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What’s the maintenance on something like this??
Lucas,
Is this building not a hotel building ? Or is it a condo building with hotel service ?
Condo reports says that the monthly HOA fee is $13,053 and the month taxes would be $12,358!!!!
I wonder what type of amenities you get for $13k a month.
As an owner instead of a hotel guest you get an upgrade from the regular escort that Vince Shlomi beat up.
http://graneyandthepig.files.wordpress.com/2009/03/shamwowhppk.jpg
Who is Vince Shlomi??
You guys follow the Murano Grande condo at all? Lots of short sales there in the $360/ft range which seems cheap for SoFi part of South Beach. Seems more like a downtown price than a South Beach price. Just wondering if there’s anything wrong at the building?
Hey guys,
does anybody know anything about the Bayview Market? Will construction begin in 1Q 2010 as was promised (only couple weeks left), or the developer had chickened out?
I’m considering buying 3/3 condo in Edgewater area, but would feel much better about making a commitment if a shopping center – particularly a chain crocery store – was located within a walking distance.
I’m not in Miami at this point, so would appreciate your point of view.
Thanks much.
Euroman
if you are willing to wait 10-20 years for the area to turn aroun, that is ok. Bayview market is not happening now.
Get out of edgewater and pick something in a more liveable area
Euroman
Brickell is considered the best area of downtown ubran miami and is the most liveable area. You can walk to three diff publix supermarkets, etc.
So I would not sugguest buying in mid-town/edgewater area. Check out brickell, the prices of condos there are getting pretty low now and more effordable..
euroman,
Not sure when the bayview market will break ground but there are 2 supermarkets lined up for that area. One is a Publix in the OMNI mall and another a nationwide organic produce chain store is considering the Retail area below paramount Bay on the biscayne boulevard.
Carlos,
I’m not willing to wait 10-20 years.
But hey, thanks for nothing, anyway.
Carlos, my apology, misunderstood your message.
How bad is Edgewater?
owneratinfinity,
thanks for suggestion,
I did look at Brickell, but couldn’t find anything new ( I prefer new construction ), above 30th floor, with unobstructed bay view, 2 parking spaces (OK, one is on 12 th level and is almost useless, but still), and storage, for $250/sq ft.
I don’t like foreclosures or short sales (unless pre-approved), so would rather buy from the developer for slightly more money.
Maybe I didn’t look well, but Brickell waterfront RE is either old, or too pricey, or both.
Appreciate your advice. Have a nice day.
I like Edgewater.
Lara,
I might be wrong, but as a value proposition Edgewater seems to be a decent area. Sure, there are better places to live in Miami, but I’d have to pay 2-3-5 times more for a comparable square footage. Views on the other hand are unbeatable. Miami Beach is minutes away.
The be honest, I don’t even understand how any area with so much potential could be so poorly developed. Empy lots are everywhere. Strange.
Many people I talked to have told me that the whole stretch of land in between I-195 and I-395 just begs for the new construction.
Once that is underway, Miami will surely become an awesome city.
But right now all I need is some nearby major shopping facility.)
I have an apartment in Quantum on the Bay that is being rented now. The area is vibrant. New developments added a lot of young people in it. I agree it was poorly developed in the past. Also infrastructure is not being built overnight. It takes years. I think the views and location has a lot of potential for the future.
Euroman,
You said,
owneratinfinity,
thanks for suggestion,
I did look at Brickell, but couldn’t find anything new ( I prefer new construction ), above 30th floor, with unobstructed bay view, 2 parking spaces (OK, one is on 12 th level and is almost useless, but still), and storage, for $250/sq ft.
I don’t like foreclosures or short sales (unless pre-approved), so would rather buy from the developer for slightly more money.
Maybe I didn’t look well, but Brickell waterfront RE is either old, or too pricey, or both.
Appreciate your advice. Have a nice day.
—> I brought a condo in brickell from the developer in a brand new building. I didn’t want to deal with a shortsale either and I also wanted new.
—> the building is infinity at brickell , it’s 3 blocks from the bay. It’s on South miami ave, between 13th and 14 street. Here is a publix supermarket, etc directly behind the building going west
—-> My condo is on the top of the building on 50 and 51 flloors and faces east with an azaming 180 agree view of the bay and ocean, and the new buildings below.
—-> The developer is selling these brand new units in the building for $200 per square feet regardless of the floor it’s on or if the unit face east or west.
—-> There are 3 bed and 3 units (like 2700sf ) and 2 bed and 2.5 bath (1550 sq) units on the top of builing faceing east with the same view as mine for sale on these high floors (top of the building).
—-> So at $200 per square feet the 3 bed 3 bath 2700 sf unit would be $540K and 2 bed 2.5 bath 15550sf unit would be $310K.
—-> you may want to go visit the infinity building and have the developers sale person show you around. The sales office is in 17th floor of the building.
—-> here is link to a site with pictures of the infinity building
—-> It show you everthing about nearly every condo building in dade and broward counties. It will help you to do your homework on what building ans area you want to buy a condo in.
—> good luck
Lara,
thanks.
Is any new development taking place in your neighbourhood – or everything is dead right now?
Any work going on on Biscayne Blvd?
Can you see any progress with naked eye?
Euroman
look at isola in brickell key. It is not an ultra fancy building, but in your price point that is a good pick considering what you are looking for. I have to advise you though that you will not be able to find everything in your list for this price unless you start to compromise on a couple of things. Remember the number one aspect is location and even though they have made Pace Park more attractive and it does have great water views, the area is still a little funky and I would not buy there unless you have years to spend to see the neighborhood turn around, if it ever will.
Good luck!
Euroman,
I absolutely concur with Lara about the Pace Park Area.
I also own a condo there.
Euroman,
I’m not sure if you’re deadset on living in the downtown area, but if you don’t mind venturing a few miles north, check out The Lexi in North Bay Village. I bought a short sale last year that has proven to be a sweetheart deal. I love the building. Big, spacious floorplans (1450 – 1750 sq. feet), amazing unobstructed views of biscayne bay, nice area, and low mainteance, at about $0.33/sq. foot.
The developer has about 12 units left, and there are several resales posted at the moment. The going rate right now is about $200-$240/ sq. foot, depeneding on the size, floor, etc. You can look up the building here on Lucases site under the North Bay Village tab, or do a google search to see the building website. If you have any specific questions, feel free to email me. Just click my name to bring up my email address.
Did u guys see this on the W Residences, South Beach? Looks like its struggling.
http://southflorida.bizjournals.com/southflorida/stories/2010/03/15/story3.html?b=1268625600^3017081
One more thing about Edgewater. It is located next to the newly built Performing Arts Center. In any major city such location has a tremendous value. I know that the center is struggling financially but so does Metropolitan Opera. If Miami(with all its faults) is in fact a metropolis then the center should survive and evetualy turn into a cultural attraction for its residents and visitors. Also a lot depends on who runs the board there. It has to be at least one cultured intellectual person with taste yet not without a business sense.
Euroman,
The buildings in Pace Park are all very cheap buildings, mostly occupied by tenants who are destroying the properties. Real ghetto area. They try to sell the idea of luxuty living with bay views, but that is not what you get.
If you have extra cash, look somewhere else.
I live on the beach, but Brickell is a much safer pick if compared to Pace Park.
However, in your price point and with everything else you seem to want, you’d be lucky to find something in pace park.
Euroman,
I agree with what Carlos who said to you:
“The buildings in Pace Park are all very cheap buildings, mostly occupied by tenants who are destroying the properties. Real ghetto area. They try to sell the idea of luxuty living with bay views, but that is not what you get.
If you have extra cash, look somewhere else.
I live on the beach, but Brickell is a much safer pick if compared to Pace Park.
However, in your price point and with everything else you seem to want, you’d be lucky to find something in pace park”.
—> I have friend that lives in a condo that he owns on a very high floor in one of the new middle of road buildings on the Bay in front of Pace park (midtown). He is not happy with all the rough renters in the building.
—> Yesterday I was where in his condo and building for the first time in several months -it is really got beat up by all the renters and I can see that the building was built cheaply and the building has a bad smell in alot of the common areas.
—> I agree that brickell is a better area then Pace Park, and since the prices in brickell is getting cheaper all the time I think you should look again at the condos in brickell, too
Euroman,
You see you’ll get a lot of different opinions here. My tenant, professional is very happy with the area. It is a matter of taste and what you are looking for. I do not live in Miami. My impressions are from my visits to this city which I appreciate very much when I come there. I have friends where even memebers of the same family have a difference of opinion about the city.
I have friends who love Sunny Isles, then others who love Hollywood, some only would settle in Miami Beach, then some prefer Aventura. Then there is a group that likes a lot Pace Park area with water views, others prefer Brickell because they consider that it preserves better value yet they recognize that Brickell has too urban feeling for those who come on vacation.
I think that Pace Park area is not dead. It is the opposite. It is becoming more and more vibrand and it is alot going on there.
“Sure, there are better places to live in Miami, but I’d have to pay 2-3-5 times more for a comparable square footage”
Edgewater is cheaper for a reason.
Next time you’re in Miami, drive over to Edgewater, park your car, and take a walk around the area at night.
