New Miami Condos – Closing Rates for February 2009
February 8, 2009
by: Lucas Lechuga
It’s been a few months since my last Miami condo closing rate update. The percentage of closed units for 25 major condo developments are provided below, starting with the first development to begin closings. Four condo developments have been added: Icon Brickell, Everglades on the Bay, Infinity at Brickell and Epic. You’ll find these towards the bottom of this post.
Below, you will find the date that each condo development began closings followed by the number of closed units in each condo development:
With the exception of Onyx on the Bay and 50 Biscayne, the first group above has remained unchanged. Onyx on the Bay was able to close one additional condo while 50 Biscayne was able to close two.
Quantum on the Bay and Plaza on Brickell once again were able to show a decent improvement in their closing rate. Quantum on the Bay closed an additional 14 condos while Plaza on Brickell was able to close 21. 1800 Club did not have any new closings but I did find another deed that had been recorded twice. This is the reason why the total number of closed condos in this update is one less than the total stated in the December 2008 post for 1800 Club. It needs just 7 more closed condos to hit the all-important 70 percent mark.
As a result of the 60-unit bulk sale, Marina Blue showed the most improvement of the above five condo developments since the last update. I did, however, find re-recorded deeds for Marina Blue that I had previously missed. The developer of Marina Blue has now closed around 82% of the total number of units.
In my opinion, the five condo developments above are all likely candidates for some sort of bulk deal taking place in the future. Met 1 was able to close 7 additional units, Asia 2, 900 Biscayne Bay 13, 500 Brickell 17 and Axis 8. As a result of the new Fannie Mae guidelines, it is not likely that we’ll see significant improvement in any of the condo developments that haven’t thus far reached the 70 percent mark.
Above, you’ll find the four newly added condo developments which began closings within the past 3 months. Timing could not have been worse for these four. They’re going to need to find a plethora of cash buyers who are willing to pay dated prices. Ivy at Riverfront, which began closings back in June 2008, was able to close 14 additional condos since the December 2008 update.
The bright side is that the condo construction cranes of Miami are gone. The cranes that remain are for commercial developments. Marquis and Paramount Bay, which should begin closings within the next 3 months, will be the last of the newly constructed condos to hit the market in Miami. It does appear, however, that Met 3 has begun to lay its foundation. Hopefully, the condo market will reach some sort of equilibrium by the time that development has been completed.
Disclaimer: The above closing rate information was derived from public County records. There can be a 2-3 week delay from the time that a closing occurs and the time that the closing is recorded. The information above is not deemed 100 percent accurate as a result of delays in the recording of deeds and deeds being re-recorded.
They made available 10 years supply (2003-2013) in 5 years (2003-2008).
So only 11,000 flats in the greater downtown area out of a total of 22,000 should have been sufficient to satisfy the end users and 2nd home seekers.
The excess 11,000 are now being held by Developers, Investors and Bulk Buyers. If half of these 11,000 flats get picked up by the bulk buyers, then the rest will belong to the investors. That may bring some sort of relief or equilibrium to the market. But the question is are there enough bulk buyers to absorb 5,500 units?
If no bulk buyers are involved, this excess inventory will take upto 2013 to get absorbed by end users and 2nd home seekers. That is why it is paramount that some or at least half of these flats get picked up by bulk buyers. They can resell after 2013 for double their investment as there will be zero new construction until 2013 and inventory should be down to 6 month levels by then.
Individual investors who can hang on to thier flats until 2013 by either enjoying them meanwhile and/or renting them out periodically may come out at least breakeven if not a profit. 2013 is still 4 years away. But I think Miami condo market will be 180 degrees away from what it is now by then.
very impressive for the Plaza on Brickell.
Many units are leased by developer also. I heard that the first tower is sold.
The second one has few more units left. They opened later.
Because of the superb location.
REAL ESTATE RULE: location, location, location
Is AJ on record calling the bottom of the market in 2013? Seems like a big departure from previous posts.
AJ said: “They can resell after 2013 for double their investment”
– I really needed a good laugh this morning! 🙂 Thanks for the certainty AJ….gotta love the ignorant wishing. You really ought to buy more……instead of selling now. Put your money where your mouth is.
