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The dues at $850/month are pretty high. If you were to rent this out you would pay around $400/month in property taxes and would also need to sink in $10-15k for appliances and clenaup. Otherwise this is looking halfway decent, especially for a cash buyer.
What you have to consider is that Blue is not a good buy: terrible location, full of renters and short sales, high HOA, middle-of-the-road to cheap building. You can’t it out on your balcony since the noise is insane and to have decent water views you need to be in line 11 or 12, since most units face north.
Nothing attractive about it.
SFBJ
Thursday, April 1, 2010, 3:17pm EDT
Royal Palm loses $143M foreclosureSouth Florida Business Journal – by Brian Bandell
View Larger The Royal Palm Hotel in Miami Beach is set for public auction after its owner lost a $142.7 million foreclosure judgment.
Wachovia Bank, as the special servicer for a commercial mortgage-backed security fund issued by Credit Suisse First Boston, won the judgment against Royal Palm Hotel Property based on a $108.4 million mortgage, plus interest and fees. The hotel, at 1545 Collins Ave., is scheduled for auction on May 27 on Miami-Dade County’s Web site.
At one point, the Royal Palm Hotel was controlled by Guy Mitchell and Robert Falor. who were the guarantors of the loan. Miami developer R. Donahue Peebles obtained control of the hotel from them in 2009 as a result of a lawsuit. A judge in that case ruled that Mitchell had committed fraud against the hotel’s interests and awarded control to Peebles, although Peebles already had a minority stake in the property.
The hotel has been managed by a receiver for most of the past year since the foreclosure was filed in March 2009.
According to data from CMBS.com, the Royal Palm Hotel mortgage is the only loan outstanding under the Credit Suisse First Boston 2005-CND1 fund. It valued the mortgage at $74 million.
More great news for the ones that believe the market is picking up…
SFBJ
Thursday, April 1, 2010, 3:43pm EDT | Modified: Thursday, April 1, 2010, 5:40pm
WSG faces South Florida foreclosuresSouth Florida Business Journal – by Brian Bandell
The litigation between Lehman Bros. Holdings and Miami Beach-based WSG Development Co. escalated with two additional foreclosure actions in late March.
The complaints target two uncompleted projects: ArtsPark Village in Hollywood and an office site in West Palm Beach.
The New York-based company, which has been under Chapter 11 reorganization since 2008, already has a pending foreclosure lawsuit over the developer’s uncompleted Prisim condominium in West Palm Beach. It also seized its Canyon Ranch residential and hotel project in Miami Beach.
On March 26, Lehman Bros. filed a foreclosure lawsuit against WSG Hollywood Development over ArtsPark Village, according to Broward County Circuit Court records. It concerns the $20 million mortgage granted in 2007 for the 4.1-acre site, along Hollywood’s Young Circle between Harrison Street and South Federal Highway.
In 2008, WSG Hollywood obtained city approval for a 25-story project with 390 apartments, 35,449 square feet of retail space, 52,500 square feet of office space and 802 parking spaces. The cost was estimated at $114 million. The developer never started construction. However, some land was donated for a charter school.
WSG Development officials did not immediately return a call seeking comment.
In Palm Beach County Circuit Court, Lehman Bros. filed a foreclosure action March 26 against WSG Poinsettia concerning a mortgage last modified in 2007 at $3.4 million. It covers the 1.6-acre site at 2609 Poinsettia Ave., which the developer bought for $3.5 million in 2005.
WSG Development sought approval from West Palm Beach to build a 20,000-square-foot office on the site, but it never broke ground.
Miami attorney Michael Woodbury, who represents Lehman Bros. in both foreclosure lawsuits, declined comment.
Lucas,
Is tehre a problem with the site? Why were all my postsm from thsi morning removed? My comment on the unit and some articles as well.
Thanks
Carlos,
The Miami News Time article was an April Fool’s joke. There’s absolutely no truth to it.
Lucas
Thank God!! That Would have been the reason to pack our bags and leave Miami..lolol
Blue as a whole sucks IMO. To many reasons to list as to why. Maintenance is $0.73/sq. foot. That is crazy!
Since everyone is posting articles from the SFBJ. Here’s one: http://southflorida.bizjournals.com/southflorida/stories/2010/03/29/daily54.html?t=printable
One word: OUCH!
BFG IV
Carlos:
You took the words right out of my mouth. I would also add: this unit has been “ridden hard and put away wet.”
I appreciate the carrera marble. But what happened to this place? Did the owner (investor?) go on a rampage? Was it not finished (note the absence of facets on the bathroom sink, no mirror in what I assume is the master bath, wires dangling from the bathroom wall, etc.) Did a squatter reside in the place?
It is a shame.
scriv
CSFB CND-2 is the real dog.
Does anyone know the story with Icon Brickell. First tower 30% off, 2 and 3 -40-50% off…..any addional discounts???? Do you know what name they use, I want to search some deeds????
Inna, your song ‘Hot’ is the hottest song on the radio and the clubs right now. love that song. Do you live/perform in Miami?
Inna,
Units were way overprices.
Tower 2 is not 40-50% discount.
It is the most expensive of the 3.
I considered Blue for the fantastic views when the HOA’s were $550 but that noise and neighborhood killed it. That same noise and click click from all the road expansion cracks must be the same at Marquis.
so i made my $310,000 offer for a 2br/2ba..(my second offer), the developer did not move off their original counter of $389,000. Really looking forward to when this TARP program ends and these guys and their banks have to start balancing their books just like i always did…maybe then i’ll be able to buy. Pretty bummed out. Looking at renting for another year. yuck.
I repeat here again, sale prices at Met 1 South Face (bay),
37 $428,000
36 $440,500 $461,000
35 $457,000
34 $384,000
33 $416,000 $394,000
32 $460,000
31 $458,000
30 $259,000 $480,000
29 $460,500 $454,000
28
27 $505,500
26 $259,000 $448,000
25 $389,000 $558,500
24 $412,500
23
22 $443,500 $372,000
21 $254,000 $235,000 $305,000
20 $390,500 $436,000
19 $437,500 $445,000
18 $377,500 $410,000
17
16 $250,000
15 $240,000 $380,500 $426,500
14 $417,000 $378,000
T-xx02 T-xx04 T-xx06 T-xx08
Geez, never seen what a foreclosure gutted luxury apartment looks like before. It’s one thing walking away from your mortgage, but to steal the showerhead and bathroom faucets on your way out is another thing.
Joebob:
I had not noticed that! The shower head is GONE.
Someone also lifted the toilet paper holder, what I assume was a shampoo and soap holding device from the master bath, the closet shelving, microwave, stove, , and the bathroom light fixtures.
I wonder how they got the microwave and stove out without being noticed? (Assuming they were there to begin with)
UNBELIEVABLE!
scriv
Bill
met 1 isn’t getting squeezed by its lender for the foreseeable future. thus, they have no incentive to budge on price.
JCrimes,
Can you share your insights who is getting squeezed in order to know when to start negotiating? Which buildings are you looking at now? Any news with Nobe?
thanks. Lara
so the $8k housing bonus is coming to a close. as is the feds purchase of mbs. today the 10 year yield crossed 4% (the 10 year is very much linked to mortgage rates). you would think that met1 would have taken an offer on the table given how the financial environment is likely to change negatively with respect to real estate mortgages in the rather near term.
my take on all of this is the one bedrooms have fallen about as low as they will go. they are affordable as cash purchases and have reached an equilibrium. but the 2B market may take a hit soon. most 2B are beyond cash purchase numbers, so they will require mortgages. which will most likely increase in rates unless the government returns to backstop the market.
i want a 2B, but seriously thinking of taking the 8K on a 1B and buying to live in short term and hold as an investment long term. some of these 1B are selling in the $125k range which i think will pretty much stay as a floor. second half of the year is still murky at best.
gables,
your analysis on 1 bd condos is spot on (prices have indeed bottomed out), but your theorizing on 2 beds is shaky.
Do you really think that cash buyers can only buy 1-bd digs?
Sounds laughable to me.
