Deutsche Bank Leading the Way in South Florida Foreclosures
Daily Business Review published a very interesting article today entitled “Special Report: Condo Lending”. It provides a list of the top five banks who have filed the most foreclosure actions from January 1, 2007 to May 4, 2007 in South Florida. Below is that list:
The most revealing part is that these banks have no reason to be overly concerned. In most cases, the loans were repackaged as mortgage-backed securities and sold to Wall Street investors. Public records may reveal the banks as the possessor of these loans, because their names are still associated with the notes, but it is the investors who will bear the monetary loss due to the risky underwriting practices of these banks. In fact, the banks actually make additional money by charging fees to the investors by acting as custodians in managing the foreclosure proceedings for them. Helluva a gig! They’re making money on the front-end and back-end!
Ten Museum Park – More Opportunities as Closing Dates Approach
I met with a sales rep today who works for Ten Museum Park to go over pricing and availability for a few out-of-state clients who are interested in buying a condo unit there. I took in a lot of good information during my 30 minute meeting and want to share it with everyone. Ten Museum Park has received its TCO (temporary certificate of occupancy) and closings for units on the first 35 floors will begin shortly. I learned that the developer will grant one extension to people scheduled to close. Then, a letter will be sent out notifying the contract holder of a firm closing date. They will be charged for each day that they are unable to close at an 18 percent APR.
There are a lot of great deals currently available at Ten Museum Park. People holding contracts for condo units in the building were required to put down a total of 20% in deposit money. The first 10% was payable in January 2004. The second 10% was due in December 2004 when the building broke ground. Many of those people are currently looking for a purchaser to step in and close for them. In many cases they are willing to sell their unit at a price point that would allow them to break even or accept a small loss. This is an opportunity to get in at January 2004 pricing. The developer charges the contract holder a transfer fee of 3.75 percent and a co-broker fee of 3 percent. Most contract holders have factored in this cost to compute their break-even point. The worksheet below will show some of the deals that are available. The majority of these deals do not appear in the MLS. The data used to create this spreadsheet was provided by a sales agent working for Ten Museum Park.
The best deal in the building right now is unit 1607. As the worksheet reveals, it has a price per square foot of $363. That is remarkable for a building of this caliber!
Ten Museum Park is located in a Downtown Miami neighborhood now known as Park West. Besides Ten Museum Park, Park West will have three additions to the neighborhood in the next 12 months. These include the following:
There are a few things that I love about Ten Museum Park. One, is that it only has 200 units. I definitely wouldn’t call it a boutique building but it isn’t a monster development either. Two, the price per square foot is much lower than in these other buildings. The building was able to launch sales and begin construction in 2004, prior to when construction costs began to escalate. These other developments weren’t as fortunate and had to price their units in accordance with the higher construction costs that needed to be taken into consideration. I also love the open floor plans at Ten Museum Park. If you’re a fan of lofts then you’ll appreciate the layouts of the units at Ten Museum Park.
I learned today that when the real estate market was red hot, a few of the “04” units sold as high as $1.3M during resales. Those people are pretty screwed. Fortunately, the lender, Mellon Financial Corporation, only allowed the unit to be resold a maximum of one time. It may seem logical for some of these buyers to walk away from their deposits seeing that comparable units are now on the market at a 38% discount to what they paid. If one of the resale buyers walks away from their deposit then the initial buyer is on the hook to close. I learned, however, that if this scenario were to occur, the 20% deposit forfeited by the second buyer would be applied to the initial purchase price of the first buyer. That is a pretty sweet deal! An instant 20 percent in equity just like that.
I’ve scheduled to have a tour of Ten Museum Park late next week. I’ll be sure to take lots of pictures and shoot as much video as I can. I’m looking forward to seeing the penthouse unit with the 1,298 square foot rooftop terrace and vitality pool.
Icon Brickell – 2 Bedroom+Den/2 Bath Becomes Available
Word came to me today that an early contract holder at Icon Brickell has passed away and his contract is up for grabs. The contract has passed from his estate to the developer and The Related Group has it back on the market at the initial price offered when it was purchased in mid-2005. Icon Brickell sold out relatively fast in 2005 and availability is now limited to the condo-hotel units in the Viceroy tower. The Related Group is the most successful developer in Florida and has the reputation of selling out their buildings within the first week. They are known to price their units very well and to leave profit on the table for purchasers rather than squeeze every last penny out of a project. They price their units slightly below market, sell out and then move onto the next project. Great business plan, and it has worked quite well for them.
