New Miami Condos – Closing Rates for December 2008
December 14, 2008
by: Lucas Lechuga
It’s been almost three months since my last Miami condo closing rate update. The last one was published on September 22, 2008. Unfortunately, there has not been a lot of progress in closings for most of the condo developments below since that time.
Below, you will find the date that each condo development began closings followed by the number of closed units in each condo development:
Latitude on the River had three new closings since the last update, Onyx on the Bay had three new closed condos and 50 Biscayne had two. Ten Museum Park and Loft Downtown 2 were both unchanged since the last update.
Quantum on the Bay and Plaza on Brickell each had an impressive number of closings, since the last update, considering how long ago closings began. Quantum on the Bay had 28 new condo closings while Plaza on Brickell was able to close 46.
On Friday, the Miami Herald reported that the developer of 1060 Brickell is looking to sell around 60 percent of its condos in bulk. Closings at 1060 Brickell recently reached the 40 percent mark meaning that this represents the developer’s remaining inventory.
900 Biscayne Bay and Ivy have now each reached the 40 percent mark. I’m actually quite surprised that not one of the condo developments in this last group has been able to hit the 50 percent mark. Enough time has certainly gone by. To rev up sales, 500 Brickell recently held a 4-day promotion offering a free Mini Cooper with any condo purchase from the developer’s inventory.
The next update will include Icon Brickell, Everglades on the Bay (now known as Vizcayne) and Infinity at Brickell which recently began closings.
Disclaimer: The above closing rate information was derived from public County records. There can be a 2-3 week delay from the time that a closing occurs and the time that the closing is recorded.
Lucas,
Thanks for the update. Great to see some numbers since the financial storm hit. The recent condo activity appears to be terrible, although i expected that under these financial conditions. Could you possibly provide the total number of closings over this period?
Looks like we may start to see the separation of building haves and have nots. Seems like buildings over 70% may survive, but i see quite a number of buildings with under 50% closings. this is going to create a large problem for those particular buildings, and will also keep downward price pressure for all buildings. my guess is we are going to see many more renters in the downtown area than any developer or buyer had hoped for. since these folks pay rent according to income, they will further put downward pressure on sale prices. the buildings with over 70% closings will most likely be in much better position for a recovery than the remaining buildings, where the developer or some other agent will most likely turn half the building into a commercially run rental complex for 5 to 10 years. although that may be a better deal than a bunch of amateur landlords…
Plaza has certainly surprised me. While i like the building, i did not expect so many closings. I think it is overpriced. Is the developer providing any discounts or incentives to close? Compared to another Related property, 500 Brickell, there appears to be significant differences in closings, even when considering different start dates. any insight to why plaza has done fairly well? and what happened to asia? thought this was full of high value buyers who were immune from a downturn?
honestly, i’m surprised by the difference in rates, especially when you consider that a lot of these buildings are similar when you cut to the chase and started closing around the same time.
gables,
You asked almost all the questions I wanted to ask! But I can add on to what you said.
I am very pleased with Quantum. Plaza is a major surprise. It is a good building and people fell in love with it. Even Opera did better!! from 34 to 37%. Who would have thunk?
I have an explanation why 1800 hit a wall after 69% (actually it is supposed to have closed 70.2% by the buildings estimate, the difference with Lucas’s numbers are minimal anyway). The developer it seems does not discount a dime on the units he holds. He is in a very comfortable situation and very strongly believes in his product. He is renting them while waiting to sell them one by one in the next 3 years. The only deal that can be had in 1800 is from another home owners who really wants to get out. So I guess we are going to see the 70% for a very long time in 1800. In any case, people are resigned to the fact that the developer of 1800 is just another homeowner, but with 140 units out of a 469 unit building. Albeit a home owner with an extremely strong financial position paying his share of the dues. That is a happy situation given the circumstances. It is similar to related group buying its own units in 50 biscayne and pushing the closing rate to 97%. In the same yardstick 1800 can be considered 100% closed, with the only difference that the developer is not holding the remaining units through a front organization or corporation but holding them himself in the name of the Bcom Inc.
I am very surprised at the MB closing numbers. I just don’t understand why 900 is doing poorly while its neighbor is rocketing towards stability. I liked and also thought 900 to be a superior product over MB (No offense to MB owners). Is it because 900 is the most expensive of all (super lux or ultra lux category)? If this is the fate of 900 which had a head start before the financial implosion, what can you expect of the remaining ultra lux that are about to come on the market? One wonders.
Met 1 is another dud. What impact will it have on Epic across the street?
Midtown 4 numbers are surprising. How did it do so well? Asia is surprising too. It was supposed to be geared towards rich people ala the purchasers at Apogee. It is languishing at 52%. What ever happened?
Overall, The numbers are nearly close to what I expected with a few minor exceptions.
Thanks again to Lucas for such a nice public service of keeping us informed.
thunk?
jcrimes, i agree. that is why i was a bit puzzled by the difference between plaza and 500. developers may have to realize that to move the units in the low closing buildings, either find a bulk buyer like avenue is trying, or drop your sale price to an equivalent price and let the common public move the units. at some point, the developers must realize all the “luxury” appliances, floors, etc do not add up to a $100k+ premium. a bare condo now runs for under $200 sq ft, and the “luxury” adds at most about $50 sq ft, putting a typical 2B in the neighborhood of $250k. but they may have waited too long into a deflating economy to get even that out of their units now.
A 70% closing rate with even half of that (35%) being rented by 100 different floplords with some desperate and others going into foreclosure as time goes by, not a building I would want to buy in. Even a stable building has significant start up HOA issues, but one coming out of the gate already on life support is not good at all. To rent maybe, since no real risk, just hassles. The severity of this pullback in home values has exposed a lot of weak positions and exacerbated a lot of people near the margins too. I was hoping 2009 would turn out to be a decent year to make a purchase, but isn’t looking like it as of now, will continue to reevaluate as more information comes in. I guess it is no big deal since I am very happy with what I am renting (happier than I thought I would be since I have always owned) and this just gives me a lot more time to explore every area and building… The more info the better…
“rocketing towards stability’ …..ha ha ha, that is the funniest thing I have heard in a long time!
met 1 is a bit of a surprise to me. i actually like the building exterior and location. i understand from some on this blog the interior was not all it could have been. was it that bad on the inside, or just not the luxury people were looking for? i see this building as one which should be affordable, a step up from the loft buildings in downtown, but would attract a professional crowd with its location. has nice water views, and should be near a commercial hub in the next few years. i would consider buying there if prices were reasonable.
Does anyone have info on Met1? I agree it is a dud, but the middle floorplan is quite a nice 2/2 with supposedly a great bay view. Also, the future of the area with the met center sounds pretty interesting
further, why are there so few units listed? reminds me of MB when it was first opening…does the developer prohibit listing on the mls?
AJ — How is the gym at 1800? Does the pool deck include an outdoor jacuzzi?
i live at plaza on brickell.
i went last week to sales office and i have to say that 901 building is almost sold out. just few unites lefts. the other building 901 started closing few months ago and thats why you see 70% closing rate. plus developer rented few units at 901 with option to buy.
otherwise would be over 90%
all the best units are gone. just couple left. i wanted to upgrade to a bigger one and i talked to the sales people.
even only few penthouses are left. plaza on brickell has a waiting list for rentals. people just wanna be in cause its is across the street of marry brickell village.
so renting is no problem at all.
Joe — how is the elevator in the morning? parking? any general complaints with living there?
I hope you guys caught 60 minutes.
Words fail me.
Lucas….
You stated there were three closings at Latitude on the River since your last update yet when I checked recent sales on your site the last sale was reported on May 16.
According to the public records that you used as your source, can you quote the price per square foot that these units sold for and when.
Much appreciated.
I saw the 60 minutes episode.
How could things have gotten so bad? Tough times are a comin’.
I can answer why the Midtown4 numbers are so high. Everybody in the building is renting from the developer. I believe he bought the unsold units out to rent. It’s a nice place to live and was the epicenter during Art Basel.
Lucas,
Great Job!
Would you be able to do the same for South Beach?
Has anyone participated in todays REDC auction?
Michael,
The three closed sales don’t appear on the recent sales page because only resales appear there. The three closed sales were developer sales that recently closed.
Link to 60 minutes “A Second Mortgage Disaster On The Horizon?”
http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml
The reference to a building that was 100% sold with 25% in foreclosure.. I assume that’s Jade?
Lucas,
Can you tell me the prices paid on those three Latitude developer units?
Joe,
18 has one of the best gyms I have seen in new buildings. They could definitely use some bench presses and incline presses. Other than that it is well equipped. The double height and the industrial design interiors are eye catching. The bay view is incredible from the gym. It is very entertaining to see all the activity in the Pace park while you are on the tread mills or working out, you may have hard time to choose between looking at the TV’s or outside!
Yes there is a Jacuzzi outside on the pool deck (A source of envy for our neighbors at Quantum, who look on the 18 pool deck and curse at Terra for skimping on a hot tub and steam room). Even the pool water is always maintained at a balmy 87 degrees. It is a real pleasure to swim. The only problem is the wind tunnel effect. If there is 20 mile wind, it gets amplified to 30 miles in the tunnel. very annoying. Eventually I will campaign to install wind deflectors or just close the hole with glass windows. Even though it looks cool, no building should be built with a hole in the middle or at least don’t build a pool in the hole.
storm,
you only surface if there is a comment on Midtown 4.
I don’t remember the last time you posted. One of the mangers at Mondrian rents in your building. Haven’t been to Midtown on this trip to Miami. I Should have checked out. But keep us posted about life out there, new developments, new business openings etc. I believe Ocean Drive is published out of there.
sooo, does anyone have info on met?
AJ —Funny you mentioned that Quantum skimped on the hot tub. It might not be important to many people, but when I was considering purchasing there it bothered me that this amenity wasn’t offered. In light of the fact that there are many medical field people at 1800 with not a great deal of free time would I be correct in assuming that the pool deck is underutilized and fairly empty most of the time? Not that I would expect it to be like the Flamingo, but I was just wondering if it’s totally dead. And how is the noise transmission between condo units?
Joe,
weekends, the pool is well utilized. Lots of beautiful people tanning on the beds. Some residents and some visitors. Weekdays the pool deck is dead. Noise transmission was never a problem. I could not hear the TV from the neighbors. The noise from own a/c unit is an issue for many. It is a loud friggin unit but extremely energy efficient and cooling. People put some noise insulating barriers to address that problem. I like the SOBE buildings where the a/c unit is outside the flat. But you cant have everything I guess.
Also regarding the noise, 18 is not a party building. It is the closest to a bedroom community you can get in a condo building. So if someone has a loud party some where close by with thumping music, I cannot tell you as it rarely if ever happens. One interesting episode, my immediate neighbors had a party for 20 people. They knocked on my door at 10 pm and profusely apologized for any sound or inconvenience etc, invited me over , after I politely declined , sent me some great food and goodies. But the funny thing is that I never heard even a squeak! I didn’t complain as I had some great food and tres leches cake due to their guilt.
as for midtown…curious to see how the commercial aspect of the project plays out now that two anchor tenants are bust (linen’s & things and circuit city). we will witness just how strong the appeal of target really is.
as for ocean drive moving its HQ over there…well, jerry p. can throw all the hip parties he wants but at the end of the day, his revenues have to be down HUGE. his mags don’t make money from a subscriber base, that’s for sure. and the real estate developers and stores that paid him all the money for advertising space are suffering.
Did you guys see that 60 minutes spot? Freaking awesome. I’ve been watching a new condo building in Miami beach where 2 bedrooms sold for 1 million. Last sale in October was 420K. 32 units total with 4 in floreclosure, 5 still owned by developer and 13 for sale! Someone is already offering at 390K 2 months later! No takers. Every single purchaser is underwater! Can’t wait until prices hit 150 for the unit I’m lo0king at.
Peace.
AJ, and others—Thanks for all the info. I’ve lived in South Beach & was considering making the move to miami, to one of the new condos such as 1800. Do you find it a little too confining just having Pace Park to walk about your area compared with all of SoBe? I like that SoBe is so pedestrian friendly & fear that I’ll feel a bit isolated at 1800, especially without a car. I’m aware of new shops & restaurants in your area, but they seem so limited compared with the multitude & diversity at SoBe. Would you not liken your vicinity to that of Chelsea in NYC of 15 years ago with respect to the unrealized potential as of yet?
Lucas, again, great information.
Again, these numbers are very good to see where developers stand, but not really give you much information as to the status of each of these buildings for prospective buyers.
You need to also look at how many units are for sale on MLS by owners/investors/speculators to realize where the individual building stands.
For example, a building that is 78% closed like Quantum (698 total units), currently has about 60 units for sale on MLS. Based on the closing rates Lucas mentions, 146 units are still available from the developer. That is a total of 206 units available for sale or 30% of the building.