Bill,
How did you miss the last year’s opportunity on Met1? 103 condos were sold there at an average of $281/sq ft.
http://www.condoreports.com/real-estate-reports/met-1_miami_condo_9012
REAL ESTATE
Feds: Homes with Chinese drywall must be gutted
Those with Chinese drywall in their homes are being advised by federal government officials to completely remove it.
BY LESLEY CLARK
[email protected]
WASHINGTON — The federal government is recommending that homeowners with corroded Chinese drywall remove all of the material from their homes — along with electrical components, sprinklers and gas lines — to eliminate safety problems.
Guidelines issued Friday by the U.S. Department of Housing and Urban Development and the U.S. Consumer Product Safety Commission recommend that consumers replace “all possible problem drywall,” all electrical components and wiring including outlets, switches and circuit breakers, all gas service piping, fire suppression sprinkler systems and smoke and carbon monoxide alarms.
“Based on the scientific work to date, removing the problem drywall is the best solution currently available to homeowners,” said CPSC Chairman Inez Tenenbaum, adding that the interim recommendations are being released before scientific studies on problem drywall are completed “so that homeowners can begin remediating their homes.”
She said that the agency has found that certain Chinese drywall has emission rates of hydrogen sulfide 100 times greater than non-Chinese drywall. Homeowners with the suspect material have complained of breathing problems, headaches and corroded wiring and air conditioning units.
But Florida Sen. Bill Nelson, who first called for an investigation into the cases of toxic drywall and traveled to China to press its government to help consumers, said he’s troubled there’s little help for homeowners who may have to shoulder the potentially exorbitant cost of removing the drywall. The cost of removing and replacing just the drywall for a 2,000 square foot home is estimated at about $100,000.
“The studies find that the drywall is bad enough to require the stuff to be removed from houses,” Nelson said, “Now the question is: who pays for it? The way I see it, homeowners didn’t cause this. The manufacturers in China did. That’s why we’ve got to go after the Chinese government now.”
Nelson’s office says there are now more than 3,000 reported cases of toxic drywall in the U.S., nearly 1,800 of them in Florida. Many homeowners in Florida who have sought help from their insurance companies to deal with the damage say the companies not only deny the claims, but drop their policies. He’s pressing the White House to make the issue a priority in talks with the Chinese government.
A Louisiana judge ruled in March that the policy exclusions that property-insurance companies are using to deny claims don’t apply, but the insurance company has said it plans to appeal the ruling.
Still, Darren Inverso, an attorney who represented former Bradenton resident Kristin Culliton, one of the first Floridians to come forward with a complaint about tainted Chinese drywall, said he agrees with the federal recommendations. “I haven’t read anything to convince me that drywall can be treated or not need to come out of the house,” he said.
Miami-Dade County last December waived the $1,200 permitting and inspection fees for replacing bad drywall.
F35, it is safe to assume that as you move up the price chain, fewer and fewer people can be cash buyers. that does not mean they wont throw considerable cash into a purchase, but there is a world of difference in the number of people with $100k of cash on hand vs those with $250k cash available for real estate investment. remember, as you move up the chain you also get increases in HOA and taxes which take resources to cover. so if you need to partially fund through a mortgage, you very well could move from 5% interest to 6%-8%. all of this affects the price you are willing to buy at. events are conspiring to make higher priced purchases (ie 2B) more difficult without a possible price decline.
F-35 and gables,
your analysis on 1 bd condos is spot on (prices have indeed bottomed out), but your theorizing on 2 beds is shaky.
Do you really think that cash buyers can only buy 1-bd digs?
Sounds laughable to me.
—> in my building I have seen in last few months many if not all of the 2bedroons units were paid for in cash, no mortgages.
gables,
Surely there are more millionaires than billionaires and more idiots than geniuses. But there is also lesser number of 2-bedrooms being built than 1-bedrooms, so I don’t think that your logic works in this case.
owneratinfinity, i don’t doubt cash buyers exist. i do question how many exist. as long as 1B stay under $150k, you will never really run out of cash buyers. but at $250k my suspicion is that there exist far fewer buyers.
Infinity is fannie mae approved, so what is driving the cash buyers rather than mortgages? At 5% mortgage you are probably better off buying with debt and moving your cash to bonds as the yield increases (remember 10 year bonds are now at 4%) than unload your cash. can they sell out the building with cash buyers?
lara
i’m not keen on the condo buildings.
in terms of troubled buildings, i think you’ll find that most banks now are working with developers. it’s a function of how long do they want the blackhole on their balance sheet. with the worst over for most banks, there seems to be a willingness these days to allow the developer to hold on and wait for a better day. especially for those developers that could be characterized as top of the class. for example, although i don’t know anything firsthand (my related contact moved on for better pastures) you’ll note that perez has not apparently turned over control of icon. not saying it won’t happen, but i was of the opinion that it would have happened sure, there’s excptions (paramount bay is heading toward the crapper with the recently filed foreclosure…star lofts isn’t far behind…have to imagine city 24 has issues as well and the price collapse in midtown 2 is making the rent to own leases in midtown 4 look absurd).
as for nobe bay – my understanding is that the project is still stuck in the mud. the bank hasn’t foreclosed yet, and even if they do, the only realistic expectation is to sell it to a third party who has another siv months to a year of construction.
as for me…i bought a place in miami beach. very happy with it except the construction is killing me.
Rents increased 1.6% in the first quarter in Miami and 0.9% in New York. The gains came during what is usually a seasonally weak period for apartments and suggested that landlords may have some momentum heading into the peak spring and summer leasing season.
South Florida appears to show signs of stabilizing after a painful years-long slump prompted by heavy overbuilding. Rents gained 1.1% last quarter in Palm Beach and 0.8% in Tampa-St. Petersburg.
FULL ARTICLE HERE:
http://online.wsj.com/article/SB10001424052702304620304575166210220338480.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
Carlos:
Interesting twist in the drywall drama, don’t you think? The article in the SF Business Journal provided an added another troubling, though not surprising, detail: that the builders/defendants in these cases originally suggested, in lieu of total removal, remedies such as coating the walls with a sealant and, if I recall correctly, the article even mentioned installing air filters as a possible alternative remedies. Neither of these would work and I am glad the federal government stepped in and called for total removal.
One question in my mind, however, is this: have there been any stories reporting the presence of Chinese dry wall being used in any of the new condo developments in Miami?
Oops. I spoke too soon:
http://southflorida.bizjournals.com/southflorida/stories/2009/06/15/story3.html
Best regards.
scriv
i’m careful to read too much into increasing rents as a sign of strength. it is a sign the collapse has receded. many units in the past year were rented at below market prices because owners were terrified of holding a unit with absolutely no income. that time seems to have passed and rents appear to have stabilized a bit-especially the 1B. seems like the 2B may still have some drop left, but not a freefall. the uptick in rents is simply a credit to the fact we passed through the abyss and made it to the other side. rents would not stay down at those excessively low levels, so you will see an apparent rebound in price. but don’t think this is a sustainable trend. but it does bode well for recognizing the market is fluttering around its bottom.
the interesting question is what will happen to all those short sales listed on the mls? they are by far the majority of listings. short sales indicate the owner wants (or needs) out because the unit is unaffordable. how the banks process these units will have a great effect on condos during the second half of the year. thus far they have processed very few units but that approach cannot last forever since the units have carrying costs in the tens of thousands per year.
From the SFBJ..pretty encouraging, ain’t it?
COMMERCIAL REAL ESTATE NEWS FROM SOUTH FLORIDA
S. Fla. Red Roof Inns face foreclosure
http://southflorida.bizjournals.com/southflorida/stories/2010/04/05/daily10.html?s=industry&i=commercial_real_estate
Survey: Florida rural land values down
http://southflorida.bizjournals.com/southflorida/stories/2010/04/05/daily3.html?s=industry&i=commercial_real_estate
Construction spending down
http://southflorida.bizjournals.com/southflorida/stories/2010/03/29/daily57.html?s=industry&i=commercial_real_estate
Former Office Depot HQ faces foreclosure
http://southflorida.bizjournals.com/southflorida/stories/2010/03/29/daily55.html?s=industry&i=commercial_real_estate
F-35,
I read reports on the rental market a few months back that basically outlined that rents were very likely to increase around 1% starting in 2010. I copy and paste most of the information here. Of course most people tell me that because I don’t live in Miami so I’m obviously wrong and there is no possible way rents will increase.
