Miami Condo Developers Slash Prices on Existing Inventory
March 16, 2009
by: Lucas Lechuga
It’s no secret that most condo developers in Miami are still left with a large supply of unclosed condos. These developers pretty much have three options: (1) Do nothing and continue to bleed money by paying interest on the outstanding debt, (2) Sell condos in bulk to a vulture fund at a very big discount, or (3) Slash prices to end users and pay the principal and interest on the outstanding debt over time. Option number 3 was something that should have been done a long time ago. Over the past year, sales agents working for various condo developers have made it known to real estate agents that “developer prices are negotiable” or that the developer is “willing to listen to any reasonable offer”. However, with the exception of Groupe Pacific with Brickell of the River South, none of the Miami condo developers would go so far as to publicly reduce their prices. It didn’t make sense to me. The only logical explanation that I could come up with is that developers were afraid of the backlash from current condo owners. The days of name calling and finger pointing are over. That was so 2008. It’s in everyone’s best interest, current condo owners included, that each condo development close as many condos as possible. This has been especially true since Fannie Mae revised their guidelines for Florida condos. Reaching the all-important 70 percent mark for closings is so critical in this market.
It seems that Miami condo developers are finally turning to option 3. Over the weekend, two major condo developments announced large price reductions.
- 500 Brickell – On Sunday, I received an email from a 500 Brickell sales agent announcing “much lower pricing” on all remaining developer condos and that “prices have dropped up to $100,000”. The email revealed that one bedroom condos now start at $180,000 while two bedroom condos now start at $295,0000. I think a good old-fashioned price reduction is a MUCH better idea than including a Mini Cooper with the purchase of a condo at 500 Brickell. I think we’ll finally start to see a dramatic improvement in the closing rate of condos at 500 Brickell. I’d love to see a price sheet of all of the remaining condos to see if the reductions were made across the board.
- 1800 Club – I found out about this one on Saturday and actually visited several of the developer units on Sunday. I can honestly say that 1800 Club now offers the best deals in Miami. Where else can you find a condo with a water view for $173 per square foot in a recently constructed condo building in Miami? Unit 1715 is a very large 2 bedroom/2 bath condo with 1,810 square feet of interior that is now priced at $314,000. It doesn’t have a direct water view but it’s actually not bad, given the price. Below, I’ve included a picture of the water view from within the condo. As I was writing this, I received a text message saying that an offer was submitted to the developer today for unit 1715. As of the February condo closing rate update, 1800 Club was able to close 68.59 percent of its overall units. I think by the next update, we’ll see its closing rate push well past the 70 percent mark.
Within the next couple of days, I’m going to publish a more in-depth post about 1800 Club and the deals that are now available, along with pictures of the units that I saw on Sunday. It should be duly noted that the 2 bedroom condos facing direct east towards Biscayne Bay have not been reduced much from preconstruction prices, if at all. For example, unit 3505 which is a 2 bedroom/2 bath with 1,222 square feet of interior is priced at $385,000.
Below is a list of the other condos that I viewed on Sunday. As I said earlier, I will do a follow-up post within the next couple of days that will include pictures of these units as well as of the amenities and common areas.
- Unit 1411 – $235,000 – 1 bedroom/1.5 bath with 1,095 square feet of interior facing South
- Unit 1504 – $167,500 – 1 bedroom/1 bath with 822 square feet of interior facing West
- Unit 1002 – $425,000 – 2 bedroom/2 bath two-story townhouse facing South (I need to find out the square footage of this one but it’s big and has two large terraces.
I guess time will tell if other Miami condo developers will follow suit by repricing their existing inventory and disclose those new prices to the public. I think it’s a good step in the right direction.
Lucas
I think you’ll see this work on the buildings that have manageable, outstanding debt. For those buildings that are now only in the beginning of closings, not sure if a price reduction will save the day. It bears mentioning that the lenders on these buildings had to agree to this reduction (based on the closed %s, there still had to be some amount of the loan outstanding). The 500 deal to me is particularly interesting – you can now get a unit at 500 that is nearly identical to an Icon unit across the street (minus the over the top building amenities) for half the cost. Note – I’m only referring to Icon units with no water view.
Good article in Money magazine April 2009. Page 65 – When Will Home Prices Hit Bottom, Already? by Amanda Gengler.
Cut to the chase……if all the govt action is successful, she predicts the Miami will hit bottom in 2-3 quarter of 2011 with an additional decline of 27.8%…..yes that is for all home prices and we know condos will fair worse than average. Yes, later part of 2011. Not unreasonable. What if the govt action is lukewarm or worse? Well, who knows. Fr. Lauderdale is in the same boat but with 24.4% declines instead. Still waiting on the sidelines to buy? Might as well set up camp and stay awhile. Probably will need to renew my lease for a few more years!!! Renting…and loving it!
That is a good news. The developer of 1800 club absolutely ruled out any discounts. But in the interest of the building as a whole, it is the right thing to do.
And let me give the devil its due. Unit 3505 is priced less than what I paid for, for my unit. I believe it is the only direct bay still available with the developer. I ask anyone with ready cash to jump on this offer. The last I knew a few months ago, the developer only had 2 direct bayview units. You might be tempted to haggle for another 5 or 10K off on this one but I will not be surprised if he gets multiple bids on this one for the asking price which he reduced by $100,000 – $125,000. 05 line is the best, the largest 2/2, closest to the elevator and a little extra view as the balcony is more open and you do not have a neighbor on one side. The views from the 35th floor are stupendous.
I have no hard feelings. There is absolutely no friggin way I could have got a loan for this unit now with the current guidelines. In fact 2 weeks after I bought my flat, the banks have put a blanket ban on almost all kinds of loans. So my situation is unique in that sense. But if there are all cash buyers waiting for a deal, their patience has been rewarded. Go for it!
Apart from 1715 which already received an offer I want you guys to seriously look at 1002. If this is the same unit as I think it is, It is absolutely fantastic. It has a ginormous terrace that you can play “football” on. It has a little patio like entrance on the 10th floor pool deck. Gym and pool are your front and backyard. It is a duplex. Life will be good. The buyer will be very happy. Must see!
Another interesting stat….. Jan ’08 compared to Jan ’09 sales at Sake are down 24% while Wal-Mart is up 2%…. So much for the rich will keep spending. Well, there are 1/3 less rich now anyway…. With all “stupendous”ness aside, condos are a lot more money and upkeep than an overpriced handbag.
I agree with AJ about unit 1002. It’s an amazing unit if you’re the type of person who likes to have large get togethers. I’ll try to get more details about it tomorrow and will be sure to post the pictures I took soon.
gables,
that 1715 would have been a great unit for you. $173/sf to get into 1800 club is not bad at all and the unit is humongous!
Ok, Now some guys will jump in and say wait even more and the deals will get sweeter. May be or may be not. Choice units like 1715, 3505, 1002 will be snapped up in a jiffy.
Units like 1411 with partial water view will be the next to go. Then those like 1504 with city views. It depends on what is your comfort level and what line you want. Mind you, of the 148 developer units (10 of them are rented and can’t be sold), he has very few of water view units and many city view. So if you guys want at least some water view, you must act now.
Contrary to what some people on this blog say, there are tons of people out there who would salivate at these prices. So if you are angling for a choice unit in Pace Park/1800 Club, take a shot now.
I personally think Pace Park is the most convenient of all 3 downtown locations due to its transit hub, Venetian Causeway connection to SOBE, Pace Park, Art District and the exponential development possibilities. Please go and take a look if you have not yet done so. You will fall in love with this building and the neighborhood.