RT,
But really, at this point if he hasn’t sold, does it really matter?
Just saying, let’s say for some unimaginable reason you owned outright one of these units today, Monday, Feb 9th 2009.
What would you do?
Seems at this point if you own it outright you may as well hang on to it.
If it’s mortgaged then it’s tricky, feed the alligator?
Muir – Why hold onto the dead dog? If you lived there then it may be a different story since there are additional factors to consider.
You may be right, I’m not sure.
I don’t think that the argument of fully absorbing units has much relevance. Once most of these buildings have sold 90% of the units (whenever that may be) then we will be in good shape. the other 10% doesnt really matter because you always have left over supply. if we reach the 90% mark then that means that the economy has turned back around, confidence is back, and a bottom will have been reached. all we really want is a true bottom so that we can being to have a normal business cycle. trying to figure out when we will absorb all these condos is irrelevant. and as I’ve said before, thanks to our friend inflation I think that when things start to pick up they will pick up fast.
Hey AZ88 (if you are still around):
No commentary, just the numbers! I would not want to further disparage your sacred white cows at Related, so enjoy….
December 2008: 500 Brickell – May 14, 2008 – (196) 30.96%
February 2009: 500 Brickell – May 14, 2008 – (213) 33.69%
70% of 615 units = 450 units. 237 more closings and 500 Brickell will be at 70%!!!
At 8 closings per month, they should get there in 24 yrs. and 8 mos. October 2033!
Just in time to demolish it for a new structure!
To their credit, 500 Brickell is doing better than that thing across the street:
February 2009 Icon Brickell – November 18, 2009 – (15) .084 % ROFLMAO!
Stalingrad I, II, and III should be 100% full in 84 years!!!!
Raffi – I don’t doubt inflation will come in the mid-term to long-term as a consequence of bad federal government policy, but I see it more as weak dollar then through economic expansion and demand caused inflation. There is a difference and that affects whether these condos get absorbed by end users or not. We are a long long long way from end users making up the majority of owners in many of these projects. The worst is yet to come I’m afraid.
RT, I definetly agree that its going to get worse this year (by how much is anyones guess). where i disagree is if end users buy the properties or not. If someone buys to live in it or buys to keep as a vacation home it really doesn’t make a difference. as long as they are buying for the long term and not to flip or short term gain. those days are obviously long gone. How the dollar is still strong is amazing to me, there is no fundamental reason to why it should be. I guess its like the market, you just cant predict it. I am hopeful that next year this thing will turn around and start a strong upward trend, and I don’t mean condos down here but the economy as a whole.
Un-Related: well you compare 500 brickell with other buildings. You do the same mistake developers did, they built and hoped that everybody will make money.
Just few did.
500 brickell sucks. has building in the front plus location is horrible.
no wonder why is doing so bad.
see KIA cars are cheap but i would never drive one.
same is with condos. some people will prefer one building and leave other empty.
some building will just do fine, some will be disaster. thats the way the life is
How much per unit are these going for? I am so confused.
Lucas, you forgot 100% of the units in Jade have sold. Can you post that closing rate? We all know that building stabilized.
Florida land boom ended 1926. I wonder what what the AJ of 1929 was saying. Just hold on until 1933….
Does this legal argument sound familiar?
http://southflorida.bizjournals.com/southflorida/stories/2009/02/09/daily11.html
Rather surprised to see so many closed at 900 Biscayne since they were pretty high priced in pre-construction. Think if I had several hundred units for sale in a building I would have signs and banners but I don’t see any in of these buidings.
some buildings are doing great but some are about to go under
i have been impressed with the closings at Plaza. I do like the building and location. But closing rate is not of highest importance to me. What will be the delinquency and foreclosure rate on the building in another year? That will describe the true value of the site.
gables: i live in plaza. most of people in the building are wealthy. many wealthy people from south america, northern USA and europe bought a vacation homes. they bought in cash.
i am serious not so many average guys here. and it is easy to rent it out, they have a waiting list for rentals.