Here is my quoted posted in February and then reposted in March:
“Apartments rents are expected to hold rather steady over the next one year with a 1.0% increase possible. From 2010 to 2011 a 2.0% increase is expected and from 2011 to 2012 a more normal 3.0% increase is forecasted.”
Here is gables response:
“You will not see $2k rentals increase in the next two years-if your lucky they will just hold steady. again, we do not have the income to make that happen. lara provides a not uncommon example of miami rentals. this is the reality of miami. gixxer i do like how you use numbers, but you truly are missing the facts on the ground in this city at times.”
So I post that rents are likely to increase 1% and I’m missing the facts on the ground and then less than a month later WSJ reports that rents actually increased 1.6%. I guess they are missing the facts on the ground also.
But now the response is that rents are only going up because they were lower to beging with. Well duh. And now the market is “fluttering around its bottom”. That’s all I said a month ago. The vacancy rate in Miami was below the national average and was soon going to start going lower. I used this a justification that we were at the bottom. After telling me I’m clueless about the facts on the ground less than a month later gables says the same thing but in more political terms.
Then magically without any actual facts the rent increases only apply to 1 bdrm apartments and 2 bdrm apartments are still dropping in rent. And again everyone here seems to only think in terms of downtown Miami condos, as if nothing else exist. If the rents in Coral Gables or Aventura start going up and now the prices are closer to want people want in Brickell where do you think people are going to go? I’ve talked to multiple UM students who rent 1 and 2 bedroom apartments in Brickell. Most of them told me that a 2 bedroom in Brickell was about the same or cheaper than a two bedroom in downtown Coral Gables and even though its farther away the can simply take the metro. More options, better finishes, better neighborhood, and better views. They ALL recommended I rent in Brickell. This is of course if I wanted to stay in condo. If I was just looking to find the cheapest rent then they recommended Kendall. I also looked around downtown Dadeland and if you wanted similar amenities as compared with Brickell then prices seemed to be about the same. Only way to save money was to go in a building that was not as nice . And every building was guaranteed a worse view and a less lively surrounding.
I don’t see how 2 bdrm rents in Brickell are going to drop when similar buildings in less desirable areas are renting at the same or higher price.
Bottom line, vacancies in Miami are decreasing and therefore rents are at minimum staying the same but slightly increasing in most areas. Prices have dropped to the point where renting covers expenses and therefore prices have no need to go lower. When its said and done I still hold that the bottom will recorded in 2nd quarter 09.
Spring Fools
Think the housing slump is over? Think again.
By Mark Gimein
Posted Sunday, April 4, 2010 – 7:54pm
Spring is the season of spring, of optimism and new beginnings, a good time for dreamy reveries and wishful thinking. Which means that it’s a good time to talk about housing.
In late March, the Treasury Department unveiled its new foreclosure relief plan. Like the previous lackluster plan rolled out a year ago, the new program is built to fail. The premise behind it is that lenders will cut the principal of at-risk mortgages and give debtors new, federally guaranteed loans for something close to their homes’ real values.
For the parts of the country hit hardest by the housing crash and the foreclosure boom, this is a pipe dream. In places like Miami (where prices are down 45 percent from their high), San Diego (close to 40 percent), or Phoenix and Las Vegas (more than 50 percent off their housing bubble peaks), lenders would have to cut loans by half to get them down to the real market values the government hopes for. There’s no indication at all that lenders, who’ve resisted cutting mortgage principal in any way, will make these kinds of reductions, and the new government plan won’t force them to.
The new foreclosure plan does invite a question that lurks in the background of any housing discussion: Have we reached the end of the housing bust? In short, the answer is no. One of the reasons the foreclosure plan won’t work is because despite recent rosy talk about housing, the housing bust is worse than ever, and even now neither banks nor policy makers are willing to confront just how bad it is.
Which is odd, because if you have been following the news from the realty and mortgage trade, you might think that it’s time to pop the Champagne corks and celebrate the end of the housing crisis. The National Association of Realtors points in its latest report to “stabilizing prices,” “steadying home prices,” and “consistent price gains” in the market—a veritable potpourri of calming language. “We are likely seeing the beginning of the end of the unprecedented wave of delinquencies and foreclosures,” declares the chief economist of the Mortgage Bankers Association.” Prices are up, foreclosures are down (we’ll get to that in a second): There’s always a reason to be happy in mortgage land.
The dirty secret of the housing recovery, though, is that in the worst hit markets—Florida, California, Nevada, Arizona, and other places where the foreclosure boom is concentrated—there’s one important number that hasn’t gotten better. That’s the percent of people who can’t pay their mortgages. Believe it or not, that number is rising faster than ever.
Consider, for instance, California. In the first quarter of 2009, according to the Mortgage Bankers Association, banks started foreclosures on 2.15 percent of all mortgages (that is, roughly one in 50). In the last quarter—the latest period for which data are available—that was down to 1.34 percent, a sizable drop (you can see the Mortgage Bankers Association’s latest report on this here).
But if you conclude from this that more folks have gotten their arms around their mortgages, think again. The number of new foreclosures may have dropped, but the number of people seriously behind on their mortgages has risen—from 4.75 percent of mortgage holders all the way up to 6.93 percent, an increase of close to 45 percent.
What’s happening here? It seems to be something like this: Thanks to some combination of government pressure, genuine efforts at loan modifications, and reluctance to seize houses and try to sell them in a dismal market, banks are simply letting more debtors fall behind without foreclosing. Think of this as the foreclosure relief paradox: A small drop in foreclosures keeps some people in their homes and helps prop up the housing market, hiding the fact that borrowers are in worse shape than ever.
Look at most of the country’s most dismal real estate markets, and you’ll see the pattern repeated. In Arizona, the proportion of mortgages that are 90 days or more past due is up 60 percent in nine months, even as foreclosures have fallen. Same story in Nevada or Florida—really, everywhere in the foreclosure belt.
In addition, where lenders have initiated foreclosure proceedings, they have in some parts of the country been noticeably slower to actually repossess properties. In California, for instance, according to RealtyTrac, a company that monitors the foreclosed properties market, banks foreclosed on and took back 12,546 properties in February, down from 18,872 the previous February (though on this the evidence is more mixed; banks also took back fewer homes in Nevada, but more in Arizona and Florida).
The effect of this strange dynamic—rising delinquencies, falling foreclosures—seems to have been to create in the worst hit areas the “stabilization” of home prices that the Realtors’ trade group is so thrilled about. A year ago I wrote that any bailout for distressed home buyers was also a rescue for lenders, saving them from being stuck with foreclosed properties they can’t sell at anything close to the face value of the mortgage.
Indeed, now we are seeing exactly the appearance of a housing recovery that lenders would have hoped for. Last year, according to the authoritative Case/Shiller Home Price Index, house prices in the Miami and Phoenix fell close to 10 percent, in Las Vegas (the worst-case scenario of the housing crash) 20 percent. Essentially all of that drop came in the first three months of the year. So in the last year it looks like even the worst markets have recovered from their housing freefall.
Or maybe not. If you’ve had the patience to breathe steadily through your snorkel and follow along on the data-diving expedition of the last few paragraphs, it’s now time to look up at the luminescent coral of the great housing market reef and consider just how much you should trust in the housing recovery.
The answer is not very much. The Realtors’ association happily reports that housing prices are rising because of tightening “inventory”—the trade term for “fewer houses for sale”—but underneath this is the scary reality that there are ever more folks seriously behind on their loans and waiting for lenders to take their houses and condos. This is something that lenders are reluctant to do because they still have no one to sell them to. The housing market looks stable only because lenders are avoiding flooding it with foreclosed properties.
