar is the savior, then you are wrong. You’d be better off to simply convert your currency now and wait for the real estate bottom instead of actually buying now. Non-locals are the easiest fools I suppose.

  46. Hello Renter Tom…I’ve been missing your comments on this blog lately.Glad to hear that your all settled in your new RENTAL.Smart man.Next year you can have your pick of about 100,000 properties for sale.You will be able to name your price….that’s if you even want to buy.

  47. With all this talk about the Beach being better than Downtown (I disagree), anyone want to rank where the best and worst locations will be for real estate in Miami? I have no doubt that some areas will be better than others. Any thoughts?

  48. There are certainly many great areas of Miami. You mention only Sobe. Why? It is like to know only Park Ave in Manhattan (very snobbish, provincial and simply silly). IT really depends on the taste and frankly to speak culture. I happen to like East Village in the City. In Miami I like different areas like Sunny Isles, DownTown, Design District, Upper East Side. More artistic, more free spirited.

    Also on another note. Today I was in Sheraton in Manhattan for the Real Estate Auction for NY and NJ properties(similar to the one that’s going to be in Miami in April 13). Investors are still there or I should say the desire to buy Real Estate is there. There were thousands of people. Properties went for double prices from the initial bids. Even extremely distressed properties were sold fo a substantial amount of money.

  49. lara
    dead cat bounce in my book.

    in terms of neighborhoods in miami, maybe i don’t get out enough, but my take is that miami has no recognizable “neighborhoods”, whether based on ethnic or age group, as you would find up north. rather, i’ve always looked at the miami neighborhoods as a function of nice, semi-rough, ghetto, or don’t venture anywhere near there regardless of what time of day it is. what in the hell is everybody referring to here when they talk about art scene in the design district? or the bohemian nature of the grove (hard to say its bohemian when considering the prices of meals and hotels in the grove). what exactly is the cultural life of miami? are we talking about the new lexus launch party (seriously)?

    i mean, take the gables as an example. what makes it unique as a neighborhood? borders? houston’s? starbucks? come on. frankly, the common misconception that my out of town friends have about miami is that it is some exotic locale/gateway to latin america. i’ll give miami credit for sharing many similarities in terms of the corruption that these other destinations exhibit. but nothing makes this place exotic or unique. new orleans is unique. san fran is unique. miami is good weather and some beaches. can find that across the caribbean .

  50. Thanks Moneyman….been enjoying the new place in Sunny Isles Beach. Renting a brand new place for half the price of ownership (not even counting the upcoming equity declines). Right on the beach with beautiful direct ocean views (just as good as that recent OBH thread pics) with wrap around balcony along the east and wraps around the south. Brand new everything, including furnishings…. This blog was very helpful in making the decision to rent versus buy. I will sit back, enjoy the place and take a look around at my leisure. Had some “excitement” today with all the news helicopters hovering outside my windows, bomb squad, etc…… it was in the news….a military shell washed ashore….ended up just being a phosphorous flare shell from a training exercise (not sure if it was spent or not). Just working on getting a tan now…. :-)

  51. “Also on another note. Today I was in Sheraton in Manhattan for the Real Estate Auction for NY and NJ properties(similar to the one that’s going to be in Miami in April 13). Investors are still there or I should say the desire to buy Real Estate is there”

    My full post is showing up at #43, but it should have been here at #54. Server glitch.

  52. jcrimes – spot on. Your post made me laugh. Lets’ b real. Miami Beach – Good beaches, good weather. Miami itself – erm, well, everything else is just, well, poor imitations of the real thing.

    I don’t think people realise just how secondary a city Miami is, and just how discretionary purchases in Miami Beach are.

    No-one is saying you can’t have fun in the sun. An economy, it hardly makes.

  53. Theres so much negativity that is not necessary nor does it add to the converstation. Att eh listing price this was good a deal (judgind by the bids) and it got overbidded up 80K;. That location is Prime becuase its beachfront Sofi just like Continuum you have Prime 112 across the St, High end Hotel ammenities, etc

    I value price like a value stock in the sense that it is worth the highest bid and have stepped away from setting my mind into price per sqFt or disount from original Purchase Price. Relative to the top of the Market if this Condo used to sell for 800K and it now sold for 459K that is a significant discount and the fact that there were multiple offers on the unit show how much demanda at 379,000 it had. In buildings like this where there is a low foreclosure rate it will be one comparable to take into account but it doesnt really set the price in any way. If there were multiple offers on that unit those other offer could go to active comparables but they wont get accepted. The fact of the matter is If Im looking for a foreclosure I wont pay anything more than the last one I bidded for was bought and If I wanted that specific location because I love the beach and walking across the st to primer and over to nikki for a drink then I want that bulding and will not consider any other deal close to there so as soon as another bank owned foreclosure comes to the market I will place the bid again. I see it happen to many of my clients where we have lost a proerty by 10K and now we are sitting around hoping that another one comes from the bank.

    I know Im going to get flamed for this comment and people are going to tell me to wait 3 years and buy at $120 a SqFt at Apogee but thje reality is that for certain buldings with high demand such as bentley beach and Continuum that are ocean front there is a list of people looking to bid at 50% off from the peak price (Which is exhibited by this unit at Bentley Beach)

    I used to use either replacement cost minus devaluation or comparable sales to value a property. Now I have moved to the Capitalization aproach or the highest bid/demand. A property is worth what the highest bidder is willing to offer you in an open market for your property, and if you bought it for twice or its less than construction cost or whatever reason it may be if you need to sell that is where the market is…

  54. Alejandro – No-one denies there are some great buildings with demand for them at particular prices versus many buildings with no demand at current offered prices.

    I think people are just fed up with hearing the beach is different, and instead of being told, at 50% off peak prices, there’s plenty of demand, that they are told that there’s a bidding war for Bentley beach property, going much over asking price.

    The context and facts are HUGELY important, and the spin given just isn’t good enough.

    We do agree on this

    1. REO price setting is not necessarily going to be THE price for every unit in that building or even the one next door, especially when foreclosures are rare. Intuitively we know that’s true, even if pure economics would say otherwise.

    What concerns people is that the non-prime beachfront buildings (Mosaic etc) have half their units for sale – and that stand off can’t last for ever. In situations like that, REOs/Foreclosures will set the bar.

  55. Kevin,

    let me start off by saying that i don’t dislike the beach, what i dont like is when people say they see no reason to live anywhere but the beach. like if it were the holy grail of places, far from it. also what you say about the 90k cars in front of the 100k houses, i totally agree, and that parents should teach kids morals, again 100% agree. and your argument about south point elementary, dont even get me started about the school system in this state. schools are ranked by the fcat scores, which dont tell you jack sh*t about the school or the people it.

    let me just tell everyone on this forum who has nothing but bad things to say about this city, and bring in all this negativity. if you dont like miami or the people than go look somewhere else. this blog is called “miamicondoinvestments” dont bring your arguments about new york or california or wherever else. if you dont like it here than go complain somewhere else, i like my city and i will defend it.

  56. Just as an ousider looking into Miami, I see the amount of money being invested into the City. I would think that in a few years the City will be as popular as the beach. I mean you have to love the beach, but the City has its positive points as well. At this point as far as what I can spend, I would rather live in one of the new buildings on Biscayne Blvd (Ten Museum, Marina Blue, 900. etc) than in a tiny 1920′s built condo with no view.

  57. Raffi
    i rip on Miami because i’m a realist. sugarcoat it all you want (and I’m not saying that you are doing as much) but let’s not kid ourselves into thinking miami is a world class city when compared to NY/Chicago/LA in the US, BA (which I believe is your home town?) in south america and numerous other cities in europe (i’ll leave out asia!). it’s just not. and it irks me when people suggest as much. miami might be there some day, but that day is a ways off.

    as for why i’m here if i hate it so much, notwithtanding my gripes about living in this “city,” in the long term, my line of work allows me greater flexibility and earning potential than i could ever find up north . one thing miami has going for it is the fact that if you’re a white collar professional, it’s easier to get ahead down here. simply, there is less competition.