My opinion is that there are 2 options for the remaining units:
1) Developer closes out and reduces prices significantly to do so which drives every other price in the building (MLS) down. Auction is a possibility.
2) Developer or some other bulk buyer looks at a rental operation at which point they cannot justifiy a $300/sf sales price. Here is why:
Assume he can get $1.50/sf in rents (give or take) and pays about $0.40/sf in HOA fees. That nets out to $1.1/sf (not including taxes). If taxes are $7k year (2 BR unit, 1,400 sf), that would bring the net rent down to about $0.7/sf.
Now, I attended the distressed propery seminar held las week at the Diplomat where almost every investor/bulk buyer/hedge fund was speaking. Almost all of these funds are looking for cash flow purchases where they can hit close to a 7.5% return (again, back to historical averages). If you assume this as a cap rate, prices would be $112/sf. Yes, $112/sf. Pure and simple math.
Cash is king and it’s not stepping in unless there is a decent return to be made. If not, ask Lupert Adler/Related who has only made one purchase.
Anyone doubt that prices still need to go down?
—-
Now, I have said many times before in this blog that Option ARM’s would be the last dagger to the Miami Real Estate market and i seems that this is happening. Wamu was perhaps one of the biggest holders of these and it looks like the mess is still unfolding.
The stats that are mentioned on that 60 minutes spot are alarming ,and tif he predictions that 50%-70% of these will be delinquent in the next 2 years, prices will have no way to go but down. Way down.
joe
i know what AJ will say…but, as a beachnik, i don’t think there’s any comparison. there’s a lot to criticize about south beach…but one thing is certain – you are always within walking distance of something to do and your options are significantly greater than the pace park area. maybe in five years this dynamic will change, but if you’re talking about a year or two of renting, the choice is painfully clear where to be.
Unit 2106 at the Mark on Brickell Bay sold for $155,000 at the Sunday Auction. It was a 1-1.5 unit with 750 sq. ft. Lots of others in the same tier are listed in the $350,000 up range. What possible motive does anyone owing more than a unit worth have to keep paying the mortgage. Plenty will probably be leaving the key at the front desk on the way out. A newer 3-2.5 townhouse in Homestead went for $82,500 which actually might make a decent rental if half the town wasn’t for sale.
jcrimes—–I tend to feel similarly. I wish I could find a large fairly new condo comlex in South Beach similar to the ones opening up in Miami, but not at insane prices (to purchase). Any suggestions, or am I just fantasizing? And if you were to predict which area in miami would have more of a SoBe dynamic in say 5 or more years, which of these 3 would you select: Brickell, Pace Park or downtown between these two areas?
jcrimes,
for once you are wrong about me.
SOBE is a walkers paradise. I just walk walk walk. I walk all the way from West avenue to ICON marina, along the water to Apogee, South Point Park, to Ocean drive, Lummus Park, Lincoln road and back to West avenue. Some times I bicycle too. There is no place in the whole wide World as walker friendly and as walker interesting and amusing as SOBE. I will have a tough time to choose between My Old SOBE condo or my Swanky 1800 condo to live in when I move to Miami. Hopefully I am rich enough to keep both for myself!
Having said that,
Joe, Pace is large enough to walk. If I get bored, I walk on Biscayne boulevard all the way to 30th st. Very interesting. Some other days, I walk south and reach Museum Park, AAA steps, Bayside Marina, Bayfront park all the way to One Miami and Back. That is a good enough walk. Very scenic and very interesting. If this walk is too long for you, consider taking the Free Metro mover which is 2 blocks away from 1800, get off near the Intercontinental Hotel and then walk back along the Bayside Marina to 1800.
If you read my posts before, Pace Park is just like an extention of SOBE, connected to SOBE by 2 bridges. This is the only Mainland location in Miami from where you can actually walk to SOBE. Take the venetian Causeway and you will be in Lincoln Road in easy 30 minutes. Or Bicycle down to Ocean drive, Park your Bicycle and then walk in SOBE. The opportunities become endless. So regarding your question “If you are confined to Pace Park (However amusing and beautiful it is)”? My answer is HELL NO.
Chelsea Comparison? Chelsea took 30-40 years to gentrify from being a cuban ghetto to what it is now. Pace Park/OMNI will be unrecognisable in 3-4 years. Mark my words. Every 2 months, I get more surprised at the transformation. It is rapid and unstoppable. Financial meltdown not withstanding.
Jcrimes,
Yes, Ideally I would like to live on SOBE. But I dont have 2 milion dollars to live in Continuum II. So I will live in 1800 for 25% of the cost with similar amenities, living space, views and still have SOBE at my doorstep to enjoy. That is having the best of both Worlds.
AJ – For what it is worth, dump the downtown ASAP and just live on SoBe. There is no doubt that the downtown will fair very poorly….no matter how “swanky” (which won’t last by the end of 2009 as foreclosures mount). No reason to hype a sinking ship…people are already out on their lifeboats.
Oh. Let me add another choice of almost free transportation that will put you in SOBE from Pace Park.
From OMNI Terminal bus station (Right next to the Metro Mover, which is about 2 blocks from 1800), you can take 5 buses (FIVE!!) to SOBE and one night Owl. You get one almost every 5 minutes.
Take A, C, S, K, M or 246 night owl for $2, you are in SOBE. So if you do not want to Walk or Bicycle or Drive or Take a Taxi, you can get to SOBE cheaply enough. No other area in Mainland Miami is so well connected by public transport to SOBE as Pace Park area. And you could be in SOBE from Pace in under 10 minutes for $2. Brickell, Midtown, Downtown are not that fortunate in that respect.
Ocean Drive already closed down in Midtown. Its now published out of NYC.
Brian,
That is not good news. I hope it is not true.
AJ—–great post. Quite apropos to my situation, as I have lived in NYC & am accustomed to being within walking distance of what I need recreationally & of the necessities, such as food shopping. Speaking of which, where do you do your grocery store shopping? When I lived in SoBe I was able to walk to Publix.
AJ, you’re right about some things, but not about walking around 1800 club. Do you walk north up biscayne? hope you have a concealed carry permit. you’re going to get shot someday. Don’t say we didn’t warn you. As the recession worsens the criminals become more desperate.
Joe
the further you move up the beach, the better the deals. i’m actually a big fan of the 60s through 90s stretch on collins. some nice buildings that aren’t troubled (vilasol/vilamur/vilazul) although it’s definitely more quiet up there compared to south beach.
if you’re looking to buy in sobe and aren’t tied to the concept that you must have a water view, i think there’s about to be some great deals. cosmopolitan, montclair and meridian lofts are already showing some price weakness and this will become more pronounced in the next year. also some new stuff coming up in the art deco neighborhood that will be worthwhile once the bank steps in and takes over.
Biscayne Blvd is absolutely safe both day and night. You have to be as careful on B Blvd as you would be in any big city street. Starbucks on 30th st is doing good. There is continuous string of restaurants/shops on B Blvd all the way to Julia. There is always foot traffic at all times of the day and night.
2nd avenue is absolutely safe during the day. After 11 pm, you may use caution. But as more businesses open and more traffic, 2nd ave will be as good as any. The game changer would be the arrival of Bayview market at 17th st and 2nd Ave.
joe,
grocery shopping at price choice @ 2nd ave and 19th st (2 blocks from Q/18). Publix is set to arrive to the area soon. The closest publix is now is on B Blvd in the 50’s.
jcrimes,
from what I gather, joe seems to be not the type who would like Midbeach or North Beach or SIB or N Bay Village. Living there is like death to a lot of people. That is why when people mention good deals in these areas, it only appeals to retirees or the sedate.
Those who prefer action (until the day they die) or want to be among action, even if not an active participant would prefer SOBE or its natural extension Downtown. Anything else just wont cut it. When you step out of your building, you want to be in the middle of everything. The only areas that offer such excitement is SOBE, Pace Park, Park West, Downtown and to a lesser extent Brickell.
Questioning Downtown
Met One
Saw a 2 bdrm 2 bath there last week on the 15th floor 1200 Sq feet with a pretty nice water view to the bay – nice balcony – nice finishes – but the pool area is small in comparison to others and the lobby and hallways are plain not exceptional – no pizazz here at all. The asking price was $486,ooo. Im not sure how deep the developers pockets are but I would guess considerable price declines over the next year or less.
Downtown Miami, Park West and Pace Park are all very exciting. http://www.spotcrime.com/fl/miami
Wild Bill
Wild Bill – did you say you work for the Chamber Of Commerce or The Miami Visitors Bureau?
I guess he has never lived in a city before!
AJ said: “When you step out of your building, you want to be in the middle of everything. The only areas that offer such excitement is SOBE, Pace Park, Park West, Downtown and to a lesser extent Brickell.”
———–
Come on AJ, quit this Pace Park thing. Nobody in Miami has heard of it. It doesn’t register on the radar. The only people who know about it either live there or read this blog.
JL,
You are one of the informed guys. You cant talk like that.
In any case, how well people know a place is not a criteria for how nice it is. Sometimes the least known are the most top class. Until about a few years ago, No one ever even heard of Riverdale in NY. Even many long term New Yorkers. Even if they did hear the name, they have never even been there or seen it. Yet it is among the 5 most desirable places to live in NYC in all the boroughs put together. Exclusive, classy, low key but desirable.
If no one ever heard of Pace Park, I am happy about it. Let it be the best kept secret of Miami. As it is hordes of people have started to invade the Pace Park on weekends for picnicking or playing coming from as far as 25 miles away. I am afraid soon the residents will get displaced from the Park itself with the “Outsiders”.
Hugo P,
Enjoyed your post.
Here is my own real life example with easier numbers that I work out backwards.
I rent for $1650 (brand new 2/2 granite/marble 2 balconies…)
HOA is $750 and taxes work out at $600.
That means that $300 is the profit.
At 7.5% CAP = $48,000.
–
🙂
$48,000 / 1248 sqft = $38.50 sqft.
🙂
–
I’ve said it before, $75 sqft.
–
Why?
Because a lot of us would settle for slightly less than 4%.
(your HOA number and rental income was somewhat optimistic)
That reminds me!
Hey, I deserve a “WELCOME!”
Just moved to our Miami “The Fair White Goddess of Cities” (saying from 1925)
🙂
Any comments about 1800 Biscayne Plaza condos? I am looking to buy a 1 bedroom for 120k but I do not know anything about the building, assestments, problems, etc…. Maintenance at 340 dollares seems reasonable.
Really pace park is a place to walk out and be in the middle of everything. Give me a break. AJ should work for the NAR. I remember when aj talked about the “beach” at pace park. And for the last time pace park is not an extension of south beach. That’s like saying bush is following ghandi’s principles. Keep dreaming AJ
I think we finally figured out where Baghdad Bob, the Iraqi Minister of Information, has gone…he moved to Miami and is going by the name AJ.
The whole area near 1800 and Quantum is absolute garbage. Maybe you have a wonderful imagination and you can see 20 years in the future through your crystal ball, but you’re not anywhere near reality. Saying that Pace Park is an extension of South Beach because two roads connect it is akin to saying that Overtown is an extension of Aventura because I-95 connects them.
You can enjoy your fortresses, Quantum and 1800, but I’m hoping there’s some kind of moat protecting you from the neighborhood. I’ll take South Beach.
Has finally bought a condo. BLUE is the choice! I’m in the process of remodeling.
Fernand…1800 Biscayne is a horrible bldg. Yes it’s real cheap now and location is walking distance to Performing arts and AA but man that bld is cheezy.
Saw there not very good.
Hello. Longtime reader, first-time commenter here, looking to exchange a few thoughts on real estate prices (condos specifically). By way of background, I am a foreigner and living in Miami for 10 years. I have seen the boom, and am now watching the massive bust unfold from the peanut gallery (apologies in advance for the long-ish post).
From where I am sitting, the picture for Miami real estate is bleak:
1) Economy is bad, and will get worse. This will be the first global recession since WWII (US, Europe, Asia, LatAm all go down hard on this one). It is also just getting underway. Despite the recently revised opinion that the US recession began in December ’07, the fact is that US GDP was still growing up until 3Q08. Job losses have so far been concentrated mainly in the US financial sector. The pain will now spread as the “average” consumer begins to feel the pain from the credit crisis. Miami is in no way immune to this, and the local economy (heavily reliant on real estate and construction), will suffer.
Europe will get hit even harder than US. European economy is far less dynamic than US economy, and in general companies have less flexibility with their labor force than their US counterparts. Fiscal stimulus is also less of a factor in Europe as governments tend to scale back spending when growth slows as opposed to US, where the government increases spending to plug the gap left by the private sector.
Economy will suck for the next 12 months too.