Then do the same in Brickell or South Beach or Brickell Key or wherever else you are considering.
If you still don’t think its worth it to pay more elsewhere, than you’ll be fine in Edgewater. The fact that there isn’t even a grocery store nearby should tell you something though.
Anybody know how sales have been going at the Viceroy? The asking price for those units are almost half of Icon tower 1, but i haven’t found any real information on how well sales have been going. Of course people in the sales office tells me theyre flying and i
have to jump in now. any thoughts?
Lara, Carlos, owneratinfinity, Visionary,
thanks all of you guys, good to know your thoughts, will certainly consider all of it, I just hope you’ll never meet each other – or somebody will end up dead…)))
DJ,
thanks for suggesting Lexi, will take a look at it, as well. Cool idea.
Miami Sceptic,
lack of grocery store is certainly a huge drawback.
One thing mistifies me a bit, though – if renters destroy Edgewater properties, don’t they do the same to Brickell condos? It’s gotta be the same demographic, with the same incomes, since the rents are similar. And Brickell is just as full of renters. No? What am I missing?
One other thing. I’m not a developer, but why would anyone develop Midtown before developing Edgewater? I just don’t get it, but that may be a subject for another conversation.
Thanks again, everyone. Have a nice day.
Lara,
I Think many bloggers are against the Pace Park, only because AJ praised it to much ?!
Euroman,
You get cheaper people at Edgewater. Brickell is a higher end area if you get into the right buildings.
Tenants and low rents are a main problem in any building that offers rents in the low end.
North Bay Village has nice water views if you have a unit facing the water, but that is about it.
Very old Miami with dumpy buildings and major traffic near biscayne.
“One other thing. I’m not a developer, but why would anyone develop Midtown before developing Edgewater?”
I’m confused, I thought Edgewater was in Midtown.
Euroman
You said,
One thing mistifies me a bit, though – if renters destroy Edgewater properties, don’t they do the same to Brickell condos? It’s gotta be the same demographic, with the same incomes, since the rents are similar. And Brickell is just as full of renters. No? What am I missing?
—> just FYI am an end-user not a realtor – my condo in brickell is my perm home, i do not own not other properties.
—> I agree with you 1000% that renters destoty all the buildings, regardless where they are located. And brickell is fulled with renters too.
–> However I do feel that the better the areas where the building is location will go up in value faster then in a not so nice aresa and when prices go up (someday – like 10 years from now) they will rent higher.
—-> when this happens the landlords will be able to ask more for their condos in the nicer areas and be more selective on who they rent their units to. Of course it will take 10 years or so for the rents to go up, however when the better renters start renting these buildings in better areas these better area buildings will have less bad renters that beat up and destory the building, then the buildings in a not so nice area. At least this is what I hope for.
—-> However I do not agree with you about the income levels. There is big different between brickel zip codes income levels and Edgewater/pace park/midtown zip codes income levels.
—-> Here are links to income, etc information for the 33131 and 33129 zip codes in brickell and the 33132 zip code which is a Edgewater/pace park/midtown zip code. These code zips for for the condo buildings near or on the bay.
http://www.city-data.com/zips/33131.html
http://www.city-data.com/zips/33129.html
http://www.city-data.com/zips/33132.html
—-> Brickell – 33131 zip code – median household income in 2008: $67,924
—-> Brickell – 33129 zip code – median household income in 2008: $63,803
—-> Edgewater/pace park/mt- 33132 – median household income in 2008: $27,713
—-> I know this 2008 data, however it close enough to show you that there is around a $40,000 per year on average lower income for the Edgewater/pace park/mt- zip code zip and the brickell zip codes.
—> plus I think there is also a higher level of education level in these brickell zip codes compared to the Edgewater/pace park/mt zip codes.
—> anyways, like I said before I sugguest you got to http://www.condoreports.com and research all the areas and pick the area and the building you like, for each building make a pros/cons list and go to each of the buildings for yourself, then work a deal for a condo you like in the building you like in the area you like for the price you like. That is what I need. You will notice that peolpe on this blog have diff opinions on the varouis areas so it’s best for you to go to the areas and buildings and make your own decsions for the your own needs and budget.
—> good luck
Euroman,
carlos said to you:
“North Bay Village has nice water views if you have a unit facing the water, but that is about it”
—> this FYI
—> here is the link to the income, etc information for the zip code that North Bay Village is in.
—-> http://www.city-data.com/zips/33141.html
—–> 33141 – median household income in 2008: $30,197, so you can see the incomes in that zip code is also much lower then the incomes in the Brickell zip codes.
This blog used to be dominated by bears who would shred anyone that disagrees with them.
Now this blog is getting dominated by recent condo owners who would stoop to any low to discredit or sling mud on other peoples buildings or neighborhoods.
Shameful on both counts.
Gixxer,
now I’m confused too.
I’ve read that Midtown was a new condo development somewhere closer to Design District, with no water views, built on a remnants of some old warehouse facilities.
If memory serves.
Can’t be Edgewater.
Carlos, owneratinfinity,
great info, thanks guys)))
mishka said: “This blog used to be dominated by bears who would shred anyone that disagrees with them.”
– Bears? Really? That is sooo far from the truth. How about, instead of “bears”, people with a non-hyped realistic view of the market that were proven 100% correct? If anything, I had been and continue to be too bullish as I have erred by not being being bearish beyond the market realities. Moreover, do you have ANY clue regarding the percent of “foreclosure squatters” that are in homes that aren’t yet REO’s? The numbers are staggering as these people continue to live mortgage/rent/tax free. In a normal market they would have been out in 6 months or less, not 18 months. When you combine the “foreclosure squatters” with the artificially low mortgage rates and the government co-signing ALL the new mortgages, prices are still artificially too high. Reality will come to this market eventually…the rate of default among prime jumbos is gonna cause high end prices to fall more.
euroman,
everyone seems to have an agenda here.
1. Housing bears: they dont want anyone to buy a single condo so that the market remains depressed for their own reasons. So I cant believe anything they say
2. Housing bulls: possible realtors or existing investor owners who want to sell. same goes.
3. Neighborhood experts: Existing home owners who want everyone to gravitate to their location or their building
with so much treachery all around you, you are your own best friend. Just do your home work. Visit the area. If you cant, google satellite images can give you some idea. Once you like a location, zero in on a particular building and know all about the building and its finances. Dont get concerned with renters trashing the building. It is totally blown out of proportion. anyway, there is nothing a paint job or some simple repairs cannot take care of. and most important, buy only if you want to live in or make it a second home. or, buy it to rent it out only if you can pay all cash with no mortgage. Then you will have some positive cash flow. I am sure you already know everything I said. Good luck.
“Now this blog is getting dominated by recent condo owners who would stoop to any low to discredit or sling mud on other peoples buildings or neighborhoods. ” – – mishka
With all deference and respect to the folks that post here, if you think about it logically, the “sling[ing]” of which you speak should be expected and, frankly, is only going to increase. This is all part of the cycle – – painful and slow as it may be – – that will and must occur.
The issue here, as it has always been since the bottom fell out of the market is: What is the fair market value of these condos?
As we all know, between 2000 and 2007 hundreds of condos were built in South Florida. As we also know, the value of goods in a market is dependent on information. The initial value of these condo units were based on incomplete information as it was largely that provided by developers and their minions.
After all, why was unit X in development Y priced at $1.2 million? Because the developer said it was worth that and some investor bought into that valuation.
Now the developers and their clueless minions are history – – more or less. While the developers spun a good yarn while the housing market was strong, their valuations are unsustainable and unrealistic in the present market. Developer pricing did not reflect the true market value. Rather it reflected the impact of a market trend (the bubble effect) on consumer activity in that market.
So where does the market information underlying the present fair market value of these properties come from? The only true source: the consumer.
While you may view many of the posts as mud slinging, sniping, etc., I think a more enlightened view of such postings is that they are subjective evaluations of these condos by actual consumers. The market place – – real consumers – – is finally (FINALLY) beginning to take a good look at these developments and judge them on their merits. Many of the new developments – – names excluded – – are pretty ridiculous if you look at them through the lens of logic. And, more importantly, because this information is published on the internet, these comments are reaching a potential audience of consumers thereby affecting, hopefully in a beneficial way, their economic behavior.
For example, why would a rational consumer pay $X00,000.00 for a condo unit whose patio is a few feet from the metro rail and overlooks a utility power grid? Answer: they probably would not – – but they might consider purchasing it for less.
Another example: would a rational consumer pay $X00,000.00 for a condo unit in a building with no on-site parking? Answer: they probably would not – – but might consider purchasing it for less.
You see mud slinging.
I see consumers evaluating goods available for sale in the market place.
But that is just me. I could be way off.
scriv
Midtown is definately not edgewater-and yes built in the old warehouse district-still surrounded by ghettos-just the old omni mall in a new location.