AJ,
You are correct that unit 1715 becomes of interest for somebody like myself. Once the prices fall below $200 sf, you get my attention in most buildings. At that point we are much closer to the bottom than the top. i dont need to buy at the bottom, just near to it.
the major issue is $300k+ total cost. in today’s financing environment that is a major problem for most buyers, except rich cash buyers. i have some coin saved up, but not at that level. biggest problem with the unit is actually the size-its great but would probably kill me on HOA over time. it would cost 50% more than your typical 2B unit at 1200 sf found in miami. but for waterfront buildings you may be seeing the lower bound of pricing in unit 1715.
i had suggested developers sell their units at 10% below preconstruction-essentially minus the deposit that walked away. if they had done this a year ago, the buildings would have sold like wildfire and developers would not be holding the cost today. they did not do this, and will now sell for much less after over a year of holding cost. will individual sellers and banks continue on the same path?
Interesting article from the WSJ
http://online.wsj.com/article/SB123725421857750565.html?mod=googlenews_wsjtarget=
Gables
absolutely. it’s not just the developers…it’s also the lenders (at all levels of the lending tree in the project). case in point – i was working on a project with a significant overhang of units over a year ago. my client was willing to credit a significant amount of the deposit amounts to new purchasers. senior lender was okay but then the two subordinated lenders would take a 50% haircut on their loans, and thus, refused to go along. went back to the senior and said share in the pain, at least a little bit. senior refused. subordinated lenders refused to budge. now, one year later, the subordinated lenders are out of the game, units can’t be sold and the senior is looking at a loss. total lack of vision.
the above anecdote highlights one critical fact – banks are absolutely f%$king retarded when it comes to working an exit strategy for troubled loans. all of these comm’l lending officers are salesmen, with no business acumen to boot when things are looking bad. when the proverbial sh$t hits the fan, the loss mitigation folks at the bank take over and they’re just as clueless.
GN,
that is an interesting article. the idea is interesting, but should not be implemented. first, you thus allow somebody to simply buy residency status. second, one of the primary reasons the US is falling behind in science and engineering education is we are continuing to devalue the fields by allowing more immigrants to do the work-at substantially lower wages. i do not want to get into an immigration argument on a RE blog, and i am very much pro immigration in many regards, but our current policies are creating some of the problems we are experiencing now. our higher education system pays for mostly foreign grad students to conduct research because we do not pay the wages necessary to keep US students in school. we could eliminate the H1B demand simply by forcing universities to support more US students and less foreign students-mostly with taxpayer money i might add. this would also keep higher paying jobs in America, good for our future economy, and provide incentive for US students to endeavor on science and engineering careers. sorry for the tangent.
Great post Lucas.
Completely agree on the pricing reductions, it is a must if you want to clear the market and get a few sales out there.
However, one of the reasons that developers usually don’t like to post their reducd pricing or do it across the board is that it will effect the comprable sales and therefore eliminate the possibility of getting a few sales at a higher price (if there is such a thing). I have seen contracts where the developer agrees to a significant amount of buyer credits in order to keep the recorded sales price high. I assume this is now common practice in the new buildings with “designer ready”.
As far as the pricing goes, I am not a complete pessimist and I agree that $175/sf might be a decent price for now, but I do still think prices will go down even further. These reductions will start showing up for all developers, banks who have taken possession of units and groups of foreclosed units in half-sold condos. Once these hit the market, I believe you will see another drop.
gables, your situation is exactly the reason I see prices dropping further. Supply vs Demand. How many people can really afford to come up with 20% down for a $300k – $400k condo? We need to get back to basics, and the road will be a tough one.
gables,
regarding #7 and #8, yes, the HOA wil be an issue for a flat of that size.
Unit #1411 would have been perfect for you except that it is a 1/1.5 albeit the largest 1 BR in the building with excellent water views if not direct water views. If I were in the market for a 1BR, I would absolutely go for line 11 in 1800 Club. It is the only 1 BR with water views.
I have already raised this issue 1 year ago. I asked Why the developers cant price their units 10-15% lower (after all that is the money left with them after they pay off the 5% to the deposit holder). I remember Samir chipped and said they won’t do it (I do not remember the reasons he gave). As you said, if they gave that 10-15% off 1 year ago they would have been in a better position today.
As far as I know 1800 Club developer has no mortgage or very little mortgage on the remaining units. He could have held up another year or two waiting for better days but for reasons best known to him, he is discounting the units. I do not know how many out of the 138 he is putting on the market. Once Lucas comes up with the list, I can definitely pick out the best units in the building. If there are any line 10’s available for $200ish, it will be a great buy. It is one of the good 2/2 with all city views.
Lucas
Please include maintenance fees. Thanks
Lucas suggested that unit unit # 3505 @1800 a 2/2 with direct east bayview has not been reduced much from pre-construction pricing if any at all, yet AJ contradicts this saying it is a $100.000-$125,000 haircut from what he paid for similar 2/2 direct east bayview. So bottom line – going back to an argument a few months back is that the floor price for good location waterfront buildings with direct east bayview apts is now about $300 per sq foot retail not including the bulk sales @ Marina Blue. Either way and like pulling teeth we have at long last found out AJ’s purchase price at 1800 but considering the direct east view he has locked in and now owns in a STABLE building he is in a good position. As he often says end users have no need to to buy at the bottom and end users are more interested in locking in their ideal unit than perhaps missing the bottom by approx 20%. It will be interesting to see if rentertom ever ever ever buys a unit and if he is indeed smart enough to pick the exact bottom for his ideal unit which im guessing he wants for his personal end user enjoyment and can get beyond myopic view that its always about the money.
gables,
I hope that article doesnt create an immigration debate, as that wasnt the intent. I posted it because certain parts of it bolsters AJ’s comment a while back that foreign buyers could help with some of the excess inventory. I seriously doubt that this plan will be implemented or even considered..
AJ,
good question regarding why the developer is discounting units at a site which he no longers carries the burden of a loan. perhaps he has found a better return on his money elsewhere and would like to put it to work. along those lines, the assumption could be either prices remain fixed but he can put the cash to work, even at low interest rate and increase profit. or perhaps he is concerned that in a year the prices will be down even more and thus lose capital. would be nice to know the developers position a bit more as his situation could shed some unique light on the future of condo prices in Miami.
The maintenance fees for units at 1800 Club comes out to 42.5 cents per square foot. At least that’s what I’ve been told. AJ, can you confirm this? The fees include basic cable TV and high-speed Internet.
Hi Luis,
Will you be updating your listings on your “condo deals” and “property search” pages with this new pricing? Thanks for this new info. Your efforts are appreciated and I will likely contact you should anything peak my interest.
Steve
This is one of the best posts that Lucas has made in a while IMO. I’ve been waiting to see developers start cutting the prices on the remaining supply in an effort to get these units sold. I think we’ll also start seeing this happen in other buildings over the coming months, but for the time being I’m going to give 1800 and 500 a look. I put in an offer (at an undisclosed building) last month at $350,000 cash. The asking price was $540,000. While my offer was certainly low-ball, the asking price has not changed since pre-con, so I think the offer was certainly reasonable under the current market conditions and due to the fact that it was cash and I would have been ready to close immediately following inspection. The developer came back with a ridiculous counter which I honestly found to be insulting so I told them ‘thanks, but no thanks, my offer is firm’ and walked. Seeing that these two buildings are now setting a precedent, which I think we will likely see happening at other buildings, I’m glad I did not end up closing on that unit. The deals will continue to get sweeter and sweeter, and there is huge glut of interory out there. Keep em coming!
Excellent post. Hope to see of this type. It is about time developers have started to realize that the bubble is over and they are finally adjusting prices to the market. Although there is probably more room for adjustment. This is a step in the right direction to get these units sold and more importantly occupied. I believe Gables said that under $200sqft would catch his attention…you got my attention as well. Happy hunting!
AJ, some advice please. I’m looking for a vacation home so please don’t judge. You said you also considered Quantum right? You said that these two buildings had the best looking women a few months ago. My question is, how is that possible? Wouldn’t they be even;y distributed across all buildings?
AJ, 1800 and Quantum is what I should tour for all around best quality buildings in Miami?
Unit 1004 has 1,700 square feet of interior. I just received the price sheet for the units at 500 Brickell.
Lucas,
You are correct. The maintenance is 42.47 cents per sf. Includes Cable and High speed internet.