2) De-leveraging, the process of selling assets/raising equity to bring down leverage ratios, is still in process. European banks are much more highly leveraged than their US counterparts (typical US bank is leveraged between 12 – 16 times), a US investment bank (now extinct) was leveraged around 35x. European banks are leveraged 30x or more.
This will mean more assets are going to find their way into the market.
3) Credit is still very tight. Not as bad as when Lehman Bros went broke, but still far from being a normal situation. Worryingly, there is not much demand for credit either.
These are all external factors and would naturally be weighing on the Miami real estate market. The particulars to our city are horrifying, though:
Massive over construction. Huge buildings sprouted almost literally overnight. Say what you will about the relative amenities of one building vs. another, but the fact is this: Miami is now home to many dozen lux/quasi-lux buildings with 300+ units and similar amenities competing for closing dollars. Barring a massive population influx, there is no way that all of those units will be occupied in the near future.
My guess is that people who work downtown and had to commute from other areas will probably be drawn into the downtown area as prices come down, but with many of the new units being rather small and unlivable (i.e. no self park, small/no closet spaces, not many areas for children, etc…) there is a limit to this number. Result: many empty units.
Another factor to keep in mind is the jet set crowd that parties in Miami, Buenos Aires, New York, LA, and the French Riviera. Some of them are so wealthy that a 20% – 30% hit to their net worth will not alter their lifestyle. Many are not so fortunate, however, and will tone down their carefree ways (or dance blithely into bankruptcy). Result: less dollars potentially coming to the Miami real estate market as these people go someplace cheaper.
We must also keep in mind that Miami has to compete with other cities that are also going down in price (this is especially true as the US dollar has appreciated against every currency except the Japanese yen during this crisis).
Which brings me to the last point: the numbers behind owning an apartment simply do not make much sense to me, especially when compared to renting the same/similar unit. I’ve done a few not-so-back-of-the-envelope calculations, and my rent comes out to less than half what my landlord pays in mortgage, HOA, and property tax bills. I’ve taken an unscientific straw poll and found that many of my friends’ landlords are in similar situations.
Apologists can point out that the landlords in this case are taking a loss today to realize a gain tomorrow (this is the same thinking that led people into paying outrageous amounts for dot-com stocks, you are buying a shot at spectacular growth down the line). I don’t buy it. The negative cash flows are meaningful (in the case of my unit, around 5% of the original purchase price per year). In effect, this means that the unit has to appreciate at least 5% every year just for the owner to break even on his investment. This is fine in a bubble market, when price appreciation is above historical trend. Going forward, I wouldn’t bet on this.
In short, I simply do not see an easy end to the Miami real estate market. To me, Miami was like the tail-end of the dot-com era: we got stuck with Amazon, eBay and Yahoo! at the peak, and Pets.com snuck in there as well.
I see one of two outcomes: either rents have to shoot up drastically (unit owners will now actually want their investments to make money, or at least break even), or prices have to come down again (and hard). As I’ve said above, unless the Miami population magically doubles in the near future, I fear it will be the latter.
I welcome any comments/suggestions/ideas.
2pence – I too am only paying 1/2 price to rent when you add in mortgage, HOA, and taxes…..if you account for property price declines over the last year, I am only paying 1/5! I have watched several buildings and see the same units for rent for months and months with more inventory everyday. There will actually be even less demand for homes as people change from single person households to multiple person households like before the housing bubble. With the Alt-A resets coming over the next 3 years the situation is appearing to be much worse than what I envisioned. I talk to condo managers and they tell me they are having to put in bad debt line items to account for uncollectible HOA fees. Having 10% in serious arrears is common. It just is a really bad situation that appears to be getting worse, not better. I have basically written off 2009 already as a year to buy…maybe 2010 will stabilize things, but will have to see about that as it approaches. Grrrrrrr, the housing bear is not even tired yet.
Hey AJ,
Thanks for the shout out.
I dip in and out of reading this blog because sometimes it gets repetitive.
I do perk up when Midtown is mentioned because I think it could be the dark horse in the race to become the next hot Miami Neighborhood. To me, it is the most walking friendly neighborhood apart form South Beach. I am female and I will walk to art galleries and restaurants in the design district without trepidation. I am not a fool I do keep an eye out for anything suspicious but I feel reasonably safe here.
During Art Basel this place was rockin’ . I am not sure if Ocean Drive will ever officially open here but they did finish their office space. Even had a swank party during Art Basel. There are two art galleries on the bottom retail space of Midtown4. Not sure how long they will stay but one of them did put up a sign today. Lime Mexican Grill is about to open here and there are a few places to eat next to Target.
SugarCane lounge had a pre-opening party during Art Basel but I am not sure when or if they will open. I do see guys doing construction in the space but it is on an inconsistant basis. The Shuichi Take gym is set to open this month according to their flyer and that should be exiting. It is supposed to be feng shui et al. A trendy restaurant has also bought some space in the botton retail area of Midtown 4 and has put up banners but I have not seen any construction as of yet. The pictures look really nice. I hope they open.
Don’t get me wrong there is still alot that could be better with the building and the urban development around the area but I feel good living here and that’s all that really matters.
“While real house prices increased by more than 80% in the decade from 1996 to 2006 according to the Case-Shiller national index, real rental prices increased by just 4% over this period,” Baker writes. “This gap suggests the extent to which house prices were driven by speculation rather than the fundamentals in the housing market.” money.com
– I guess that is why rents are 1/2 price compared to owning….rents went up 4% while prices went up 80% in real dollar terms…. Well rents aren’t going up, they are going down so that leaves home prices with only one way to go.
Storm,
Thanks for the update. If I am not such a sucker for water views, I would have definitely considered Midtown. I like the concept and when all that is planned is going to materialize, It will be even more exciting. It will be sooner than everyone thinks.
Thanks for the update. Helps all those who read this blog from Vancouver to Vladivostok to be kept in the loop.
Believe me folks, Come 2013, all those plans that are shelved would be dug up, dusted off and we will start constructing again by 2014. There is just no other way unless we all decide to keep our children living with us or 10 to a room. Population is increasing by 50% in 40 years (Never in our human history has it increased by that much). That is in one generation you will see Earths population go from 6 Bil to 9.3 Bil by 2050. Just by the time you pay off your mortgage, you can see the severe strain on resources for water, food, land and almost for everything else that will keep your sanity. Honestly I do not want to live long enough to see a World with 9.3 Billion people (US will have close to half a billion of them). That is a stuff nightmares are made of. No space, no privacy, no place to live, no food to eat. The kind of lifestyle that you can have in Miami ( a simple 2/2 with water views) right now will be only an exclusive preserve of a very few extremely wealthy or privileged people. You dont have to wait till 2050 to see that happen. By 2020, you will look back and see with amazement what went on in 2008. But I am not advocating anyone to buy and hold till 2020. If you need a place to live, go and buy. Lots of great deals out there. If you are like me, who need a place to live in Miami in a few short years and are very specific and particular about what you want, go and buy too. But ofcourse if you are the type that counts every penny in the short term, do not go and buy anything. If you are also an investor planning to sell your condo in 2-3 years and make money, dont buy.
AJ,
By at the rate your going the only valid prediction for 2013 is that you will be on food stamps.
On rents and costs.
Why guess?
–
“I rent for $1650 (brand new 2/2 granite/marble 2 balconies…)
HOA is $750 and taxes work out at $600.
That means that $300 is the profit.”
–
see post #50
AJ
the population may boom in this world but it’s taking place in third world countries; not in the us, not in europe. not to mention, if you think you’ll look back in amazement to 2008…you will look back with astonishment to 2009…and 2010…and 2011. sorry guy, but this is getting much worse before it gets better. read the southbizjournal or its bastard brother, the dbr, to get an idea what i’m talking about. 2008, the banks were figuring out what the hell was going on. now, the banks are repo’ing at a frantic pace. problem is, no one is buying on the back end yet. you already have two NEW buildings in brickell that have officially thrown in the towel (wind and avenue) with another one coming soon (i can’t divulge but it will probably happen in the next three months). related might have the wherewithal to ride out the storm, but the ridiculous amount of inventory it alone holds is going to be a drag on prices for years to come. the biscayne stretch will be a nightmare soon with all the foreclosure activity (on the developers not end users). all of this…will CRUSH prices for those that already purchased. i mean, if i own in wind, i just lost at least 100k on paper because of wachovia’s foreclosure suit.
Muir… completely agree with you.
I do think that there are some bulk buyers and funds who would be willing to maybe breakeven on the rental operation (or make a tiny return) and just count on selling the units at a profit in 7 years, so that might bring up the prices just a bit by reducing the cap rate.
I am impressed when people in this blog (AJ for example, although he gives balance to this blog) just relies on current pricing and the changes over the past 12 months to make a prediction on future stabilization prices when the oversupply and the escalation in prices over the past 5 years was way above anything this City has seen historically.
It happened before and believe me, it will happen even worse this time. And that doesn’t even include the fact that we are in a serious recession
Like I said, I went to the distressed property symposium last week where almost every real estate investor, attorney, hedge fund, etc was drooling over the opportunities they are seeing now and even more on the ones they are expecting next year. Any reson to doubt this trend?
How would you explain the fact that every foreclosure that has reasonable price is being purchased by investors. It is a very competitive activity out there in the market. People make money(investors) by wholesaling the properties. For example I concentrate in Ft.Myers area. This year only I completed 6 deals and 2 on the line before the new year. Every reasonably priced foreclosure gets multiple bids and actually being purchased. So despite very bad economic predictions real estate investors find their anclave. You can ask me why I do not do my deals in Miami? Simply because Miami is much more competitive and the amount of money that you have to invest before you get the the profit is twice as much as in other areas of SW Florida.
I agree to the fact that prices probably will continue falling but they are great deals out there and as investors we can make money even in today’s market
lara
Agree with you, there are some good deals out there, but the large deals (those who will set the market pricing) are still to be had and people are waiting on the sidelines for this.
The good news for housing is that housing starts continue to fall … and fall to historic lows. That is good for many areas of the country. Most areas of the country simply stop building more single family homes on lots, however, as we well know, in Miami and other areas of coastal Florida it is large 100-500+ structures that are still under construction since they take years of planning and construction versus just a few months for a s.f. home. So as other areas of the country make improvements with respect to lowering their new home inventories…many parts of Florida, esp. Miami, will lag significantly. I am sure there are some deals out there….but more and better deals are sure to come. At this point, I am still firmly in the “why participate in this market now” camp. With rents at half price, Alt-A resets over the next three years, rising unemployment, and serious economic uncertainties – renting at half price (not including home price declines) is still looking like the way to go in the next 12 months.
RenterTom…
As per adjustable rate mortgages resetting, I would thing that would be a big positive.
Mortgages are tied to indexes such as LIBOR and US Treasury bills which are at historic lows.
I would think the adjustable rates will reset to much lower levels.
Am I wrong?
Michael,
My biggest question regarding the ARM loans and resets is, did those people buy to live in the unit or as an investment? My guess is many bought as an investment, and even with the low interest rate they are probably pushing their payment ability. they bought the unit with low interest in order to profit from a higher sale price a couple years down the road. this is why so many mortgage which were reworked are still failing months later. the scheme only works when prices go up. even if ARMS reset at low interest rates, the people still cannot afford the unit and are just suffering a slow financial death.
this is also why housing has not rebounded with low interest rates. while it seems great for me to get a mortgage at 4.5%, prices are still unaffordable with respect to salary. its not the rate, is the size of the principal which must change. and that means somebody has to take an actual loss somewhere in the system. just wont be me.
I guess my understanding of the Miami area is lacking.
I am from the Northeast (NY/NJ) and enjoy vacationing in Miami.
I have recently visited several highrise condo buildings and was extremely impressed.
In my neck of the woods these same units would cost double or even triple and have a higher tax base.
I understand Miami is overbuilt but what you can buy for the price there as a northeasterner is a steal.
Additionally, Miami is a true international market.
It is a beautiful city with arts, beaches, and great weather.
So how can it not recover over the next few years?
I know there is doom and gloom now and may not be the absolute bottom, but I am confident when we look back a few years those who bought will be happy.
Michael – The problem is the resets will be higher than what they currently pay…..many had very low “teaser rates” with no intent on carrying the unit forward even at those low rates. Moreover, low 4.5% mortgage rates aren’t really low in REAL dollar terms…when you take into account the nominal debt financed a deflating real prices asset, the real rate in Miami could be 20%. The doom and gloom has no end in sight, literally. As a potential buyer…I am disappointed at the current state of things but look forward to buyer at a low low price.
Michael,
No they won’t if they know they could have bought at 100/sf. Sure I could buy apple at $200/share and eventually the company will get back to that price, but right now apple is at $90/share (and I’m still not buying).
Also, you reasoning is completely wrong. The median salary in Manhattan not to mention RENTAL prices are much higher. NY market is still in the early phases of crashing too.