Which all brings us back to the latest bailout plan. Cutting borrower’s mortgages to a level they can afford means bringing their principal down by 40 percent or 50 percent—-which means admitting how far the market has fallen and that it’s not about to recover. Lenders won’t do that. They hope that they can somehow wait out the slump and wait for prices to pop back up.
In the housing price run-up, lenders bet that prices would climb up forever. Now they hope, with similarly optimistic illogic, that prices can stabilize even as the buildup of busted mortgages continues. The first time, the lenders fooled us, and shame on them. This time? Remember the old adage: Fool me once, shame on you; fool me twice, shame on me. The mortgage bankers and realtors might say recovery is right around the corner, but shame on you if you believe that this time.
http://www.thebigmoney.com/articles/money-trail/2010/04/02/spring-fools?page=full
Carlos,
One again people are using other people opinions on a blog as the basis for their information and no actual facts. This article basically says that the overall market has gotten better, but be afraid of that scary shadow inventory that will secretly sneak up in the middle of the night an destroy the market.
Simple common sense will tell you that the argument in this blog is ridiculous. The government has been trying to prop UP prices. If you think they going to write prices down to 40% lower than current prices you’re not very bright.
When they talk about reducing principal by 40% to 50% they are talking about doing so to people who bought years ago when the market was 50% higher. If they reduce their principal by 50% then they would only be reducing the price to CURRENT prices. How would that take the market lower???
Ex.
Average Joe buys a property in 2006 for $300k. In the mean time similar properties have dropped to $150k. Average Joe is screwed because he lost his job and now has a lower paying job and his wife is working but they still cant afford the $300k. And they cant sell because other properties are selling for $150k. So they get the bank to reduce the principal to $150k to be in line with similar properties. How does that reduce prices? Houses in the area are already selling at $150k. This just means one more person in the area owns at $150k and can actually afford it so you don’t have to worry about another foreclosure. Further stabilizing current prices.
Every single piece of data in that blog showed that prices have stabilized. Then after pointing out all these pieces of data that show the market is getting better they use their opinion to say that things are going to actually get worse.
“Indeed, now we are seeing exactly the appearance of a housing recovery that lenders would have hoped for.”
“The Realtors’ association happily reports that housing prices are rising because of tightening “inventory”—the trade term for “fewer houses for sale”—but underneath this is the scary reality that there are ever more folks seriously behind on their loans and waiting for lenders to take their houses and condos. This is something that lenders are reluctant to do because they still have no one to sell them to. The housing market looks stable only because lenders are avoiding flooding it with foreclosed properties.”
If every single foreclosure property went onto the market TODAY prices would go down. But I think it obvious that even if they wanted to, banks couldn’t put all these properties on the market today. We already know that these foreclosures will work their way through the system over the next couple of years at a slow steady pace. Foreclosure fillings are already down 25% year over year.
This is the same tired old line that foreclosures are going to flood the market one day. How long before people realize that this is never going to happen??? Given the length of the foreclosure process you have to first see a considerable spike in foreclosure fillings months to a year before you see a flood of actual foreclosed properties. And the foreclosure fillings are going down. So all these people who are behind whose houses are going to flood the market will arrive at the earliest over a year from now.
Here is a blog that talks in depth about shadow inventory. It’s focused on California but the principle remains the same:
http://www.foreclosuretruth.com/blog/sean/shadow-inventory-confusion-reigns/
As you can see people have been making this argument for months. But due to government intervention and other factors its obvious that the “wave” is never going to come. But blogging about an impending wave of foreclosures that is going to send the market spiraling again draws more people to your blog.
Gixxer
I am entitled to my opinion as well as you are entitled to yours.
For someone who does not live here, does not have money to invest or has ever done in the SoFl market you seem to be very opinionated.
As I have said before, I rest my case.
This is not the statistics bureau.
It is a blog and people’s perceptions are as valuable if not more than numbers.
Numbers and false investment promises is what brought all of the country into this state.
You are bullish. I am bearish for the real estate market in Florida in the near future.
I allocate my money in big return markets. Not 5 % a year as some would consider a great investment.
Carlos, the difference is, gixxer actually posts his opinion, while all you do is cut and paste articles. The only “analysis” I’ve seen out of you yet has been the volley of insults you just launched at gixxer. Bottom line, if you have an opinion, let’s hear it. Anyone can find an random blog posting on the net and repost it here, Mr. big money investment bigshot.
You bet I am DJ.
Would never buy in that dumpy 360 in awful North Bay Village.
For the resident of Miami Beach like me, more fantastic news !!
Posted on the lead today
Closing a $30 Million Gap
Miami Beach has Another Budget Crisis Looming and it’s Going to Hurt
By Lee Molloy
When a regular person has a budget crunch and needs a few dollars to pay the pizza delivery guy, they may reach down into the back of the couch or even raid the change jar to find a few extra bucks. But it isn’t quite the same when a municipality like Miami Beach has to find some cash. With revenues dropping and costs rising, the city has to find roughly $30 million to balance their budget this year, and some very tough decisions need to be made. City officials are going to have to raise taxes or significantly cut services, which means that either residents or city employees are going to have to pay.
Commissioner Deede Weithorn, a financial expert and CPA by profession, put it quite succinctly. “Somebody is going to have pain,” she told The Lead.
Weithorn says that most people make assumptions about governmental budgets that are just plain wrong. “A budget in the corporate world is a goal, but a budget in the municipal world is a contract,” she said. “It is literally the road map of how you are going to spend that money.”
Having already cut expenses from last years $225 million budget, the city is projecting a further deficit in their revenue against expenses of around $30 million in 2011 with a gap of more than $50 million expected by 2014. Unlike a for-profit business that can run at a loss, it is illegal for a municipality to have an unbalanced budget.
“When the balance goes up there are only two choices, either increase fees or taxes, or cut what you’re paying somewhere else,” Weithorn said. “But, somebody is either putting more money in or somebody is taking less money out. There is no magic.”
According to Weithorn, the multi-million dollar gap is caused by an “increase in pensions, expenses going up, and property taxes going down.” Weithorn is estimating that this year we will see another decrease in property values, which will result in revenue from property tax dropping by roughly $15 million (last year that figure dropped by around $10 million), pension costs rising by around $15 million and other normal expenses, such as gas and health insurance, of which there is not really any local governmental control, going up by around $4 million.
Where Do Our Dollars Go?
There are three pools of money, or funds, that the government has responsibility for, and draws from to provide services to residents.
Fiduciary Funds are essentially “somebody else’s money,” the commissioner explains. One example is city pension plans. This is money that the city cannot use for other purposes, with the city acting in the role of trustee, or agent, for its employees.
Proprietary Funds are the enterprises that are run like businesses by government, including the water division, city parking and the Miami Beach Convention Center. These are all supposed to break even, and therefore pay for themselves.
Governmental Funds are the pool of cash from where virtually all of the tax-supported activities of government are accounted for. It is here that the city has the $30 million deficit.
According to Weithorn, “Governmental Funds do things that nobody else could, should or would do.” An example of what another entity couldn’t do would be “running a park system, because it wouldn’t make any money,” she said. “Nobody should [run] public safety except for government as we wouldn’t want private contractors to carry guns. And only the city should care for streets or sidewalks because people would say, ‘this is mine.’”
Saving Money
At roughly $130 million, the public safety services performed by the police and fire departments account for more than half of the city’s budgetary expenditure. With many police officers picking up six-figure incomes (often as a result of mandatory overtime) and having generous pension and benefits packages, many members of the community are asking if it is time to reign in their budget.
Public scrutiny and outrage has not been helped by some recent incidents, including one officer shooting two people in the same week and an incident on Saturday, March 27 when two young women were stabbed in the South of Fifth neighborhood. Multiple residents of that neighborhood have written letters to community activist Frank Del Vecchio complaining that when they called the police about their worries on Saturday night, and at other times, the cops did not show much concern.
“There is an enormous reservoir of goodwill for the police, but it’s being sapped by residents’ frustration at the inability of the City to protect them,” Del Vecchio told The Lead.
However, Fraternal Order of Police President Alex Bello refutes the idea that the police department is losing the confidence of residents. “Homeowner groups are telling the city manager that they support public safety, and if they have to pay more taxes they will do so,” he said.