Kramer,
I only have to add one more thing to your post. B com Inc the developer of 1800 has very limited direct East view units. Some say it is as little as two flats. Most East view got sold out and closed. We will know when Lucas posts the available units for sale, if there are any more direct bayview available other than 3505.
But here is my poser. What if the last remaining East units gets sold for such enticing price of $385K to cash buyers. Then the only ones remaining will be the owner/investor units which will not be discounted as long as the owner/investor can hold. So if someone wants direct bay in 1800 Club bad enough, they got to pay more for any future units. Me thinks.
gables,
In fact about 3 weeks ago, I sent the developer a posting from MCI and asked his opinion. He replied back to me via e-mail saying “we do not aggressively cut prices like that”.
I do not know why the change of heart. May be he needs the money elsewhere as you suggested or something else. I had many meetings with him and he is a firm believer of his project and the neighborhood. He is more gung ho about the prospects of Pace Park than even me! He used union code to build his building making it one of the most well planned and built, put up only 469 flats against a permitted 700+. He is very very proud of his building. I absolutely do not think he is worried about losing much by holding out. Just may be he does not want to become a landlord of 148 flats. He is not like that. I sure will ask him the reason for the about turn next time I speak to him.
Here’s something to look forward to this weekend. Ultra Music Festival + NCAA Tournament at American Airlines Arena = massive traffic along Biscayne Blvd.
Lucas- Ultra is the following weekend not this one. March 27th & 28th.
Lucas stated: “500 Brickell – On Sunday, I received an email from a 500 Brickell sales agent announcing “much lower pricing” on all remaining developer condos and that “prices have dropped up to $100,000″. The email revealed that one bedroom condos now start at $180,000 while two bedroom condos now start at $295,0000. I think a good old-fashioned price reduction is a MUCH better idea than including a Mini Cooper with the purchase of a condo at 500 Brickell. I think we’ll finally start to see a dramatic improvement in the closing rate of condos at 500 Brickell. I’d love to see a price sheet of all of the remaining condos to see if the reductions were made across the board.”
Perfect timing. Sunday was “The Ides of March” Big Gorge is issuing proclamations! Before you play Three-Card-Monte with the RCRS hucksters, permit me to point out a couple of major league loopholes. The units in 500 Brickell West Tower were ALWAYS approximately $75 per square foot lower (approximately $75,000 for a 1/1, $100,000 for a 2/2) than those in 500 Brickell East Tower AND 400 of 615 of the pre-construction buyers WALKED away from 75% of their deposits! That in itself netted Big Gorge between $20,000,000 and $25,000,000, or $55,000 to $60,000 per unit!
The “new” discounts aren’t new. They were offered to the “walkers” and Related Finance would finance “any and all” of the “walkers”!
RUN, don’t walk AWAY for the RCRS hucksters……better yet, steal one of the Mini-Coopers or carjack Big Gorge’s Ferrari, put the pedal to the medal and just get the hell away from these passé whores….
GN – Interesting, but the article was written by: “Mr. LeFrak is chairman and CEO of LeFrak Organization, a real estate builder and developer. Mr. Shilling, an economic consultant and investment adviser, is president of A. Gary Shilling & Co.” A little bit of self interest by the authors. Next we’ll hear from car makers that if someone buys two GM cars they get citizenship. Of course, they’d have to have “advanced skills and education”…. There is no nexus with housing and foreign buyers aren’t banging down the doors to buy, those that wanted to buy have…and not just one.
Everyone has to realize that the main factor in marketing real estate is to creating a sense of urgency, exclusivity, and/or you’ll miss out. Whether that is a private showing before a home is listed, pre-construction pricing, friends and family discounts, or listing one unit at a time in any particular line at a discount. It is that sense of urgency that some discounts may be given on a limited number of units…..to create a false sense of scarcity. I’ll wait for them to really hit a wall and to stop playing games like that one developer did recently.
The $0.42/sf maintenance on that 1,700 sq. foot unit is $721.99/month!!!
I suppose that is why you refer to it in square feet (like it is some kind of friggin’ commercial property) instead of the total amount. At some level even you realize what a lousy investment it is.
Can’t Be Serious….combine the maintenance fees with taxes and you’re nearing probably $2,000/month in carrying costs (and that’s assuming you paid cash for the unit and have no mortgage).
Krame,
don’t hold your breath on RT ever, ever, ever buying one of those condos. If he is paying 3K/month to rent, I am willing to bet money he is not going go dig deep for 500k-1M (cash, because he probably won’t be able to get a bank to finance him in this environment). If you factor in the holding cost alone (HOA and Taxes) on a unit in that price range is going to run about half of his current monthly rent then you consider him having to plunk down that much money. I am sure he would rather keep his 500K -1M in a CD/MMF which earns him 3-4%, apply the int. to his rent and still have his money as a security blanket. I don’t think he is willing to pay that kind of premium just for the privilage of saying he owns his apartment. I know I wouldn’t, not in this environment.
Un-Related, Can’t Be Serious, DJ, makes me think,
Let them buy.
Seriously.
Think about it.
The upside to Bears would be tremendous if a bunch of “investors” were flushed out now, as opposed to, lets say, 2 years from now. Your powder will be dry, theirs, well, they will not have any powder, wet or dry.
__
If all of us agree, we can start amongst ourselves a “buy now prices will never be lower campaign.”
I’m for it if you guys are, we’ll post every day about what a great market this is.
Our posts will rival AJs!
RT takes himself too seriously, so he’s not invited. (Though yes, RT would benefit also)
Muir
Here’s an example:
Guys, if prices do fall a bit more, which they might, why make life so difficult!?
Get the premium units today.
Does anybody seriously think that Miami will lose it’s appeal?
There is something magical about Miami, people do love it, you see people having fun from all over the World. They could go elsewhere, but they choose to come here with us.
Will that change next year, or the following? Come on!
So let’s compare REAL prices: $300psqf for a beachfront condo? Where else on Earth.
Miami is a REAL bargain, if you are sophisticated in these things.
I think we need to step back and look at the big picture, ohh, and enjoy life.
Just my 2 cents anyways.
Love Muir,
Ok, fine, it needs work.
It was my first attempt.
Muir
Very interesting discussion, and I believe strongly in the potential of 1800 Club, as well as Quantum’s.
A question for you readers on this blog: is it better to buy a premium unit with Bay views at 20% more than the bottom price, or wait more and buy a city views unit, less desirable, at bottom prices ?
When the market comes back, and it will eventually come back, even in 2099 like RenterTom thinks, which unit would you like to own at this time ?
And even more, in which unit would you like to LIVE during this time waiting for the market to come back ?
Thank you all for this very interesting discussion. Very nice article about immigration. Just a point, foreign students have to pay full price their education. They don’t take advantage of the lower tuition paid by US citizens or residents. The lack of brillant minds we are having is due to the fact that we as a country didn’t invest enough in education. Don’t blame the foreigners on that. Check how the Japanese, Chinese, Indian, and even African kids do: they learn instead of watching Hannah Montana on TV.
Best regards.
FD
I know you guys always say anything coming out of a RE guys mouth is a spiel. But this line of thinking I subscribe to also.
As e-mailed by Dan Maza:
“Condo Sales Increase 10% in the last three months. A large surge of South American and European buyers are making the most of the low Miami Real Estate Market Prices.
As a vast majority of US real estate buyers sit on the sideline and wait for the economy to show signs of a rebound, International buyer are coming to take full advantage of the opportunities which now exist in the Miami Beach and the surrounding area. With condo price averaging $140 to $400 per sq. foot from Brickell to Hallandale some waterfront new building these are the lowest prices in a decade. Mr. Silivio from Rome, who purchased four condos in the past four months made it clear he will not wait to hear about the market upturn from CNN or a similar news channel. “If I wait for the news to give me positive feedback I will have missed 6 months worth of great deals. I am basically buying now at the cost of construction or up to 50% above that cost. Deals like these come around once in a life time. By the time the rest of the public gains confidence in these LOW prices, the best properties will be gone. In fact I missed 3 condos which where on the market for only 3 to 5 days before someone else bought them at a very low prices. One of the condos was in South Beach it sold for $260,000. The same condo was bought by the previous owner in 2006 for over $700,000. By missing that property, I was convienced that the best opportunities are NOW!