  58. jcrimes,
    You’re right on about the white collar thing. I find your comments worthwhile and more importantly — extremely funny. Where do you live, by the way? I’ve heard you talk fairly knowledgably re: the beach as well as midtown and the Park West area… Just curious.

  59. jcrimes,

    I dont compare Miami to NY, LA, etc. and thats what gets me mad, people are like “oh Miami is not blah blah blah” Miami is Miami, it has a lot of potential but you cant compare such a young city as this to more historic NE cities. if your looking for the city with world reknown plays, operas, etc. then Miami right now is not for you. but dont knock it, it’ll be there some day, god knows its trying. end of story is that I like Miami and I’m tierd of people coming on this blog and complaining about it. if you dont like it then go somewhere else.

  60. kim – live in south beach and work downtown…but sometimes it feels like the other way around. i do a lot of work with developers so i’m familiar with their projects as well as their competitors. as for knowing the neighborhoods, i’ve been doing this abode search thing for too long now (about 2+ years). hell, i think two girls broke up with me because i was driving them nuts about seeing places on weekends.

    raffi – it would be nice to see it happen some day. i just don’t think we’re on the right trajectory nor will we be any time soon. frankly, i don’t even think you need an art/cultural scene for miami to realize its potential or for that matter, massive public expenditures. rather, simple changes into making this place more user friendly would go a long way. e.g., bayfront park is the most under-utilized resource i can think of down here. really, how is that park not exploited more? hell, i look at it every day from my office and it’s empty. throw some trees in there. some benches. a dog park. a baseball field. i mean, just make it a park and in the words of terrence mann, “people will come ray, people will most definitetely come!”

    a completely unrelated note – i can’t name names…but there is a massive developer who jumped into this market a few years back who now, according to my source, has indicated to his/her team to dump it all.

  61. Alejandro said: “A property is worth what the highest bidder is willing to offer you in an open market for your property”

    Agreed. Just like my Yahoo stock was worth $500/share in Jan 2000 because that was what people were willing to pay in an open market for it. Just like this (and many other) Bentley units were worth $900k in 2005 beacause that is what people were willing to pay for it then. What’s the point?

    The name of this blog is “Miami Condo Investments”. An investment is something that you put money into hoping for a financial return. Thus, it is important not only to evaluate a condo based on what someone is willing to pay for it today, but what they will be willing to pay for it in the future.

    In this context, many of the posters on this blog, as investors, are looking not only at where the market is, but where it is going. It would be very imprudent to ignore the worsening macroeconomic conditions, credit market deterioration, and growing supply issues in the Miami condo market.

    What a unit in Bentley is worth today is not really important to most of the potential investors on this forum. What it will be worth in the next several years is of more concern. The fact that the unit was listed below the current market value (and was bid up) is irrelevant. The more important fact is that this particular unit has already fallen in value by half in a period of 2.5 years.

    How much further will it fall? That is an important question to ask.

  62. hi JCRIMES,

    Does it mean that you can provide to us some leads for great deals? If you could do that I would appreciate it very much.

  63. Raffi,

    I appreciate your tenacious defense of your beloved city; God knows I’d do the same for Chicago. However, quit being such a cheerleader. One of the reasons this board is so strong is that the board supports an exchange of a variety of viewpoints and OPINIONS. If you don’t like an opinion, make your point, and move on. However, don’t tell me to leave the board b/c I want to express an opinion that differs from yours.

    That attitude supports a narrow-minded and limited perspective, and is very reminiscent of a time not long ago when those that opposed the Iraq War were told by the “true patriots”, if you don’t like it, leave. They make America (and by extension, this board, Miami, etc) better by staying and raising those problems.

  64. Mr. Flamingo: The URL is “condo” with no “s”, and the logo at the top has no “s”. There is obviously a discrepancy.

  65. Slightly off topic: does anyone know if it is better to just buy a condo outright or does it make sense to buy it into an offshore company, say the Bahamas. I just wondered if it would save you the tax on sale if you sold it to another non-resident.

    Not that I’m willing to buy yet but it pays to know.

  66. lara
    sorry, but i’m in a position where the information i get re: my clients simply cannot be revealed by me. that said, i’m sure lucas hears rumblings about a lot of the stuff that i work on and does a good job of reporting it here. people always talk.

  67. Jcrimes, Raffi, etc,

    the reason miami is nowhere close to all the other cities is that there is no true industry and spins off higher paying jobs. the elected officials think that tourism is the way out – moronic thinking (come work at carnival cruise lines and get paid $28k/yr and ‘travel the world!’). until they bring/lure in REAL jobs and create true industry down here. until this happens…it will always be a city that wants to be something that it’s not (similar to many of its residents).

  68. I hate to tell you guys but corporate America is not in the US anymore. Manufacturing jobs are in china, IT jobs are being outsourced to India, etc, etc, etc. It is not unique to Miami.

  69. cyrus/raffi
    i don’t think you’ll see corporate america moving here en masse any time soon or for that matter, ever. i’ve posted about this before but briefly, there’s several inter-related reasons

    1. cost of living – if your backoffice and lower level staff can’t afford to live here, then you’re screwed.

    2. qualified people – decent schools down here bnt miami doesn’t compare to other cities that have significant influx of qualified people (from a degree standpoint). e.g., charlotte has duke/unc/wake and vandy. atl draws from all of those plus emory. chicago/ny and la have great schools plus draw from across the country. why re-locate my company here if i’m not going to get a good influx of qualified candidates? corporate america’s elite, even though many of them are not blue bloods, like knowing that they get applications from the supposedly elite schools.

    3. salaries – the salaries needed to be paid here in order to afford it are something that corporate america won’t pay. why pay a secretary 65k in miami when i can pay her 45k in clt? from a white collar standpoint, i can say that the banks down here pay significantly less, at least initially. same goes for law firms. however, if you stick it out, long term, you could end up coming out ahead. problem is, most white collar types are too risk adverse to take that chance and would rather take the bigger paycheck in new york along with the white shoe name to boot.

    4. the qualifications of backoffice staff – my own experience is that the competency level of native staff down here is inferior when compared to what i had back up north. it’s my anecdotal opinion.

    5. hurricanes – don’t kid yourself. why move here and risk the fact that you might have to close shop for a week or two because of a bad storm?

  70. Mr. Flamingo: I didn’t say you were wrong. But I’m obviously not wrong, either.

    You can’t correct someone for calling it “Miami Condo Investments” when that’s what the URL and head logo say – regardless of any tweaks to the name that were made to get more traffic. The original name (and the URL still is) Miami Condo Investments.

  71. Jcimes,

    you’ve actually made some points that would be beneficial for a corporate employee to live here (back office especially).

    but to touch on some of your points:

    1- nyc/london/s. + n. california backoffice types have long commutes to the perspective cities to their jobs. if you live in nyc, you commute from the boroughs/jersey/hoboken, etc…therefore, a back office type would find miami prices cheap, relative to big cities in and out of the US…not to mention the lack of state income tax. i used to pay almost 11% in local and state taxes in nyc….part of the reason why i moved down here. it became a no brainer to get an 11% savings AND lower cost of living. yes, if you are a floridian who has a lower paying job, then it’s expensive. but again, relative to big cities of the world, it’s cheap + no city/state income tax.