Edgewater-definately poor construction, while great views thats about it-oh and still surrounded by ghettos…Oh and as I commented in the past Bayview Market…Pipe dream…
Park West-definately poor construction, basically no retail as promised? Museums what museums? oh and still surrounded by ghettos-
Downtown filling up according to DDA-yes it sure is with those from the western suburbs who could never afford anything but a small walk up on the beach with zero ammenities-hence the windfall-better to live in new urbania than the desolate nothing to do suburbs of West Kendal-unless you are Married Latin with Children that is…
Brickell Key-unless you work downtown its a traffic nightmare-try driving during the ING Marathon, and every other event that goes on downtown where the city fails to notify the residents…
Best Advice Ive heard-RENT RENT RENT
“North Bay Village has nice water views if you have a unit facing the water, but that is about it”
True on the water views, but I think NBV has quite a bit to offer. Here are some pics that I took of my condo shortly after I bought it in 8/09. I’ve posted these before, so if you’ve already seen them, my appologies. These were taken shortly after I moved in, so the decor is a little sparse, but you’ll get the idea.
http://s985.photobucket.com/albums/ae338/djpooper/
I’m honestly not trying to talk up my hood or my building, just want give people an idea of what’s out there. I looked at condos all over miami….brickell, downtown, sobe, miami beach, etc. before finally settling on my place. I found that for the most part in North Bay Village, you get more sq. foot per dollar. I paid just over $200/sq. foot for my place, finnished with marble floors, window treatments, etc., etc. 1753 sq. foot under A/C plus an additional 675 sq. foot wraparound balcony, with 270 degree views of miami beach, sobe, port of miami, brickell, downtown, midtown, all the way up to north miami pretty much.
I also love the area….little traffic, good restaurants all around, a few minutes between biscayne and collins in either direction, plus it has a small community feel right in the middle of miami. Anyhow, those are some of things that sold me on the area. I actually have to give credit to my realtor because I wouldn’t have even thought to look here when I began my condo search.
Buyer makes $200,000 profit in 20 minutes by flipping 19 Miami condos
BY ELAINE WALKER, The Miami Herald
It could be one of the quickest profits made in Miami’s condo market.
All it took was 20 minutes for a bulk buyer to make $200,000 by purchasing 19 units in the new Mi Primera Ilusion Villas Miami condominium and then immediately selling the same condos to another investor, according to a report from CondoVultures.com
The Fama Group, with principal Nancy Marquez, purchased 19 units in the 30-unit condominium on Southwest 18th Avenue in Miami for $1.25 million, or $102 per square foot, according to Florida Secretary of State records. The deal was completed at 1:25 p.m., Friday, March 5.
Exactly 20 minutes later, at 1:45 p.m., Marquez’s group sold the units for $1.45 million, or $118 per square foot, to another Miami-based entity, Rentdepo LLC with principals Alain Bonvecchio and Karen Stanford Bonvecchio, according to government records.
Even the second owner purchased the condos at a 60 percent discount compared to the $293 average closed sales price in the project, according to Zalewski’s report based on Miami-Dade County records.
CondoVultures.com has documented at least five examples where bulk buyers have purchased condos and resold them for more than a 40 percent spread in the course of weeks, according to the Condo Vultures Bulk Deals Database.
owneratinfinity-
Euroman posed a question regarding tenant income/demographics of Edgewater v. Brickell and you post 2-yr old household income statistics from city-data.com that may or may not even include tenant incomes, since these demographic stats typically only account for homeowners and not necessarily renters. Plus how do you know where city-data retrieves and how it compiles their stats? I was looking for a source(s) and can’t find anything.
North Bay Village has a large elderly population so therefore the household income levels will naturally be lower. You cite the NBV income v. Brickell income like its proof that Brickell residents are in some way “better” than NBV residents when in fact the opposite may be true. Personally I’d rather live in NBV next-door to an old quiet Jewish guy with an annual income <$30,000 yr rather than live in Brickell next-door to an obnoxious, loud 25-yr old Argentinian importer/exporter.
My point is that zip code income stats are not a very good measure of whether renters in Edgewater or Brickell have a proclivity to "destoty all the buildings", as you say in your garbled English. More broadly, nor is it a very useful stat in choosing what neighborhood one wants to live in.
Drew, good point on the city-data zip code stuff. Just to confirm how off-base that argument is, the median income for zip code 33139, which includes SoFi, Star Island, Palm Island, etc., plus all the houses along the Venetian, is $40,505. Really I don’t see how the median income for is Brickell is over $25,000 higher than arguably one of the best zip codes in Miami. The only explanation is either that that argument is flawed or the data is flawed.
Condoswindler
“Midtown is definately not edgewater-and yes built in the old warehouse district-still surrounded by ghettos-just the old omni mall in a new location.’
I don’t want to start pissing people off because I’m not from Miami but I think people are confusing “downtown” “midtown” and “uptown with actual neighborhoods.
For Miami Downtown would be from Broadway up to 17th Terrace. With Brickell making up the financial district and the area north of the river making up the central business district (the hear of any downtown).
Then north of 17th Terrace up to I195 make up midtown. Downtown and midtown are both bordered by 95 on the west and Biscayne Bay to the east.
Edgewater is simply a neighborhood located in Midtown and only refers to the area west of Biscayne Boulevard.
The same way that Chelsea or Clinton are neighborhoods in Midtown Manhattan.
Man, it’s unbelievable how CondoVultures.com turned into such r.e. shills almost overnight. Incredibly shameless.
——
DJ post #44 — There’s no way 33139 has a median income of $40,505. That zip code has routinely been listed as one of the wealthiest in the country. It might have even been #1 at some point, back when the islands were still chock full of the A-list crowd.
——
QUESTION: I keep hearing and reading “bad construction,” “poor construction,” etc., etc. So, I thought a survey question might be in order: What percentage of the new condos — or, if it’s easier, which specific buildings — built during the r.e. boom really, truly seem to have been built with end users in mind rather than the flippers? I’m starting to wonder if that number is higher than 20%. Thoughts?
DJ, you have a very beautiful apartment. Enjoy it!
Condoswindler ,
You said,
Brickell Key-unless you work downtown its a traffic nightmare
—> I love Brickell Key, however then was no new building there in my price range
—> I do agree that the traffic would be heavy trying to get to Brickell Key since you have to fight the traffic on Brickell ave, to get there,
—> cause my building is 3 blocks from west from the bay, I can get to the i-95 highway in 5-10 mins regardless if it’s rush hour or no – it’s very quick access to the highway.
DJ
The brickell population at the time of the last census was tiny compared to South Beach (4700 vs 38,000). If you understand how median incomes are calculated you will understand why 33139 is so much lower than 33131. The incomes from the houses on Star Island are negated by the dozens of dumpy apartment complexes in South Beach housing the low income bar/club/waiter types.
The most recent census data is from 2000, the most recent IRS zip data is from 2006. Given the huge changes in downtown Miami in the last 5 years, I would say most of this demographic data is meaningless anyhow. Most of Brickell as we know it didn’t exist in 2005. Interesting to see how things look after the current census
Meredith Whitney recently came out and predicted a double dip in housing once the fed govt support ends. I respect her opinion, especially since she looks at the macro factors that affect our economy and markets. She ranks almost as high in my book as Robert Shiller in her approach. A double dip, even nationally, is not out of the picture just yet. People should at least be aware of it and avoid being a knife catcher. Full disclosure, I am looking to buy but am in no rush. If the right unit comes along at the right price, I’ll know it when I see it. Caution and prudence are the right moves in this market, especially with condos.
Drew,
“My point is that zip code income stats are not a very good measure of whether renters in Edgewater or Brickell have a proclivity to “destoty all the buildings”, as you say in your garbled English. More broady, nor is it a very useful stat in choosing what neighborhood one wants to live in”
—> he asked if the incomes are the same, no they are not – there is large diff in incomes, between the park pace/midtiown bay area where the 4 new condos building are in front of the pace park and the zip codes by the bay in brickell.
—> I am sure when the results of the 2010 census gets released we will see that the average incomes of the brickell zip codes will go down, due to all the lower income peolpe who are renting the brickell condos at a cheap rent.
—> However I don’t think the brickell zip codes income will ever go down to the level the pace park / midtown zip code.
—-> the bottom line is, peolpe need to make there own choices, who cares if there are many lower income peolpe near or in your area, if you like the area, the building, the condo, the price and you feel safe in the area buy the condo.
—-> I would of bought a condo in the park pace/midtowm area, the area is ok I feel safe there, however a condo in park pace/midtowm in my price range did not have the enough value for the money in my eyes for what I was looking for. Its that simple
Lara,
Thank you!
Miami Skeptic,
Yes, I understand how to take the average of something. My point was, picking the mean income for one zip code in Miami and using to compare against another is not a sound argument to conclude one area is better than another. Your response to my last post confirms why. Also, who knows where that city-data site gets its source info from.
joe,
you siad,
DJ post #44 — There’s no way 33139 has a median income of $40,505. That zip code has routinely been listed as one of the wealthiest in the country. It might have even been #1 at some point, back when the islands were still chock full of the A-list crowd.
–> you are correct however but remember that the 33139 zip code also includes all the people that live in south beach, not just the rich ones, there are 100s of small old apt buildings in south beach (not on the water) with 1000s of old apts that rent pretty low to lower income folks.