Do a public records search for buildings like Plaza on Brickell. Some of the liens are are for assessments of a few hundred dollars. Makes you wonder how many liens will be placed when they have to do major repairs. How do these people not have the ability to pay a few hundred dollars? Scary.
Raffi – I would consider vacation home buyers as “end users”. My concern is that non-end users are simply going to put the units back on the market in the near term so selling to non-end users doesn’t really affect absorption.
Luca,
Thank you very much for this very interesting information.
Something that always surprise me as a real estate broker is how easy it is to become an expert on the Internet.
You cannot mix and match the buildings nor the locations. You have some buildings who were poorly built, or built in a not so nice location. They will just become affordable housing and we badly need that. That will be good for the city.
Some other are nicely built in nice locations and I bet that many people will love to live there later.
If you witness the changes happening around Margaret Pace Park with all these new buildings, you will see that the nicely built will fare very well. And the not nice will bring enoug hpeople to justify shops, services, restaurants, etc.
What will suffer will be the older buildings, were people will now negotiate prices and we will get more options for affordable housing.
So 2013 or 2033 like somebody said ? I don’t know. I just know that you should focus on buildings with intrinsic qualities and nice floor plans and you should do just good in the long term. You just have to do your homework.
I didn’t want to name any building here. I respect Luca’s work and don’t want to bring him any type of problems.
Best regards.
FD
I don’t understand why Raffi, RT, Gables say that absorption of the excess inventory by end users does not make a difference. It will take the inventory off the market for a quick stabilization and quicker reaching of the bottom.
H2o, I did not predict bottom in 2013. In the absense of bulk buyers, yes, ofcourse, it will take that long. But if the bulk buyers pick up at least half the excess inventory (to the tune of say 5,500 flats) by the end of this year or mid next year, and the remaining half would remain with individual investors who can afford to hold on to them for 3-4 years, we can precipitate a bottom.
As someone mentioned, it is not the closing rate but the ability of the building to survive by way of regularly collecting HOA without default. Exactly, If my theory holds good ie. out of the 22,000 flats, half are owned by end users, quarter by individual investors with money and the other quarter by bulk buyers, all 3 parties will have the capacity to pay the HOA’s and thus will ensure the strong survival of the building.
So lets hope for the formula 50% End Users + 25% Individual investors + 25% Bulk Buyers.
RE: Lucas’ comment on Wind suit:
Lucas, as jcrimes and a few others ably pointed out, suits like this will go nowhere. Please update us on the case, but even a HLS-YLS double-team will not get much mileage on this one — and as I mentioned earlier, even if Plaintiff’s win the suit, how do they expect to collect? The entity they are suing don’t have the money…
fairkim — they expect their deposits back. Deposits are typically held in escrow.
The “economy sucks” tactic is not going to get these people out of their contracts. Not only is the legal argument misplaced (the economy is not an “Act of God” rendering performance impossible), it will strike the courts as grossly unfair. Not to mention setting a terrible precedent.
I predict that even if these opportunists win at the trial court level (unlikely), the appellate court will reverse. What an awful lawsuit.
Seems the posts just miss the big picture.
You are all talking about the concrete barriers that will stop the German tanks (1939) meanwhile the faint sound you hear is the Luftwaffe overhead.
These condos are not sold in a vacuum.
Just exactly how are you going to sell these things if we end up in a depression?
Unlikely? Well, how about ‘a prolonged deep recession?’
How unlikely is that?
Because I put the last at about close to 100%
Un-Related,
Yes, I did take a look at the numbers. What you fail to mention is that 500 Brickell had the second HIGHEST number of units closed (excluding the Marina Blue bulk sale) of all the new condos listed since the last update.
Rooting for the failure of a building and its developer says a lot about you…. The only one being disparaged is yourself.
No commentary, just the numbers! I would not want to further disparage your sacred white cows at Related, so enjoy….
December 2008: 500 Brickell – May 14, 2008 – (196) 30.96%
February 2009: 500 Brickell – May 14, 2008 – (213) 33.69%
70% of 615 units = 450 units. 237 more closings and 500 Brickell will be at 70%!!!
At 8 closings per month, they should get there in 24 yrs. and 8 mos. October 2033!
Just in time to demolish it for a new structure!