The condo unit that just came back on the market is unit 2703, located in tower one of the Icon Brickell development. It is floor plan B, which has a southeast view. The picture below will give you an idea of the view that you would have.
It is a 2 bedroom plus den/2 bath with 1,503 square feet of living space and has a 219 square foot balcony. It is priced at $916,000, or $607 per square foot.
Icon Brickell is the second development with the Icon name attached. Icon South Beach was the first and is one of the most well known buildings in South Beach. Icon Brickell is sure to be as spectacular as its South Beach counterpart. The picture slideshow below will show you some renderings of the building and amenities.
Mortgage Rates Continue to Head North
Existing home inventories are up, foreclosure rates are rising and mortgage rates continue their ascent – talk about bad medicine for the current lackluster real estate market! CNN.com reports that 30-year fixed rates have jumped to 6.53%, their highest level in 10 months. While rates, a year ago, were slightly less than they are now, the state of the real estate market was in much better condition 12 months ago. An increase in rates now only amplifies the problems that exist.
The Mortgage Bankers Association (MBA) expects 30-year rates to hit 7 percent by year’s end. The Mortgage Bankers Association (MBA) and the National Association of Realtor don’t foresee a recovery until the beginning of 2008. This foreseen recovery has been pushed back a number of times, and at one point early this year a slight increase in home prices for 2007 was predicted. In real estate markets, such as Miami, I expect this recovery timetable to continue to be pushed back until early 2009. The number of new units coming to market actually increases next year and doesn’t drop off until the following year. There’s no denying that the South Florida real estate market is a safe long-term bet as it will become one of the top retirement destinations for the millions of Baby Boomers set to retire in the next ten years, but demand has to catch up with supply. That will take some time.
Those people holding preconstruction contracts will soon seek financing to close on their condo units. For those that are questioning whether to walk away from their deposit or to close on their condo unit, the ever increasing rates will make their decision a little easier.
Neo Vertika – Living in a War Zone (pictures)
If the building, Neo Vertika, were a stock, I’d be selling it short all day long! This is a follow-up to a previous entry that I wrote on May 21, 2007 entitled, “Shoddy Construction at Neo Vertika?“. Now, there is no question about it.
When I wrote that piece, I had heard about all kinds of problems from residents including three major water leakages, the sprinkler system needing to be replaced in the entire building and each individual unit, and the air conditioning system being unusually loud. I didn’t realize just how bad it was until today. A client of mine, who is renting a Penthouse unit at Neo Vertika, sent me some pictures of the present condition of his condo unit. He began his lease at the very end of April and still has not been able to move his belongings into the unit. It goes without saying that he is looking to break his lease and get his money back. After seeing the following pictures I don’t blame him one bit. Work to replace the sprinkler system in his unit began last week, and he was told that it would take a total of 2-3 weeks. This is occurring in each and every condo unit in the entire building! Neo Vertika is not even one year old yet.
Imagine how high the cost of insurance will be for the building after all the work has been completed. I’m predicting that within the next six months, the association will increase maintenance fees and/or declare a special assessment. If that happens, which I feel is inevitable, prices at Neo Vertika will surely continue to head south.
Coming Soon: Ten Museum Park
Ten Museum Park is a highly anticipated luxury condo building that will begin closings later this month. Ten Museum Park is located in the recently-dubbed neighborhood of Park West and offers spectacular views of the city, Biscayne Bay and even the ocean and South Beach from high floors. Park West is making way to be the most high-end neighborhood of Miami. Ten Museum Park is walking distance to the American Airlines Arena, Entertainment District of Miami, the newly opened Carnival Center for the Performing Arts and the shops and restaurants at Bayside Marketplace. There are also plans for Bicentennial Park, which will be renamed Museum Park Miami, located across the street in the underutilized parcel of land that you see in the picture above. $13.5M has already been allocated for the new park and the Miami Art Museum and the Museum of Science are collaborating to work on the plans. The pictures below show a model of the design for Museum Park Miami. It will be the premier public park in Miami.