—-> However there are many sources on the internet to find incomes for differnt areas so looking at other sites could show higher incomes for the 33139 zip code.
Regarding zip codes information, I agree with Drew. The problem is why many of us were going round and round in the other thread. Median income is very unreliable in an area like Miami were were there is a small concentration of people at the top and a lot at the bottom. Here is the a breakdown of the adjusted gross incomes from the 2008 tax returns for the zip code 33141:
$200k or more – 511
$100 – $200k – 780
$75k – $100k – 580
$50k – $75k – 1260
$50 and under – 12,196
20% of the people have adjusted gross incomes over $50k. And these are adjusted gross income numbers not actual pay which for most people is higher
Now compare this to Brickerll (33131)
$200k or more – 676
$100 – $200k – 872
$75k – $100k – 529
$50k – $75k – 832
$50 and under – 2,802
When looking at adjusted gross incomes over $50k you get
33141 – 3,131
33131 – 2,909
The only difference is that Brickell doesn’t have a place for low income people to live. All of the lower income people living on beach help to bring the median income in 33141 down.
I’ll also point out that MEDIAN is not the AVERAGE. Median is simply the middle number. So if you had 10 people with these salaries:
$10k, $11k, $12k, $12k, $20k, $50k, $80k, $90k, $90k, $100k then,
Average = $47k
Median = $20k
In A city like Miami where often the average is higher than the median it shows their are a lot of outliers at the top. Zip codes with higher medians simply mean there are a larger portion of people in the mid to lower range.
“–> you are correct however but remember that the 33139 zip code also includes all the people that live in south beach, not just the rich ones, there are 100s of small old apt buildings in south beach (not on the water) with 1000s of old apts that rent pretty low to lower income folks.
—-> However there are many sources on the internet to find incomes for differnt areas so looking at other sites could show higher incomes for the 33139 zip code.”
Two wonderful reasons why the income/zip code argument fails.
Joe,
“There’s no way 33139 has a median income of $40,505. That zip code has routinely been listed as one of the wealthiest in the country. It might have even been #1 at some point, back when the islands were still chock full of the A-list crowd.”
This is where people constantly go wrong by making simple assumptions without looking at the facts. Are there a lot of rich people in 33139,yes, but there are also a lot of poor people getting buy on on the beach as well. You’re logic would make more sense in a zip code like 33109 (Fisher Island) where there aren’t any places for low income people. Breakdown of 33139:
$200k or more – 1,383
$100 – $200k – 1,620
$75k – $100k – 1,163
$50k – $75k – 2,192
$50 and under – 12,869
As you can see 33139 actually has the LARGEST concentration of people with an adjusted gross income of $200k and above. In fact it has the largest concentration of people making $50k and above in all of Miami with 33160 coming in 2nd and 33180 coming in 3rd. But the problem is that the again the median in the MIDDLE number. With 12,869 people making under $50k the median is going to fall among them.
There is a sizable amount of people in Miami doing very well, they are just drowned out in the stats by the enormous amount of people struggling.
Gixxer 1000.
Good work ,
If you could somehow take just the incomes for the peolpe who live directly on the bay in brickel (from miami river south to 25th street) and compare their incomes to Mid-town/park pack people who live on the bay from 395 highway north to 195/112 I feel you would get much lower incomes.
However I don’t know where you could get the stats on that.
Owneratinfinity
“If you could somehow take just the incomes for the peolpe who live directly on the bay in brickel (from miami river south to 25th street) and compare their incomes to Mid-town/park pack people who live on the bay from 395 highway north to 195/112 I feel you would get much lower incomes.”
Comparing 33131 and 33132 would get you pretty close. 33131 is pretty much east of S. Miami Ave. but does go up north of the river to NW 1st st. Then 33132 picks up and again stays east of N. Miami ave and goes all the way up to pace park.
33131:
$200k or more – 676 (12%)
$100 – $200k – 872 (15%)
$75k – $100k – 529 (9%)
$50k – $75k – 832 (15%)
$50 and under – 2,802 (49%)
33132:
$200k or more – 94 (5%)
$100 – $200k – 170 (8%)
$75k – $100k – 135 (6%)
$50k – $75k – 270 (13%)
$50 and under – 1,428 (68%)
The Brickell area definitely has a higher percentage of people at higher income levels. But this is based on 2008 tax income so I’d guess the gentrification in the area is pushing these numbers up. But regardless this area still has a ways to go. This is also reflected in Brickell having an average square foot price of $334 while Wynwood/Edgewater is at $233.
But I believe there are big plans for that area. For example I think they plan to get rid of Park West. The north part will become part of the Media and Entertainment District and be renamed to Art and Entertainment District, while the south part will become part of the Central Business District. The the entire waterfront from Bicentennial Park all the way down to the river will become the Waterfront District.
If they are able to accomplish that then I would think in the future there won’t be that big of a difference between Brickell and the rest of downtown. But that is years away.
Meredith Whitney. Are you kidding me. She’s was bearish on banks all of last year as they continued to rally and rally. I’ve got news for all of you. The shit is going to hit the fan pretty soon here with the big banks. The big four banks are have “secondary assets” ( HELOCS, and 2nd Mortgages) that add up to about 500 billion on their books. They are declaring the value of these assets at 85% of par. Being that we are fairly informed bloggers here, does anyone actually believe that these secondary assets are worth 85% of their value? What happens in a foreclosures to subordinate lean holders? Most of the time they loose all of their principle. What is going to happen to the big 4 banks when these secondary assets losses have to actually be reported?
bubbleRefuge – What is your point of #59? I love Meredith Whitney and Robert Shiller….great thinkers. So she was bearish on banks….and apparently so are you in your armageddon scenario, so you two agree. Let’s face reality, the big four banks are only being propped up by the fed govt and accounting tricks. They can take advantage of the yield curve for now…..artificial bailout is what it is.
RT- “Meredith Whitney recently came out and predicted a double dip in housing once the fed govt support ends. I respect her opinion, especially since she looks at the macro factors that affect our economy and markets. She ranks almost as high in my book as Robert Shiller in her approach. ”
Isn’t she the same one that went on CNBC saying Lehman Brothers had a very good business and was a real company just before they went bankrupt, Lehman was about $50 at that time. She might be right but these experts know shit and get lucky sometimes. I guess it takes a real genius to make that call. Let me see, gobmt stop buying mtgs at end of march, Private market still not buying much,market goes up or down? Gee let me see… duhhhh, ahh.. duhh, duhhh!
I wouldn’t bet on the 4 big banks going down.
The government is doing everything to keep them afloat and if that doesn’t they will cook the books and keep or move those liabilities off balancesheet and everyone will look the other way. Remember the report that came out about last week? who is to say this isn’t going on right now with a nod and wink of the fed. What do you think the low int rates are about?
Gixxer 1000,
Thanks for doing the research – you are great at it.
So like I thought Brickell incomes near/on the bay are higher then Mid-town/pace park incomes near/on the bay.
Higher incomes, is one of the reasons I picked Brickell over Mid-town/pace park area.
And I do agree with you that Mid-town/pace park is getting better and I think once there are new supermarkets, etc in walking distance from the bay area buildings it will be more much better. But like you said it will takes years to get there.
mischka,
thanks for the infusion of some common sense in this debate. No doubt, most posters have their own agenda. Nothing wrong with that, it simply means means that great deal of opinions should be discounted or thrown out altogether.
Gixxer 1000,
I think you are one of the most informed and least biased people on this blog. If as you say (and I happen to agree), more dilapidated areas of Greater Downtown will be catching up with the more developed ones, wouldn’t it be reasonable to buy condo in half-baked area like Edgewater, since they are positioned for more and better quality (due to Miami21 zoning) buildup, and will probably appreciate faster in value?
Because Meridith Whitney is incompetent but lucky. She doesn’t know what “Repo 105” is. The big four are hiding liabilities. Lehman brothers used “Repo 105” to hide things on their balance sheet for a long time. Timothy Geithner denies knowing anything about Lehman using “Repo 105” yet he was running the NY-Fed whom was overseeing these guys. Timothy Geithner may wind up in jail. He will surely bring down Obama. And gents we are facing Financial Crisis/Meltdown Act II in a matter of months.
The market hates financial skulduggery. When the market gets wind that these banks have no real capital. Its sayonara for the markets. And this time there will be no bailout because the political will is not there.
Condo Swindler,
the way you describe Greater Downtown is at odds with your RENT, RENT advice.
I cannot help but deduce from your rant, that downtown Miami is not a livable area to begin with. Why would anyone even rent a place? Just run, as far away as you can. But which city would you run to? Where is that American Nirvana? Where would you want to live?
Hi. Third post. Maybe fourth. I wanted to thank everyone here for the comments and advice received in the past two months. Very helpful. After 2 years living on the beach side my husband and I last night decided that we are going to sign a contract to purchase at Everglades On The Bay in Miami. The reasons…… Price, Location (can walk to my office), Huge park across the street, Quality, Club House ( A Ten), Pool Deck ( A Ten). To us it was mostly about the Value. We did our due diligence. It came down to Marquis, Epic, 900 Biscayne or Everglades. Everglades in our opinion offered more value. Lower price, with better views, proximity to a park and a Metro train right outside our door. The others quality wise were nicer with Miele appliances etc. but for the price difference we can swap out or switch. Very nice Lobby. So Thanks again and please wish us well.