Bello further asserts that residents’ frustrations are the result of police understaffing. He explains that even on busy weekends there are only between eight and 10 police officers patrolling the streets. “We should really have 20 to 30 officers in the South Beach area,” he said. However, “it’s the city’s well-known philosophy that it is cheaper to pay overtime than it is to hire a new officer and pay benefits.”
Bello believes that his union has been doing everything it can to work with the City on cutting costs, but will not budge on one issue — reductions in pensions. “The pension stuff is just off the table for us,” he told The Lead. “We are not going to look at it.”
Raising Money
The traditional way that the City of Miami Beach raises money is through property tax. Currently the millage rate (percentage paid in tax) is a little less than 6 percent of the value of the property. Therefore, a 1 percent raise in the millage rate on, for example, a $300,000 home, would equal an increased tax burden on the homeowner of $3,000 — an unpalatable solution to those commissioners who will be seeking reelection within the next couple of years.
According to Weithorn, last year the value of a one point raise in the millage rate would have resulted in a $23 million increase in revenue for the city. However, due to the projected fall in home values, “it will be different this year, probably less,” she said.
Although he says that implementing all of his ideas is not going to fill a $30 million gap, Commissioner Jerry Libbin, who was recently hired as the new President of the Miami Beach Chamber of Commerce has, perhaps unsurprisingly, been looking into some more entrepreneurial ways for the city to raise revenues and is asking residents to send him more ideas.
“We need to spend as much time and energy looking at potential revenue ideas as we do the cuts,” he told The Lead.
One of the suggestions Libbin is backing is for the city to sell creative advertising space. Although he does not believe that the giant murals found on buildings in the city of Miami are appropriate for the Beach, he has suggested selling space on parking blocks inside city garages. And, as many buses from Miami-Dade travel through Miami Beach covered in advertising anyway, Miami Beach should allow the SoBe Local bus to carry advertising, and share in the profits, he says.
After meeting with some Hollywood film producers, Libbin discovered why more movies and TV shows are not shot in Miami Beach, which was once an ideal location — at 15 percent, the State offers a very low tax credit to production companies, compared to the 35 percent offered in New York, the 30 percent in Louisiana or even the 20 percent in California. Libbin asked the City Commission to support a resolution that would petition the State to make it more competitive in attracting production of something other than the TV series “Burn Notice.” This “potentially gets more film business, which puts more people in hotels, raises more resort tax, gets more people in restaurants, and makes money for the city,” Libbin said.
According to Weithorn, another idea for raising cash is selling the Miami Beach brand. “If Bullfrog wants to be the official suntan lotion of Miami Beach, then allow them to be the official sponsor of an event,” and the city will pick up revenue, she said.
Although some of these ideas are likely to help with the budget crunch, most of the problem will ultimately be solved by either slashing services or raising taxes, which Weithorn believes residents can’t afford to be indifferent about.
“If you care about your quality of life, you better pay attention, because there aren’t any good options left,” she said
or even worse the lexi
Thanks DJ,
I really don’t understand the logic of people sometimes. Carlos post a million articles a day and then when you point out where you disagree with the article and why, he seems to get offended. Its like some people don’t want to even know the truth. They want to believe something and they want others to simply agree with them. And when you post actual facts that’s when they really get upset and then turn the argument toward the person delivering the facts.
What does me not living in Miami, or not having money to invest change the facts behind my argument. Do you poll to see if the authors of all the articles you post live or have money to invest in Miami??? The funniest thing is that his actual facts support my argument. It like playing a basketball game against someone and scoring more points but they think they’ve won. When you ask them why they think they’ve won they say “I won because I scored less points”.
I don’t see where I said Carlos is not entitled to his opinion. I’m simply pointing out where I think his opinion is wrong. If you don’t like it Carlos skip over it. I could care less if you rest your case. What you believe and what is reality are two separate things. I don’t see how perception is more valuable than numbers (reality). Who cares if a few people think the market is still declining if in reality the numbers show that it is not.
“Numbers and false investment promises is what brought all of the country into this state.”
Numbers didn’t get us into this, peoples perceptions did. Just how you choose to ignore numbers and rely on perception now, people were ignoring the numbers and relying on perception then. “I can’t afford this mortgage but the perception is that housing will continue to go up forever”, even though the numbers show they can’t.
Who cares if I’m opinionated. So is just about everyone here. My opinions just differ from yours, and I like to use things like facts to support them. And again why do you care if I live there or have money invested there? That seems to make me more objectionable than most.
This seems to be a recurring thing among the many bears on this site. They ignore the facts and data. They even openly admit it. Some don’t have the time to look at actual facts and other believe perception is more important than reality. Then they run to opinion based blogs to confirm their thoughts. Keep telling yourself that your winning because you scored less points, and the recent bulk buyers will continue turning an average of 27% in profit.
Carlos,
You cut-and-paste abilities are top notch. Keep up the good work!
“I allocate my money in big return markets. Not 5 % a year as some would consider a great investment.”
People that make statements like this to make themselves seem more important or successful are almost always full of shit. Plus, if that was the case, then what are doing on this site, day in and day out, copy-pasting blog postings from all over the net?
You’re so full of shit she smell is starting to permeate from my computer speakers.
Gixxer,
you are da man.
And carlos is just carlos. Nobody is taking this clown seriously.
Schriv/Carlos
In regard to your coments and to the cut and paste article-as someone who has been involved from the very begionning it is important to realize the article in the SFBJ only points out the recent CPSC initial remediation guidance in protocol for remediation-CPSC did not release a remediation protocol; it’s interim guidance. I whole hertedly agree with Allison Grant-a lawyer represnting hundreds of plaintiffs in the matter that “Missing from the guidance is removal of corroded plumbing, the HVAC, insulation, other damaged building components, along with appliances and porous materials. In many instances, replacement was not included in the interim guidance because of the absence of a direct connection to health and safety, but that does not mean these items should not be removed and replaced.” There are also fire hazards that must be looked into as well as the loss of personal property in the form of jewlery, electronic equipment, and other personal effect. We are all anticipating and can only hope and expect that Judge Fallon’s ruling to come will shed some more light to this case-Needless to say this will be another huge nightmare for Florida Real Estate.
Gixxer, how many thousand new and luxury condos have come on line in Miami in the past couple of years? most of these units are much nicer than the existing inventory and are going to rent at a higher rate than the existing inventory which set the average over the past decade. by default these units will give you a rising average for the area. but follow the rentals the way case schiller does home sales. for an individual unit, year over year, rents are not rising. you will see this if you live here. i ask the forum, is there anybody on this blog who has rented in Miami over the past two years and seen their rent increase? my suspicion is no long term renter has endured a rental hike. like myself, i have seen a drop (although that was not reported to mls like many other i suspect).
comparing brickell condos to coral gables or coconut grove is like apples and oranges. for one, there are FAR fewer condos in those areas than Brickell, and many have owner residence. the rental quality and variety is much better in Brickell unless you can get into one of the few nice and new coral gables condos. in the new construction in coral gables, rents will hold and stay higher than Brickell because they are much more desirable places to live. higher prices in coral gables will not drive up prices in Brickell-not enough units to affect a neighborhood the size of Brickell. as a side note, that metro ride will probably take you nearly 40 minutes to UM. from downtown coral gables your trip is 10 minutes at rush hour.
CDWSOLUTIONS,
Chinese Drywall is a “huge nighmare” not for “Florida Real Estate” (whatever that is), but for those people who were unfortunate to purchase a home made of it.
For Florida as a whole it’s a non-issue. Few lawyers will get rich, few developers will bite the dust, and a lot of drywall will get replaced. If anything it will create some economic activity out of thin air, and is slightly positive for the economy.
You are spitting into the wind.