Mr. Silivio and buyers like him may be right. Statistics from the NAR (National association of Realtors) show that only 18% of the available inventory in the Miami Metro area are waterfront properties. An NAR spokesman stated “International buyers want condos and homes with water views. They are not concerned about the other 82% of properties located inland in such places like, Pembroke Pines, Weston, Davie, South Miami or Kendal. In fact most overseas buyer don’t even know where those neighborhoods are located and in some cases they have never even heard of them.” It seems that well informed current buyers have been tracking home sales and housing starts statistics in the past year to gain enough confidence to enter the Miami Beach real estate market. ”
Pay particular attention to “Statistics from the NAR (National association of Realtors) show that only 18% of the available inventory in the Miami Metro area are waterfront properties. ” I thought that number was higher than that. I am surprised to note that it is just 18%. Out of which only about half or less than half (no more than 9%) should have direct water views . These units will never have a lack of buyers even now or in the future.
I also have no reason to suspect the story of Mr. Silivio. There are probably many such people from Europe and South America. There is still plenty of money floating around, people. May be you and I don’t see it but it is there.
Amen AJ, amen.
I suspect that this $260,000 condo instead of $700,000+ was at the Waverly in South Beach.
Amen to that. At least it is not one of us Real Estate professionals lying here 😉
Regards.
FD
FD, you answered your own question. Go back and read your post, it shows that you really want a premium unit.
Always the RE mantra from the country I came from is this:
“Buy the highest floor, the largest flat with the best line (In respect of views etc) that your money will permit”
I ignored that rule twice, once when I was 24 and once when I was 26 by buying substandard second home properties because that is all what I could afford . I have sold them and learned my lesson. I could have begged, borrowed and bought a premium unit and it would have been worth 20 times since then. The second rate units I bought just appreciated 3 times in the same period and I finally dumped them in disgust. Never again.
So, If you cannot really really afford an aspirational place, then I guess buy any place to live in your hometown as your primary residence. It does not matter.
But if you are buying a second home or investment home, go for the best. That is the only rule you should remember. If you have to pay a little premium for premium units, so be it. You will get that all back and some when things get better. People have a very short memory.
Finally I say hats off to Kramer, he summed it up best. You do not have to buy at the bottom. You can be within 20% of the bottom and still be OK. I never thought about it that way! I will completely agree with that. So if you assume Dow hit the bottom at 6400 then everyone who bought at 8000 is a winner. You do not have to buy anything at absolute bottom. If only you can predict when that is going to be, you will be GOD.
We have a lot of self appointed gods out here who are predicting housing bottom to the month! But if you can buy unit 3505 for $385000 (which I think is the bottom for that kind of premium unit with stunning water views) do you really care if down the road there just might be another unit for sale at $360,000 or $350,000? I don’t think so. If one is that sensitive then they do not belong in any market leave alone housing.
AJ, that Dan Maza dude is trying to sell condos, plain and simple. He’s a salesman and is telling potential buyers what they want to hear.
i’m curious…when people say “when the real estate market comes back” what exactly is meant by “come back”? certainly you all don’t mean the boom period growth in pricing. that was a fantasy not to return for a few decades. hell, 2005pricing won’t be seen for at least another ten/twelve years after this debacle runs its course.
AJ babbled: “Finally I say hats off to Kramer, he summed it up best. You do not have to buy at the bottom. You can be within 20% of the bottom and still be OK. I never thought about it that way!”
I have some bad news for you. Kramer was talking about the equities markets, NOT about buying condos…………
By the end of the year, Big Gorge may have to head for the banko court and six months after that you might begin to see the bottom…………..
One comment that is somewhat troubling about the article by Dan Maza:
“Deals like these come around once in a life time. By the time the rest of the public gains confidence in these LOW prices, the best properties will be gone.”
I have been hearing this since ’06 when 650sqft units in Neo Vertika were sellng for 300K+. I do agree that you can certainly find great opportunities in Miami in this market, however the best are yet to come. Although the opportunities will be for end users not investors in the condo market.
AJ – You can dollar cost average into equities over time if you don’t want to attempt to time the market in some way. You can’t really do that with condos as physical units to own. Moreover, give me one example of a property that you considered or in any building you own that went up “20 times”. The bottom in real estate will be here for a very long time….even studies of equities have shown that you can wait for the bottom in equities and buy even 10% above bottom and do almost as well as dollar cost averaging in. The beauty of dollar cost averaging is that it is a forced savings sorta like paying off your 15-30 year mortgage (or it was before HELOC madness came into play).
Contrary to popular belief, I would buy the unit I am renting for $300/s.f. in cash today. The building is reasonably stable with adequate reserves.
“Mr. Silivio from Rome, who purchased four condos in the past four months made it clear he will not wait to hear about the market upturn”
LOL. Was going to say something but the snippet speaks for itself.
Lucas needs to change to name of his website from Miami Condo Investments to something like Miami Condo End Users as ALL Condo Board of Directors will eventually have to realize that the new Fannie Mae guidelines changed how this game is played. The only way to make your building STABLE is for the board to restrict rentals to no more than 30% or preferably 20% so that new buyers can get a mortgage. Which leaves 70 to 80% as either end users or second home buyers who will be restricted from renting their units out unless under the boards new threshhold. Fannie Mae guidelines were implemented with the idea that if each buildings Board of Directors wont do whats necessary to to create stability in their own buildings from lack of unit owner involvement then Fannie Mae will do it for them. This effectively limits these buildings from becoming “INVESTMENTS”. With a 20 % rental threshold – Voila – you have a stable building as most of these “investors” get locked out.
Mr. Silvio from Rome scoffs at Condo Boards and their silly requirements.
Within a couple a years you guys will be kicking yourselves for not buying in the South FL Real Estate market now.
You can still find excellent units around $200 today.
But you suckers will wait until you see $600 psqf again in Brickell, but by then, it will be too late.
‘what exactly is meant by “come back”? ‘
JCrimes,
that is an excellent qustion. I have asked that question in the past.
I remember reading somewhere that less than 5000 condos were built in Miami since th e 1970’s to early 2000 but in the past few years 25000 were built. I have to ask what is considered a return to “normal” the 5k built over the 3 decades or the 25K built in the past few years. I don’t know how accurate those statistics are so maybe someone will be able to enlighten me. I also recall AJ saying that if he didn’t buy his condo at 1800 when he did there is no way he would be able to buy it now. If that is true then I am assuming the same could be said for a lot of people who bought condos before stricter lender standards were enacted. I will ask again what is considered a return to “normal” is it the current lending environment where you need to put 20% down and have verifiable income to qualify for a mortgage or is it the heydays where anyone who said they had income could get a half million dollar loan without having to proove it?
I am just curious as I am trying to make an educated guess on where housing/condo prices in Miami will be in the next 10-15 years.
jcrimes,
In my dictionary, market coming back means when it is not bleeding prices anymore and any growth is either equal to inflation or upto inflation +3% per year. Neither me nor anyone else is hoping for the ridiculous 5% increase a month you saw in Summer 2005.
RT,
20 times appreciation on a prop since 1996 is not in this country. In any case unfortunately I am not the beneficiary of such a good fortune. The miserable prop that I picked up, I got rid off in 2005 for just 3 times the value I paid in 1996.
DJ,
May be so. But I cannot believe a broker of any repute what so ever would lie about the existance of Mr. Silivio or his experience in a general news letter to all his potential customers. He could lose his broker licence or even worse if it is proved that Mr. Silivio is just a fictional character. Even with a name change to protect the identity, there must be a person of such description with such experience.