Lara heres a nice explaination to your sales (from another blog):
There is a common misconception out there that the power to stop the housing slump is in the hands of the people. That at some point buyers will decide the time is right to “jump in,” and they’ll start snatching up all this inventory. When individual listings are discussed, someone might say the house is overpriced, that it should be listed at $500k or so, and someone else will respond “there’s no way anyone will let it get that low.” Or, “that house will never fall under 1 million dollars again.” These types of remarks are easy to understand given the runaway inflation of home prices we’ve seen in the last 7 years. But they reflect a misunderstanding of how the housing market works, and especially what the major problem is with it at the moment.
Now, I’ll start by saying this. Any house that prices itself below the competition in an area is going to sell. Why? Because there is a select number of buyers on the sidelines – buyers with significant down payments and verifiable income who really want to get into a house or a particular area. This is why some listings get multiple bids while the majority get none at all. There are buyers out there, and they’re going to flock to the best-priced houses.
BUT, and this is a big but, there aren’t enough of these buyers out there to prop up house values on a macro level. So home prices will continue to tumble until there are enough buyers to support the market. Supply and demand.
So why aren’t there sufficient buyers? The credit crunch. The only reason (well, you could probably add greed as a second) house prices skyrocketed during the bubble was the loose lending standards of banks. You’ve all heard the stories. Million dollar houses bought with 0 down and no verified income. The “creative financing” became more and more creative as prices grew, and it was a vicious cycle that sent prices into the stratosphere. However, that’s all over. Creative financing, exotic loans, teaser rates – they’re a thing of the past. With few exceptions, you can’t get a mortgage in bubble areas (like our own L.A.) unless you have 20% down, verified income (matched to the price of the house as discussed in the previous post), and good credit. That’s why the buyers have dried up. No one can get loans.
And that brings us back to fundamentals. Prices will continue to plummet until they fall in-line with fundamentals (price/income and price/rent). At that point there will be enough buyers that can secure a loan from the bank to stabilize prices.
Trust me, I have full faith in the financial stupidity of those around me. I believe most people would still take a zero-down, interest-only loan if it would get them into that “dream house.” They would walk head-first into financial suicide, losing hundreds of thousands in equity over the next year if they could. Thankfully, the banks won’t give them those loans anymore.
There’s no silver bullet for housing. Alan Greenspan just said today that he thinks housing prices are “no where near the bottom” (http://www.cnbc.com/id/25953040). I’m surprised that’s not obvious to more people, although I think if vested interests were set aside, we’d hear more people admitting it. Prices must fall to match people’s incomes.
Quote from above “there is a select number of buyers on the sidelines – buyers with significant down payments and verifiable income who really want to get into a house or a particular area. This is why some listings get multiple bids while the majority get none at all. There are buyers out there, and they’re going to flock to the best-priced houses.”
No surprise! When all of you talk about South Florida’s excess inventory, you are including Homestead and the likes. But Half of Homestead is on sale but no one ever wants to live there. Numbers from those areas skew the total Miami-Dade numbers. That is exactly the reason why a original $250,000 SFH or townhome in Homestead will not find a buyer at $89,000 but line 01 in Waverly at $367,000 gets stolen by some inside deal even before the ink dries on the MLS.
SOBE and greater downtown is where people want to live. They are willing to pay for that. That is exactly why some of you are scratching your heads and wondering “as per the pundits and the general indications of the area and the country, these flats should be had for a song”. But it is not the case.
Keep watching the Lucas’s graph above. Every building which has crossed the critical 66% threshold will survive. And if the remaining 1/3rd is held by a strong developer either someone who paid off the construction loan or someone with a strong financial backup, that building is in a solid footing.
So this is what I am going to expect, in the failed buildings the banks will give more time to those that reached 50% and see if they can do any further retail sales or bulk sales. Anything that sold 40% or less will be foreclosed and sold off to bulk buyers with pennies on the dollar (Sorry folk, banks will not sell them retail). Those bulk buyers will make it work in terms of rentals etc. as they got it at a very cheap price. Don’t expect them to sell to you in retail for a similar cheap price that they bought these flats.
So where does that leave the average retail buyer? No deals in stable buildings. The only deals that can be had would be from foreclosures. Not from a direct sale.
Even I am surprised by the way desirable buildings have not fallen in price across the board to 2004 levels. What else are we waiting for?
With the much anticipated Alt -A resets, I will bet my last dollar, the resets will be held off and given extension or loan modification. Most Alt A holders are more educated than sub prime and know a little bit about working the system. Combine that with the serious govt, effort to stop the bleeding, Alt A will not be following the subprime trend. They made a mistake with subprime, they will not make it this time again with Alt A.
The problem is too large for the fed govt to save housing…they need to save the financial system first…. Nothing like a target fed funds rate of 0%-0.25% to really cement the liquidity trap….and set off further deflation as holding cash has no lost opportunity cost. The low rate won’t help house prices, it will only cause faster deflation esp. since the effective fed funds rate was already close to ZERO. Desperate times calls for desperate measure……hold on it is going to be a very steep and bumpy ride down!
AJ said: “I will bet my last dollar” – please do then you won’t have Internet.
Again AJ, for someone who likes people to use hard figures you seem to avoid this on every one of your posts. Interesting.
“Every building which has crossed the critical 66% threshold will survive. And if the remaining 1/3rd is held by a strong developer either someone who paid off the construction loan or someone with a strong financial backup, that building is in a solid footing”
Do you even know what yu are talking about? I mean, let’s use some hard numbers here before you write 4 paragraphs of complete nonsense.
First: All of this buildings will survive, it’s not like it’s going to be demolished. Once pricing stabilizes and buildings fill up, ALL buildings will be OK.
Second: How does a 66% threshold represent anything to anyone? Like I said in my post #31, even developers with strong financial backup want to sell the units quickly to avoid carrying the taxes and HOA. In the Quantum example, the developer still holds 146 units based on Lucas’ rate. If you estimate their appraised value at $300k (not sure), then he is carrying close to $900k a year in taxes (2% of value) and probably $1 Million in HOA fees ($600/unit). This doesn’t even include the cost of capital. Do you think that just because he has paid off the construction loan that he will continue holding on to the units forever? Absolutely no!!!
I have seen many cases where developers have sold out 90%+ of the buildings and then reduced their pricing 50% to close out the remaining units, even selling under preconstruction prices. That is what it takes to clear the market today.
Third: You argument that the building is in “solid footing” is even more interesting. Just because the building has sold more than 66% does not mean the association is in the clear. There have been many buildings that closed 100% of the units before the bust and their associations are now sitting in a huge hole as a significant number of units are in foreclosure or the investors have stopped paying the HOA fees until they sell the unit. That situation is forcing HOAs to record liens but that doesn’t help in the short run and causes them to reduce their opertaing budget (and cut services or maintenance) and generates additional assesments for the owners who are paying. Parc Central in Aventura (in the paper several times) is a clear example of this.
Again, don’t be surprised if you see a lot of auctions happening in the next year, specially the buildings that are being completed now like Infinity, Icon, Axis, etc.
Last year 16 million new cars sold….next year, prediction is 9.3 million for 2009! A 42% decrease…. Condos, cars, and credit cards…oh my.
I think there are a lot of good deals out there and I know first hand that the best deals get scooped up very quickly. having cash in the bank is absolutely useless for the long run, unless its a small amount. why would you keep over 100k in the bank sitting? you arent getting any interest from savings accts, etc. the rates on cd’s are terrible and you cant put it in the stock market cause we know how thats going. if you have money, real money that is, you gotta buy something. i just bought a property, all cash, older building, not downtown, brickell, beach, etc. that has a positive cash flow (already rented) and gives me 5% yield at the current deflated rate, so in 10 years while i keep getting my 5% per year (which can only go up since we are in one of the worst periods in history right now) you guys can sit on your 100k which will be worth the same, or most likely less since in 5-10yrs. we will see a huge difference in inflation. The deals are out there and there are lots of people waiting on the sidelines, i think that when things recover they will recover fast.
Hugo,
You try to make me sound like an idiot. That is why I keep saying that many people do not see the big picture and are still wondering why the prices are stubbornly holding in many choice buildings.
A developer will not be sitting on his remaining units twiddling his thumb. Many, who have no construction debt left have started to rent the units, after paying the taxes and HOA, each individual unit is actually making either a small positive cash flow or at least break even. All they have to do is ride out the next couple of years, which is very possible at little or no cost to the developer or even at a small profit. When they need some serious cash, they might strike a deal here or deal there. But in general Developers holding less than 30% of the building will not discount. Yeah, after selling 90% maybe the guy decides to dump the rest as he made his money. But not before.
Those buildings that are sold to bulk buyers and vulture funds at 40-50 cents on the dollar will also be sitting on these until they can realize at least 60 cents or upwards on the dollar. They are not here for charity. So if retail buyers are expecting to pick up anything for less than 60 cents on the dollar, will keep waiting like one waits for rain in the Kalahari. By most estimates, the best bet for a retail buyer is to look for bank owned foreclosures or a distressed owner willing to take a loss. A public auction? I have not seen one being held for a downtown building in a very long time. Will it ever come? My guess is as good as yours.
“so in 10 years while i keep getting my 5% per year (which can only go up since we are in one of the worst periods in history right now) ”
–
Very optimistic view raffi.
How’s 2009 and 2010 shaping up?
2008 will be looked at with fondness and nostalgia as the time when things were good.
–
Some people on this blog will be long forgotten yesterday’s burnt toast before this is over with.
–
Hugo,
AJ posts under various names.
–
At one time I felt some sympathy, no longer.
Yeah, If you want to go and live in Wind (or gas) go ahead and buy it at a discount.
When you can actually buy a flat in 50 Biscayne or MB or 1800 for a more than normal discount then let me know. I will be waiting to hear from you.
Just when I thought the riff raff and the low lifes are gone, this arsehole surfaces again. The blog was such a pleasure with out these pieces of shit. My mood and my language deteriorated as soom as scum like this reared their head again.
The past few days have been good days for the blog. No undercutting, insulting, name calling etc. I actually thought that all the home owners and investors that were put off by the likes of these scumbags will start coming back again and contributing to this blog. But I was hoping against the worst scum. It wont go away.
The losers will be the blog users. As they will not hear from owner/investors and this will be filled with yes men and what you want to hear.
I also must commend the housing bears such as JL, jcrimes, gables, Miami2009 for always engaging in a civil discussion. But when rabid dogs espouse your cause, it does not benefit any housing bear. You guys must make sure that this blog does not get hijacked. We used to have a good input from a 900 owner dlr, a Quantum owner DLJ, La la, Visionary etc. All of them are either homeowners or investors. We all could have benefitted from their point of view, 1) Why they bought 2) How much they paid 3) what are they doing with it 4) Are they going to hold or sell 5) If hold why 6) If sell at what cost, why are they not discounting, at what point of time or consideration will they decide to cut and run and by how much …….
So what ended up happening is that the rabid dogs drove away the owner/investors. I am the hold out, stubbornly holding on only because I take it as a challenge to face up to these low lifes who insult, call names at those who speak a different opinion.
When you have no opposing point of view, you will be like an ostrich with head buried in the sand. And you will all be waiting for that $125/sf that will never come in any of the waterfront buildings.
I just did not want to take the creeps name on my lips lest I have to go and rinse my mouth. But just so that there is no speculation, #83 is is for Muir. Now go and shove your sympathies up your arse.
Muir,
I definitely agree with you that the next 2-3 years wont be good, but that doesn’t mean that there aren’t good deals that provide positive cash flow. you cant tell me that having lots of cash in the bank is a good thing, and in 10 years I am more than optimistic that things would have turned around. If in ten years we are still in this mess than wow, I cant even imagine that.
Raffi,
If you cash flow positive.
Bingo!!
You have a winner!
No argument from me 🙂
I’d be careful, that’s all.
Well have deflation for some time longer.
gl
AJ,
I read the first line of first post and assumed you went on a rant.
It’s been my experience that people with real money don’t behave as you do.
You’ve been taken and will be a lot poorer in 3-4 years now, if you are not already.
I have zero sympathy for you.
If a new building has their CO and has been closing lets say for 6 months plus but has hit a wall with less than 50% closed – if the developer decides to rent the remaining 50% of units – doesnt that preclude anyone from coming in and purchasing as no bank will lend in a building with more than 30% rentals?
Good point Kramer. I have a hard time swallowing living in a bldg i bought to then see renters come and really not take as best care as most unit owners. I mean some renters are good but let’s face it when something is not yours and your using it your a bit more careless with it or don’t pay as much attention to it.
I don’t mind a few renters but 50 % is out of hand. At most 15 to 25% is managable and I could live with.
Besides owners fix up their places renters through up some sheets on the window.