DJ,
thanks a lot for sharing those pics. You obviously did good with your condo shopping. Had your unit come well-appointed or “decorator-ready”? Do you have any info on Lexi availability beyond what I can find on MLS? I’ll definitely take a look at it.
Love how peaceful your place is.)
DJ,
please disregard my “decorator-ready” question, since you already answered it in your post (I probably suffer from “reading too fast” syndrome) …….. which of course begs another question – how did you manage to get all those marble floors and other goodies from your developer, when most of the new construction in Miami is delivered raw and unfinished? And all for about $200/sq ft. That’s a fantastic deal, I think.
Christine,
R u aware that Everglades on the bay is in foreclosure?
Honestly, I think you should reconsider your decision.
I have been to the building and it is the worst of them all by far. It is not even finished. They are renting units without any flooring.
There is a reason why the price is much lower.
Think about it.
However, I wish you and your husband all the best.
owneratinfinity,
I have a page that shows all of the condo buildings on a map. The link can be found towards the top of the home page near the header.
http://www.miamicondoinvestments.com/map-search/
Euroman — Miami is severely overbuilt at the moment. You’re probably looking at a minimum of 10 years before the “dilapidated” areas of Miami see big improvement. Remember, it took the biggest r.e. boom in history just for downtown Miami to become respectable.
——
Christine — Congratulations on the purchase. I don’t know anything about that particular building, but a downtown condo should be great for someone like you who works downtown. IMO, commuting is about the biggest waste of time there is. Good luck!
Renter Tom,
John Paulson – who made billions on subprime fiasco – bought tons of Citi shares, while Meredith Whitney was stuck with a “sell” rating on the bank. Who is smarter? I’ll pick Mr. Paulson any time. And so far John Paulson is winning.
So, if she is no good as a bank analyst (her specialty), why would anyone take her word on real estate seriously?
Well, anyway, you have 6 months left for that 30% real estate drop, that you and Moody’s (these guys rated subprime slime AAA all the way to the toilet paper status) are predicting.
So Miami market better start collapsing by 5% a month, or you’ll look foolish.
Joe,
I agree with overbuilding argument. That’s why prices declined so much. All I want is to capitalize on such a debacle and buy myself a decent waterfront condo at a decent price. I want to live 6 months in Miami and 6 months elsewhere.
By my calculations there is probabaly around 5000-5500 new downtown condos left in developers’ inventories and banks’ vaults. That should go 1000-2000 by the end of this year, since no new deliveries are expected.
We could argue about it until we get blue in the face, but these are my numbers, and I don’t see how any additional downward price pressure can develop from here. Upward – maybe, downward- unlikely.
Need to specify previous post – new downtown condo inventory should go TO 1000-2000, not BY 1000-2000.
Sorry for confusion.
Lucas,
WOW! You did a great job on the maps of the various areas in miami. It will help folks to understand where on the map the various condo building are located in the miami area.
Thanks for doing it so quickly.
Gixxer 1000 and Euroman,
Check out the new link on this site
http://www.miamicondoinvestments.com/map-search/
owneratinfinity,
That link has been there for about 2 years.
Euroman – If you don’t like Meredith Whitney, then how about Robert Shiller? He has been warning of a double dip in housing for several months before M.W. came out and said it. Granted, Shiller never trumpets his opinions in a blunt statement, but he is “very concerned”….and with good reason – artificially low interest rates and the fed govt co-signing every loan results in making people “able” to buy a home when they otherwise wouldn’t have been creating a false demand. Demand for housing will be lower than today once this stuff ends…housing demand just isn’t self-sustaining with artificially high house price floors in place, high unemployment, stagnant incomes, savings to deleverage the consumers balance sheet, etc. People are fearful of losing their jobs so they are not taking on more risk or debt when possible….they are staying put. If anything, they are simply putting money into remodeling and investing into their homes for a long stay….NOT to move out and up in a few years. Home owners are in no rush to climb the property latter today. Historically speaking, we’re living in huge houses….so huge that the trend in new construction is smaller square footage. People realize they HAVE TOO MUCH HOUSE! 🙂
Lucas, owneratinfinity,
map feature is amazing tool for people who don’t know Miami very well, like myself. Very cool.
…that’s “property ladder” (typo!) 🙂
Euroman (#68 + 69), I bought my place on a short sale, so the previous owner put in all the goodies. I have friends that bought a unit here from the developer though, and they were able to negtiate a pice a little higher than what I paid… ~215 sq. foot, and had the devloper install hardwood floors. That’s probably something to consider no matter what building you’re looking at. The buyers obviously have all the bargaining power, so might as well try to get the developer to throw in some upgrades or finishes.
As for availability here, I know the developer has 12 units left for sale. Other than that I don’t have much more info other than what you might find on the MLS.
Good luck with your condo search!
Euroman,
Thanks for the compliment. I don’t really have a dog in this race so I think it helps when looking at information. For example many people have been quoting the Moody’s Economy.com study that says prices wont reach the housing bubble peak price levels until 2030. The problem is they’re not smart enough to realize that even if that came true that means 3-5% appreciation per year. Do the freakin’ math people. Median home prices reached $400k, they are now at $200k. If prices appreciate 3.5% every year starting right now then the median price would be $397k in 2030. Had they just titled the study “houses to do what they’ve always done and appreciate at about 4%” then no one would care because it’s not sexy. So instead they rephrase it and put in a big number like 2030 and it gets re-posted on all the blogs.
The same thing with Meridith Whitney. The Case Shiller national index has already flattened after a modest increase. This leaves room for anyone to make a case for a double dip, which is what she predicted. So she makes a “bold” prediction like a double dip and her interviews are reposted on every blog. Great publicity for the Meridith Whitney Advisory Group, LLC. Then people like Renter Tom latch on to it and believe it not because of the data behind it but because they think that she is a “great thinker”. She probably is a great thinker, but the problem is that she gets paid to make predictions. She (and most other people providing forecasts) get paid more making bold predictions that captivate CNBC viewers than she does by being right.
No BS, here is a quote from someone commenting on this story on another blog:
“Well, I’m pretty convinced. Whitney has a good track record and a lot of credibility with me. So her saying “there surely will be a double dip” is significant.”
Sounds a lot like Renter Tom, who knows, maybe it is.
For months she has been calling for another “leg down” in the real estate market. The Fed pulls out, rates go up and banks will only lend to people with great credit. Well that’s funny because I thought banks right now were only lending to people with A+ credit. How does any of the information that she has presented actually affect Miami downtown condos?? A huge portion of the market right now is cash buyers. And everyone else has great credit with large down payments.
While I think there is some validity behind some of the things she says it does not apply to the market being discussed on this blog.
Renter Tom,
I don’t disagree with your “people staying put” thesis, meaning people are not selling houses to each other and moving around the country just because they feel like it.
However, since 2006 America’s population has increased by 12 million people, while only around 2 million new housing units were built. Maybe you missed it, but tomorrow USA will have some 9000 people more than it has today – and only 1000 houses.
If you count for the old housing stock attrition, then net new dwellings is even smaller. Probably 3-4 million units short of what’s needed, cumulatively since 2006.
Will all the new population stay with their parents, or bunch up with 9 people living in the same single-family house? Is that how you see it?
I don’t.
I believe that in the absense of huge new housing boom (and I can’t see one coming any time soon), the remaining housing inventory will be absorbed relatively quickly, simply due to the natural population growth, which in the US amounts to roughly 1%/ year.
Right now new housing sales in this country ARE LOWEST SINCE RECORDS HAD BEGUN.
You’ve got to be kidding me – or more likely kidding yourself – if you think that only this is sustainable, but somehow we are going even lower from here. There is simply nowhere to go but up. Slowly – but up. The pent-up demand for housing is building every day. It’s got to.
If banks start throwing people out of their houses as you expect, those folks will have 2 possibilities – either to become homeless as some will, or line up for rentals, which should push rents up. Miami rental vacancy rate is 6,8%, so there isn’t much slack in the market. With rents heading up, foreclosed properties will be snapped up by speculators pretty fast, and rented out to former owners.
So it’s a wash at best. So-called “shadow inventory” is non-issue, and so far, despite all the scary stories, nobody has even seen how it looks.
I was bearish on RE since 2003, but I just can’t justify keeping such a stance at this point.
Gixxer 1000,
nicely done. Thanks.