My point is not whether Dan Maza has a crystal ball or not. My point is that some of the views expressed by him and his client “silivio” are similar to mine. The foloowing utterances ar especially reflective of what I have been saying independently:
– will not wait to hear about the market upturn from CNN or a similar news channel. By the time the rest of the public gains confidence in these LOW prices, the best properties will be gone –
But Miami 2009 is interpreting these words in the wrong way. The best props as he meant are units such as 3505 in 1800 or the unit he missed in SOBE etc. Which foriegner in their right mind looking for a second home would want to buy in Neo Vertica for gods sake!? Go a little below the article and read further. Here is what it says:
— Statistics from the NAR (National association of Realtors) show that only 18% of the available inventory in the Miami Metro area are waterfront properties. An NAR spokesman stated “International buyers want condos and homes with water views. They are not concerned about the other 82% of properties located inland —
I will reiterate once again what I said in the past (with apologies to Swiss Luxury .com)
Any developer or any investor who thought these inland flats in buildings such as Wind, Mint, Ivy, Latitude and yes Neo Vertica are worth $400 – 500K for a 2/2 either in 2005 or in 2050 is nuts.
So Miami 2009, do not bunch me with them. I will still stick my neck out and say the flat #3505 in 1800 might be worth its asking price of 525K in the next 5-10 years or even earlier. But nothing in any of these inland buildings have the remotest chance of being valued on par with the flats in waterfront buildings and with water views. So it is not nice that you are using Neo Vertica example. Please compare Apples to Apples.
In order for a condo board to restrict rentals they would need a majority vote. It’s almost impossible to get a majority vote when half the buildings owners are investors. They won’t vote against renting or they’ll go bankrupt. I warned this would happen years ago. Now the boards are so desperate to allow rentals because they now the loser investors with the rental units cannot make maintenance payments. Essentially the idiots who bought condos as investments to rent out are killing their own investment value. A the cash buyers dwindle so will the asking prices.
“Mr. Silvio from Rome scoffs at Condo Boards and their silly requirements.”
Heh heh
Kramer #46,
This is not the time to tighten screws on rentals. Give it a year or two.
In fact my NYC Co-op who had the strictest rules of a owner being able to rent out his unit for only 2 years in the lifetime of ownership, just increased it to 3 years after resisting such a move for the past 30 years. That is a seismic shift as far as I am concerned with this tight arse co-op. If they have budged due to the tough market conditions and the fact that flats are not selling that easily, how can condos in Miami act any more haughty than a NYC co-op?
In any case all rentals are not equal. Ok you have rental buildings that look like frat houses or frat parties. But then you choose the building carefully before you buy. All renters are not created equal either.
1) Just go to 1800 Club. Out of the 321 closed units, 186 are renter occupied and 135 are owner occupied. So the renters are slightly more than owners. The ratio is 42% owners vs 58% renters. That is still better than 80% or 100% renter buildings.
2) Take a look around. I challenge if anyone can correctly identify a renter or owner in 1800 Club. I cant. The renters I have seen there are the most responsible and respectable individuals I have seen in any building. They respect and protect their building, not party animals and are conscious of their surroundings. They are actually as much proud of 1800 Club and Pace Park as the owners themselves and you scratch anyone of these renters and you will see a potential owner wanting to make 1800 their permanent home.
It might only look bad on paper that renters out weigh owner in 1800. But in reality the quality of renters is what you should look for not just the number. There are of course the occasional bartender or a waitress shacking up (no offense to these professions, I have been a bartender myself) but for the most part the renters in this building are professionals, lawyers, doctors and such.
So choose your building wisely before you buy. Having renters automatically does not devalue your building (maybe it wont qualify for a loan).
In how many different ways can I stress this?
Wild Bill – You are right #51. The ability to get a loan is a huge question as even cash buyers don’t want to be stuck with a unit they can not unload later. Everyone wants a known exit strategy. I have seen some of these desperate owners who are slaves to sneaking in short term renters as “relatives”. Pretty pathetic but the management doesn’t vigorously enforce the rules….management can’t (won’t) go around asking for proof of relationship, etc. and the desperate owners blatantly lie knowing management can’t go to such lengths. I’d hate to be a slave to my “condo investment” running it like a hotel room.
AJ said: “2) Take a look around. I challenge if anyone can correctly identify a renter or owner in 1800 Club. I cant. The renters I have seen there are the most responsible and respectable individuals I have seen in any building. They respect and protect their building, not party animals and are conscious of their surroundings. They are actually as much proud of 1800 Club and Pace Park as the owners themselves and you scratch anyone of these renters and you will see a potential owner wanting to make 1800 their permanent home.”
– Come on already, stop this nonsensical BS and dribble about how perfect and envious people are of such and such…….
AJ,
I hate to play devil’s advocate but the renters at 1800 Club can’t be as responsible as you say, otherwise the board wouldn’t have banned renters from having pets. One of the concierge people told me that the board no longer allows new tenants from having pets because of the pet “accidents” that kept occurring in the building. It’s a shame that the rule was changed because I’ve recently had to find renters who have pets other buildings to live.
RT, sounds like sour grapes. Any kind of positive news or good news gives you acidity. Get off your arse and take a look at some of the downtown buildings before spewing some of that drivel at us. Oh, I forgot. You cant! You are enslaved to your computer and TV. They won’t let you go anywhere.
Get some real life knowledge and experience than just what you have by the way of surfing the net or watching the boob tube.
– Let’s just hope it was the pets that were having the accidents!
– Oh AJ, sour grapes my arse. I’m the one saving $$$ by renting and am carefree. You’re the real estate slave….too funny.
Lucas,
I don’t know why but do not just blame the renters. This is a disease afflicting all dog owners irrespective of if they are owners or renters. These people love their dogs so much, their pets can do no wrong in their eyes.
Having said that I have mixed feelings about this new pet policy that started on March 1st.
I am in agreement with each and every word of it except that one rule which grand fathered existing renters pets but prohibits any new ones. It kind of defies logic but maybe they just want to reduce the number of pets in the building? When I get to Miami next month, I will request the board to reconsider this particular provision. I can campaign hard to get this removed as I have a bit of accumulated good will capital but I am not sure if I want to spend it on this issue or even after all that I would be successful.
Personally I will never rent my unit to a renter with a pet. That is just me. All my flats have this thing clearly mentioned. But I do not want to take away the right of a owner to rent his flat to someone with a pet.
But leaving the pet issue aside, I still stand by the statement that 1800 Club renters are very desirable renters. I am not sure if this is due to the fact that they are all very well behaved by coincidence or because a very high percentage of owners live in the building (compared to the other new buildings) who zealously guard their property and put some good rules of conduct in place?
RT, it is just what you are saying. We don’t know that.
If you are real, then why didn’t you accept my offer to hang out one evening? I will take you on a tour of Miami that you never knew. I am real and I have nothing to hide.
………..I guess not.
Only if I can bring two USSS SA with me.
re: 1800 Club
“…and put some good rules of conduct in place?”
Curious, what kind of rules does 1800 have that would make their rules any different than most Condo boilerplate?
Miami professionals aren’t the best tenants. They don’t pick up after their dogs. They party like crazy and use more recreational drugs. The high end buildings in Miami cater the drug dealer and prostitute crowd. The Floridian in Miami Beach was a classic example before it turned condo. A luxury rental building with major drug dealers inside.
Condo boards cannot kick out tenants. The they can fine the owners to force them to remove the tenant, but that usually takes about three or four meetings. Sucks to live on a floor with a habitual pot smoker. The Miami Heat were using an Aqua island rental as a whore house. How would you like to drop a few million on a place and have to put up with that?
You all are missing the point in this disagreement about renter versus owner. If as Wild Bill says that “no board” will self impose those restrictions of 70% principle residences – but that is the new Fannie Mae restriction – so in effect it allready is imposed upon each Condominium in the state of Florida. Which means that if your over the 30% ratio of renter to owner occupied then NO MORTGAGE. Its as simple as that. And AJ with 1800 Club at over 50% renter to owner occupied why would I buy there knowing that I cant re-sell to a prospective buyer who needs a mortgage. You need an exit strategy of some sort unless u plan on dying there. Thus this restriction imposed by Fannie Mae has to be calculated into the price of that buildings units. That means these units are worth less. Period!