You Guys forgot to Mention that with all these Scavenging & gutting of
a Nice Condo , Where’s the So call professional Management Co. &
Their Managers . Sleeping on The JOB !!
gables, you are living in fools paradise. Yeah, if you want to livein brickell, the rents are cheap. anywhere else good luck. Downtown, park west and pace park , all saw rent increases in the past 2 months. th eonly reasonwhy brickell is still affordable is because of the glut in brickell. all other areas, cheap rents are a distant memory. not only do i not get an affordable rent in the areas I mentioned, my friends are being served rent increase notices. One of my friend living in 1800 club in a 1 bed unit in line 6 is served a rent increasenotice. from $1350, he has to pay $1500 to continue to stay. He is looking for other cheaper alternatives. so please do not generalize. i get very annoyed when i read your posts. it does not apply to me or many other people. the world is not brickell.
“For Florida as a whole it’s a non-issue. Few lawyers will get rich, few developers will bite the dust, and a lot of drywall will get replaced. If anything it will create some economic activity out of thin air, and is slightly positive for the economy.” F-35
And CDWSOLUTIONS illustrates your point quite nicely:
Florida Profit Corporation
CHINESE DRYWALL SOLUTIONS INC
Filing Information
Document Number P09000038854
FEI/EIN Number NONE
Date Filed 05/01/2009
State FL
Status ACTIVE
Nothing wrong with that, mind you.
scriv
Rent increases are more than welcome!
It will help get rid of the riff-raffs who live in the so-called luxury buildings and live in units with no furniture and sleep on mattresses on the floor!
Maybe this will make biscayne corridor become a luxury waterfront corridor at last!
gables,
“how many thousand new and luxury condos have come on line in Miami in the past couple of years? most of these units are much nicer than the existing inventory and are going to rent at a higher rate than the existing inventory which set the average over the past decade. by default these units will give you a rising average for the area. but follow the rentals the way case schiller does home sales. for an individual unit, year over year, rents are not rising.”
The rent increases are for the first quarter of 2010. Rents are 1.6% higher than they were three months ago, not 3 years ago. Do you really think enough new luxury condos came on line in the last three months???
“comparing brickell condos to coral gables or coconut grove is like apples and oranges. for one, there are FAR fewer condos in those areas than Brickell, and many have owner residence. the rental quality and variety is much better in Brickell unless you can get into one of the few nice and new coral gables condos.”
That’s what I was comparing, a new condo in Brickell to a new condo in downtown Coral Gables. As a potential renter places like Merrick, Ten Arragon, Minorca, and Puerta De Palmas seem comparable to places in Brickell, only Brickell seems to be a little more desirable and has better view.
When looking at these condo buildings they all seem to be 80%+ non primary residents just like downtown. There are few units but there seems to be enough empty units that anyone who can afford one wont have a problem finding a unit.
And why is comparing these units apples to oranges. As a potential renter both of these places are close enough that I can rent at either place. They are both options on my list, so why wouldn’t I compare them. I can’t be the only person in Miami that has Brickell and Coral Gables condos as options for renting. These two places are in direct competition for renters. You’re talking about places that are 5 miles apart.
“the rental quality and variety is much better in Brickell unless you can get into one of the few nice and new coral gables condos. in the new construction in coral gables, rents will hold and stay higher than Brickell because they are much more desirable places to live.”
I don’t know if that is necessarily true. The people I’m talking to are telling me that Brickell is a more desirable place to live right now if you’re talking about condo living. Central location, more nightlife, better views, etc. So why would people pay more to live in a similar condo in Coral Gables (or Coconut Grove for that matter) than in Brickell, outside of actually working in downtown Coral Gables?
“as a side note, that metro ride will probably take you nearly 40 minutes to UM. from downtown coral gables your trip is 10 minutes at rush hour.”
Doesn’t that tell you something when UM grad students would rather spend 40 minutes each way daily and live in Brickell rather than spend 10 minutes and live in Coral gables?
Thank God!,
I somewhat agree with your sentiments. I’ve noticed that a lot of people have a serious entitlement attitude. Complaining about leaving Miami altogether because downtown luxury waterfront condos are not affordable!! I can understand the frustration of not being able to afford to live in a neighborhood that you like but sometimes that’s life. I wish people would stop buying Ferrari’s so they would decide to reduce the prices but until then I’ll stick to what I can afford.
Staring salaries out of FIU, UM, etc for undergrad are $40k – $50k plus $5k for bonus. This gives a recent graduate the ability to possibly find less desireable 1 bedroom unit in Brickell and definitely split a two bedroom with a roommate or stay in a one bedroom with significant other. What more do people want?? Were talking about one of the most desirable neighborhoods in a major metropolitan area. Its like people think these condos should be available to the average working class Joe. I’m sure as these neighborhoods fill in more affordable housing will be added west of Miami Ave and closer to I95. Until then just live in another area.
Gixxer,
Brickell empty units number in the thousands. Coral Gables empty units number in the tens. Supply and demand curves in real estate are quite local. As any realtor will tell you, location, location, location. This explains the difference in rental rates to a very large degree.
As for comparing Brickell living to Coral Gables living, its a personal choice. In my opinion Coral Gables is a superior place to live. Much more walkable with an very diverse nightlife and restaurant selection. And easy access to major highways. But where you work makes a difference. Grad students financially prefer Brickell because of the deals available over the past year-not because the area is more desirable. But its the law students who tend to prefer Brickell because they do not commute every day. Many other students who work late hours daily in the labs prefer to live closer. Again just personal choices i guess.
“The rent increases are for the first quarter of 2010. Rents are 1.6% higher than they were three months ago, not 3 years ago. Do you really think enough new luxury condos came on line in the last three months???”
I think new luxury condos completely dominate the Brickell rental market and downtown. If i were to rent in the area, it would be in Icon, Met1, Infinity, Plaza etc rather than Vue, Club, etc. There is a difference in the rental rates for those buildings.
slater,
you can get annoyed all you want. i say the areas i follow are not rising in rent. you say the areas you follow are rising in rent. deal with it. Both of us are right. 1800 club only has one 1B listed as a rental (68 days on the market), so right now the supply curve is in the landlords hands. but there have been several units rented below $1500 over the past few months. at this point in time you have little leverage. in brickell and other areas there are far more units availble for rent-that is where i can win. much of the available supply can be skewed due to when a building was opened. at times my own building has gone from zero units available to 20 units available in a couple of months. you pay a price based on when your lease is due. you think 1800 club will play hardball once paramount comes online?
gables,
Would you please tell me which buildings you are following where rent is decreasing?
If someone – maybe Mr. Lechuga himself – could update situation with Icon Brickell (rents uptake and sales), then the situation will become much clearer. Since almost all Brickell vacancies are in Icon, once those buildings fill up, “cheap” Brickell will become history for good.
Lucas, can you give us some info about that?
Reasonably credible anecdotes, rumors and hearsay would work too.
gixxer – was that dig meant for me?
” somewhat agree with your sentiments. I’ve noticed that a lot of people have a serious entitlement attitude. Complaining about leaving Miami altogether because downtown luxury waterfront condos are not affordable!! I can understand the frustration of not being able to afford to live in a neighborhood that you like but sometimes that’s life. I wish people would stop buying Ferrari’s so they would decide to reduce the prices but until then I’ll stick to what I can afford”
someone else called us riff raff. but we are the ones who prevented you landlords from going into foreclosure when the days were tough. Our small rent helped you a lot. now you are calling us riff raff? you ungrateful person.
gables, no problem. paramount will have no effect . the 1 beds in paramount are around 1500-2000 sf. they are in a league of their own. when they eventually sell, it will be for rich people who may not rent it out and use it as a second home. if they do rent, 1 bed in paramount will go not less than $2000. who am i kidding. i cant even afford 1800 club and you are joking with me right, when you said paramount is opening soon. then what?
Concur with Gables #52. Coral Gables is far superior to Brickell (location, restaurants, shopping, walkability, parks & a better demographic). As Gix says, “views” may be better in Brickell, but views are overrated and after a while you don’t even notice the view.
slater,
It was partially meant for you and also gables. gables made a comment about leaving Miami because of Brickell rent. You keep making the comments about how the party is over for young professional. If the market is still open to recent undergrad salaries I’m curious about how cheap you want it to be. You can rent a two bedroom at Camden Brickell for $1500. Get a roommate and split it $750 a piece. That’s what young professional do in NY, DC, LA, Boston, Chicago, etc. People complain about pay so much here and then turn around and act like they deserve more than other places. With better pay here in DC I still can’t afford to live on my own downtown without a roommate either, unless I go to a less desirable area.