To their credit, 500 Brickell is doing better than that thing across the street:
February 2009 Icon Brickell – November 18, 2009 – (15) .084 % ROFLMAO!
Stalingrad I, II, and III should be 100% full in 84 years!!!!
Un-Related,
Yes, I did take a look at the numbers. What you fail to mention is that 500 Brickell had the second HIGHEST number of units closed (excluding the Marina Blue bulk sale) of all the new condos listed since the last update.
Rooting for the failure of a building and its developer says a lot about you…. The only one being disparaged is yourself.
FD-Miami-Real-Estate,
You have a remarkable talent for writing entire paragraphs that don’t actually say anything. You should get into politics.
“You cannot mix and match the buildings nor the locations.”
Hmmm. Insightful….
“You have some buildings who were poorly built, or built in a not so nice location. They will just become affordable housing and we badly need that. That will be good for the city.”
Well, that’s certainly one take on it…
“I just know that you should focus on buildings with intrinsic qualities and nice floor plans and you should do just good in the long term. You just have to do your homework.”
“Homework”, floor plans and “intrinsic qualities” (whatever the hell that means). Who knew it was that easy?
P.S.- I know the definition of the word intrinsic but think that you use it to obfuscate. I don’t think you actually know what the hell you are talking about.
Joe — I am considering renting at Plaza. Do you have any complaints about the building? How is the elevator in the morning? Any issues with the garage, internet, hot water, or anything like that which wouldn’t be readily apparent on a tour? Thanks!
AJ, i never intended to say that absorption by end users will have not effect-maybe just a miscommunication. end users are required to salvage the condo market-not investors, speculators and renters. a major problem will arise, however, if end users are unable to acquire financing through the fannie (and similar) programs. note investors are not eligible for fannie anyway.
without financing available, the average good credit end user will not be able to buy a unit unless it crashes in value. we need end users, like myself, more than ever. but the forces are aligning against poplulating miami condos with a strong working class who will live and support the area year round. small local shops (coffee, eatery, etc) will not thrive with rich foreigners who visit a couple of months out of the year.
AJ- I said “full absorption” doesn’t matter and that once we reach a 90% level that will indicate we are in a healthy market.
FD- what the hell are you talking about? worst written paragraph I have ever read. looks more like you wanted to promote your website.
AJ – I never said what you said I said. Why do you like to put words in people’s mouths? End users are those people who don’t plan on just putting the unit back on the market in the nearer term.
Miami and Miami Beach areas have a huge amount of owners who are going to try to unload their units as the economy gets better. I don’t know if these people have the money to survive their taxes or special assessments. These were short term flips that turned into rental units which are now long term investments.
The second wave of mortgage resets isn’t going to hit until 2012. Isn’t this correct?
Hi Guys- This is off topic, I’m considering renting at Aventura Marina and was wondering if anyone can give me some insights on the building. Any issues with noise level etc..Thanks
According to Moody’s…..Miami’s housing will not bottom until early 2011!!!!!
GN
I have an ex-girlfriend who now lives there. I don’t particularly like her. I’d be fearful of whatever demonic effect she may have on the building.
I wouldn’t really take into account anything the morons at Moody’s have to say. we all saw how well their AAA rated investments fared.
I heard that there was a bulk sale at Quantum and 900. Can anyone confirm this?
Moody’s or not, anyone who thinks that the market will rebound in 2009 is completely wrong. For those of you who still not believe this is the case (like AJ), please visit: http://www.foreignpolicy.com/story/cms.php?story_id=4590 which has 5 articles from 5 great economists.
We keep sliding and we have not yet seen the real impact of foreclosures and unemployment. Hold on… worse is definitely to come.
Lucas, please give us more details about the closings in Sunny Isles Beach.
What was Jorge Perez thinking when he got into the Icon Brickell deal???
He is was probably thinking that the taxpayers where going to foot the bill while he takes the profits….LOL….long live the bail out!!!