Or even why would any bulk buyer make any purchase knowing that he will be restricted to cash buyers only when they are ready to flip their units?
RT,
Face it you are a bitter renter.
AJ is right, you’ll be kicking yourself for not buying when you had a great opportunity.
Alas, life is short, and you are wasting it by waiting for this imaginary condo give-away.
You ask about wasted opportunities.
Now I ask you, how many opportunities will past you by while you engage in this, and I quote, “hobby?”
AJ has more than a point here.
Lucas,
Can you please find out the name of the decorator who “designed” picked out furniture and art for this unit.
Whoever did this has a lot of talent and I need to get their name.
http://www.miamicondoinvestments.com/property-search/view.php?mlsid=M1241158
Kramer makes some interesting points about the role of the Fannie Mae rules in future prices. The peculiarities of those new rules will bifurcate the final clearing prices for the condo market.
Buildings that have not cleared the requirements will have lower clearing prices than comparable units in buildings that fall within the regulations. Prices in non-conforming buildings will be at least 15% lower, based simply on the interest rate differential between GSE conforming loans and jumbo rates. It is worth remembering that it is still in theory possible to get mortgages in the non-conforming buildings but those mortgages cannot be securitized by Fannie and Freddie and banks have to be willing to retain them on their balance sheets. In that respect the 15% differential is probably an underestimate since the potential pool of people qualifying for jumbo mortgages is much smaller, especially now that banks are very reluctant to expand their balance sheets. If the jumbo loan market completely shuts down and these buildings become for all cash purchasers only then the clearing price should slip even lower.
U.S. Economy: Housing Starts Unexpectedly Jumped
I’m calling bottom for this market.
We should see a strong rebound in price by end of year.
Muir, I wish I could agree with you, but I still think we have more room to fall. The fundamental problems still exist. Excess inventory, job losses across the board and fear by the consumer of a worsening economy which has led to people increasing savings and not making big ticket purchases. Credit is cheap but standards are tight. It is worth noting that the credit markets have not participated in this most recent rally. Unfortuinately, I don’t think we are there yet.
ocean5
You are only looking at this from a local perspective.
About 20 minutes ago the FOMC made its announcements and T Bills plummeted.
AJ is right to look for the International buyers.
They will be snatching these prime units up in no time.
Mortgage Rate Forecast 2009
Click on the name FORECAST
Sure there is money on the sidelines there will always be rich folks out there but outside the U.S. is actually doing worse compared to us. The dollar has remained strong relative to other currencies. Speaking about countries outside the U.S. is necessarily a general discussion but the European crisis much worse than the U.S. A few highlights below.
Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region’s GDP. Good luck. The credit window has slammed shut.
Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble.
“This is the largest run on a currency in history,” said Mr Jen.
In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America’s sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.
Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.
They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data).
Spain is up to its neck in Latin America, which has belatedly joined the slump (Mexico’s car output fell 51pc in January, and Brazil lost 650,000 jobs in one month). Britain and Switzerland are up to their necks in Asia.
Whether it takes months, or just weeks, the world is going to discover that Europe’s financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus.
Obviously Muir is being sarcastic in the last few posts….
CURRENCIES
Dollar plunges on Fed Treasury-buying plan
By Lisa Twaronite, Deborah Levine & William L. Watts, MarketWatch
Last update: 3:03 p.m. EDT March 18, 2009
SAN FRANCISCO (MarketWatch) — The U.S. dollar plunged against major rivals Wednesday afternoon following the Federal Reserve’s decision to expand its financial rescue strategy to include purchases of $300 billion in longer-term Treasury bonds.
The dollar index (US Dollar Index Future – Spot Price Last: 84.75-2.19-2.51% 2:42pm 03/18/2009) , a measure of the greenback against a basket of major currencies, fell to 84.573, down from 86.471 shortly before the central bank’s announcement, and from 86.861 late Tuesday.
The euro rose to $1.3422, from $1.3105 before the announcement and from $1.3013 late Tuesday.
The dollar fell to 96.25 Japanese yen from 98.29 yen ahead of the Fed news and from 98.55 yen late Tuesday.
“The U.S. dollar has been crushed, even the emerging market currencies have rallied,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. “The key consideration might be that quantitative ease is currency-negative — as it was for sterling, yen and Swiss franc.”
___
Here we GO boys and girls!!!
All caution to the wind, FED backstops everything , pump-a-pump re-inflate at all costs.
I’m calling bottom on both the market (1200 points late is better than never) AND Real Estate!
Who woulda thunk it?
ocean5 /Mar 18, 2009 at 2:38 pm
“Sure there is money on the sidelines there will always be rich folks out there but outside the U.S. is actually doing worse compared to us. The dollar has remained strong relative to other currencies. ”
MarketWatch exactly 25 minutes after your post:
““The U.S. dollar has been crushed, even the emerging market currencies have rallied,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York. ”
see above
(Bloomberg) about an hour ago
“Gold futures for April delivery traded at $940.40 an ounce at 3:40 p.m. on the Comex division of the New York Mercantile Exchange, after the close of regular trading. The price reached $944.50, the highest since March 6.
Before the Fed announcement, gold had declined $27.70, or 3 percent today, to settle at $889.10 an ounce, the biggest decline for a most-active contract since Jan. 12. The price closed March 16 at $922.”
RT,
We both lost about 3% of our wealth today.
When I mentioned the 60 minutes interview, it wasn’t the words spoken (if they have their mouths open, they are lying) it was the pictures of the printing presses that I wanted you to see.
___
AJ was right all along, I went to see this house in the Gables today
Let’s see if I can buy it.
I plan to to make a full cash offer at listing price tomorrow. ( $202,900 )
This weekend let’s see if I can nail a couple of the premium units before my dollars are worthless.
Muir – They are ALWAYS printing money. No indication anything is different now. I can show video of them shredding currency, so what? Why am I 3% poorer now? Come on, the dollar went up some, down a tad…… I am concerned about the dollar but this hasn’t changed my concerns. Don’t be so reactionary if you are serious about what you posted. Prudence is good.
Muir – You’re joking about that house, right? Yuck. 0.16 acres, laughable.
Of course, some of you may be tempted to buy SKF at$105.66
But only if you are a loser, doom& gloomer in which case you will crushed like the cockroach that you are.
___
Summary
ProShares UltraShort Financials (the Fund), formerly UltraShort Financials ProShares, seeks daily investment results that correspond to twice the inverse daily performance of the Dow Jones U.S. Financials Index (the Index). The Index measures the performance of the financial services industry of the United States equity market. Component companies include regional banks; United States-domiciled international banks; full line, life and property and casualty insurance companies; companies that invest directly or indirectly in real estate; diversified financial companies, such as Federal National Mortgage Association, credit card issuers and investment advisers; securities brokers and dealers, including investment banks, merchant banks and online brokers, and publicly traded stock exchanges. The Fund takes positions in securities and financial instruments that, in combination, should have similar daily return characteristics as –200% of the daily return of the Index.
Renter Tom,
“Muir – You’re joking about that house, right? Yuck. 0.16 acres, laughable.”
Well, you are right, 0.16th of an acre is pitiful
However, at least it is in the Gables and :
Property Information:
Primary Zone: 0601 SINGLE FAMILY RESIDENCE
Beds/Baths: 3/2
Floors: 1
Living Units: 1
Adj Sq Footage: 1,483
Lot Size: 6,900 SQ FT
Year Built: 1947
Legal Description: 17 54 41 PB 14-25 COCONUT GROVE SEC 1 CORAL GABLES S5FT LOT 3 & ALL LOTS 4 & 46 & N5FT LOT 45 BLK 27 LOT SIZE IRREGULAR OR 18397-1621 0398 4
Sale Information:
Sale O/R: 24647-4507
Sale Date: 6/2006
Sale Amount: $725,000
It sold FOR $725K!