Liek me I just bought and am investing over 80 – 100k in fixing it up with top of the line
materials. Do I have to no..but that’s the type of house I want. I wanna live in my palace.
The place will look like a million dollars when done compared to the neigboors but my point is owners would be willing to do the work to fix it up. Renters don’t need to and wont thus the place never gets better.
Reading some of the back and forth here. A few thoughts:
1) Have not seen any convincing evidence as to why condos in Miami cannot trade down 70% – 90% from their peak. To me, the Miami real estate market resembled the NASDAQ bubble. No fundamental value, just a bunch of speculators buying before the next guy did. When supply exploded, everyone lost money and values never recovered.
Waterfront property is not scarce. Buildings luxury amenities are a dime a dozen, and unfortunately they all have many hundred units. This results in a commoditized product.
2) Someone (I think it was AJ) has continually stated that a building with >66% closing rate is “safe”. From what? I think the only one who is “kind of” safe is the developer (and even then, not for very long). If a large percentage of owners (be they individuals, the developer) default and HOA fees go unpaid the building is screwed. Let’s face it: credit was extended to a lot of people who should have never received it. This unwind is still ongoing. Re-default rate of people who had their loan modified during 1Q08 is 58% now. Think about this. Nearly two thirds of people who sought and received bank assistance only 6 months ago are once again on their backs.
Alt-A (people with good credit, but who depend on jobs to pay mortgages) are next to go. Delinquencies in prime mortgages are increasing much faster than economists anticipated.
Another note on HOA fees: many buildings have artificially low HOA fees during their first few years (everything is new, developer has to replace anything that breaks, reserves are not fully-funded, etc…). What happens in a few years when things naturally begin to break down and need replacement? I lived in a building on Brickell Avenue that saw 40% annual increases in HOA fees (for unfunded reserves) + special assessments to pay for building restorations. End result: when I left the building, the monthly HOA fee on my 1,400 sqft condo was $1,100 and the building was facing an assessment that amounted to roughly $25,000 for my apartment (to be paid over two years) to repair hurricane damage to common areas after Wilma. Ouch.
There are many more shoes to drop in this story.
Sorry, one last point I forgot to mention.
All of the above is before taking into account the massive over-construction of the Miami area. I read in Barron’s about 2 years ago that Miami could naturally absorb 1,500 new condos/year, and there were 20,000+ units scheduled for completion during the next three years (through year-end 2009).
I wouldn’t sleep well if I were long Miami real estate….
Simply put – here is a very happy owner/landlord in Quantum on the Bay with a 1b1b and I’m clearing $1,060 each month after all expenses. Now I don’t get to enjoy the apartment but will at retirement, or between renters. Business does not take me there often and I just don’t have that much vacation time. Each time it snows in NJ, as it did today in Lambertville, I think of Miami and can’t wait for the return.
This blog is good reading with the extreme opposing views, it’s healthy to see all sides but everyones situation is different.
NJDave,
Could you run the numbers in detail.
I assume you bought at a good price.
Taxes? HOA? Are you assuming a 52 week / year occupancy?
$1060 net is what exactly? Bought all cash?
Is $1060 a cash on cash and if so what is the return? $1060 is 2.5% return if you bought at 500K.
–
AJ, no need to take anything personal. The same goes to Muir.
My point is that you always seem to have a very strong opinion but don’t seem to want to understand or give any vailidity to the numbers presented by other people.
I have given you several analysis on how residential real estate is analyzed but yet you have never agreed with any one of my posts or at least any of the points/facts I mention. You seem to stick with your $300psf in “waterfront” buildings with no real analysis or backup. If you have a real number or analysis, please share.
Unlike you, I tend to form my opinions based on facts, historic averages and just common real estate investment sense. The reason why we got into the mess we are in is that capital was so abundant that neither developers, banks or buyers were considering any of this and assumed that prices would go up forever. We will get back to normal which might be 2001-2003 prices which is about 30%-40% less than today:
http://www.zillow.com/real-estate/FL-Miami-home-value/
I have also said that every investor looking at Miami is doing the same analysis, but yet you still seem to disagree with that too. Wondering if every smart real estate investor in the country is wrong and you are right. Maybe you should try and get a job at Related/Lupert Adler to see if you can convince them to make another bulk purchase.
Finally, like I said before, we need more people on the other side of the table like yourself but the fact that you own 2 condos doesn’t mean you can’t sit on our side at least for a while.
Raffi – As I see it now…and you can disagree….that +5% is really -15% for 2009 if you factor in home price declines….worse than that on average if you owned for all of 2008! You need to factor in more than just the apparent cash flow…in real dollar terms I doubt there are very many deals that in 10 years people will say was a smart move to buy and rent for that period of time. Right now, well at least as of last week, got 4.25%-4.35% on 12-24 months CD’s all FDIC insured for $1.25M (staggered them). No risk. Residential properties are a pain and even one month vacancy can throw the return into the negatives. Top that off with realtor commissions, major special assessments, bad tenant that trashes the place or worse an eviction….and that extra 0.65%-0.75% over the FDIC CD rate (plus flexibility of a liquid asset without transaction or holding costs) and at least for me is isn’t worth it at all. Anyway, that is how I look at it…personally, I don’t want the hassles of residential properties as an investment. Good luck though….cause cash might have less value too….who knows in 2+ years.
2pence
you’re hitting on something that a friend and i spoke about over a year ago. fundamentally, assets should always trade at or near their intrinsic value. sure, there will be a divergence from that number both up and down but eventually, you revert back to fundamental value. all the way up to say 2002, miami RE held to a consistent track record. then, as we know, things changed drastically on the upside. “why?” is the question. what variable, which was completely ignored up to that date, finally realized and priced in to the value of the asset? i submit nothing. although the realtors give all the same bs excuses (e.g., we’re running out of waterfront!) but those same bs excuses were just as true ten years ago as they are today.
2 topics of discussion-
1. Miami condo speculators are as stupid as Bernie Madoff investors.
2. The Miami condo market was nothing more than a giant Ponzi scheme.
Discuss amongst yourselves.
JCrimes
I’ve always read that historically real estate prices climbed with inflation plus ~1%. To see such huge run-up in prices as we saw here in Miami means there are only two ways out of this:
1) Prices remain stagnant for a very long time until inflation catches up, or
2) Prices “correct” and come back down
Given current situation (no credit, worldwide recession, etc…) I am betting on number 2.
Renter Tom,
I disagree, I bought very recently and i don’t think that it will decline a further 15%, but hey thats the risk I take. and in 10 years no matter what you buy today it will be worth more cause of our good friend inflation, I dont expect this period of deflation to last more than 2 years, and I have my theories which I have stated before that when inflation comes its going to be fast and furious.
Hugo,
How come I was in the minority when I was screaming and shouting from atop every rooftop as early as late 2004 saying that we are in a serious bubble and we are going to have a severe crash?
In fact I did not even have this forum to express my opinion as MCI was not around then. I was in other housing bubble blogs. I have always maintained that the run up in Miami prices between 1999 and 2003 are just a result of the stagnant prices catching up with time and inflation and reflection of Miami’s international popularity. All price increases from 2004 to 2007 (sometimes as much as 5% per month) is pure speculation and greed.
Theoretically, if it is just bubble the prices should fall back to spring 04 + normal inflation per year. But then we have an unusual perfect storm of Bubble + Financial meltdown which made things complicated.
How come economists who predicted the bubble way back in 2004 were in such a tiny minority? Every big name including the senile arsehole Alan Greenspan would not agree to the bubble until 2008. How come I sided with the minority then? So what happened with your famous numbers provided by Nobel Prize winning Mathematicians who showed by complex formulae, these packaged mortgage backed securities are sure winners. Now they are all eating dirt saying “they forgot to add one most important and crucial element, the all important X factor to the formula – The Human Element”
Numbers and formulas could not predict the Human Element would start defaulting on the mortgage payments!! How simple?
Now for all the numbers you and others crunch up such as 1) Excess inventory 2)Economy etc is still not adding up! Surprise! Bears are making the same mistake as bulls in 05-06. Being totally blind to the Human Element. So just supporting ones theory with numbers is not enough. Numbers are just that – numbers.
You guys are so friggin blind you just don’t want to know why and what are the circumstances of the owner/investors. As I said before, rabid elements drove away the owner/investors and thereby completely shutting out their point of view. Now you guys do not even know if dlr and DLJ are going to hold or sell or they have the capacity to ride out the storm, enjoying their flat meanwhile. You guys don’t know if the international investors will keep the flats due to their never ending love affair with Miami or will they dump. You guys don’t know the profile or the ground realities of the people who bought. I have given the example of accidental residents of Miami. People from Kentucky and Nebraska and Massachusetts, who initially bought as investment but later decided to keep the flat and enjoy/rent it as they fell in love with Miami and also they realized that they could not sell in this market. I Know these people personally. I am not pulling these facts from my hat.
Also for example, pundits here have already determined 1) Why I bought 2) What I am doing with it 3) What is my capacity to pay 4) When I will go bankrupt 5) When I will foreclose 6) What my salary or income is and many other things even I did not know about myself!
Just like the banks have lent to everyone and expecting them to repay in those days, you (bears ) are speculating that everyone is an investor and everyone is going to default. You are not considering any other variable. You will not even accept the existence of any other variable. Just like the bulls of 05-06 fell flat on their faces, you guys also would end up with the same fate because you chose to ignore a few basic facts as it will not jelly with the happy picture you guys are visualizing.
You guys are no different from the greedy bulls of 05-06. You are greedy bears. But when greed becomes excessive, it blinds oneself. It completely makes you oblivious to so many other things you should be paying attention to.
Does anyone know the thickness of the adjoining walls in most of these new condos? Are they typically one foot thick?
I thought I was the only one who thinks home insurance is a big scam in this country. Well it looks like I have company. Here are some comments about an article on Yahoo about home insurance.
1) Insurance is a scam. My uncle was living in New Orleans when Katrina went through. He paid for flood insurance for 25 years. The insurance company said it was wind damage that caused the storm surge, even though the house was up to its roof top with water. Then FEMA took over and the insurance company said you have to deal with FEMA because it’s a disastor area now. It’s in there hands. Fema wanted to give my uncle a LOAN on the money, that was owed to him, for the house at less then half of what the house was worth. What a scam!! My father inlaw built his house for $8000.00 years ago. It is now worth $150,000. He wanted to insure it for $65,000 flat, if unliviable for any reason. Insurance company would not insure him because they could not raise rates every year. You can insure anything, antique cars, jewelry, your legs, but try to get a flat fee for your house were the rates won’t increase. We are not talking replacement cost, we are talking flat $65,000.
2) insurance is a HUGE scam, but we cant get a loan (auto or home) without it, i wonder what my policy DOES cover, so far have spent over 8k on repairs, insurance did not cover one item, but they still take my money every month. i dont have enough money to lobby congres, so i guess my claims are a waste of my time.
3) One can sure tell that this article was written with insurance companies in the favorable thought. the article is way too simplistic and to what are the limitations to even being able to buy a fair policy in the area in which one lives. Also the “small print” portion of the policy too often turns out to be the real contingencies of the policy. And most of which is merely a outline which omits the importance of the guy who assesses your damages.
4) Remember that you get what you pay for and that if it sounds too good to be true than it probably is and get a good agent because your policy is only as good as your agent. I know because I am one. (In Florida no less – the mothership of Homeowner Insurance HELL ! )
NJ Dave,
Please give some more details. There’s a lot of ways to read this “I’m clearing $1,060 each month after all expenses.”
Look at the scrollable Miami Panoramic view. You can see all the new buildings.
http://www.miamiwhereworldsmeet.com/?utm_source=Yahoo-Network_BT_Travel_Destinations_Florida_Miami_New_York_IPs_300x250&utm_medium=banner&utm_content=GMCVB1438_English_V_300x250_html&utm_campaign=GMCVB_006
Just got done watching Cramer rail on CNBC about how the rate cut will guarantee housing bottoms in 2009…. basically he’s predicting 30 year rates might hit 3.5% or less and that’ll be enough to get housing on track in ’09.
But here’s a great example of unintended consequences. Everybody’s nervous about their money right now and won’t bite on any expenditure unless they get an “amazing deal”. So say you were interested in housing now and saw a “great” deal but were convinced this Fed move would knock rates from 5% now to 3.5% in a year (cutting down your monthly payment by say 16%)… would you buy now or wait a year?
Could this Fed rate cut meant to bolster housing stick a dagger in it’s back for the next 6 months keeping people on the sidelines waiting for that 3.5% or even 2.5% (like Japan)?
This reminds me of my favorite saying “In theory, theory and practice are the same. In practice, they are not”
In theory, forecasting low rates should bolster housing, but in this week environment, can it sink it instead by having an unintended consequence of people sitting on the sidelines waiting for a killer rate? We aren’t talking the difference between 6.5% and 5.5%. 5% vs. 3% is a completely different world (monthly payments reduced by 21%).