Sorry Gixxer 1000, but I put a lot more weight behind M.W.’s opinion then yours. Same goes for Robert Shiller…why not dis him too? What you fail to mention is that projected home prices in 2030 are the nominal dollar prices, not inflation adjusted. While I don’t think we can predict what home prices will be in 2030, I think it is interesting to note the degree of the bubble that even in nominal dollar terms, home prices might not get to that level for 20 more years. M.W. does have insights and interesting analysis of the macro factors affecting banks…and that affect housing in that banks have historically been the lenders to buy homes. Again, if you had listened to her comments, she clearly opined on the fact that banks aren’t writing mortgages for “lend and hold” … only lend and pass onto the fed govt entities…similar to the same thing that got us into the mess of passing on bad loans to others….now it is mostly to fed govt and us taxpayers. Nothing really has changed that much but it will once the fed govt stops absorbing the mortgages and co-signing all these loans. There are NO BUYERS of new mortgages besides the fed govt right now…banks are too scared to hold any more mortgages EVEN at today’s selling prices. That should tell you something. There is still substantial imbalances in the housing market and prices have not gotten to the market clearing levels yet. I remain cautious…and will happily rent and half price the cost of owning if I don’t find the right property.
Euroman – You are wrong on the slack in housing. Vacancy rates are high all over the country and have driven down rental rates practically everywhere even in high desirable areas of NYC. You have to look at all available housing stock…we have more houses per population then ever before. Anecdotally, I have a friend who owns a nice co-op in a great location in NYC who was just lamenting to me two days ago about the rent he just got for his co-op….about 20% less than before. I would also be interested in seeing the more recent stats on US population growth, especially with so many people moving back to Mexico…the REAL ID act will have a lot of consequences in that regard too. The bottom line, at least for the Miami area, there is more risk of substantial price reductions (10% or more) than price stability.
euroman, I never thought that way. gives me something to think about. Yes, the housing construction has ground to a near total stop but immigration and newborns are adding more people everyday to this country. add the newly homeless due to foreclosures,the rents are coming under a lot of pressure. My lease will be up this coming July and for the first time in 2 years I am scared that my rent may go up for the next year. As of now my building rental vacancy is just 5.3% . I like here so much and I do not want to move. I read the Miami Herald article regarding the downtown condos are 72% full. someone commented that the success of downtown attracting young renters will make it very expensive soon for these same people. I want to enjoy the low rents for another 2 more years but looks like it wont be.
Christine-
Agree with Carlos about Everglades on the Bay. Have you examined the association’s financials (if there are any)? That project is swamped in litigation- with buyers who want deposits back, a BofA construction loan foreclosure, and the developer (through the project entity) filed for bankruptcy. And the developer’s principal dropped dead of a heart attack last year.
Its an absolute disaster. Given the above factors, your future condo fees are a complete wildcard along with the future value of your unit. You seriously should re-evaluate your decision. That place will probably turn into a tenement.
Christine, I hope you got a great price there. Bank of America and the developer are still fighting it out in bankruptcy court to force a foreclosure on e Everglades on the Bay.
Seems like a really unstable place to be buying into until things get sorted out.
Best of luck
Renter Tom,
“Sorry Gixxer 1000, but I put a lot more weight behind M.W’s opinion then yours.”
That’s your problem you base a lot of what you think off the opinion of other people instead of actually looking at the data. If M.W. said she thought the world was really flat would you care about her opinion then?
Her argument is that there will be no buyers of RMBS.
http://www.housingwire.com/2010/01/14/new-private-label-rmbs-may-thaw-jumbo-market-sources-say/
These deals are all ready starting to happen.
Right now financial companies are figuring out how to reassess the risk of RMBS and how to underwrite them. And it will probably only happen on the ones who use high FICO scores and decent down payments for collateral.
The funny thing is if you listen to Meridith she is saying the same thing. She slips in comments where she says only people with great credit will get loans. So while there aren’t any current buyers she knows that deals are being set up right now and there will be some. She knows this as a fact. Will there be less deals and will they be based on only the loans with the best credit and collateral, yes. But she get’s more airtime if she goes out and says there ARE no deals right now (while the govt is still there).
Anyone with half a brain knows that the system isn’t just going to stop with zero mortgages written. But that message plays to a certain crowd. People like you who would care about her opinion and not dig deeper.
So I know you’re smart enough to know that people with great credit and 20%+ down payments will still get loans. This collateral is not the problem. You can write 20% or 30% losses into the RMBS and still find a way to price them at decent levels. So if banks are currently only lending to these people for Miami condos AND half of the Miami market right now is CASH BUYERS, how would any of this affect the Miami condo market????
Renter Tom,
http://riskcenter.com/story.php?id=19700
“Lower FICO (< 700) borrowers in P7/8 also tended to have high LTVs. It should not be surprising, therefore, that losses for these borrowers were 15-20%. This is 3 times the rate for P10, in which low-FICO borrowers had significant equity cushions. Going forward, analysts will assume that (as was the case in the recent period) home-price crashes will be accompanied by a shock in unemployment. Borrowers with even slightly tarnished credit reports will be required to provide substantial equity.
Concluding Thoughts
We believe that future Prime collateral will be underwritten to strict standards with minimal tail risk compared to what was last securitized. We have demonstrated that the credit performance of such pools is likely to be superior. This would seem to be required in order for investors to again embrace non-agency RMBS. "
Basically for new RMBS to go through people are going to have great credit or they are going to have to put down LARGE down payments. This will definitely apply pressure on housing in the lower market segments. But in Miami this is the same segments that has the most activity and is being purchased by investors.
Also,
https://www.tcw.com/News_and_Commentary/Market_Commentary/Insights/02-04-10_Non-Agency_RMBS.aspx
“Loan-To-Value Ratios (LTVs) – The original LTV ratio on this pool of loans was 75%. To capture the decline in home prices, we can use public home price indices such as S&P/Case-Shiller to place the current adjusted LTV ratio on this pool at 110%. But we can go further, and we do. Our propriety database adjusts a loan’s LTV ratio through multiple methods, essentially using S&P/Case Shiller data as a midway point. This approach is augmented by a more conservative methodology that uses recent local distressed sales data (very difficult to obtain) to derive what is typically a lower home value, and thus a higher LTV. Our research examining recent borrower behavior suggests that an Alt-A or even Prime borrower’s behavior tends to migrate toward Sub-prime borrower behavior when their distressed-sales-LTV ratio crosses the 150% threshold. This recently observed behavior helps drive our model and portfolio managers’ forecasting of prepayment, default, and severity behavior.”
Our View:
“Too Early To Exit Non-Agency RMBS The true return opportunity still remaining in this strategy is not just the yields found in the table on page 3 (generated by amortization and coupon payments over a long period of time) but in the potential price appreciation over a shorter time period. We believe this potential will be unlocked sequentially.”
“First, the market will adjust the long-term default and severity assumptions on the majority of these bonds. As the economy and the housing markets inevitably stabilize, the weakest borrowers will be weeded from the pools through defaults, strengthening the remaining pool (Note: some pools will actually get worse over time, but we’ll save that discussion for another day). Our loan database indicates that the current loans in the example transaction have 30% more equity in their homes today when compared with the delinquent pool of loans.”
“Second, not only will base-case assumptions improve, but the market will gain a higher degree of confidence in the forecast. Said another way, the fear and market-implied probability of the adverse scenario will subside. This leads to a lower required risk-adjusted IRR, and when combined with more favorable cash flow projection, a rise in prices. Finally – and admittedly not part of the value thesis – although traditional recourse leverage has returned to the system (ignoring short-term government programs like PPIP, which are finite), borrowing terms are still well short of where we believe they will eventually settle. More advantageous borrowing terms (another 10% reduction in haircut requirements and 100 basis points in borrowing costs) and lower required market ROE’s should help lower the risk-adjusted IRR another 200-400 basis points and contribute to a final leg of price recovery and the move from the blue to the yellow shaded areas of Table 1, above.”
“After considering the current risk-adjusted unlevered IRR’s of 8-12% available at today’s prices, and the potential price appreciation should our expectations prove correct, it seems to us far too early for an exit. In the near term, there is the possibility for some retracement in prices as government stimulus programs end and a looming inventory of distressed homes finally hits the market. As value managers, however, we would view such a near-term price decline as a buying opportunity. The ability to redeploy cash flow in this window should be accretive to final realized returns once the strategy has finally run its course and the time comes to permanently harvest the gains. While we hope that time comes sooner, in our efforts to manage investors’ expectations properly we feel that a 24-month time horizon is likely to be sufficient to allow for the true economic and housing recovery upon which to build the final half of this return opportunity.”
Meredith Whitney’s own website shows that her companies area of “expertise” does not cover real estate or RMBS. But yet she is the one getting all the coverage on the news, websites and blogs because her prediction is sexy.
However a firms like TCW that does cover RMBS and mainly provide information to investors NOT by way of the media seem to make more straight forward forecasts and no one cares, except the people making money on them.
“In the depths of the credit crisis, panic enabled astute buyers of non-agency RMBS to build portfolios based upon worst-case prepayment, default, and severity assumptions when projecting cash flows. IRR’s of 15-20% were applied to the forecasted cash flows to arrive at market prices.”
No one want’s to hear about the restructuring of non-agency RMBS. They want to hear stuff like “double-dip”.
“Vacancy rates are high all over the country and have driven down rental rates practically everywhere even in high desirable areas of NYC.”
This isn’t true. Here are market reports for NYC:
http://www.citi-habitats.com/market.php
Vacancy rates peaked in Nov ’09 at 1.84% they’ve fallen each month and the vacancy rate now stands at 1.54% Consequently rents have also been increasing. The highest vacancy rate which is in the Upper East Side is 2%.