AJ is right.
Lets face it.
We were WRONG.
I’m dumping my dollars before it’s too late.
You should rush immediately tomorrow to the bank and liquidate your CDs.
Better your pride than your wallet I say.
Thank God we have someone like AJ here to have the guts to say the truth.
But Muir, that price decline will be “snapped up” by some “glamorous people” who are “rich foreigners” after everyone is envious to live in Coral Gables! LOL
😉
Ssshhhhhh…..
Lucas,
This is a long post.
But some here may find this interesting.
Here’s what you will NOT see in tonight’s news.
_____
Fed to buy Treasurys in latest bid to restore growth (Stock Market leaps up)
Posted on March 18, 2009 2:30:01 PM EDT by AngieGal
Edited on March 18, 2009 2:41:54 PM EDT by Admin Moderator. [history]
The Federal Reserve surprised financial markets and committed to buy $300 billion in longer-term Treasurys to help the economy recover.
TOPICS: Business/Economy; News/Current Events
KEYWORDS: bailout; obama; treasury
Navigation: use the links below to view more comments.
first 1-50, 51-100, 101-130 next last
Yikes. Let the money printing begin!
1 posted on March 18, 2009 2:30:01 PM EDT by AngieGal
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To: AngieGal
Sorry left out the source…
MarketWatch
http://www.marketwatch.com/News/Story/Story.aspx?guid={8C08C8DB-1945-4A8A-A047-C3782DE43911}
2 posted on March 18, 2009 2:30:49 PM EDT by AngieGal
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To: AngieGal
are these people F#$@ING CRAZY???????????
3 posted on March 18, 2009 2:30:58 PM EDT by Mr. K (physically unable to proofreed (<—oops))
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To: AngieGal
Here comes Inflation… Welcome to the Carter Regime, Act II.
4 posted on March 18, 2009 2:31:53 PM EDT by So Cal Rocket (I am John Galt…)
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To: AngieGal
I had no idea the Fed had that sort of reserve.
I suppose this means we don’t need China’s dirty ole money.
Hooray!
I’m going to go buy stocks because any company I pick will have a better balance sheet because of this!
5 posted on March 18, 2009 2:31:58 PM EDT by Glenn (Free Venezuela!)
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To: AngieGal
If I take $20 from my right pocket and put it in my left pocket, did I gain wealth?
This is nuts.
6 posted on March 18, 2009 2:32:47 PM EDT by PogySailor (We’re so screwed…..welcome to the American Oligarchy)
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To: Mr. K
Gov prints money and buys its own debt… I wonder if it discounts its own interest rate?
7 posted on March 18, 2009 2:32:54 PM EDT by DonaldC
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Comment #8 Removed by Moderator
To: AngieGal
The equities market is in a suckers rally.
There is a gross and et outflow of foreign money flowing out of US equities.
This is a equities market suckers rally that has almost exclusively American money as the suckers at the table.
When this flushes, this will cause untold harm for years to come.
9 posted on March 18, 2009 2:33:55 PM EDT by JerseyHighlander (the people criticizing Christie are directly connected to the criminal politicians he convicted.”)
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To: AngieGal
Gold has gone parabolic in the last 30 minutes….It’s moved up over $45 dollars. UNREAL!!!
10 posted on March 18, 2009 2:34:51 PM EDT by Boanarges
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To: AngieGal
11 posted on March 18, 2009 2:34:58 PM EDT by rednesss (fascism is the union,marriage,merger or fusion of corporate economic power with governmental power)
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To: AngieGal
The Federal Reserve surprised financial markets and committed to buy $300 billion in longer-term Treasurys to help the economy recover
Does this mean the Chinese didn’t show up to the auction?
12 posted on March 18, 2009 2:36:35 PM EDT by fso301
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To: AngieGal
Yikes. Let the money printing begin!
Gold agrees with you 100%. Up forty bucks in fifteen minutes. That’s one of the sharpest spikes of all time.
13 posted on March 18, 2009 2:36:43 PM EDT by jiggyboy (Ten per cent of poll respondents are either lying or insane)
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To: AngieGal
The Federal Reserve surprised financial markets and committed to buy $300 billion in longer-term Treasurys to help the economy recover
With what money? No answer needed — it’s just a rhetorical question. The answer is, with the money We the People haven’t even made yet and so will be working to pay off until the seas rise and swallow Washington, DC due to global warming.
14 posted on March 18, 2009 2:37:46 PM EDT by Maceman
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To: PogySailor
If I take $20 from my right pocket and put it in my left pocket, did I gain wealth?
What interest rate did you charge that pocket.
Will you have to send the broken nose boys to visit it when it can’t make the payments?
Will we soon see that pocket on “pocket foreclosures in your area” infomercials?
_____
_____
These posts were real time as events unfolded today.
The posts are hilarious.
Muir (for this post only, Member of the Smart Money)
Muir,
you really think the fed pumping $300b into the economy buying up long term debt is a good thing? they are doing this because the mortgage (and thus RE) market is dead, and they felt (wrongly) they can induce the market with these moves. what they do not realize is the mortgage rate is not keeping the RE market down. it is the amount of the principal. you can double your mortgage rate, and i will still buy if you cut that $200k condo to $125k. cutting, or keeping the mortgage rate lower is not a very effective solution. they are desperate to avoid a severe deflationary situation, which is why the move has been made. i am afraid it will not work. trouble is ahead, because we no longer allow irresponsible folks to participate in the financial system. those like myself are still on the sidelines. today was a bad, not a good day, for the financial future of this country.
gables.
It saddens me …. only Tom understood me today.
Please read #85 (post before your’s)
By the way, unfortunately, you are factually wrong.
Fed will buy 300 bil in treasuries AND 750 bil more of agency MBSs on top of the 500 bil already announced.
This was a 1.25 Trillion dollar move.
The earth is still shaking as I type.
Look at my post on Gold.
Look at my post on Dollar.
The bond markets just declared war.
It’s a cluster-f**k and FUBAR.
It’s not just another measly 300B more
Monetizing the debt?
Quantitate easing?
Piss*d off Chinese?
{Ferris Buller}
Anyone?
Anyone?
gables – I agree. The problem isn’t the nominal interest rates for mortgages, it is the risk of repayment of the principal, deflation and real interest rates … which comes down to the asset price. Drop the asset prices and you’ll see the bottom in real estate and activity … cash coming off the sidelines. So far, all we’ve seen is more “creative financing” ideas out of the Obama admin. Sad. I would say Bernanke sees a bleak future and goes on 60 Minutes, announces this stunt today, etc. The next resets hitting over the next few years in mortgages demand a low mortgage interest rate….. As I have posted many times before, regarding keeping people in homes, a low interest rate is really all you can do for that….and you need to make it available for everyone that is capable of making the payments out of fairness.
Muir,
you need to get back on the meds. you are nuts if you think anybody has the patience and is willing to follow your posts today. you once joked i had the patience of a teacher. well young man, go put your nose in the corner until you calm down and produce some coherent thoughts! 🙂
RT,
until people like us move off the sidelines, nothing is going to get fixed. but they are just looking for another sucker to buy the bloated asset-and its not happening. it was a game of hot potato to our leaders, until they just now realized they are the ones holding the potato and everybody else has said i’m done playing this game.
muir, i was not factually wrong. just too lazy to write the entire discourse on recent events.
gables – Like I have said, I’d buy the condo I am renting for $300/s.f. in cash today….but not $350/s.f. nor $400/s.f.
New “Condos-R-Us” (CORUS BANK) Article”
http://southflorida.bizjournals.com/southflorida/stories/2009/03/16/daily32.html?ana=e_du_pap
*********************************
Corus Bank warns of failure, raises loss estimate
South Florida Business Journal – by Brian Bandell
A Chicago bank that placed huge bets on South Florida condo projects is in deeper trouble than previously disclosed.