Now say you think hyperinflation is also coming down the pike… waiting to lock in a rate that low would be a double win.
Anyway, not sure how all this is going to play out, but I thought it was interesting. When Cramer mentioned 3.5%, that got my attention and had me thinking if I saw something now, it would have to be really sweet since it seems the Fed will be following Japan’s blueprint for 0% rates “for some time”… who knows, maybe 2.5% 30 years are coming.
JL – Unlike during the bubble, I think people are buying on price now and will wait for the really really good deals before jumping in.
AJ – Are you off your meds again? Seriously, your recent rants on the “love” of Miami, being persecuted, name calling, etc. are manic and delusional. Be sure to declare all of your income and pay your taxes since audits a tough enough even if you have done the right thing all along…somehow I suspect you don’t use a CPA???
JL – Meant to also say that people are buying on price now whereas during the housing bubble people just wanted to get in on the action at any price….
Raffi – I don’t disagree about possible inflation in the future, not sure when. I guess my concern is that there are two parts to an investment: income and capital appreciation. During the bubble all the mattered was the capital appreciation, not the income. Now it seems people are justifying tiny incomes (not worth the comparable risks in my opinion….why work hard and have worries for 1%?) and not taking into account the capital deflation. Banking on what the asset price will be in ten years to justify tiny incomes now is speculating on housing price appreciation. Worse, it is an illiquid asset with high transaction costs and heavily dependent on many factors outside your control….just look at Detroit….massive job losses brings down all home prices while foreclosures in your neighborhood hits you even harder and more directly. It is hard enough to keep up your owner-occupied home and neighborhood, to do that with investment properties is even harder…. There are other ways to hedge against inflation and protect one’s purchasing power so if it is an inflation or currency play, why do that in an illiquid, high transaction cost asset? I would prefer to have that part of my portfolio only include my own personal residence(s). You may be totally correct, just putting a few points out there.
AJ—-I’m sure you know the answer to my question-how thick are the adjoining walls in most of theses new condos? If not, someone on this forum must know.
Alan,
Depends.
I have been on an 11th floor of an unfinished building. When you stand by one corner of the building, you see clear through to the other end; no walls.
Now at some point they have to put fire retardant walls. But, these are not solid pour concrete walls; rather, they are cinder block.
Now, those are walls between units, as to walls to the corridor, well… just taped my own wall and it’s drywall.
Now, before someone goes off on a ramp, no, not every building will be the same.
Hope that helps.
Renter Tom
“AJ – Are you off your meds again? Seriously, your recent rants on the “love” of Miami, being persecuted, name calling, etc. are manic and delusional.”
–
No doubt.
AJ
I throw in the towel. Your “human element” is just too much for me:
“Numbers and formulas could not predict the Human Element would start defaulting on the mortgage payments!! How simple?”
Yes, numbers cannot predict that someone who gets in over their heads will start defaulting. What a comment.
Finally, I am from South America and I can tell you that everyone I know (from Brazil, Colombia, Venezuela, Argentina) who might be interested in buying a condo for vacation is not stepping into this market under any conditions. Like Renter Tom, they’ll keep their money in more secure investments until the knife hits the bottom.
Maybe you can plan a trip and get some of them to buy your $300/sf+ condos.
Peace
JL (#106), this has been my feeling for a while. Dropping interest rates to spur economic activity now becomes a liquidity trap in the future, unless inflation kick in high gear. People still buy housing based on affording monthly payments. So the low interest rate keeps the principal the same, but the low rate reduces the monthly payment to a level the buyer can afford. But these low rates will/can not last forever (although ben’s extended period of time statement has me worried). when mortgage rates eventually rise, will buyers be able to afford a higher monthly payment? if not, the only way to move the property is to drop the principal so the monthly payment is affordable. only if inflation kicks in with higher wages will this not be a problem. low rates today are only meant to bail out current debt holders-just pushes the real problem off to tomorrow. unintended consequences of manipulating the market.
for all of you who believe the miami market is such a great bargain, i ask why there are still so many units on the market with only a handful of sales in the past months. there are still a lot of wealthy individuals in the world. why have they not come in and scooped up the available properties? nothing is stopping them. some desirable properties have moved, but the majority of the market is completely stagnant. the units may be a bargain compared to future prices, but today there is significant risk associated with a miami condo, and not enough reward to justify upward price pressure. in fact pressure is still to the downside.
there are plenty of rich folks in the world who will pay whatever price to own their vacation home in the location of choice. but there are not enough of these folks to make a market. and part time residents make it difficult for neighborhood businesses to thrive due to unpredictable schedules. the local economy does not support enough high paying jobs to make demand greater than supply. at least not yet. hopefully in the future miami will prosper and we will all benefit.
NJ Dave,
I fully concur with you.
I am in the same comfortable situation.
Muir—-So if the walls between units are cinder block, aren’t those usually about 12 inches? Then would you need to add about half an inch on each side for drywall to get a thickness of about 13 inches? Does that sound about right?
Alan – I doubt that….I’m pretty sure you don’t apply drywall directly to concrete block.
You would use a one inch furring strip to attach drywall. Thickness of drywall is either 5/8″ or 1/2″.
http://en.wikipedia.org/wiki/Furring
Alan,
I do not know the answer to that question. I am imagining that the separating wall between two adjacent flats must be at least 12 inches thick and the internal walls in a flat being about 6 inches. I wish I knew.
Hugo,
Re: #113, I am in the same boat as you guys. Just like you or gables or Miami 2009 and others , I am on the lookout for a flat in Miami. I got a super deal and my mother in law wants me to find her a similar 2/2 like mine at an unbelievable price so that she can move to Miami. She wants a direct water view and has zeroed in on One Miami, 50 Biscayne, MB, 900 and 1800.
I am as frustrated as any of you guys that there are no deals. I don’t care if the price goes down to below what I paid so that I can secure a flat for her (Eventually I will be the beneficiary of her will anyway 🙂 ), I am in it for the long term and will not be bothered if the price dips to below what I paid. But leave alone prices dipping to below what I paid, they are not even remotely close to what I paid. She would only buy if I can get her a direct water view 2/2 for $325 or less. Right now they are hovering at $450-$500 for a direct water view in all the buildings she liked. And I am resigning to the fact that I may not a get a deal for her and she would decide to stay put in Myrtle Beach (what a stink hole of a place that is). It took me years of goading her to move to Miami from that horrible place. Finally when she relents, I could not make it happen.
So forget about $150/sf, show me a direct water view flat in any of the buildings I mentioned for $325 and I will be grateful. I am as interested as the rest of you that prices will go down further, way way down (at least for a short while) so that we can swoop in for the kill, but no such thing anywhere on the horizon. I have been looking for the past couple of months and it is frustrating. If I believe all you talking heads, I should still not lose hope. Hopefully I can find her a deal before she changes her mind.
Hey AJ, why don’t you show your mother this unit:
http://www.miamicondoinvestments.com/unit-view/1800-Club/M1249677/
2/2, “direct bayfront unit” at 1800 Club – $244 sq/ft.
Sorry, “flat”. 😉
TeePee,
Thanks for looking out. Line 15 is not direct bayview. It is either a misprint or false advertising.
AJ,
I guess we are all demanding different requirements for our units. I agree the premium bayview units in a great line will not be discounted dramatically. I would love to buy one. Problem is that those type of units become uneconomical in the long run due to taxes (homestead helps but not always applicable). Thus even if i were to buy a great penthouse, sometime in the near future i will probably get priced out of the unit due to external forces.
what i do not understand are the people holding onto “common” units in a building and still expecting to receive a premium on the unit. just because you are in a “desirable” building does not automatically make the unit a premium. these are the units i would like to see fall to bargain prices. would be great to buy and own my own unit, and these common units are most suited to my financial abilities. would love to own the premium units, but they are really out of my financial leauge. but a 15th floor city view in Plaza is not premium, and should not cost beyond even $250 sq ft (maybe even $200?). these units will need to drop towards the club and vue prices in order to create a more liquid market.
until the market restores some confidence so that the average end user, who may only keep a unit for 5 years, feels confident that he can buy, hold for 5-8 years, and then sell without a loss in a liquid market, the real estate market will continue to be frozen for condos. most homeowners are not long term investors-just a fact of the transient job market in the modern world. we need to remove more of the risk in homeownership-it has been turned into an investment strategy over the past decade and now we are paying the price.
AJ, since you have some New York experience (I also have lived in the area in past but never with interest in homeownership), any thoughts on how a co-op building might fair in Miami? would it be possible to turn one of the bankrupt buildings into a co-op? while they are highly illiquid, they have the advantage of controlling tenants to a large degree, and thus could be advantagous in creating a truly “exclusive” building in Miami.
gables,
I agree, Plaza is a class A1 building. Very desirable. But a west view should be available for $250/sf. I do not know what force of nature is keeping these units so high priced. That is why when Hugo ridicules my X factor variable, all I can say is ‘show me the money’. It is one thing to rat off all kinds of numbers and doomsday scenarios, but when you go to buy a city view flat, it is no where close to $200-$250 that you think is fair and willing to pay.
I go to look for a flat for my relatives and it is nowhere close to the $300-$325 that they are willing to pay for water views. The worst part is that I have to hide my face now. After two years of badgering my mother in law to move to Miami and I promised her to get a killer deal, she finally relented at the Thanksgiving Dinner table. That is a really big deal. She has a 3/3 direct ocean view on the beach in Myrtle Beach and a well entrenched friend circle. Now I have put my foot in my mouth it looks like. Now that she is all psyched and ready to move, I have nothing to offer. I have no major hope that anything would come around anytime soon. I have made a quick trip to Miami last week to take stock of situation, and it is the same as last Summer. Nothing changed.
That is why I get mad when all I hear on this blog is how the World is collapsing around us, and in reality the the ground realities are completely different. I don’t have an explanation why I cannot buy in 50 Biscayne for less than $500. Can the talking heads explain why? Do I have to wait till 2009? 2010? 2011? Forever?
Re: Co-Op, I have a flat in a NYC co-op and I hate it. It is extremely restrictive. You need board approval to fart in your own flat. I hope the co-op culture never comes to Miami.
I have been bearish on the Miami condo market for a long time. I see no reason to go back to ’04 prices. The fact is that the supply dynamic is vastly changed compared to 2002 (or whatever you consider pre-bubble). Miami’s population has not grown enough to support all of the new condos built during the last few years.
People who have cash and are looking for investment alternatives are not only spoiled for choice, many of the people who jumped early into some investments are down 30-40% by buying assets that were hugely discounted to begin with. As an investment, a Miami condo has to compete against stocks, bonds, leveraged loans, convertible bonds, private equity, MBS, and other exotica. The math behind buying for invetment doesn’t make too much sense just yet. Sorry.
As a thought exercise, consider the following:
US equities (I would argue far less inflated going into this than Miami condos) are down 40% since January. Illiquidity discount can usually account for another 25% on top of this. You are broadly looking at a drawdown of 60-65% from peak. This is without taking into consideration the risk you take due to the massive supply overhang in Miami.
I encourage board readers to look up the historical returns on Nasdaq from 1990 – today to get an idea of what I mean.
Last comment on this…I swear.
You are not seeing the $325/sf or the $250/sf in Plaza because we are far from the bottom. I say Plaza stabilizes at under $200sf and other buildings like the ones you like at about $250-$300.
Like I said, I am willing to place a bet that it will happen. When? Not sure, but I would bet end of 2009, beg 2010.
All local economists who have been through these cycles before and have been predicting this (McCabe, Goodkin, etc) agree with that timeline. I’ll put my money with them
Hugo,
I have no problem with your prediction.
Contrary to what people may think, I am not advocating a state of high prices. I got what I want and no regrets, no buyers remorse. If it ever goes down to below what I paid, so be it. I am 101% sure that it will come back and more.
What I really want is that the prices are attractive enough so that every remaining developer units gets sold and we have end users in all these flats. I’m definitely sure that by 2013, each and every flat will be sold and occupied. But 2013 is too far out there. I want it to be done and over with by 2010 or 2011. So the sooner we hit bottom, it is better for everyone.
Alan, not sure what it is you’re asking, but I’ve lived in three new condo buildings in Miami in recent years and each one had very thin walls with the adjoining unit. Where I am now the wall is extremely thin and I can hear the girl next door turning pages in a magazine. thankfully she is quiet for the most part. anyway, don’t expect much privacy and pray that you enjoy the same kind of music they do because you will hear them continually. (I’ve actually been careful when passing gas when home alone so the neighbors aren’t annoyed.)
my belief is the major holdup keeping prices from reaching an equilibrium at the bottom is stupid government intervention of the economy. and make no mistake, i am not some extreme free market enthusiast- i have a very keen understanding of the need for market regulations and all. but the government is doing very crazy things to affect the market, and this seems to be keeping everything in a holding pattern. florida has put a moratorium on foreclosures until after the new year. uncle ben and big hank are refunding the banks and GSE’s. treasury and fed are making plans to keep mortgage rates under 5%. this is CRAZY! artificial manipulation of the market is keeping legitimate buyers on the sideline and only pandering to the screwups who are whining about the losses they must take on bad investments.