Mark:
the good on Plaza on Brickell: excellent building management, security, and door people. professional and first rate. attentive. not even a pizza man will get by without having to call up. (I consider this a plus.) this does not apply to the valet parkers, whom I recommend you never, ever use. I’ve seen too many of them driving like jackasses. Location is pretty awesome, too.
the bad: walls are thin. pray you have quiet neighbors. the entrance to the garage is criminally-poorly designed. backs up with just a few cars trying to get in or out, and you need to swing widely to position your car to get in. whoever designed this should be skinned alive. also, I haven’t yet figured out the algorithm on which they run, but you will wait and wait and wait for the elevators. four elevator wells, but normally only two are running at any one time. and they are somehow timed to make the fewest number of trips with maximum load statistically possible.
Mark:
Stay off big buildings, they are nothing but trouble. Check out west brickell where you have 3 new small buildings.
Lucas,
FYI – Reference your post about having lunch with Beck and Lee.
http://southflorida.bizjournals.com/southflorida/stories/2009/02/09/daily11.html?ana=e_du_pap
“Monday, February 9, 2009, 6:14pm EST | Modified: Tuesday, February 10, 2009, 12:00am
Wind condo buyers want out, blame financial crisis
South Florida Business Journal – by Paul Brinkmann
Add a new reason to the list of tactics being used to get condo buyers out of contracts: the “global financial crisis.”
Four condo buyers at Wind by Neo in downtown Miami say they are unable to obtain mortgages, and therefore should be released from contracts.
Blanca and Julio Hernandez, Claudia Gomez and Miryam Gregory filed suit Feb. 5 in Miami-Dade County Circuit Court against developer Neo Epoch 1 Ltd. for buyer rescission.
“In the intervening time since the date the contracts were entered into, nothing short of a global financial crisis has taken hold, which even the most renowned of economists were unable to predict,” the complaint states.
Buyer lawsuits became common in South Florida since the downturn in the housing market. In some cases, new legal precedents have been set and new legal strategies explored by plaintiff’s attorneys.
The suit against Neo Epoch 1 includes several of the more usual allegations, such as violations of the Interstate Land Sales Act.
Attorney Jared Beck, who has handled several buyer rescission claims, filed the suit.
In the complaint, he alleges that the global crisis and inability to obtain a mortgage gave rise to a “mutual mistake and impossibility of performance” – which he says Florida law provides as grounds for contract rescission.
Beck and his partner, Elizabeth Lee Beck, said they believe the claim could set a precedent.
A Neo spokeswoman did not immediately respond to a request for comment on the lawsuit.
The suit seeks return of the plaintiffs’ deposits – $85,360 from a 2005 contract for Gomez and Gregory, and $67,800 from a 2008 contract for the Hernandezes.
The 42-story, 498-unit Wind by Neo is the first building built during downtown Miami’s condo boom to get slapped with a foreclosure lawsuit. On Nov. 26, Wachovia Bank filed a notice of foreclosure against Neo Epoch 2, which listed company officer Lissette Calderon. At the time, the foreclosure document exempted the 214 residential units and four commercial units the developer already sold.
Tue, Feb 10 02:30 PM
Chavon Sutton, Forbes.com
Those living in Monte Carlo may enjoy the Côte d’Azur’s beaches, glamorous nightlife and status as a tax haven, but they pay for it.
For the second consecutive year, the resort area tops a list of the world’s most expensive housing markets, boasting average prices of $4,420 per square foot.
“Monte Carlo is a city of the rich, small and concentrated,” says Matthew Montagu-Pollock, publisher of Globalpropertyguide.com, the online real estate research firm that released the report Monday. “The primary reasons for such high prices are related to a shortage of space and tax havens.”
Moscow ($1,937 per square foot) and London ($1,928 per square foot) ranked second and third. Moscow’s one-spot jump to the top three was propelled by strong economic growth, partly a result of recent high oil prices, and a rise in residential real estate prices in the first three quarters of the year. Last year, the country experienced gross domestic product growth of 6%, according to the CIA’s World Factbook.
A surprising turn was New York’s drop to No. 6, from No. 2, as growth in Asian markets pushed Hong Kong and Tokyo to the top five. Residential apartment prices in Hong Kong and Tokyo were as high as $1,373 and $1,103 per square foot, respectively, in last year’s survey. In New York, the average price per square foot was $1,384.1.