    2- i 100% agree that there are no good schools down here…and it’s why i will send my kids back up north or west for college. having said this…but this can also be resolved IF there were good high paying jobs here. many students leave their respective college and move to another state for work (again, major cities for higher pay jobs). you could bring them down here if miami offered good jobs…maybe not as high paying as coastal cities..but high enough where the tax savings and weather could lure them in. again, there isn’t a real industry to lure ANYONE down here. at $150k/yr here, you could have a real nice living…in coastal big cities, it’s a sustinance level.

    3-salaries don’t need to beat other cities to lure in well qualified workers…just needs to be somewhat competitive …. weather and taxes will bring them in.

    4-hurricanes is not a real reason not to come down. i went through the last 2…overblown issue as everyone watched katrina…

    bottom line is if the dumb elected officials actually REALIZED that they need to lure in large corporations through incentives (mainly larger tax breaks than other cities)…the rest COULD fall into place in 5-10 yrs…

    but nothing is being offered. morons are still trying to bring in cruise agents and tourists…so no matter WHAT they build down here, it will be booms and busts. too many morons in the local gvmt to understand this.

  72. Just saw this news alert about Blackstone raising $10.9 billion for real estate fund:

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aqKWTa8pFWnc&refer=home

    Here is a blurb: Blackstone and other so-called opportunity funds aim to take advantage of a drop in asset prices following the collapse of the U.S. subprime-mortgage market. These funds, seeking returns of about 20 percent or more, started in the early 1990s after the U.S. savings-and-loan crisis. The failure of more than 1,000 thrifts that speculated on real estate in the 1980s forced the federal government to sell defaulted mortgages at discounts.

  73. Confucious say….sell America buy China that is where the action is.Soon China buy up the rest of the leftovers.IN U.S.A.

  74. hong kong investor….china is a poor country and will be poor for a long time to come. Chinese stock market and real estate markets are propped by artificially by the communist party officials. China is head for a bust and it will probably make the 12 year deflation in Japan look like a picnic.

    No society can repress its people and prosper. The gap between haves and have nots is rising in china and soon will reach a point where social unrest will insue and society will fall apart.

  75. Juan, the 4/13 REDC auction link is:

    http://www.ushomeauction.com/auction_details.php?auctionID=H-024&chkVenue=112&search=1

    The 4/12 Hudson & Marshall auction link:

    http://www.hudsonandmarshall.com/listings.asp?subsaleID=2515&auctionId=415&display=Sale+Number+01%26nbsp%3B%2D%26nbsp%3BFort+Lauderdale%2C+Florida%26nbsp%3B%2D%26nbsp%3BProperties+%2D+101+%2D+299

    Condos of possible interest include Vue, Club, Mirador, Roney, Cite, Waverly. I think it’s all with reserve, not absolute, so bidders may be disappointed with the reserve amounts.

  76. This whole post is BS!

    If I’ve told you once I’ve told you before the smart money is waiting for the Miami Condo market to hit $125 per square foor which ought to happen in late 2009 or early 2010. Then and only then move in for the kill.

  77. I love this blog and the smart people who contribute to it. Here’s my take: I’m a real estate pro with $1M cash to spend on a condo in South Beach which I like because of the weather, people, restaurant and general edginess. I’ve been looking for the past 3 months at the high end which I define as Setai, Ill Villaggio, Continuum I and Murano at Portofino. (Apogee is too high end for me). The prices in these buildings have not gone down anymore than prices went down in SoHo in the late 1980′s and early 1990′s when the rest of the world was crashing. People in the best neighborhoods simply stop selling in bad markets; they wait until the markets come back – which they always do. I can’t find anything…yet. Continuum II didn’t turn me on notwithstanding its excellent location. The lobby sucks and, looking down from the upper floors you see the roofs of the townhouses with their cheap, shitty $800 hot tubs. And then there’s this crummy little smelly lagoon around the cabanas. Everybody says quietly, respectfully, “It’s the last of the great oceanfront condominium projects”. Such shit. Wait till whoever owns Nikki Beach Club sells out. Speaking of which, the noise on Sundays from this place permeates Continuum II’s trumpeted “paradise”. It’s like being in the front row of a rap concert with nothing to see, assuming you wanted to see something in the first place. Last comment: the construction going on in the park at the very southern tip of South Beach is becoming really scary. Thank God I didn’t buy a townhouse at Continuum I: the views are going, going, gone. Huge mounds of dirt are taking on the feel of permanence. That great view of the Cut is going, going, gone. And what are these huge mounds for? Ampitheatres? Public performance spaces? Public pissoirs? Watch out Niiki Beach Club! You may be getting some competition. And so then, living in your million six condo at Continuum I or II on Sunday, surrounded by thump, thump, thump, thump. All day. Absolute hell. What did the brochure say? “12 acres of Paradise”. Please.

  78. what folks dont’ realize is that foreigners have more buying power

    with the Euro approaching $1.60 foreign buyers will eat up some of the inventory on south beach for a while (until they realize how much $$$ is going down the toilet in fees and taxes on their vacation home)—but the reckoning will come this summer.

  79. The city of miami beach owns the land underneath Nicky Beach. It won’t be developed.

    I agree the lobby and interior of Continuum II is silly for a beach location. Reminds me of a Rooms to Go showroom.

  80. The Euro may be an advantage for buyers today…but lets not forget all markets have cycles. It will only be a matter of time before the dollar strengthens against the Euro. It will then become MORE EXPENSIVE for Europeans to maintain the monthly mortgage/maintenance fees. Also, if prices flatten out they will have less Euro’s when they go to sell.

  81. I have said this before regarding the Euro, better to just exchange Euros into US Dollars now and buy real estate later. There is no reason to confuse the currency issue with the buying decision.

    Samson – I’m pretty much in the same boat as you…except not sure exactly where to buy (South Beach through Ft. Lauderdale area). So am renting and will look at my leisure…. So far, renting has been carefree! I own several other properties up north so renting is a new experience for me….but it is the smart move in this market for sure!

  82. Sobe is over-rated and is beginning to earn a horrible reputation as being racist, rude, and overcrowded. These are things that the rich generally tend to avoid., as they can afford to live without them.

    I give Sobe another 2-3 years, global recession, along with a Cat 2 and Sobe will go back back to pre-80′s Sobe, with a nice paint job.

  83. This is the best time for foreigners to by real estate. With the weakened dollar, and current market conditions it’s a no brainier. Mike K you say it’s only a matter of time before the dollar strengthens against the euro well it’s only a matter of time before the real estate market stabilizes and begins to appreciate again. At which point that foreign buyer becomes a seller which 1) sells higher then be bought assuming he buys now and holds to sell until after the correction 2) When those dollars from the sale are converted back to his currency he makes a double killing assuming the dollar gains strength. This blog is filled with so many pessimistic views. I will say this real estate will always go up given a large enough time frame, and secondly I think it’s just sad that there are actually some semi intelligent blogers on this site that don’t want to differentiate between the beachfront properties and the mainland properties ever hear the saying location, location, location?

  84. RG – Boy are you wrong. The dollar with strengthen much much sooner than real estate prices will strengthen. It won’t even be close. If you’re going to play the currency game why not just go for the pure play instead of confusing it with the real estate purchase decision (esp. with declining asset prices in this category)? I do agree that the beachfront properties are a different market than the inland properties, but all properties will be affected…all.

    ex-sober – Haven’t hung out at SoBe yet, how is it racist? Just wondering…

  85. SAMSON..a word to the wise.Your too smart to spend a MILLION right now anyway.You know as well as myself and Renter Tom that a year from now …you’ll be able to buy the same 1Million dollar condo for 700K .What’s the RUSH.

  86. RG said: “ever hear the saying location, location, location?”

    The difference between the beach and other areas is that the beach is more desirable and therefore, more expensive. This is nothing new. It was true before the boom and it is true today. That will not change. That is what is meant by “location, location, location.”

    That does NOT mean that the price appreciation these beachfront properties experienced during the boom due to speculation will hold.