I understand how you feel but it seems like both (tenant and landlord) benefited from the situation. The landlord got some needed cash flow and the tenant got subsidized rent in a condo they can’t afford. Its not like you were doing them any favors and they somehow owe you.
I wouldn’t take offense to the riff raff comment. If you’re not the type of person to sleep on a mattress and throw trash off a balcony while living in a nice luxury condo then it obviously doesn’t apply to you. If you are that type of person then being called riff raff is the least of your concerns.
slater #47 — Your small number of examples doesn’t mean much. A lot of the rent-increase notices going around are a ploy by the flipper-owners to get their current residents out of the units so the flipper-owners can list the units on MLS and try (again) to unload them (as they had planned to do all along, before being forced into the rental game). There’s simply no way Miami rents are spiking by 10-20% right now.
——
Gixxer 1000 — Why is it that when you post statistics, they’re “facts,” but when others post statistics, they’re just “opinion”?
The information in the article Carlos posted above about foreclosures dropping while serious mortgage delinquencies have INCREASED is a real, nationwide statistic/fact. Do you dispute this? Do you dispute that it might be more than a teeny-tiny problem for the r.e. market that people are increasingly having trouble paying their mortgages?
Just in the spirit of fairness, since we’re always arguing, I just wanted to say that I agree 100% with Gixxer 1000’s latest post (#58).
Drew,
view are not “overrated”.
If your view is an empty parking lot surrounded by concertina wire and walls plastered with gangsta graffiti – you won’t stop notice it for as long as you keep opening your eyes in the morning.
You are one funny fella.
Drew,
“As Gix says, “views” may be better in Brickell, but views are overrated and after a while you don’t even notice the view.”
As a side not that attitude seems to sum up why I think a lot of people don’t enjoy Miami. Instead of taking the time to enjoy the benefits they get complacent and devalue it because to them its now common place.
I think we may just be coming from different perspectives. The people I’m talking to are younger and to them Brickell is an up and coming area with a lot more to do. I haven’t spent much time in Coral Cables except at the UM campus so I don’t know, but they told me nightlife in Coral Gables was nothing to write home about. I got the impression that Coral Gables would be better once I had kids to raise. I think the kind of person that is attracted to a one or two bedroom condo will also be attracted to Brickell over Coral Gables, but I don’t have any statistics that just my opinion.
Gixxer, I have to assume Luchas has accurate numbers on his site and my interpretation is correct. If you go to the rental page and scroll to the bottom, you can click on $/sq ft for condos. The titles say sales, but I assume these are actually rental bid and sell prices, since you dont sell condos for $2 a square foot! Luchas can you please confirm?
Scanning the graphs for the sell (not the bid) curves, I see essentially flat lines over the past year for Plaza, Emerald, Brickell on the River North, Axis, Met1 and 50 Biscayne (actually seems down). Going to Coral Gables Ten Aragon has a slight increase and Minorca is essentially flat. Considering the scatter, none of the curves should really be considered up or down-just flat. Over the course of the entire year.
Slater, looking at 1800 club the trend appears down over the year. There are signficiant spikes in Feb and March which I cannot account for, since there are similar numbers of units on the market and rented vs year before. Did the economics change drastically? Did some of the units rented have significant value (penthouse, etc)? I dont know. But the average price to rent in that building has been on the decline over the past year, although I would still say its almost flat on average.
These are Lucas’ numbers, and I only draw your attention to them.
Gixxer,
Brickell is slowly moving up in the entertainment of its residents, but you will find limits to its appeals today. Downtown Coral Gables on the Miracle Mile (walking distance to many of the new condos in the area) is a very established location with 20+ restaurants, 2 large bookstores, 4+ coffee shops, multiple bar locations, etc. The community, particularly around UM campus, is not nearly as vibrant. Downtown Coral Gables is great. Brickell will be there in due time, as Mary Brickell Village serves as a sort of anchor. But they have a long way to go before they exceed what is available in downtown Coral Gables today. It is livable and walkable today! IF you go to UM you should seriously check it out.
F35, there are only a small percentage of Brickell units that have a “view” worth paying premium on. Little bit better for units along the Biscayne corridor. But for most people its just an added luxury after a few months (unless you are on the beach). People are just too busy with other things to stop and smell the roses. For the most part you get the same view in Brickell, Coral Gables, Dadeland, etc. Partial sky and the side of an adjacent building.
Joe,
If they wanted the tenant out and their lease is up why not simply put them out instead of raising the rent giving them the option to stay. With the vacancy rate decreasing and rents stabilizing I’m sure a few of the people renting at lower prices are going to try and test the water to see if anyone bites. As gables pointed out in another thread it makes more sense to leave a good tenant in a unit instead of kicking them out over $100 a month. I lose $150 on my rental property but the tenant takes care of the lawn maintenance and minor repairs. Once you factor in tax benefit its not that big a deal. But once that difference starts to hit closer to $300 a month and I know I can get another tenant in a short period I’m not going to be as lenient.
As far as statistics where did I dismiss the statistics that anyone posted. I do not dispute the number of delinquencies nationwide. I have already addressed this but it was probably in one of those post that you actual have to read and didn’t have time for. Here is my thoughts on the delinquencies.
Most reports are quoting 5 – 7 million. I’ll use the 7 million number. If you look you see that of this 7 million (of proposed shadow inventory) 1.2 million are currently in foreclosure. Delinquent loans represent 5.5 million and REO’s represent 900,000. Most analyst are working off the assumption that every single delinquent loan will ultimately become REO. This has NEVER happend and is very unlikely. I don’t know if you noticed but job losses have stopped and we have started adding jobs. A year from now more people will be back working.
If you figure 50% of the delinquent loans (conservative figure) become REO’s then your looking at ultimately at about 3 million homes. Given processing times for these homes and the fact that the rate of foreclosure fillings are decreasing it most likely that these homes will hit the market spread out over the next few years. I seriously doubt that a large portion of these homes will hit the market all at once. This will probably slow the recovery and slow new home builds for a while. Nationwide we have about an 8 month supply of houses.
Now lets switch gears to Miami specifically. Foreclosure fillings are down 33 percent. If the number of delinquencies are going up why would foreclosure fillings go down??? Banks are realizing that foreclosure is not the route to go. It’s quicker and cheaper to simply short sale.
“Lenders now know that a foreclosure action will take 18 months and at least $100,000 to complete in South Florida, which is three times longer and twice as expensive as back in 2007 when the crisis first began. Once the bank owns a troubled property, the residence usually sells for about the same amount as a comparable short sale, which can be completed in a fraction of the time. ”
The HAFA program just started April 5th I believe which should also help grease the wheels. These short sales are going to be at market prices. So basically we’ll have an inflated supply for a while. Think about it as these houses change from one owner to the next we still aren’t creating much new supply. Where do you think all the people who lose these houses are going to go???
Foreclosures don’t cause price declines. Price declines cause foreclosures. Regardless of whatever supply you have there is a bottom. People will spend a certain amount of their income on housing if there are 8 or 20 months of supply. And investors want to make decent returns. We’ve seen that now with rent. You can argue if they are going up or not but they clearly have bottomed. So if a homeowner doesn’t want to buy the property then an investor will.
gables,
As far as rental information you not looking at the data right. Were talking about rental information from only a couple condos per month. Click on the button that lets you look at all the recent rental prices. Using your 1800 club example with slater you’ll see that a fully furnisher 2/2 with waterview was rented for $3000 in Feb and one of the larger corner 3/3 units was renter for $3200 in Mar which accounts for the rise.
If you want to look at price trends looking at average price per square foot isn’t going to tell you much when the selection of what is rented varies so much from month the month. The best way would be to look at similar units over time. For 1800 club I would say that overall prices are flat.