Ten Museum Park will have a total of 200 units on 50 floors and has units ranging in size from 858 square feet to 4,100 square feet with either 10-foot or 20-foot ceilings. Units at Ten Museum Park will have stainless steel appliances by Bosch and Sub-Zero, high-end bathroom fixtures by Duravit and Dornbracht, glass-enclosed showers with body jets and rain shower and much, much more. Take a look at the Ten Museum Park website for more information.
Ten Museum Park will receive its TCO (temporary certificate of occupancy) in the next week or two and closings will follow soon thereafter on units located on the first 35 floors. Condo units located on floors 36-50 will begin closings in 30-60 days. There are resales currently available at Ten Museum Park. There are quite a few people holding contracts in the building that have their units priced at, or slightly higher than, what they paid for them back in January 2004 to prevent from having to close on their units.
I am eagerly awaiting to see the inside of Ten Museum Park. I will try to gain access this week and post pictures and video of what I see.
There’s a 2 bedroom/2 bathroom short-sale opportunity at Courvoiser Courts located in the exclusive neighborhood of Brickell Key. The condo has 1,236 square feet of living space and a 95 square foot balcony. The condo, located on the 24th floor, faces northeast and has partial bay views from the balcony. It is the best priced 2 bedroom in the building at a list price of $450,000, or $364 per square foot. There’s a 2/2 currently available at Courvoisier Courts in the same line as the short-sale unit that is listed at $499,000. It is located 7 floors lower. There’s another available condo located 14 floors lower that is listed at $529,000.
Courvoisier Courts was converted from apartments to condominiums at the beginning of 2006. The building was originally built in 1997. Courvoisier Courts offers fantastic amenities which includes: full-service concierge, 24-hour security, fully equipped business center, bi-level fitness center, racquetball/squash courts, bayside swimming pool and sundeck, club room with billiards table, theater room, and valet parking. Courvoisier Courts has a total of 272 condo units in the building. The picture slideshow below will show you some pictures of the building and amenities at Courvoisier Courts.
Because Courvoisier Courts is such a recent conversion, there aren’t many 2 bedroom resales to use as comparables. There is one closed sale and two pending sales. The closed sale is not an adequate comparable, however, because it is a penthouse unit with 13 foot ceilings and has great water views. That unit sold for $568 per square foot. The two pending sales are better comparables but still need to be adjusted because of the bay view offered by those two condo units and the extra half bath. Those condo units were listed for $555,000 and $575,000 before an offer was accepted, or $441 and $446 per square foot, respectively.For those of you who don’t know, Brickell Key is a 44-acre triangle-shaped island situated just east of the heart of Brickell. It is well known for being a highly exclusive neighborhood with brick-paved roads and is home to the world famous Mandarin Oriental Hotel.
Contact me for more information regarding this short-sale.
Update #2: 2 Bedroom Foreclosure @ The Cosmopolitan in South Beach
The list price of the 2 bedroom/2 bathroom foreclosure condo at The Cosmopolitan in South Beach has been reduced from $520,000 to $495,000. This is the second 2 bedroom foreclosure at The Cosmopolitan in the past month. The first condo unit went under contract after it was reduced to $485,000. That unit was inferior for several reasons. The first 2 bedroom foreclosure had one parking space, tiled and wood floors and no balcony. The most recent 2 bedroom foreclosure has two assigned parking spaces, marble floors and a balcony that offers a partial ocean view. The pictures below will show you the most recent 2 bedroom foreclosure at The Cosmopolitan.
In 2007, there have been two 2/2 condo units at The Cosmopolitan that have closed. They sold for $581 and $558 per square foot. This unit is being offered at $490 per square foot.
The Cosmopolitan was built in 2004 and is located two blocks from the beach at 110 Washington Avenue in South Beach. The map at the top will show you a street-level view of the building. Please refer to my first and second foreclosure postings on The Cosmopolitan for more information about the building and the neighborhood.
UPDATE: I finally got to see this condo at The Cosmopolitan for myself. I’ve seen a lot of condo units at The Cosmopolitan and this one holds up to or even surpasses what I’ve seen. Marble floors, 2 parkings spaces, granite countertops, stainless steel appliances, partial ocean view from the balcony and a spacious floor plan. What more does someone want in South of Fifth for under $500K? This one is a steal!