    If all properties in Miami declined in value by 50%, beachfront property would still be more expensive than anything else, by the same proportion. Prices declining across the board does NOT go against the “location, location” saying.

    Now, I don’t think anyone is saying that the beach will take the same depreciation hit that downtown condos will. Most of those downtown condos never had real end-user demand in the first place. They were built purely to satisfy demand from quick-buck flippers. So, they will fare worse than anything else.

    However, any price increase that occurred in the beachfront areas due to speculation (which is almost any appreciation that occurred in at least the last 2-3 years of the boom) will be erased.

    “Location, location, location” refers to fundamental value (the desirability of the location itself) – NOT the immunity to rampant speculation. Miami Beach wasn’t less desirable in 2001 than it is today. The “location” element can not be used to explain the ridiculous price increases that occurred from that time.

    What DID cause prices to go crazy was the widespread idea that real estate was an easy way to make money, combined with cheap credit. This formed a self-feeding loop that caused prices to skyrocket.

    Location had nothing to do with it.

  87. I really haven’t seen any specific data in Miami indicating the real estate market is being buoyed in a way that reflects the dollars continued weakness against, for one, the euro. A downside for foreign buyers is the reconversion risk one day back in the future. If the dollar remains a bearish asset why expose yourself to U.S. real estate & currency risk at the same time?

  88. I see the U.S. economy no longer as the engine driving all the other country train cars, rather there is a more loose tether that will pull other other world economies along eventually and in the same general direction albeit not the exact path. Thus, under this concept, the U.S. dollar will strengthen against the euro as things unfold. Some will follow the U.S. shallowly and others will get whipsawed….. China will be interesting….Europe (western) won’t be as bad and will just get tugged along. Regardless, the U.S. Dollar will strengthen. The biggest concern is govt deficits — war spending and transfer payments. God help us if Obama is elected president… (sorry for the last part but I couldn’t help it given what this guy is promising to those that don’t actually work and are dependent on govt programs….it is frightening…).

  89. This discussion just reminds me of the “fire-sale” on a Canyon Ranch Unit. As I understand it, this unit in the refurbished old building rather than fancy new glass tower. But denial is slowingly giving way to capitulation.

    This, of course, is the development described by some realtor as “Canyon Ranch Living will NOT be just another condominium; it will be a destination”.

    So look how far we’ve come in just a few months. I will bore myself again, most of Miami Beach is no different – second home, discretionary purchases that people just don’t need/want.

    If a couple of buildings end up being immune, so what?

    —————
    PRICE SLASHED!
    Presenting this 1330Sq.Ft. two bedroom, two bath, residence located in the Carillion Tower at Canyon Ranch.
    Lowest priced residence in ALL OF CANYON!
    TRY $600 PSFT – THIS IS WELL BELOW, DEVELOPERS DAY #1 PRICE / FOUR PLUS YEARS AGO AND IS CURRENTLY THE LOWEST PRICED RESIDENCE IN ALL OF CANYON; GUARANTEED!

    p.s. couldn’t leave it without pointing out the $14k a year HOA and $16k a year taxes. That’s a whole lot of nights at the Delano or a ton of time at the Diplomat.

  90. To continue with generalmagic question, what is happening with the Mondrian West avenue? I called them and they have no clue as to when the hotel will start. They have an office on 57th st Manhattan and are desperately trying to sell the remaining units.

    Any news that anyone can contribute here about the Mondrian?

  91. Thing’s are bad enough!!!!! Vote OBAMA and see what happen’s.You think thing’s are BAD NOW.WAKE UP AND SMELL THE ROSE’S.A VOTE FOR HIM IS A VOTE FOR A WELFARE STATE.

  92. Mike K,

    Those median home prices are so off base its unreal. I cannot believe that the median home price in 2000 for florida was $105,000. Actually I guess if you include all the hillbilly parts of florida it may make sense, but as far as Miami goes you couldn’t find anything half decent for 100k, not in 2000. Maybe 1990.

  93. I am reading a lot of opinions here and agree with a few.One thing for sure is that Oceanfront bwill always be worth a lot more than inland property.I still think that some of the prime Oceanfront condos will DROP like crazy.We are entering a Recessision/Depression and price’s are not going to stay where they are.Only a fool would believe they would.I have been watching/living in the area for year’s …seen it done it and know exactly what’s going to happen.A word of advice WAIT …very soon you will see what I mean.There are no bargain’s right now.Only left over’s from other people’s mistakes. GOOD LUCK.

  94. “p.s. couldn’t leave it without pointing out the $14k a year HOA and $16k a year ”

    Add another $7,900/year if the property is a discretionary second home purchase

    +$3,600- I would like to mention here that any person buying a condo in this unit would almost certainly have Hi-Def Cable with multiple boxes/Broadband/phone line and a $100/month electric bill (need A/C on 24/7 to prevent mold) which would tack on about $300/month or $3,600 a year

    +$300- Let’s add another $300 for tips you should be making as a resident to the regular staff for Holidays and such.

    +$4,000- And let’s add a really really really generous $4,000 expense account for “shit happens” like calling a plumber, your plasma breaks, Hurricane throws crap on your balcony that you need to get cleaned off, normal wear and tear “depreciation” of your furniture value (note we are not even talking about the upfront cost of furnishing the condo, just a very small depreciation amount of the furnishings value in a year… realistically, a well furnished 2 BR condo could depreciate closer to $8K/year alone on the value of the furnishings. Assume a purchase price and assume what you could sell the furnishings for in 6 years –Furniture, beds, plasma, stereo-). These are costs you incur as an owner but wouldn’t be extra costs for staying at the Delano.

    This $7,900 I outlined was not in the calculus for an investor because they didn’t need to furnish/occupy the units. Now that it’s finally come down to a situation where real people will have to buy/occupy these units, that $7,900 is a real cost a real person needs to weigh when considering buying a condo as a second residence for a couple weeks a year versus staying in a hotel.

    When people bought these “investments” in years past, the fact that they were buying things they couldn’t remotely afford was completely masked by the appreciating values and lending (NON) standards in South FL.

    Truly rich people aren’t buyers of the sub $2 million RE market. You can guarantee people in the sub $2 million bracket care about throwing away $30,000 – $40,000/year as much as the next guy. All this investor nonsense really clouded the fact that values back then and values now are not compelling to a true buyer looking for a discretionary 2nd home in this price bracket. With the investment angle gone, you need to convince a true buyer what is so compelling about this purchase for a person that is well off but not truly rich to want to burn $40,000 a year over.

    A lot of people can throw away $10,000-$20,000 a year. It takes a different breed to be able to throw away $30,000 – $50,000 a year.

  95. JL that was very interesting.VERY INTERESTING.I’m sure that RENTER TOM would agree with you as I do 100%.Who in there right mind would even want to consider BUYING IN A DOWN MARKET like this. ou can rent in a TOP NOTCH hotel for a fraction of the cost of owning.VERY WELL SAID.Thank you JL

  96. JL, You are right on. I dont know who is buying these 750K – 1.5 Mil condos. Are they really rich? can they afford to burn 50K a year just for the luxury of owning a condo in continuum and other buildings even if there is no mortgage and it is paid in all cash? Unreal.

    And Mr. HK investor or whoever you are, Please dont hijack this blog with talk about Politics or Politicians. If you have nothing to say about Miami real estate or related topics, don’t say anything. Thanks.

  97. ABC nightline story (Sent to me by Mark Zilbert):

    Dear AJ,
    If you happen to catch tonight’s ABC NEWS NIGHTLINE (11:35pm), I will be featured in a story about the impact of today’s real estate market on everyday families who invested in condo flipping.