AJ may be underwater right now, but at least he has an understanding that he bought as an investment with a time horizon. but why are we trying to bail out people who cry because their investment lost dollars starting on day 1? sorry for the rant, but if the government would just let the dominos fall we will find equilibrium much sooner-otherwise we risk a decade like japan.
“I’ve actually been careful when passing gas when home alone so the neighbors aren’t annoyed”
PTC gets the neighbor of the year award
AJ, i understand the issues and flaws people have with the co-ops. but you should see what is happening in some of these new buildings in the greater miami area. they are no longer owner occupied. they are rental buildings, and they are filling up with college aged room mates. when somebody spent $500k (as they did in my building a few years ago) for a 2B, expecting a professionals building, and then end up neighbors with college students, as an owner you must be a bit pissed off. this will kill your housing value. at least a co-op would keep this from occuring. just seems to me i would feel a bit more secure about dumping $300k into a coop than a possible romper room. but i could be trading one evil for another.
AJ,
You have your in-law moving in the wrong direction. Older people are especially leaving places like Miami to go to Myrtle Beach, and not vice-versa. Just because you like hearing Tiesto in the hallway at 4am doesn’t mean your Mother-in-law is going to want that.
Look for a place around Aventrua. I’m sure she’d rather be close to the Mall than Space.
I concur with gables, it’s fun for a while, but it gets old when the only concern of everybody you run to is if they got a table at “xyz”…
Miami is expensive. It doesn’t have good schools. It has a higher crime rate than most large cites. Miami is not affordable for the average retiree. The county has over 50,000 owners who haven’t paid property taxes and has around 2,000 foreclosures a month. Good luck finding replacement buyers for these condos once fire sales start. Truth is nobody wants them. They are filled with owners who are stuck with them and looking to make excuses to justify their bad decisions. Go on any stock market forum and you will find the same thing.
There will be 55K foreclosures in miami dade. The average these days is about 5,000 foreclosures a month (last month was 4,900). Another blog has all the numbers
Alen and others on thickness of walls,
From having been in an unfinished floor of a condo building and seen the plans, I can tell you that the separation between units is usually cider block which is not be a very good sound insulator. They do whatever they have to do to achieve the fire retardant measure required.
Here’s a real life example: a decorator I knew knocked out the wall in his closet and hit this cinder block and it did not reach the ceiling, there was a good 18 inches separation. Thus, what separated the units for those 18 inches was 2 pieces of drywall, one on each side.
He cemented to the top and afterwards the neighbor thanked him because he no longer smelled the cigarette smoke from the decorator’s unit.
–
There are condominiums where interior walls are a solid concrete pour, though very few.
What you may find surprising is what separates your unit from the hall. It’s drywall in almost 100% of cases.
–
Hope this clears it.
Found this recently
Investment group involving Miami real estate developer Avra Jain recently closed on a $14.7 million deal for the commercial component of Marina Blue Condo on Biscayne Blvd. property includes 27400 sq feet of retail space and 15100 sq ft of office space. Many of the properties 23 commercial condos have rental contracts signed with various eateries, law firms etc. “Jain is also in talks with a national entertainment organization interested in the space”. Whatever that means.
Also
Metropolitan Miami has secured a $250 million construction loan for its downtown Met 2 Financial center. Project is a joint venture between MDM Development Group and New York based Met Life. “To have secured a $250 million construction loan in this economic climate is nothing short of unprecedented”, said MDM vice pres Tim Weller. The development includes class A office space, a 42 story JW Marriot Marquis branded hotel, and the first Beaux Arts, the new super luxury hotel of Marriot Intrnational luxury group. Met 2 will also house the first DB Bistro Moderne location outside of Manhattan.
And no Im not AJ or even know who he is. I still pronounce my space as an apartment and not a flat and instead of arse use the more familiar ass when referring to undesirables. I have been cautiously optomistic in the past regarding downtown – brickell- -pace park etc yet most recently have taken a negative view – meaning I think prices can come down further in 09 – but not because of the area itself – im bullish longer tern for downtown but because i fear the economy in general is the real problem here.
AJ
i can explain why you can’t buy for less than 500sq ft in 50 biscayne – the sellers are unrealistic. eventually though, reality hits you like a brick.
I have a strong feeling Kramer lives in 50 Biscayne.
That aside, Kramer, why do you have to vehemently deny that you are me? Is it that insulting to be mistaken for me? Is my stock that low 🙁 ?
Anyway, good update on Met2 and MB. I would really like to know if anyone has any info on Bayview Market on NE 2nd ave and 17th st. My life depends on it!
AJ said:
“She wants a direct water view and has zeroed in on One Miami, 50 Biscayne, MB, 900 and 1800…She would only buy if I can get her a direct water view 2/2 for $325 or less.”
AJ, have you honestly tried looking at those buildings? The best waterfront 2 BR line in One Miami would be “07” which is South facing, and 2307 is asking $267/ft while 2907 is asking $297/ft
Sample view from 2507
http://sefmls.goidx.com/SEFimages/25/M1171865_201_73.jpg
Now to get a direct east view, you need to get a 3BR in One Miami and that would be “09” or “12”.
3312 is asking $317/ft while 3009 is asking $290/ft.
Sample view from 4112
http://sefmls.goidx.com/SEFimages/31/M1219999_701_22.jpg
AJ said: “I don’t have an explanation why I cannot buy in 50 Biscayne for less than $500.”
It’s probably because unit# 1902, the best line in the building (“02” 3BR corner unit) is asking $366/ft. You are looking too high… at the people pricing their units based on recommendations from the top heavy ladies in Jorge’s office.
Sample view 1902:
http://sefmls.goidx.com/SEFimages/40/D1311272_301_19.jpg
———————-
I should get a realtor’s license… AJ, send my 3% to Lucas.
More news on the Miami Retail plans
http://www.greatermiami.com/pdfs/chamber_in_action/regional_business/tc_remarks.pdf
I tried every source on the net to see the ground breaking date on the Bayview market to no avail. I wonder if I should call BDB LLC to see if anyone will volunteer some info. It will be a major cause of celebration when they break ground for Bayview Market.
Are we heading for deflation? The following article is not conclusive though:
http://timesofindia.indiatimes.com/Business/Is_US_heading_for_a_deflation/articleshow/3853788.cms
Dubai is dead.
Have you read the Newsweek article about the end of Dubai? Lou Dobbs talked about it this evening too. I am very happy. Suffer you bastards! Their debt is equal to their entire GDP. HappineZZ!! Their property prices set to fall 80%. Am I in heaven or what.
Let that terrorist money laundering bank capital be engulfed in a never ending sand storm and the Palm Island be swallowed by the Persian Gulf. Every Indian, Iranian, Saudi, Brit who put their money in that hell pit should lose their shirt. I feel better now.
Sorry AJ – didnt mean to disparage you at all. the only reason I mentioned is because rentertom recently posted after I made a comment that you and I were one and the same. I suppose he thought that because we do have similar thoughts on the viability of the new downtown Miami and the synergy being created. To give you an example I was in the downtown Biscayne corridor last friday night when at the same time the Miami Heat had a game at 7:30 and right next door CirquedeSoleil had a performance and just a few blocks down there was an event at the Ziff Ballet Opera House. Not quite Broadway at curtain time in Manhattan but the energy along with the 60 degree temps was invigorating with all of the people out on the street having a great time.
i have enormous sympaties for poor AJ who spends so much blogging energy in vain ,trying to bolster his pace park hovel.
The market has 3 yr inventory in SFH & 4 yr inventory in Condos. Even a bumbling first grader would know that prices in every possible parameters (price/rent, price/household income) is indicating ~25%+ more pain, a major chunk of which will happen in 2009. Folks will be surprised to see blood at the higher end this time around.
After a minor loss in 2010, prices should flatten for few yrs.
I must say however, that Miami has a lot going for it and in time this shall too pass.
What local govt can do:
Reduce property tax to 1%
Cut outrageous wages for the govt employees and cut down on govt payroll to meet the budget.
Invite few industry: Hitech/Biotech & clean tech in palm beach county.
AJ
“Are we heading for deflation? The following article is not conclusive though:”
AJ,
We are in a deflation.
The only question is will the FED and Obama create a Hyper-inflation?
–
Muir – Are you sure we’re in deflation…I mean don’t home prices always go up….you just need a long term time horizon! LOL Housing down, gas down, car prices down, sales on everything to move the slack…
Roubini has become MORE pessimistic saying the recession will last at least through the end of 2009…….a global recession with political unrest.
Heh. Roubini is a scare-monger, although he has been more right this time around than most… Economic pain will probably last another 12 months worldwide. This is going to be a nasty little recession, unfortunately.
As far as condo prices are concerned, I am very much in agreement with Andi. Even without the oversupply issue we would be looking at a hit to prices. With the oversupply issue, I think the fallout for Miami condos is going to be quite severe.
I am also trying to think about what kind of building gets through this in decent shape (financially). I’ve said before that closing rates don’t tell you much about the long-term stability of the HOA since all owners have to pay their fees. A lot of people who received mortgages should never have bought property (sorry, it’s the truth). Most of them have still not been shaken out of the market yet. Any thoughts on this? I would very much like to buy my own place in the next 2-3 years (at the right price), but this is one thing that I find very hard to quantify.
Well my pocket will get hit hard thanks to our NY Governor Paterson and his 88 new tax increases. From increases in state college tuition, iPod tax to obesity tax, yet increasing welfare spending…WTF. Got to love NY. More liberal run states will follow which will leave less money for people to spend, invest, etc. NY State taxes combined with whatever Obama comes up with…Ouch!
My initial intention was to purchase a moderate condo in Miami Beach to enjoy. Looked at some older buildings in SOBE. When the boom ended, I realized that I now could get into a newer building in Miami for the same $ or less and still be relatively close to the beach. So I have been waiting on the sidelines until my type of unit is at my price level. With all this tax and spend mentality and redistribution of wealth crap how the hell can I justify putting my hard earned money into a second home which will no doubt decline in value. It would be irresponsible of me. The middle class is going to suffer for quite some time. There is not enough wealthy people to keep this economy going. The poor will not get poorer but the middle class sure will.
We need across the board cuts not increases, what is wrong with these elected officials and the people who elected them!
Sorry I had to vent a bit…
Sorry forgot to put the link to the story. I have to get out of this state!
Sorry to hear about your situation, Miami2009. I think you are illustrative of many potential buyers–people who are willing, but for one reason or another (factors outside their control) are going to wait it out in the near-term. I think Miami condos have a long way to fall…
Miami 2009,
I have for the same reason wanting to run away from NY state. Fleecing till you die. Yeah, greatest city in the World but it’ll cost ya. Miami’s prop taxes are benign compared to the fleecing of NY.
JL,
only lines 09 and 12 are the way to go. Had them on my mind for a long long time. Even though the price per sf is right, due to the huge size of the flats and the killer HOA, It goes beyond budget and we are hesitating.
Kramer,
Love that energy and activity. Even when I am 90 and in walkers, I want to be in the middle of it all. Wants one to continue to live.
Andi,
Dead Wrong. I am not trying to bolster nothing. I am just stating time and again that I am ecstatic with where I am going to live. In fact Pace Park = Park West = Downtown. All 3 neighborhoods are interlinked and like one big happy family. Each location has something unique to offer, all 3 are walking distance from each other and connected by the Metro Mover. If you live in one, you live in all 3. It is developing to be the most vibrant and exciting community in all of American cities. When the dust settles, The few blocks between One Miami and Paramount Bay will be the envy of the World. Even the great NYC does not have something as dynamic as these 10 city blocks with everything you ever want and more all in one.
Sympathize all you want. I and other lucky people who will be fortunate enough to live in this small patch of land (Water views or no water views) will be the ones having the last laugh.
Some good news.
both 15 and 30 year mortgages are at 4.5% now. I want to refinance saving $250/month. Will my bank holding the original mortgage refinance or should I have to go to another bank? This is very new to me as I never refinanced before (as I usually pay off in 4-5 years).
The federal funds target range of zero to 0.25 will probably be around for a very long time so I wouldn’t rush to refi now. One would think 4% is in the cards. Do I hear 3.5 or 3?