Mumbai, India, rounds out the top 10, with prices averaging $851 per square feet.
Such high property values are surprising during this global economic crisis, but they are a sign of historically high real wealth and global growth.
“Even in these trying economic times, there is still tremendous wealth out there,” says Nikki Field, senior vice president of Sotheby’s International in New York. What drove down New York’s rank was, in part, a “hesitancy for conspicuous consumption. The need and ability still exists to buy at the upper tier, but people are scared to publicly spend.”
Lucas,
Any reason that the last recent sales and rentals information at the Plaza is from September? Lack of information or no movements (MLS rentals/sales) since September?
Thanks!
Dream on AJ and do your homework. You can’t get £1000 a sq ft even in prime Chelsea anymore. So 2 years ago.
AJ-
Let me break it down for you.
There are two types of people who purchase housing.
The first type of person is the one who buys housing as shelter to live in, or a second vacation home that they intend to own for many years. The thought of selling the house for a profit does not really enter into the equation. They just hope to have the home keep pace with inflation, provide a place to live. Imagine a woman saying this is my dream home, or an old couple saying this is where I want to retire. These are end users.
The second type of people who purchase housing are people who don’t really love the house or condo. They love MONEY!!!!
This is the category you fall in AJ. Flippers, Speculators, Investors, Bulk buyers, whatever term you want to use, it all means the same thing.
These people will gladly unload the home or condo the second they can make a monetary return on it.
The problem is that this whole generation has learned a hard lesson about home price appreciation, and the phony and unrealistic housing bubble price appreciation is not coming back any time soon.
Yes… There will still be people who purchase true bargains to invest in and flip but the people who do this will be much more realistic. They will buy foreclosures in good neighborhoods, they will buy distressed properties, they will buy cash flow positive properties where at the very least the monthly rent covers the mortgage, taxes, insurance and association dues with hopefully atleast a hundred bucks left over for profit every month from the hassle.
The reason why you are so screwed AJ, and why you will never get your wish is because you paid way too much money for your properties. Investors will never touch any of them because the crazy house price appreciation is gone for a generation, and they will only buy based on cash flow. Which yours is not, its a debt trap.
So your only hope of selling your unit is to the first type of person, which is end users. The problem here is that your average end user in Miami makes a 50k a year income and has no interest in paying 300-400-600 a sq foot for a condo. Not even 10 years from now with inflation will anyone pay that much because wages simply will not rise enough to justify it.
If you were smart you would just liquidate the bad debt, walk away from your property, and in 2 years your credit will be good enough to purchase a real bargain that is cash flow positive. During that 2 years you can bank all the money you are throwing away into an overpriced condo and use that as a 20% down payment on a true real estate investment in the future.
Just to give you an example up here in michigan I found a 910 sq foot 2 bedroom house on 0.50 acres of land in a very nice, upscale suburb of Detroit.
(Think Kendall Florida as an example for those familiar with Miami)
The price of this 2 bedroom foreclosed home with garage on 0.50 acres is $25,000 dollars.
With a 19K mortgage and property taxes the montly expense to hold this property would be $300 dollars a month.
The rental market in the area commands a rent of about $800-$900 a month for that kind of property.
That is $500 a month positive cash flow, and a true real estate deal.
You guys really need to reconsider what is an investment, and what is a money pit.
Very Funny. Detroit? C’mon now Christopher. If making a measly $500/month cash positive is all I want, I can do that in tons of places in US and abroad. The thing is that I don’t want to live in Detroit or even visit Detroit for gods sake (been all over Michigan and Detroit extensively and don’t ever want to go back there again).
I am almost breaking even with my props in Miami if I consider Mort + HOA + Taxes. Once I pay off the morts, I will be definite cash flow positive for these props ($650 on one and $850 on the other) and I will have a flat in a place called Miami to retire to if I want.
Detroit, no thanks.
[email protected] – But you can’t put a price on glamor and snobbery! LOL LOL LOL
– As I have always said, you make money in real estate at the time of purchase, not when you sell. At the time of purchase is when you decide (1) Do I want to participate in this real estate market? (2) What price do I want to pay to participate? From then on you have little to no control over rents or sales price since the market determines those. AJ obviously believes he is ENTITLED to profit on his over priced condos….he is in denial still and needs to somehow post and post and post about real estate prices in some remote part of the world out of desperation to not admit his real estate was a bad investment. Very very sad indeed.