    While many people made a fortune buying and selling condos during Miami’s condo boom, today’s flipping market is a far cry of what it once was. ABC’s story tonight shows how everyday people, many of them working parents with children, bought into the condo game, and are now paying the price. In fact, it’s not uncommon to find families who own speculative condos with carrying costs higher than their incomes.

    From a broker’s perspective, we sat through (and are sitting through) it all. During the good times, we tried to ensure that condo buyers understood the risks of flipping condos. Still, the hundreds to thousands of buyers that we worked with were determined to buy condos. We’d get condo buyers sending us e-mails with orders to place their deposits on anything that looked promising. We’d stand in line with buyers, desperate to place a deposit on the newest and most-exciting condo. And, many buyers bought more than one condo. It all seemed to be too good to be true.

    So, today, we see many of these same buyers defaulting on their contracts, fearing a continued oversupply of condos and lack of buyers. Many of the buyers who are closing on their condos are quickly turning them into rental properties, often earning a fraction of their carrying costs. And, as we will see on ABC tonight, some of these new condo owners cannot afford to carry the condos that they have closed on.

    While the prospects of a resale for many of these investors seems bleak, there are a number of options available to them. We believe that foreclosing is probably the worst thing that a condo owner can do in these times. A huge new market in short-selling seems to be the direction that many are taking. Short sales will ultimately end up in a loss to the seller, but the seller has an easy way of stepping away from the property. Sellers need to understand that the difference in the amount of the short sale and the amount of the loan owned comes back to the seller as 1099 income in the following tax year. But, many sellers are holding-on, with the belief that a market recovery will slowly bring things back to normal. It’s likely going to be 3-5 years before things pick up again, but many new condo owners plan to keep renters in place until then.

  98. Has anybody heard of the status of Met1 lately? Great looking building but i have heard nothing about price and availability.

  99. THANK YOU AJ I will be watching that story later tonight.AJ in your unbiased opinion…what are we looking at per sq. ft. in the next 6 month’s to a year??/ I realize that you have to compare apple’s to apple’s.I’m talking a nice condo a little off the ocean with a nice view nice amen’s and fairly new.I know that’s a hard call …but only picking your knowlegable brain’s.Thank you.

  100. Good News for the Club at Brickell Bay!

    Condovultures.com’s Peter Zalewski is reporting The Club has dropped in their foreclosure rankings from 1st to 2nd; that’s a 100% improvement!!!

    And Jade is off the list!

    The Miami-Dade ranking is:

    1. Parc Central Aventura
    2. Club at Brickell Bay
    3. Oceanview
    3. Blue Lagoon
    5. Vue at Brickell
    6. Venetia Gardens (North & South)
    Homestead
    7. Las Vistas at Doral
    8. Shoma Condo at Keys Cove
    Homestead
    9. Mirador
    10. Grand
    11. Antigua at Country Club of Miami

    Mirador’s the only SoBe condo on the list. If there are SoBe steals anywhere, shouldn’t be there?

  101. Hi Marcel, Thanks for The kind words.

    I am kind of a Sobe guy. So I can talk about such buildings in Sobe only.
    The buildings that you desire 1. Fairly new 2. Amenities 3. Not on beach but close enough 4. View .
    Such fairly new buildings are are not many that I know off in SOBE except a few new Loft style buildings that came up in the past 3 years. Maybe more such buildings are in Mid beach and North Beaches.
    In Sobe, you can find the first 3 requirements of yours but with out much view. To add the view we have to go to the ultra luxury highrises which I think are a rip off for anyone other than those with tons of cash and dont know what to do with it.
    I am particularly intrigued by this listing. Seems to be a descent buy. What do others think about this Loft in SOBE South of 5th.

    http://miami.craigslist.org/rfs/621761385.html

    As far as price per sqft ? This is just a guessing game on my part:

    Assuming that we will be out of recession by the end of second quarter.

    wishful thinking 175-275/sqft.

    realistic 225-325/sqft.

    If we are in a depression and this recession drags into the 4th quarter ’08 or may be even the 1st qtr of ’09 then all bets are off. Then god only knows what will happen. I hate to even go there.

  102. Mark Zilbert (Zilbert Realty) is scheduled to be on NightLine ABC tonight at 11:35 talking about the impact of today’s real estate market on everyday families who invested in condo flipping.

    ing about

  103. Hi Perez,

    Thanks for the list. Great info. Where did you pick the list from. Is it public info?

    Aha, Mirador! No wonder, there are gazillion units up for sale in the south tower. I have been tracking the price /sq.ft. there. Incidentally I still have the price list when they went condo in 04. I was one of those tempted to stand in line for 3 days to get a unit there but decided againt it. I am glad about that. The prices are now hovering just a little over the condo conversion prices offered by the developer (Direct bay view at 350-400) . Some hold outs are still listing at 450-550+ /sf . They will be sitting on them for a long time and still wont be selling. I am waiting for the prices to drop to $300/sf for direct bayview so that I can pick up a unit there. I have a good feeling it might happen in the next 6 months.
    What do you guys think?

  104. MIRADOR: i kept a place there for a few months while i worked down there for about a yr (my house is 1 hr north and i took a place there for about 2 nights/wk to help w/the commute). word of advice: do NOT buy a place at an condo conversion. the bldgs are older and walls are thin! you can hear everything. i only slept at the rental 2 nights/wk but it was terrible. not to mention i offered the landlord 6 months upfront and got it 30% off asking…and that was 2005! i wouldnt buy in there even at 50 bux/sq ft.

  105. i hope my post above saves people from making the mistake of buying into a condo conversion. only one that seemed somewhat well done was the Waverly…

  106. aj
    i’ve looked at that listing in the absolut lofts. i don’t think the bank is approving the price so it’s just wishful thinking. the unit itself is nice, nothing spectacular. the floors don’t really match the style of the unit. area is nothing special…it’s in the okay part of south of 5th. hard to tell from the pics, but your magnificent floor to ceiling glass windows look out onto a street across from a school. not exactly something to write home about.

  107. Cyrus, Thanks. I am a sucker for a view. That leaves only limited choices. The Waverly direct bay view are line 01 and 02. They came down from the highs of 900,000 to a couple of units being offered at 650,000. But even then that is very high for me. That works out to $550/sf. Non direct bayview in Waverly can be had for much cheaper price like under 400/sf in many foreclosures. Does anyone think that direct bay lines 01/02 will ever get to $400/sf either in a natural course of time or in a foreclosure. If it does, is it worth buying ?

  108. Hello Jcrimes,
    Thanks for the info on Absolute Lofts. Yes It is on 3rd and Alton. Well if the bank is not going to approve, the would be short seller has no choice other than going into foreclosure. I was tempted to go there for a look but after your report, it saved me a trip.
    Don’t I love this blog!

  109. AJ
    i’d still look at the unit. if it goes in foreclosure the lender may well be willing to strike a deal at a price that’s too good to pass up. my beef was that i didn’t really want to look at a school/field out of my 18ft+ windows. not to mention, i’d be guaranteed ten speeding tickets a year if i lived over there.

    if you like south of 5th, but don’t care about the view, there’s a 2/2 at cosmo that’s priced to sell. it’s a foreclosure, owned by the bank. mnt fee is a little tough and i’m not sure what the lien situation is.

  110. JC, Same reason as you I wouldnt want to be there. I dont want to look at a school all day. Not a great fan of South of 5th. I dont know how a few luxury highrises gave a previous no go area such desirability. For me SoFi = inconvenience.
    My previous tenant bought a unit in Cosmo at the height of boom against my advise. I visited him, not impressed at all with the building. The units themselves are good but zero views, tiny lobby, main streets on all sides. Not walking distance to any conveniences except Smith and Wollensky and such.

    There are some new lofts between 5th and 15th at Meridian, Michigan, Jefferson, West etc. I got to check those out too.

  111. The following is a copy of an email I just sent to Mark Zilbert. I thought the readers here might enjoy it.

    Just watched the Nightline piece.