Here is a quote from the 2009 year end report:
“vacancy rates which historically increase during this period actually decreased slightly over November’s rate, indicating positive absorption into the market.”
3,700 new rental units were have were absorbed into the market in 2009 and vacancies are already back on their way down and rents are back on their way up.
RT, banks will get back in the lending business. Right now they don’t have to because there are easier fruits to pick like borrowing at close to 0% from the feds. The lucrative credit card fees are drying up and the feds are raising rates. The bank will have to look to other sources to support their bonuses so they will return to traditional banking functions. Right now they don’t have to lend but when the feds start take away the feeding tube they will have to find a way to make money.
just my humble opinion
Gixxer 1000,
Using all the research you have done, plus your own gutt feelings, do you think the for the $200K or less condos on or near the bay in miami (brickell – downtown – mid-town/pace park) have bottomed out in their pricing yet?
Or so you think the maimi condos near/on the bay that are selling today for $200K or under will continue to drop in price?
If, yes what % do you think they well drop to before they will reach the bottom?
I value your opinion and I would very intested to hear what you think to this subject. Thanks
Gixxer – Whitney’s credibility is based on her calls in 2007 and 2008 when the crisis was still developing. She doesn’t get coverage because her predictions are sexy, she gets coverage because her predictions were right when many/most bank analysts and even bank execs got it very wrong. Her questions on the BOA and MER conference calls at that time, as well as her calls on C and others ahead of the meltdown were spot on.
I generally don’t put a whole lot of stock in “expert” opinion, but Whitney does at least have some track record to speak of. I don’t agree with her current opinions, but there are good reasons why she is quoted so often in the media.
also TCW research is owned by one of the largest banks in the world, so be sure to take that into account when reading their reports.
Miami Skeptic – This sums up my thoughts on Whitney:
“Whitney’s insights haven’t always translated into lucrative investment picks. Based on the performance of her buy and sell recommendations relative to her industry peer group – what analyst tracker Starmine refers to as an analyst’s “industry excess return” – Whitney’s stock picking ranked 1,205th out of 1,919 equity analysts last year and 919th out of 1,917 through the first half of 2008. That said, evaluating Whitney solely on the timing of her buys and sells misses the point. It’s not just that she’s bearish on the entire banking industry. What makes Whitney so interesting is the brutality of her arguments and the evidence she summons in making them.”
“Based on the statistics aka something we call the facts, Meredith Whitney isn’t that great a stockpicker. And if I’m a client or investor, I’m guessing that the correctness of stock picks is what makes me money and not the “brutality of her arguments and the evidence she summons in making them.” Looking at her stock picks as a metric for measurement doesn’t “miss the point”. It is the point.”
“However, the media love a story and Meredith Whitney provides it. She is married to a WWE wrestler (JBL for those like me who are former WWE fans. And no I’m not ashamed to admit that. Okay, I kind of am). And more importantly, she makes swing for the fences calls which attract attention. If she was wrong, she’d have faded into obscurity. But because she has been right on SOME of these big, hairy prognostications, she’s been appointed a guru and CEOs and CFOs spend time with her (most recently Ken Lewis, CEO of Bank of America, CFO Nelson Chai of Merrilly Lynch and CEO Ken Chenault of American Express).”
“Unfortunately, it seems the frequency of being right which I presume the folks who are ranked highly in the equity analyst crowd is being drowned out by the magnitude of correctness no matter how frequent.”
“Let’s remember the primary objective of an equity analyst should be to make good calls that inform clients’ investment actions and enable their success. As a result of this, they should be rewarded. Somehow, being 919 out of 1917 equity analysts doesn’t seem worthy of much praise, but once again, style sells. ”
TO BE CLEAR, I do not discredit anything she says just because she says it. Do I think the RMBS market will take some time to work itself out, yes. I’m more in line with TCW’s 24 month projection. I’ll also add that not all the information I provided was from TCW. But if you listen close to Whitney she leaves little “outs” for herself by saying “only the best people will get credit”. This allows her to make really bold statements like there are NO BUYERS for RMBS which catch more peoples attention (like Renter Tom) when she actually means there are FEW BUYERS.
More than likely there will be few buyers at first and as they slowly gain confidence and risk subdues more will come in over time. And by that time no one will even remember what Whitney was saying because she’ll have revised it somewhat and made another new BOLD prediction.
You people are asking the wrong questions. I don’t care if every condo in Miami sells tomorrow, prices won’t increase. Prices are based on rents. Rents are based on jobs and population. Florida faces the highest unemployment rate in it’s modern history. More condos were built than actual humans to occupy them. The faster these condos are sold to pie in the sky idiot investors the faster they are placed on the market and the faster rents can collapse. Once icon and Everglades are fully online we should see some price action. Icon prices are already down ( one month free= way of hiding price drop)
Who are these people trying to fool?
Maybe investors from the NE, because if you live in Miami you know this is just cheap talk.
http://today.msnbc.msn.com/id/26184891/vp/35907802#35907802
Yeah Gixxer 1000 – There aren’t any games being played right now. The market is fine, jump right in. (sarcasm).
http://www.calculatedriskblog.com/2010/03/squatter-stimulus-no-mortgage-payment.html
carlos,
you said,
Who are these people trying to fool? Maybe investors from the NE, because if you live in Miami you know this is just cheap talk. http://today.msnbc.msn.com/id/26184891/vp/35907802#35907802
—> I know what you saying, however I think a good part of what they said on this video is correct for what I saw in the research of new miami condo building over the last 2 years that lead up to me buying my condo in Infinity at Brickell last fall.
—-> I have noticed in the last 6 months for the new miami condo building (near or on the water/bay) that once they lower then prices (around 200 per foot) that the building’s develoeprs are selling units much quicker
—-> Last fall, I was going to buy a condo in 1060 brickell ave instead of infinity, when they lowered there prices around 220 per square foot. Once the developer lowered there prices the remainer of their unsold units sold better quickly.
—-> Today, I checked condo report.com and saw that it looks like nearly all the units sold in the 1060/1050 brickell ave buildings.
—> Since my building has lower there prices (200 sqaure feet for non-preconstrcution buyers) and now that the FDIC is allowing closings again my building my developer is closing around 8 to 10 units a month. Last month for feb they close 15 units and none of them were bulk sales.
—> I noticed today in Condo report.com that the other new miami condo buildings near or on the water are closing more units per month then what I saw 6 months ago. This is due to those buildings developers lowing their prices I would think.
—> So compared to what I saw 6-8 months it looks like the condo developers for the miami new condos buildings near or on the water for closing more units.
—> I know there is lots more new condos units to be sold, but I think things are moving along much better then 6-8 months ago.
Owneratinfinity,
This is my opinion based on downtown condos only. The floor is already in place. Here are my reasons why:
Jan ’09
Sales Volume $27.8M
Avg. Unit Price $278k
Avg. Price/sqft $239
Dec ’09
Sales Volume $152.5M
Avg. Unit Price $313k
Avg. Price/sqft $287
Units might be selling cheaper than ASKING prices but they are not being sold cheaper than what was sold at the beginning of ’09.
Look at it this way. Everything that can be marked down to $150K is marked down and sold. Average price for sales will be around $150k. After you sell through everything at $150k you move on to everything that can be sold at $160k. So while you’re constantly marking down prices the average price is actually increasing. If you want to buy something at $300k then you can sit around and wait. But if you wait until the markdowns are at the $300k range to buy something for $150k you might be out of luck because it has already been discounted and sold.
Here is my estimate up to the end of ’09:
Total Condos Available end of Dec ’09 16177
Average month sales for previous 6 months 941
16177/941 = 17 month supply total
$0 -$250: 8907 condos (55%)/ 716 avg sales (76%) = 12 month supply
$250k -$500: 3903 condos (24%) / 141 avg sales (15%) = 27 month supply
$500k – $1m: 2003 condos (12%) / 56 avg sales (6%) = 35 month supply
$1m and up: 1358 condos (8%) / 28 avg sales (3%) = 48 month supply
Were marking down and selling through the $0 – $250k inventory now. When we get to 6 months prices in that segment will stabilize which will provide footing for the segment above it.
Keep in mind these numbers are for Miami-Dade. I don’t know of a way to get the information for just downtown, but I’d assume that downtown make up a bulk of the sales from this information from Miami DDA for downtown condo sales only:
Sep ‘09 268
Oct ‘09 339
Nov ‘09 234
Dec ‘09 486
So a third to almost half of all condos being sold right now are downtown.