Corus Bankshares (NASDAQ: CORS) warned in a Securities and Exchange Commission filing on Tuesday that its delayed 2008 annual report is expected to include a statement that the company’s current condition raises substantial doubt with respect to the bank’s ability to continue as a going concern.
Corus is one of the most influential players in the fate of South Florida condos. It had $1.38 billion in condo loans outstanding in the region as of Sept. 30. Federal regulators saddled it with restrictions that could make it harder for Corus to grant those developers loan extensions.
The SEC filing said Corus did not file its annual report on time because it is finalizing its financial statements and examining the condition of its borrowers and their properties.
On Feb. 2, Corus said it expected a $260.7 million loss in the fourth quarter, but, on Tuesday, the bank’s SEC filing revised the estimate to a $317 million loss.
Corus estimated a preliminary loss of $465 million for the full year.
The bank’s filing with the Federal Deposit Insurance Corp., which was based on the earlier estimate, listed 37.6 percent of Corus’ loans being noncurrent at year-end. Even before the new estimate, federal regulators had required Corus to raise its capital ratios.
However, Corus warned that even its more severe loss estimate might worsen.
“The preliminary results do not include potential entries that could arise from subsequent adjustments relating to the company’s commercial real estate loan portfolio,” Corus stated in its SEC filing.
Corus also disclosed in the filing that CFO Michael Dulberg has taken a personal leave of absence, starting Monday. Corus said Dulberg took this leave at his request and it was not connected with any known disagreement with the bank.
********************************
“37.6 percent of Corus’ loans being non-current at year-end” ….. Could be worse. LOL
gables,
My point was simple.
AJ was right, was right all along, we were wrong.
I thought it was a simple point.
Renter Tom ,
“gables – Like I have said, I’d buy the condo I am renting for $300/s.f. in cash today….but not $350/s.f. nor $400/s.f”
You’ll regret it RT.
Prices can only go up from here.
gables,
You are delusional.
“until people like us move off the sidelines, nothing is going to get fixed. but they are just looking for another sucker to buy the bloated asset-and its not happening. it was a game of hot potato to our leaders, until they just now realized they are the ones holding the potato and everybody else has said i’m done playing this game.”
“until people like us move off the sidelines”
You’re gonna get trampled on the sideline as buyers come into this market.
Listen to AJ
Muir – We get the sarcasm, no need to beat a dead horse or a foreclosed condo!
Bitter renters:
1. U.S. Economy: Housing Starts Unexpectedly Jumpedhttp://www.bloomberg.com/apps/news?pid=20601087&sid=agLqzpq2jKIM&refer=home
2. SAN FRANCISCO (MarketWatch) — The U.S. dollar plunged against major rivals Wednesday afternoon = FOREIGN BUYERS!!
AJ is right, you’ll be kicking yourself for not buying when you had a great opportunity.
Alas, life is short, and you are wasting it by waiting for this imaginary condo give-away.
Some asked about wasted opportunities.
Now I ask you, how many opportunities will past you by while you engage in this Don Quixote quest for imaginary condos.
Better my pride than my wallet.
Thank God AJ has been the voice of reason here.
Sorry RT
I’ll knock off for a couple of days. (by not logging in)
cya.
(p.s. “We get the…” replace the “We” with “I” and I believe you)
I wasn’t catching the sarcasm either. I guess you have to be a close follower of the various personalaties on this board to fully pick it up. Anyway, a one day dollar decline in my mind doesn’t change the global picture. I’m not happy to say it but I think there is more downside generally speaking. On the other hand if someone has found their “dream home” and can get a decent price NOW, I won’t judge.
The real estate market is BACK ! Rich foreigners are already flooding thru the Miami airport gates with deposit in hand to purchase up all the deals on high-end condos in Miami. AJ will soon retire a multi-millionaire and all those former real estate agents can leave their positions at strip clubs, bars and restaurants and get back in the game….WOOHOOO !!!!
Muir – FYI, the housing starts were month over month so a small jump gives a large % esp when most of it was in the dead multi family housing….single family was up maybe 1% which is not surprising on a month to month basis. There really is no hope as the Fed is now clearly desperate with the Chairman going on 60 Minutes and the whole buying treasuries thing….then Obama has to go on Leno and cause a distraction/diversion about handicapped kids…. Anyway, just spoke to a couple of real estate people this afternoon for a few hours…..it is really really bad no matter what kind of happy face they put on it as owners from other states and foreign owners don’t even return calls about having units painted for rentals….there is no money. Sad. More buildings will go down hill even quicker then I thought……
By the way….looks like the Federal Debt could go $20 Trillion in less than 10 years…….yep over 150%+ of GDP….. That’s what we get with a tax and spend spend spend fed govt.
MUIR….aren’t you a member of the “Smart Money Group”??/ the $125 a sq. ft. group .?
RT,
Face it.
You are wrong.
AJ is right.
In the end the current prices for condos are cheap.
You’ll regret mightily that you were with the “hip replacement crowd” in Sunny Isles instead of some hip digs like AJs.
You’ll end up like a jilted bridesmaid, waiting for an imaginary condo giveaway to invite you in.
I know that you are not as AJ said “a prissy bitch that could never afford to live there.”
And he was too harsh when he said “Just live off the interest on your CD’s and enjoy your early bird specials.”
However, this obsession you have with your “hobby” as you called it, to chase these future imaginary profits is costing you much, in pleasure you are refusing yourself and wasted financial opportunities.
Life is to short to waste on imaginary lovers, follow AJs lead.
There is a “shadow inventory” of hundreds of pre-foreclosure and bank owned properties that are not actively on the market. Investor units sit unrented for months. These units must be absorbed before price stability will return. Condo prices have no where to go but down in the near term. Sorry.
Muir,
You are getting too poetic and lyrical. Off those shrooms.
Ahhhhh, it’s a three bank failure Friday with one of them only having their INSURED deposits safe with the other two having all of their deposits assumed by acquiring banks. But that’s not all folks…..two large credit unions went under too. So I guess it is a 5 institution Friday! Booyah.
The debt burden and deflating asset values is CRUSHING people …. even the high end. With 1/3 of people with net investable assets of $500K or more gone…. I spoke to a condo property manager in a building that was started around 2001 but took a little over 4 years to complete….making it in effect a beginning bubble building. Some of the contract buyers did flip their contracts but other didn’t. So, less speculation in the building but still have owners who are hurting. It really is amazing how people lived beyond their means at all income levels. The yacht repo’s is interesting but so are the jet repo’s ….. both at big record highs. The appetite for condos….luxury ones….is way way way down. I think we are really going to see desperation run rampant in the second half of this year.
Muir – See your post #99…..please. 😉
RT,
I was hoping to get lucky with AJ this weekend, give me a break.
AJ,
? 😉
what AJ and cohorts do not realize, that waves of foreclosures are still on the way for the higher value properties.
I have no doubt that you buy 2/2 condo in sofla suburbia & all for 60-80k, it will be a good investment in the long run.
I personally know 5 people who have 5 properties bought since 2005 w/ portfolio as large as 4 mil each. These suckers are at the cliff and will keel over by year end. You would be amazed how many out there.
A good number of sofla baby boomers have helocked their house to book condo properties in downtown/beaches. These are again headed to foreclosures/walkouts. W/their bubbly 700k home now 500 k (in their minds) but actully may sell for 300-330 k when and if gets sold gives you an idea as to where we are.
AJ be scared. Be very scared.
andi,
In this blog we all vow down to AJ.
He is infinitely wise and generous.
Moreover, when his long time prediction of +$1000 psqf for “premium units” along the Biscayne corridor pan out, you will feel like the wretched fool you are.
Thanks for this impressive updated report. It helps a lot in promoting our site, we’ll come back and visit this site often. Thank you once again.
FLGREENLIVING
Miami, FL
its not awlays up to the developer to determine sale prices. these loans were created in 2005 and were based on strong market fundamentals. many things have changed since but the loans have not. lenders need to approve prices once they drop below a certain threshold. if they do not approve the sale, the developers cannot sell it.