    Gee Mark, if I didn’t know better, I’d say you sound EXACTLY like that guy Jack McCabe, a year after he said the IDENTICALLY same things were going to happen.

    50% off, 5-8 years before a turnaround, rental income currently 50% of ownership costs…..hmmm…..

    Pretty AMAZING how much your comments in the media have changed 180 degrees.

    I remember when your quotes were diametrically opposite of mine. I do give you credit for finally becoming realistic and ending the BS huffing and puffing.

    Best regards.

    The quoted and copied original.

  112. Hello Jack,
    I didnt know you follow this blog. Your name is all over the web for the past 3 years. Consider me a fan.

    The realtors have always knew that this whole thing is just a mirage. The stratoshperical 5% price rise per month that happened in 04-05 is a total scam on all unsuspecting people.But they will never admit to it. It is just that they did not want to upset the gravy train that they were riding. Probably a job compulsion. Now they have to eat the humble pie in public.

  113. AJ,

    The ranking of foreclosures is available from condovultures.com and was recently published at: http://cbs4.com/local/foreclosures.homes.property.2.690007.html

    In fairness to Mirador, and some of the others, the ranking was based on the total number of foreclosures this year. Mirador included 3 addresses (1000, 1035, and 1200 West Ave) so there are a lot of units there. On a percentage basis it may not be as bad as other condos.

    Has anyone seen comparisons of condos on the basis of the # of foreclosed units as a percentage of total units available?

  114. Condo conversions and thin walls.

    I’ve heard that before, but is it a function of the age of the building and applicable codes of the time, or the thickness of the cement partition, or drywall thickness?

    If both a condo and an apartment was built in the 70s, are the condo walls thicker?

    Some conversions take it to the studs and replace the drywall, instead of just re-painting; shouldn’t those be Ok?

  115. Any news on the new project, the Viceroy? Saw the plans a few months ago while visiting… Love SoFi…. but not sure if this is a good one to look into on my next visit…… I knew you guys would know the scoop!!!!!!

  116. JL said: “With the investment angle gone, you need to convince a true buyer what is so compelling about this purchase for a person that is well off but not truly rich to want to burn $40,000 a year”
    ——

    People that tout the high end of the market seem to suggest that “rich people are rich – so they don’t care what the price is, or how much it costs to own”.

    I believe that idea is utter nonsense. Rich people don’t get rich by being careless in their purchases and investments. And if they are rich and careless, they won’t be rich for very long with that attitude.

    Why do so many people who win huge lottery jackpots end up broke again? Because they aren’t smart with their money. The rich people that stay rich analyze their purchases carefully.

    All of these condos had a huge investment angle to them when the market was soaring. In the context of that market, price and holding costs didn’t matter. They matter A LOT (even to rich people) in a flat or declining market.

    Overpaying for a condo in a declining market just because you “like the beach” is something a white trash lottery winner would do – not a smart, self-made, wealthy investor.

  117. BFG – You’re right on the money. Those that earned the money don’t like to waste it, those that get it as a windfall tend do reckless things with it.

    The Nightline show last night was interesting but didn’t reveal anything new to people that follow this blog or the market. If a building has 70% speculators in it, then things are going to get really bad the further they hold out…it is wishful thinking this market will turn around in the next 5 years. I feel for the couple that was featured, they look a bit tormented by the situation they are in right now but they allowed greed to cloud their judgment and forgot one of the top rules in investing …. diversify. It looks like they choose some nice units, but gross over supply means that there are many more just like it and they are powerless when it comes to demanding a price.

  118. Hi Jack, Very nice and informative power point presentation. Thanks.

    Couldn’t agree more with Perez and Cyrus regarding quality of construction of Condo vs Rental buildings constructed in the seventies. We can understand the Mirador but Floridian being such a relatively new construction is built with such shabby standards is unforgivable. Quite an eye opener. I have never even thought about that aspect.

    BFG, you are right on about the people buying these ultra luxury 1.5 mil and up condos. Investors have wisened up and not touching these units. When a rare unit gets sold, it gets touted a lot.
    They say Europeans are smarter than Americans ( at least more worldly wise and more knowledgeable about the World than an average American). I doubt if a Franfurter or Hamburger or a Milanese would just throw their money away even if they are floating in Euros. Moscovites are notorious for demanding value for their money and rightfully they should. Only the Latin American Mafia and the ruling class with ill gotten wealth who send their wifes and children to Miami to avoid them being kidnapped in the barrios of Caracas, Bogota, Rio can afford to pay these ludicrous prices and holding costs. (Ok the last one was extreme. What the heck, I just wanted to say it. Some of my South American friends from Icon and Portofino would disown me for this LOL)

  119. Looking in my crystal ball showed me that the Nightline story couple payed $459,270 for their unit. 2/2 1314 sq. ft.. Loan for $413,000 with a second home rider. At least they didn’t commit fraud by renting it out while they were supposed to move in within 60 days. Best priced 2/2 in the building is $309,000.

  120. Lucas,

    you need a new post, 140 replies….thats nuts, I’ve been on this blog since Nov. and I think this is the highest number of replies…good job, keep it going.

  121. It would be fun and very informative if we could have a thread/analysis on the RE trends on Star/Palm/Hibiscus/Venetian/North Bay Road houses and Fisher Island Condos.

    Although it’s not a focus of this blog, IMO, what’s happening in those locations is the ABSOLUTE best predictor of RE values for the “Hi End” SoBe condos (new Ocean construction and/or South of 5th).

    The houses/condos in those locations have a long history and are about as safe as safe can be in the S. FL Real Estate market. If they are not holding rock solid, the writing is on the wall for Hi-End beach condos from Apogee to the Continuum.

  122. JL
    not exactly sure if that holds. north bay village is entirely different than south of 5th, at least to me. heck, fisher island is entirely different than south of 5th.

  123. North Bay Road 33140… similar price range to Star and Palm islands (at least the houses on the water side).

    A mansion on Palm Island is obviously quite different than a Penthouse on Continuum or Apogee, but I think what goes on in Palm/Star/Venetian/North Bay road is a good leading indicator for the Hi-End overall since you have a history for these houses as a backdrop.

    Smart rich buys a $10 million house on the water. Dumb trying to be rich buys a $3 million condo in Apogee or Continuum.

    In this case, I’ll say the Smart Rich will be the leading indicator for which way the Hi-End Miami Beach market blows over the next couple years.

  124. Re: Mirador condo

    You know why Mirador made #9 on the foreclosure list. because of all the damn construction. It is absolutely unbearable. I had a friend who i used to visit when i lived in Southgate apt. And it was like living in the middle of a construction site. I am sure in a year or two it will be liveable. But right now, no!!

  125. Any news on the new project, the Viceroy? Saw the plans a few months ago while visiting… Love SoFi…. but not sure if this is a good one to look into on my next visit…… I knew you guys would know the scoop!!!!!!

  126. I agree with Raffi, give the lions some new fodder to scrap over with a new post … Although the blog certainly has come a long way — McCabe, Zilbert… All we need now to balance out all this pessimism is the Genius Goodkin and perhaps a few choice words from Sean Sneath and maybe even Barbie Corcoran or David Lereah could weigh in for ole’ times sake… Then your blog will have really arrived, Lucas.