Were talking about a 1.6% increase in the first quarter for all of Miami apartments. No one is really arguing that rents are raising much. Your talking about maybe $20 a month. Realistically one at one place rents go up $100 and another place rent goes down $80 so the overall average is slightly higher. I think the point is that rents are not dropping on average.
Gixxer, I look at the data fine. Fully aware of the fact that there are only a few units rented per month. That is just the data. The fewer the data points, the larger the standard deviation is to be expected. But look at all the condos i listed over the course of a year. There is quite a bit of consistency in the levels of the rental prices nevertheless (discarding months with no sales)-the variability washes out over time. As i pointed out previously, in 1800 those two months most likely had an outlier influence the results-comes with the territory of small data sets.
I agree with you the best way to analyze the data is same units over time-mentioned that in previous post regarding case shiller. but i’m not in the real estate number crunching business so i’ll leave it up to you if interested 🙂 very interested in seeing trends like that for buildings in miami.
Judge Awards victims of Chinese Drywall $2,607,129.99
in a judgment against Taishan Corp.
Today is a monumental day for the many, many families that have been plagued and who’s lives have been turned upside down as the result of tainted Chinese Drywall that was installed in their homes. Judge Fallon’s ruling will certainly set the stage and set the protocol for the remediation and removal of the Drywall, and finally allow the process of healing to begin. While there are still many questions, including who will end up fitting the bill for this weather its the insurance companies or better yet the Nation of China, at least there is some clarity for these families who will expect to collect.
Here are the Highlights of Ruling
The total amount of the Final Judgment against Taishan for the
seven families is: $2,609,129.99 based on an average cost for
repairing the subject homes in Virginia at $86 per square foot.
Damages were based on the following remediation protocol:
* Removal and replacement of all drywall in the home;
* Removal and replacement of all electrical wiring (it is not
feasible to clean wiring to render them free of risk of future
failure);
* Removal and replacement of all copper pipes in the home;
* Removal and replacement of the entire HVAC system;
* Removal and replacement of all insulation in the home.
* Replacement of most appliances (particularly refrigerators);
* Replacement of electronics, such as TVs and computers and
anything with a circuit board;
* Replacement of carpet must be replaced (not cost effective to
clean and store);
* Replacement of hardwood and vinyl flooring (hardwood
flooring has been damaged by virtue of the heat/humidity);
* Replacement of tile floor unless it can be properly protected
during remediation;
* Removal and replacement of cabinets, countertops, trim,
crown molding and baseboards;
* Removal and replacement of all bathroom fixtures;
* After removal of all drywall, property must be clean with
HEPA vacuum, wet-wiped or power-washed and allowed to air
out for 15-30 days;
* Property must be certified by an independent engineering
company to certify that the remediated home is safe; and
* Temporary housing will be necessary for 4-6 months.
Judge Fallon denied damages for diminished value as it is too
speculative at this time.
CDWSOLUTIONS:
Thanks for the update.
I am actively building a home and, I admit, when the stories about Chinese drywall first surfaced I was all over my contractors because I wanted nothing to do with the junk. I have been watching these cases as they developed. I have not read the decision yet. Should be a good read.
It strikes me that the protocol the court adopted – – and I know nothing about this stuff – – sounds similar to that used for asbestos: rip it out, “disinfect,” replace with substitute.
But one problem here for the real estate market created by this ruling is that the property has to “air out” for at least a month, cleaned with HEPA vacuum or power washed after the removal, potentially slowing down the transition of many of these properties from investors/owners financially underwater to bona fide purchasers for value. Right? What can you do?
I would note however that a big problem for the plaintiffs could be recovering the actual damages from the defendant because, after all, the defendant/respondent is in CHINA. Although the plaintiffs have a victory to cheer about – – it was a default judgment, meaning that the court rendered its decision in the absence of the defendant/respondent.
The other problem I see is that this judgment applied to a class of plaintiffs from Virginia. As the other plaintiffs’ cases from other states are stacked/piled on, evaluated and damages awarded – – the respondent may choose to go out of business or just “disappear” rendering collection impossible. Hopefully this will not happen, but it could.
For those interested, here are a few links to the relevant articles concerning the case.
http://southflorida.bizjournals.com/southflorida/stories/2010/04/05/daily48.html
http://www.cbsnews.com/stories/2010/04/08/national/main6375330.shtml
Great post.
scriv
Dear Scrivner,
So, what about the newly built condos in Miami Brickell and downtowon? Are they tainted with the Chinese dry walls and going to pose big problems in the future? Let us know about it. Thanks
What Do You Think:
I don’t know if there is a drywall issue in all/any/some or a few of the new condos built downtown.
Hopefully not, after all, the condo associations have enough problems to deal with. Don’t you think?
scriv
Re: Chinese drywall.
Does anyone know if there’s a list floating around of condos in Miami with confirmed chinese drywall? I think over the past year or so I’ve read articles here and there that might have said some building or another had it, but I don’t remember which ones. It would certainly be helpful for people who are in the market, and would save them the money of having to have their place tested, as I did.
Thanks Scrivner-appreciated, as I have been involved in this since October 2008 and have seen it all, including all the carpetbaggers trying to peddle their quick fixes…FYI people there is buildings with the drywall throught Florida…INCLUDING MIAMI-and I at this time on this Blog for the sake of not exposing my clients-will not share the results of my years of research and Screenings. As far as the potential slowdown, what about how slow it took for my clients to await at least this ruling-30 + days is nothing, to wait, home can still be marketed, and once “fixed” closing can take place.
DJ;
I doubt that there is a “go-to” list of condos in Miami with confirmed Chinese drywall issues. My guess is that HOA’s, battered as they are by financial issues, have kept that information protected by nondisclosure agreements. That is how I would do it.
As I said in my earlier post, hopefully none of the new Miami condos are affected by this issue.
But……a recent South Florida Business Journal article, dated June 12, 2009, reported that one Miami condo was facing Chinese drywall issues. And this article also reports that a condo in West Palm called The Whitney notified its residents of a Chinese drywall issue.
Where there is one, unfortunately, there are bound to be others. Right?
Here’s a link or two:
http://southflorida.bizjournals.com/southflorida/stories/2009/06/15/story3.html
http://www.wpbf.com/news/19696382/detail.html
http://blogs.browardpalmbeach.com/juice/2009/06/the_whitney_west_palm_beach_chinese_drywall.php
http://findarticles.com/p/news-articles/palm-beach-post/mi_8163/is_20090610/whitney-condo-testing-chinese-drywall/ai_n52017523/
And of course, the investors/flippers appear to be trying, once again, to cash in on the game by purchasing properties with Chinese drywall issues and then flipping them on unsuspecting/uninformed/unsophisticated buyers without fixing them. (http://www.newsguide.us/business/insurance/The-Chinese-Drywall-Complaint-Center-Warns-Buyers-To-Avoid-Toxic-Drywall-Homes-In-Florida-US-Southeast/) Makes me wonder/concerned about the ability of all those bulk purchasers to turn a profit if, God forbid, a Chinese drywall issue arises in one of the bulk purchases.
Best regards.
scriv
scrivener,
The Whitney sold in bulk for $24M in February 2009. The Chinese drywall issue was reported later that year in June. Ouch! I wonder if the investment group had any recourse.
http://www.bizjournals.com/southflorida/stories/2009/02/16/daily7.html
Lucas:
Maybe yes, maybe no.
The most definitive answer I can give you is: “it depends.”
I am sure that whom ever it is that heads the bulk buyer group was not pleased when the Chinese drywall issue was discovered. Somehow “Ouch!” just doesn’t quite cover it.
($170,213 a unit + carrying costs + cost of completing the unit (floors, etc., not installed by developer) + cost of Chinese drywall repair) – anticipated resale price = profit?
scriv
They will…..
CDWSOLUTIONS:
The article is more properly a note for perspective buyers. After all, if you watch NCIS you know:
Rule #3: Don’t believe what you’re told. Double check.
scriv
Talk about SCREWED, and they didnt even get a kiss….
And a note for Realtors…
Realtor named in CDW suit for lying about disclosure in sale of contaminated property.
http://www.heraldtribune.com/article/20100412/ARTICLE/4121008