Next factor is rental rates. Here is the average rental price/sq ft in 2009:
Jan ’09 $1.71
Feb ’09 $1.74
Mar ’09 $1.69
Apr ’09 $1.75
May ’09 $1.74
Jun ’09 $1.79
Jul ’09 $1.64
Aug ’09 $1.75
Sep ’09 $1.71
Oct ’09 $1.62
Nov ’09 $1.73
Dec ‘09 $1.66
There is some fluctuation but the prices aren’t going much lower. So if I was looking at places around $200k I would figure out what the rental rates are for a similar unit. I’d also call and see if they’re willing to offer a month or two free as they usually use tricks like that to keep rental rates appearing high. Once you have the rental rates calculated your carrying cost and see how close they are. If they are close either you are going to buy it or another investor is. The market is not going to let a condo that rents for $1500 sell at a price that would create carrying cost less than $1500. Thats like someone walking up to you and asking you to buy their business that generates monthly cash flow of $1500 and you only need to borrow an amount that would give you a month payment of $1000. I could see maybe if rent’s were falling creating a lot of risk, but they’re not. Also leasing has been steady and robust at about 345 units per month. Besides there is also a sort synergy affect. The more people who move downtown then the more services and desirable it becomes. The only thing that could take downtown rents downward is if people couldn’t afford it. And they seem to be doing fine now with around 11% unemployment. And job losses have pretty much stopped. Now it’s just a matter of how long it takes to start adding jobs.
Next is foreclosures that we keep hearing about. From Miami DDA there are 22,955 condo units downtown. If you go to Realtytrac.com and check for the number of foreclosures in the downtown zip codes you get 1,536 foreclosures. That’s about 6% of the entire condo inventory. Even if a flood of foreclosures was to come, it wouldn’t affect the downtown market much.
Renter Tom,
Again, you’d rather focus on extreme cases that are used to play on your emotions than look at the true current situation. I could post cases where people are still extremely racist and use that as an argument about how America is still a racist county. But it wouldn’t be true for the majority of America.
From your article:
“I’ve heard a number of stories of people living in their homes for a year or more without paying their mortgage – and without the bank foreclosing”
The key phrase in that sentence – “I’ve HEARD a number of stories.”
What on earth does this have to do with the actual facts of Miami condos????? I mean how silly is it that your response is a guys OPINION, on a blog, about a story of ONE lady and the fact that the blog poster has HEARD of a number of more stories. Meanwhile the median home price in Irvine (where the lady lives) is actually up????
I agree with some of your overall concerns about the NATIONAL system. But all of these concerns are not going to translate into decreased prices for downtown Miami condos. So while the national system works itself out there are going to be some markets that perform below average, some will perform withe the average and some will perform better than the average. On this blog I’m really only concerned with Miami condos as I suspect are most of the other people here. If you can tie any of these arguments directly to Miami condos I’d love to hear it, but if you just want to rant about the entire system why not simply do that over at calculated risk blog where the choir will love to hear your sermon.
Renter Tom,
“Vacancy rates are high all over the country and have driven down rental rates practically everywhere even in high desirable areas of NYC.’
By the way, I tried to post this earlier but it didn’t go through, maybe it was the link. Vacancy rates in Manhattan peaked in Nov’09 at 1.84% and have gone down since and is currently at 1.54%. There were 3,700 new rental units introduced into the market in 2009. Essentially all of these units have been absorbed and vacancy is back down and rents are back up. After I got accepted to Columbia I started doing a lot of research. Unless I go to Harlem or Washington Heights I’m looking at at least $2200 for a one bedroom, sucks.
Owneratinfinity,
Saying that Icon Brickell is closing one unit a day is a joke.
1060 has been sold out when they slashed their prices to around 220 usd sqft
Gixxer 1000,
Great work as usual- I wish you where on this blog back when I was doing my research to buy my condo.
Buying at the bottom, as much as possible, was important to me, so that is why I waited to buy.
However even if the same unit as mine in my building sells for $20 per square foot less then I paid I will not be upset, because the olds are the unit would be on a lower floor without my amazing view, plus I was tried of renting a place and I wanted to have a place to call my own.
Also – GOOD NEWS – I just found out today from my accountant, that I will get the $6500 tax credit for buying for my new condo. It is dollar for dollar money, so I will be getting back the $6500 plus another $1500 that I over paid in Federal taxes last year. So getting $8000 back is the most I have ever got back from the IRS in my life, usually I have to pay each year. This $6500 credit is the most generous thing I have ever seen the IRS do in my life.
Gixxer1000,
Once again you cant compare jobless Miami to Manhattan.And if you want to get into a decent building in Miami ( I mean decent and not faux luxury with lousy tenants ), you would be paying around1,800 to 2,000 usd for a 1 bd to start.
Please go to Columbia.
If I had to work in Miami I would be clueless.
That is why people here prefer to be waiters and valets here: money in the pocket, nothing to declare ..they end up making more than working at the so called professional jobs
That report said that 40% are cash buyers which means many are finding financing.
Seems like Enzo may MAY have been incorrect when he stated that it was very difficult to find financing, if we are to believe than msnbc report.
I’m not comparing Manhattan to Miami. RENTER TOM made the comment that vacancies were high and rents were down in NYC. Since I’ve been researching MOVING to NYC I simply was saying that vacancies are now down and rents are up. How is that comparing it MIAMI????
“Again, you’d rather focus on extreme cases that are used to play on your emotions than look at the true current situation”
Well that’s conservatives for you!
gixxer, great reasearch. are you not related to RE profession at all? just a question.
carlos,
You said,
“Saying that Icon Brickell is closing one unit a day is a joke”
–> You are 100% correct about Icon on Brickell, it will take them forever to sell out the 3 buildings.
—-> Before buying my place I kept trying to work out a deal with icon (over and over again), but they never went down in price enough for me.
—-> Which was good, because the more I went there I more I didn’t like things about the buildings.
—-> the building’s common areas design (which in my eyes looks like a gay haunted house),. These common areas will date faster then other buildings normal looking common areas.
—> I liked the finishes in the condos and the building is much more upscale then my middle of road infinity building.
—-> but there was noting at icon that was in my price range and if they did lower their prices enough the only condo I could of afford would of had a very bad view, compared to the view I have now in condo at infinity
—> also sharing my pool and commons areas with over night hotel guests is another reason I didn’t like icon for me. It’s like having 100 renters that only stay for a night or two using all the common areas and not caring much so they mess them up.
—>I think the major problem with icon is the simple fact that they just built too too many condos for such an upscale condo building. I would think no one who is paying 400 per square feet would want to live in a building that had 1600 or condos and pools and gyms used my over night hotel guests.
—> if they would of keep it to 1 or 2 buildings with like 500 units or so it would be considered much more exclusive and be worth more money. However since there are so many units for sale, I would think they will need to lower their prices to $300 or less per sf to sell them.
owneratinfinity
With that $6,500 tax credit now you can fly Gixxer to Miami 1st class and seduce him on your glorious 50th floor balcony.
Makes Me Think,
You said,
That report said that 40% are cash buyers which means many are finding financing.
Seems like Enzo may MAY have been incorrect when he stated that it was very difficult to find financing, if we are to believe than msnbc report.
—> From my own experience you can get financing for these miami condos (with 20% and a good debt ratio and a good credit score etc).
—-> By checking the public records for the sales in my infinity building I see about 35-40% of the buyers are financing their condos with at 20% down and the rest are paying 100% cash.
—-> like i said before I obtained my financing with 20% down from bank of america without a problem. And I paid no orig fees and rec’d 5% interest rate for 30 years.
So if I can do it others can do it too. It’s not a big deal.
Gixxer 1000 – I was simply making a statement that even the most recession proof areas have come down in rent prices. I think you need to get more boots on the ground experience. I’ve been watching the Miami market for two years now…it is buyer’s beware in this “wild west”. I still see a lot of overpriced listings that simply don’t move except for some price declines. If you are looking to buy a place to reside in for only three years then resell, you’d be better off just renting…just my opinion, but hey, feel free to lose a lot of money like a lot of other dump people in this area.
mishka,
I work for a large Construction Manager/Contractor/Developer in DC. I’ll be studying to get my Masters in Real Estate Development this fall at either USC, UM or Columbia (still holding out for MIT and Harvard but it ain’t looking pretty 🙁
I’ve been researching the respective local markets so that when classes start I won’t be at that much of a disadvantage to the local students. Plus since I’ve moved around a lot I’ll probably stay in whatever city that I go to school at so I wanted to understand what I’d be able to afford.
RenterTom,
you are entitled to your opinion, but simple facts of life – and the math – render it baseless. All you really do is recite hearsay and opinions of other, seemingly even less knowledgeable than you, people.
DJ,
could you tell me which unit numbers in the Lexi are end units with those wraparound balconies and downtown Miami views. Thanks a lot.
Gixxer 1000 — You do a nice job with all of the research, but doesn’t it strike you as counterintuitive to suggest condos in the $0 to $250k segment have hit bottom and could even begin to appreciate when the same data you posted shows MASSIVE backlogs in every market segment above $250k?
Drew,
you said,
owneratinfinity
With that $6,500 tax credit now you can fly Gixxer to Miami 1st class and seduce him on your glorious 50th floor balcony.
—> You know you insulted both Gixxer and I with your comment, not very nice.
—> You know if you are happy when good things happens to others, good things WILL happen to you.
I TOTALLY agree with Lara
Euromanm,
02 (faces SE) and 12 (faces SW) are corner units with warp around balconies that face downtown. 01 (faces NE) and 11 (faces NW) are in the same line but 01 will only have a downtown view if you are on the wraparound part.
I’ve got an 02.
DJ,
great, thank you.
Have a nice day.