  127. BFG,

    I think you are absolutely correct in your assessment of “new” buyers of these condos. I am perhaps a future purchaser of one these units but I have the same concerns that you mentioned. While I may be “able” to afford one of these condos, I think about all of the cash outlay required just to “own” it. Maintenance costs are about twice a high as other comparable condos in other parts of the US, along with probhibitive real estate taxes (those too are also twice as high as many other part of the US). If I consider that I would pay around $350 to $400K cash for the unit; I would still have to pay approximately $8 to 10K yearly for real estate tax and at least another $7K or so for the
    montly maintenance fee. Add on a few other things and one is pushing $20K or so just to own it. The long-term average of a good mutual fund is about 12% per year. On my $400k, I would earn $48K (that would leave about $40K after
    tax on the earnings). With $40K, I could spend
    $10K to visit the area yearly. That $10K would buy me some much more “fancy” diggs than my $400K condo to use for a few weeks of the year; I would have another $30K left over to invest and I would have none of the hassles of home ownership.

    I think these are the “alternative” costs, or uses, of the money that people overlook.

  128. David -

    I believe you have the right idea about opportunity cost, but I think your analysis is a bit off. First of all, 12% return in the stock market is extremely difficult to obtain…look at the last 10 years of history. Most poeple I talk to say that the normal investor should use between 7 and 8% as the value for conservative purposes.

    Furthermore, your analysis leaves out the Condo as an investment. Even through this downturn, everyone eventually acknowledges that after the inventory clears up in S. Florida (either by enough price drops or through vulture sales, conversion to rental..etc) that appreciation will return to the real estate market here. Of course, the 20% annual appreciation in RE is lost and gone forever…but historically Real Estate has appreciated right around the rate of inflation or a bit higher. After all, if it outstripped inflation not many people would be able to buy houses at all! Now I know somebody will chime in about real wages being stagnant and thats how people got in this whole mess with unaffordable housing…yada yada…but I believe in the USA and I do believe that our free markets, best graduate universities in the world and a desire to be rich will pull us out of this recession. This is *NOT* Japan, our banks have “marked their assets to market” and are not propping up broken institutions.

    So, lets get to the fun part…the analysis. Assume you pay $400k for a killer condo. Lets also ssume this represents the bottom of the market (I know, a big assumption…but these are my numbers nyah nyah nyah). Anyway, if you purchase a $400k condo, you are going to be getting it with leverage. Who the heck wants to pay cash?! So, $400k condo means $80k down payment to avoid PMI (and the complications that come with it). *THAT* represents your opportunity cost. Looking on bankrate and a few other places, I see that 5 and 10 year CD’s are yielding between 4.5% and 5%. That represents your risk free rate of return. Yeah, the peanut gallery will say “CD’s aren’t technically safe, you should be using Treasuries here!” but honestly, we’re below $100k in the opportunity here and the FDIC insures me…so again…NYAH NYAH NYAH. Ok, back to the analysis. Remember, Mortgage interest is tax advantaged, even on second homes. Assuming someone can pay $400k for a condo, they’re probably in the 25% or higher tax bracket a year. That must come out.

    $80k up front cost.
    1.5% of house value per year in HOA (12×500 and divide that by 400000…carry forward based on home value)
    2.4% of home value in taxes per year.
    Mortgage rate of 5.75% (right off of http://www.madrate.com)
    If you liquidate at the end of 10 years, you’ll have about $240,000.
    This isn’t the whole picture, because unlike a stock portfolio where you GAIN dividends every year, with real estate you have to PAY taxes and HOA, although you do get 25% back in terms of a tax rebate. Those #’s will come into play later.

    Now, lets look at your stock portfolio. I dont agree with the 12% annual rate of return…and I’ll use 7.5%. Now you’re probably going to say “What about dividends!!” Well, if you’re getting 8% return, you’re investing in a lot of growth co’s, which aren’t really known for their stellar dividends. But I’ll give you a 1.95% dividend yield per year, ok? See here: http://www.indexarb.com/dividendYieldSortedsp.html But aha! Dividends are taxed! Holding our assumption from above, 25% taxes gets cut on those. Then there’s long term capital gains of 15% on the total capital gain to account for also.

    $80k up front investment
    8% return per year
    Additional 2% dividend yield.
    After 10 years of keeping your $80k invested and getting gains plus dividends minus net all yearly gains taxes, etc would be $147k.

    Now, how do we make these #’s fair? I think Net Present Value analysis is good. I wish I could post my excel spreadsheet, but I calculated a NPV after 10 years of the investment portfolio to be $18,000, meaning you make more money investing in than you would parking your $80k in a CD for 10 years. Conversely, the NPV after 10 years of owning a condo is -$9,000 or abouts. That means, over 10 years you’ve actually lost $9,000 of your initial $80,000 in opportunity cost owning this condo.
    I dont know about you, but to me its clear that investing still wins out on a dollars and cents perspective. *BUT* we are forgetting one *HUGE* factor here…rent! The calculations get way too hairy when you involve renting and all the factors like depreciation and writeoffs that go along with it…but suffice it to say, over the long run considering the volatility of the stock market, investing in sound rentals is probably just as good as investing in the stock market.

  129. my #’s are a bit off…dividend excel cell was supposed to be .0195. The NPV of the investment is $26k. Basic premise still holds…investing is bigger return, but watch out for rental possibilities. Most would prefer to put their money in stocks and sit back rather than managing as a part time rental…but to each their own.

  130. Dear Kim,
    With all due respect, does it really matter if this blog has finally arrived or not?

    This is the problem with the Miami wannabes ( not that I am calling you one); They always seek out some big names or name dropping. They always want to arrive on the scene. What is this obsession with looking certain way, driving in the flashiest convertible, Live in the most high end condos, desperately wanting to be part of the A-List circuit and the parties?

    As far I am concerned, this blog has already “arrived” (hate using the word but I just want to talk in the same mindset as you). I value the opinions of everyday investors and realtors here than some A*H* two tongued, self serving big names. When everyone else was singing hosannas to Alan Greenspan (the biggest name you can think of) back in the days, I was wondering “this senile bastard is taking us down the path of ruin soon”. It is now a well established fact that Alan Greenspan’s name is synonymous with a four letter word.

    Just a word of caution, please snap out of these irrelevant status indicators.

  131. nightowl,

    just a few comments:

    (1) the US is NOT a free market…anyone who thinks this is out of their mind. we’re in a free market only when things appreciate. when they decpreciate, we socialize losses. this is a fact.

    and

    (2) assets are NOT properly “marked to the market”. you think the CDO’s that are marked at 80-85 cents on the dollar on the books are accurate? try and sell one if you’re unfortunate enough to own one in the open market….see what the market gives you (maaaybe 20 cents, IF you’re lucky?)

    (3) FDIC ‘insured’. tell anyone who owns auction rate securities which are AAA insured tax free munis and ask them about their “money market” product…see what they tell you. insurance in our country is a marketing tool. during times of turmoil, things like ‘safe’ dividends, AAA ratings, insurance (see monolines) go down the tubes. let’s hope we don’t see the same for FDIC and that we never have to see what happens…

    sorry for the sidebar away from condo talk but these issues directly affect the real estate market.

  132. Nightowl said:

    $80k up front cost.
    1.5% of house value per year in HOA (12×500 and divide that by 400000…carry forward based on home value)
    2.4% of home value in taxes per year.
    Mortgage rate of 5.75% (right off of http://www.madrate.com)

    Please se my comments about the true cost of ownership #111

    If you are buying a condo now to occupy, there are huge real costs you need to tack on as an owner versus being a tourist in a hotel for the week. I didn’t even factor in an upfront cost of furnishing a unit. If you buy stock or a CD, you don’t have to furnish, insure and pay utilities/cable on it. There are huge real ownership costs required to live in a 2nd location that get unmasked when the property value is stagnant.

  133. If you are seriously considering investment in any realestate anyone should take a look at the DUBAI market. I have a 1/1 960sft apt i bought 3years ago for $240,000 a conservative estimate for the value now is $650,000 i have rented it at $5,000 /month !! there is NO PROPERTY TAX there is NO CAPITAL GAINS !! there is NO INCOME TAX on rent !! amazingly there is still an upside as a lot of liquidity is chasing a comparitively small market!
    i love miami !! i love to have vacations there but as an investment i would put my money in Dubai property and RENT IN MIAMI !!

    if you need any more info on the Dubai market Id be glad to offer.