JL,
from your key strokes to Gods ears (or Fed Chairman’s?). 3.5% or 4% is a dream. It will be almost like free money.
those low rates sound great, and i hope you are able to benefit from them. but do you see the similarity between us and japan? these low interest rates do not change the fundamental problem that home prices are overvalued. the economic slowdown will not fix itself until this correction occurs. and low interest rates will keep seller asking prices high, and will keep many buyers, especially cash buyers, on the sidelines. my cash will continue to accumulate on the sideline, waiting for the proper price correction so that i can put it to work. all we will do with this mortgage rate manipulation is try to jump start the economy with more debt-bad move. the government needs to let existing cash move back into the system, not more debt. otherwise we will have a lost decade just like japan.
RT,
🙂
I’m all cash as you know, so I do hope that the deflation continues.
But, being realistic, the FED this week has made our monetary policy resemble Argentina’s or Ecuador’s.
–
AJ’s post (#162) is correct, “It will be almost like free money.”
He’s more right than he even know himself, I know a guy who has a HELOC (unneeded) and took the money and has it at 4.35% in a CD. He is making 1% on the arbitrage right now, today.
It’s not “like” free money, it is free money.
Many smarter people do the same thing on bonds and swaps.
–
Anyone who ever clicked my name knows where I stand on this.
If this turns sour better have an exit strategy for your CDs.
In terms of the Euro and gold, it has not been a great week to be in US dollars.
AJ,,, the rate cuts are great but not for everyone. I was told yesterday by a mortgage manager that a re-fi like all mortgages require an appraisal on the property. Todays appraisal may come in below the current mortgage on the property. If so the homeowner will have to come with cash to cover that difference PLUS 20% of the appraised value. Lending standards have changed and most homeowners will only be offered 80% loan to value.
Maybe Miami needs a condo pawn shop…
I don’t understand why the govt. keeps stepping in and prolonging the inevitable. they need to let this ship sink so we can start rebuilding already, instead of dragging this on and on. The Fed is either run by the dumbest people on earth or there is some conspiracy, I’m with choice number 2. this is all being done to hyper inflate the dollar so that our huge national debt will be wiped away. like I’ve said before, inflation is going to come fast and furious.
I just don’t see the appeal of downtown versus Miami Beach. It just doesn’t feel fun to walk around, all you can see as a pedestrian are elevated parking garages, no community life & no beach. Even in Manhattan you rarely see 50 story residential towers slapped next to eachother . Some of these buildings have either great bay views in one line or horrible in the other three lines. I think as bad as the market has been & will still be ,we should distinguish between the South Beach market & downtown, they might as well be in different states in terms of supply & appeal. That’s not to say SoBe doesn’t have its real estate issues as well . Downtown was subscribed to by investor/flippers who never really sweated the areas desirability for the most part as they never seriously considered living there & it shows. To me the future of some downtown towers is, unfortunately y shakey.
SeanJohn
downtown eventually will work out (i.e., seven to ten years). but the key is that the price point needs to work. downtown doesn’t work at 400sq ft. not at 300 either. too much competition from better areas at those prices including mid-beach and the gables. in the 200s, you will see interest. in the 100s, it’s a great deal.
Raffi
If this deflation turns on a dime to inflation the key is to watch the dollar and gold prices. Once the market deems the Fed successful in halting deflation it will turn quickly. So the question now is – is the 15% decline in the US dollar the past few weeks the sign that the market has turned?
I’m an inflationista, but you people have to realize the relation between home prices and wages. If wages don’t go up home prices won’t go up. The dollar will just be worth less and we will be poorer and poorer. Like a bunch of Mexicans in Mexico when the peso lost value.
Kramer
“If this deflation turns on a dime to inflation the key is to watch the dollar and gold prices. Once the market deems the Fed successful in halting deflation it will turn quickly. So the question now is – is the 15% decline in the US dollar the past few weeks the sign that the market has turned?”
Kramer, although this is not a financial blog, the above makes no sense at all.
I mean, it’s total hogwash.
It’s like “if the doctor succeeds in hating the low blood pressure by increasing it to 275 over 190, then the patients’ condition has turned.”
I mean really, if you have no idea what you are talking about, why not post about what you do know, like “line 02 in building x has Bay view windows.”
JCRIMES
I agree at $100+ a sq ft downtown may be more interesting/affordable but I still think almost regardless of the current real estate woes there is a fundamental flaw in just who & how many people can actually ever truly make downtown home. Many of the current owners didn’t plan on being owners & yes, renters will always come & go. While many U.S. downtowns experienced urban renewal in the past 20 years there is not one successful U.S model that we can draw as a comparison to inspire Miami’s downtown future. L.A. which unlike Miami does have a real professional job market didn’t suddenly expand its downtown housing stock by multiples of hundreds of percent. This is not about not seeing past the current construction & infrastructure issues that downtown has & where it will be in 10 years. People were blindly buying real estate during the gogo days a few years ago. If you live in South America or Europe or NY Miami is South Beach or at least MB to many people who did little due diligence & allowed themselves to be misled into believing that downtown was just an extension of MB & who cares anyway its going up 20% a year & I can get a no docs loan. My point is even if we were still in the gogo days I think a lot of buyers would be sour on their downtown investment. The city just doesn’t have enough professionals to fill up those condos & folks who want a second home in Fl don’t want to fly to Miami for a weekend from NY or London & have to take a $30 cab to hang at the place they thought they were living in. Lets face it some of those glossy sales brochures were really good.
Sean John,
You are painting with a wide brush.
I did not buy downtown in gogo years. I bought in 2008, well after the party is over.
I had a 1/1.5 in SOBE and I was looking for a 2/2 to retire to in future.
I have done enough looking and research. I could have bought an equivalent 2/2 on SOBE for almost the same money. But I consciously chose to buy/live in downtown. I find that the downtown has more to offer, more potential, more everything. SOBE has kind of become jaded. But, Why ask me, ask all those hundreds of people, who are moving from SOBE to downtown (both renters as well as homeowners) and they will tell you how ecstatic they are with the move. In fact one guy told me that his SOBE days were like a bad dream and he is glad it’s over. Don’t get me wrong. I am not ranking on SOBE. Both SOBE and Downtown are my favourites. They have their own charms and advantages depending on your age and lifestyle.
Manny Diaz is asking for 3.4 billion for Miami from the infrastructure stimulus package, the largest among any city in America! Hope he succeeds. Read on.
“Give the money to banks or individuals and they might just horde it. Give it to states or the federal government and it will get stuck in the bureaucracy. But give it to the cities and they’ll spend”, says Miami Mayor Manny Diaz, the president of the Conference of Mayors. (Not that the governors are sitting idly by–they have $136 billion in plans they’d like to initiate.)
Perhaps it’s no surprise then that Diaz’s city outlined the boldest request, with 456 projects in Miami that could be completed for a cool $3.4 billion. They estimate the projects would create 55,355 jobs.
Major projects in Miami waiting for cash range from $281 million in various airport projects to $200 million for parking garages throughout the city to dozens of little projects from school renovations to upgrading fleets. Perhaps the most exciting project? $280 million to put a new public transit system on Miami roads: streetcars.
AJ
manny’s full of it. what he meant to say is “give us the money…we’ll find a way to misuse it, go over budget, line our pockets in the process and in the end, say oops, we need more because we stole too much.”
make no mistake about it, diaz and his crew are all crooked.
SeanJohn
i don’t disagree with your assessment. reality is that miami just doesn’t have a hotbed of white collar industries which are all critical to the downtown RE market. the whole concept of young professional here simply doesn’t exist. there are no prestigious/big player financial firms down here; the best law firms are not top int’l players or instead, are small satellite offices of northern based firms and there is absolutely no presence of top consulting/strategy shops. couple that with a de minimis fortune 500 presence (which going forward, will not get any better) and the job outlook for a college grad looking to live in miami isn’t terribly great.
if you had a strong base of white collar options…this RE market would turn faster. however, since that’s not the case…it’s going to take time to fill these units up…all with folks you wouldn’t anticipate living there.
i’ve been a supporter of the streetcar for quite some time. you could run a line between brickell, downtown, park west and pace park that would essentially make the entire shoreline one long community. run the line over extended hours and the business you would keep alive would more than pay for the cost. little restaurants at one end of the line could easily draw customers for the far end, thus expanding the local community. socially, streetcars are much more appealing than bus lines and tend to attract all walks of life and not just the poor who cannot afford any other type of transportation.
on the other hand, having seen how florida and especially south florida spend money, there is absolutely no way i would give $3.4 billion to miami unless i wanted 70% of it to go toward fraudsters. unfortunately, if money is spent in south florida, it should be controlled by outsiders. the locals have proven over and over they are not responsible enough to oversee such funds.
Well, I’m looking to buy at some point and I dream of living in Miami Beach. Downtown Miami is trash, I only rent there because I can’t afford Miami Beach.
55,355 jobs and about half who actually work. It disgusts me when I see and realize the waste and mismanagement in our local government. bloated payrolls and overpaid, bad attitude employees.
Did we already forget about the mismanagement recent projects?
The airport project is now over budget and lets not forget the delays and hundreds of millions in cost overruns for the performing arts center.
Didn’t that same Mayor take a stand on mortgage fraud and add more employees to payroll to form a Mortgage Fraud Task Force? Mortgage fraud ran rampant while they lunched.
What Manny is probably saying is his staff will need $3.4 billion to hold meetings and strategize out how to create 55,355 jobs. Then in another couple years, they’ll need another $3.4 billion to get the 55,355 people in their new jobs to actually start working. Then in another couple years, they’ll need another $3.4 billion to get the 55,355 people with jobs to work faster. Then in another couple years, they’ll need another $3.4 billion to hold meetings and strategize how to downsize the construction projects because the projects went over budget. Then in another couple years, they’ll need another $3.4 billion to hire a new set of 55,355 people to replace the previous set of 55,355 failures…
Manny Diaz does not even know where the money he is asking for will go. I was just watching an interview with Diaz on Lou Dobbs. They asked him about some of the 11,391 projects nationwide including a $1.5 million dollar water park project. He responded that he did not read the full report on the projects and did not know about the project for a $1.5 million water park ride. The person who was interviewing said “the $1.5 million water park ride project is in Miami and a request from your city”.
Diaz deliverd the request to congress and he does not even know what the hell he is asking for.
Maybe there is a Parrot Jungle ll in there too. More wastefull projects that that later need support from taxpayers.
Times are so tuff that the house my 6 yr old son just built for the gingerbread man just went into foreclosure
^^Ha ha and into his mouth no doubt! Merry Christmas and festive holidays everyone!
AJ
The reason downtown is the national if not international poster child for the U.S. real estate bubble is no where else better represents uncheckered & unnecessary development. Yes, some of the do/tn buildings are by themselves nice, that just doesn’t translate into anything close to a demand that will come close to ever satisfying the supply. South Beach itself has always been to a high degree transient even on an owner scale but historically those buyers felt they could get in & out quick if they needed. Owning in Mia is becoming less sexy. Even with $100-200 sq ft prices HOA & taxes are like paying a rent by themselves. I hate to come off like I;m ranting about downtown but numbers are numbers & I can’t help viewing downtown as a case of the emperor wearing no clothes with thousands of units still in the pipeline. I’m glad AJ that you got a good price downtown but I still feel that if a comparable 2/2 in SOBE cost the same at the time then maybe you paid too much because that (generally) doesn’t seem to represent the current market comparisons between the two locations.
“both 15 and 30 year mortgages are at 4.5% now. I want to refinance saving $250/month. Will my bank holding the original mortgage refinance or should I have to go to another bank? This is very new to me as I never refinanced before (as I usually pay off in 4-5 years).”
AJ,
Where are you getting or seeing this rate? My assumtion is this would be w/ points. The best I have seen is 5.0 with 0 points.
I just closed at 5.5 so I may just have to refi now to get a 4.5 saves a bit over $120 a mnth.
Once Again, the rate cuts are great but not for everyone. I was told yesterday by a mortgage manager that a re-fi like all mortgages require an appraisal on the property. Todays appraisal may come in below the current mortgage on the property. If so the homeowner will have to come with cash to cover that difference PLUS 20% of the appraised value. Lending standards have changed and most homeowners will only be offered 80% loan to value.
I have been quoted 4.75% & 4.5% with 1/2 point. Banks will however in case of refi require a 70% LTV (LOAN TO VALUE) which unless you put a lot down will be hard for any fl buyers for most of this decade.
Once again, Yes they are with points. I am waiting for a true 4.5 (without points)
Ok that’s what I got. I’m also waiting for the true 4.5 w/ no points. I literally just just got a 5.5 a week and a half ago since I just closed. I got an appraisel and actually bough tbelow market value since I bought a foreclosure from a bankrup bank so I actually within the % ranges for the refi’s.
Are you going to give us more details of the place, price etc after you close?
[…] get an idea of which new condo developments in Miami will be affected, read my latest condo closing rates published in December. addthis_url = […]
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