  134. Pingback: Miami Beach Real Estate Trends & Buyer Lessons 101 « Ashton Coleman’s Weblog Wire

  135. umer,

    If what you say is true, you may want to sell now. That sounds just like the speculative bubble that just popped in the US..and is starting to pop in Europe. 5k a month is pretty amazing, but from those emails that circulate about what they have planned for that city, it looks like there will be tons of capacity out there soon.

    Just a thought.

  136. Cyrus
    I think you’re speaking with the rage of a tin foil hatter. The socialization of assets in the modern era has always benefited the government when it has been incurred – I cite the S&L bailout & the Chrysler bailout. So while there may be moral hazard, its not like the taxpayers took it on the chin on those. I think long term, I think the same will occur in the $29B that the Fed is securing in the JP/Bear deal.

    Frankly, I grow tired of all these attacks on the the USA. If its such a crappy place to invest and if you really feel like you’re getting the short shrift, by all means you are entitled to take your money and invest it in Umer Ahmed’s Dubai ventures. Go nuts!

    I for one keep my money in the primarily US based S&P 500 index, my cash in a Citibank online savings account, own my home in Fort Lauderdale and work for a Fortune 500 US based company.

    When the proverbial $hit hits the fan globally, the flight to quality is to the USA…as it has been since WWII. Now things may change 50 years from now, but at least our corruption is of the legal variety…ie “campaign donations”. What other country do you have access to the most liquid capital market, the deepest talent pool, the most productive labor force and the most vetted and “fair” legal environment. On the balance, I think the states is still the best place to be…although the margin between #1 and #2 is probably shrinking. Its very easy to kick the big guy when he’s down…the amazing thing is that the US has an amazing propensity to forget these slights and do the right thing when the chips are down. (Asian crisis bailout…Mexico currency bailout…Russian ruble bailout, etc, etc).

    BTW, Id love to see how all these European welfare countries would do if their common defense wasn’t subsidized by the US. Imagine all the services they’d offer with a re-energized powerful Russia on their Eastern border and no NATO to save their a$$. Same goes for the Canadians and their fabulous healthcare system…how far along would that be if they were spending nearly 4% of their GDP’s on defense.

  137. I think one needs to consider the transfer costs — closing costs, realtor fees, holding costs while you try and sell, etc. in the analysis. So, if you plan to live there min. 5 years (better min. 10 years) owning has its perks….but with rental inventory like there is now, renting makes the most sense in South Florida.

  138. Renter Tom -

    I did factor selling costs in the final amount used in the NPV calc…and who in this market isn’t demanding seller paying all closing costs? And the analysis above was done without any rental income (and associated drawbacks or perks thereof).

  139. nightowl,

    The comparison you’re trying to draw only works when the condo in question is a barren investment property… and anybody buying a condo in MIA now as an investment property deserves what they are going to get over the next 10 years.

    If the unit is something to live in as a second property, then there is no comparison. You are going to get smoked buying a condo for a second home versus grabbing a hotel a couple weeks out of the year and living like a star buying $1,000 table service while you are in town.

    Furnish a unit, insure it, have utilities on 24×7, Cable in every room, Broadband, Phone line, Housekeeping, tipping for the Holidays blah blah. The real costs are tremendous for owning a discretionary luxury condo and people are just realizing now how expensive it is without the yearly funny money from RE appreciation.

    It’s finally dawning on people that making $70,000 a year doesn’t equate to owning a $350,000 condo in SoBe.

  140. nightowl – What I meant was the costs associated when you SELL the property later down the road, not when you buy it now. Just wanted to clarify that.

    From what I have been told, some of these new condo buildings are practically “hotels” already with all kinds of work for the condo associations dealing with all the renters (of course not me since I treat my place like I own it….so it will be better after I’m done renting it (unless of course I end up buying it) then when I first got it).

  141. Renter Tom – again, when I calculated the NPV I reduced the last year cash flow by including a 6% sales comission. I wish there were a way I could just post my spreadsheet.

  142. nightowl,

    i was touching on some of your comments regarding “free markets”, marking to the market and FDIC insurance relative to other marketing tools such as ‘safe dividends’ andAAA rated, insured paper…which all lose their stability when turmoil strikes.

    and i don’t rip on this country…i would die for it.

  143. I showed 4 beachfront condos in South Beach today with ocean views. All 4 condos were either the best priced in the building for that line or represented the best value because of the quality of the unit. Each of them were purchased in 2005 (close to the peak). They were all priced well above what the previous owner paid. Again, these were the best priced units in the building, or represented the best values. For the most part, prices for beachfront condos in South Beach haven’t come down much, if at all. Obviously, these condos still haven’t sold and are still available. However, even if prices dropped 10-20% they’d still be back to 2005 prices. In one case, prices would need to come down 35% in order to return to 2005 prices. Beachfront condos in South Beach with ocean views, for the most part, haven’t been hit with the 20-30% discounts that we read about in the papers. There’s a HUGE difference amongst beachfront condos in South Beach and those located either inland or on the bay. There’s an even bigger difference amongst beachfront condos and condos located in Miami.

  144. I have to agree with Lucas and others who are differentiating the beachfront properties from those located inland or on the bay. I am retired from NYC and have live at a condo on South Beach for the last 8 years. Our building is located at 15th and Ocean Drive and is directly on the beach. Prices here have actually reached record levels on some units in the last few months. Recent sale prices on two and three bedroom units have been close to $1200 a square foot.

    By the way, I do like living in South Beach because it sort of reminds me of living in Greenwich Village with a beach (and good weather!) I grew up in NY and I need to be in a neighborhood where I can get out, walk and see people. No it’s not perfect but it’s an interesting diverse area and I don’t have to use my car every time I go out. I never feel unsafe here at any hour and that is also very important to me.

  145. that is good place though,Fmosquito said that “I never feel unsafe here at any hour and that is also very important to me.” and that is important…

  146. Thanks for the advice guys, two of my “low” offers were not accepted anyway. The other a short sale has not been accepted by the back and will be teminated tomorrrow.I still would like to find a few good buys on South Beach, I think that the market will come back and that at a sensible price it can actually be an invetsment,
    even for the weekend/vacation use.

    Sam

  147. does anyone know if $280k for a 1430 sq ft 2/2 in one of the older brickell bldgs is a good deal? full water view of course…pls let me know as i put the offer in and am waiting to here back but not sure now if prices can continue to drop from this and will b upside down on my purchase in a few months…

    also, question about ios on the bay, how long to wait? how low do u think we can see these go? really love the concept of smart bldg on bay

    ps-raffi and jcrimes, i love Miami…and plenty of stuff besides only south beach! cant compare mia to other cities bc miami is miami, and yes we do have neighborhoods! i currently rent at 50 biscayne and im not particularly liking mine yet, but i know in a few yrs will get to where we want it. i overlook bayfront park too….again, wait a few yrs!

  148. oh and on the viceroy, i think i saw the sales office set up across from prive but have no clue about the prop-sorry!

    there are these stackable townhomes right on the bay on shore dr in normande isle…they were selling for $900-$1.3M in August 2007….I think one closed as low as $450k a couple months ago (source is zillow)

    and- is the one thats letting it all go lisette?

  149. hi Fiona, you failed to mention the name of the building. With out knowing your building, it is hard to justify if the price is right. similar prices exist in the 4 Ambassadors. I do not like that building as there are no balconies and other issues. Are you talking about 4 Ambassadors?

  150. Fiona…what is the HOA fees on that unit? Alot of the older buildings have large special assessments as well.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Featured Articles





Blog Archives

Blog Categories