AJ said: “I am almost breaking even with my props in Miami if I consider Mort + HOA + Taxes.”
– BS AJ. You previously posted that you paid cash, no mortgages except on the one property in NYC which had a small mortgage. If you factored in a real mortgage rate for a return on capital you’d be a loser. Oh well, you have now lost all credibility in my eyes since your posts are just fiction…..
RENTER TOM……..I’m surprised at you…….Have you just come to that CONCLUSION NOW…….That AJ is only a ficticious figure that shoots a LOT of BS on here………Renter Tom you are a very well respected contributer to this blog.
I recall that AJ was going to disclose his purchase price in Feb 2009. Is that going to happen? its one prediction he could really make happen
DON’T HOLD YOUR BREATH with AJ I think he’s busy disc jocky’ing at some sleazy bar in DETROIT
More confirmation of the falling home prices in South Florida…..
Some great quotes from Jack McCabe in this article: http://southflorida.bizjournals.com/southflorida/stories/2009/02/09/daily30.html
[email protected],
Great post Christopher. A very clear disection of AJ’s nonsensical notions on real estate.
AJ,
“If making a measly $500/month cash positive is all I want, I can do that in tons of places in US and abroad.”
Except apparently in Miami, right AJ?
Renter Tom,
The Miami Herald article refers to the Moody’s report.
Do you still believe the people who rated AAA all those packaged Sub-Prime mortgages?
2/2 condos (1000 sq ft)in many sofla suburbia can be had for @75-100k. Next yr w/ 10%+ unemployment, these could be had for ~50k. These look much better as investment properties as cash flow is decidedly positive.
They will impel the downtown & nonluxury miami beach apts down as well.
I am back from dubai & coste del sol, spain. (poor bojo AJ ) real estate BUST is causing unprecedented sufferings to millions.
AJ,
you are missing the point.
Theoretically, if you can risk 25K to make 6K a year then why would you want to risk 3ook-400k to make that same 6k. The 25K house pays for itself in 4 years.
4 years from now that 25k house will cash flow about 10K/yr( -Taxes& Insurance) while you are still “almost breaking even ” on your condos. You can retire comfortably in a few years on just a couple of those 25K homes if you can find them.
Lucas, I have heard some analyst talk about the drop in foreclosures but I wouldn’t put much stock into those numbers. I have had several people tell me that they haven’t paid their motgage in almost a year but the banks haven’t foreclosed on them yet. Even if it is true who is going to pay the notes for the 1.5 million people that have been laid off in the last 3 months?
banks are at least waiting longer to foreclose on homes.
makes me think,
I don’t put much stock into those foreclosure numbers either. We’re in for a big wave of foreclosures unless the government does something.
RAM – I realize that the Moody’s report was part of the article, but not the entire article. Moody’s screwed up on the MBS….very complex securities with the different levels of risk for each part etc…..moreover without history defaults, was hard to rate and as such should not have given any rating. Live and learn I guess. With housing, not that complex. All the drivers to own residential real estate are six feet under without hope of a resurrection. The absurd financing terms and availability – gone, the appreciation – gone, profitable rentals – gone at near bubble priced assets, HELOC your way to a luxury lifestyle – gone, having your residential real estate provide more income then your day job – gone. I continually get more pessimistic regarding the local housing market…which is surprising since I usually see opportunities – and there are some out there, just not really any in the residential real estate segment.
– With regard to foreclosures, the recent moratorium that was also extended and had large participation of course affect the December numbers. The “pent up” foreclosures out there is probably very shocking with many people not paying their mortgages for more than one year without having foreclosure proceedings started. As I had previously posted months ago, I know several non-US people that stopped paying and will bank the cash until they are finally foreclosed on then will simply go back to their home country with the extra cash, no credit hit, and screw our banks…..stupid banks to begin with but also unethical foreigners. Very sad and maddening that people can get away with such thievery.
Lucas, i don’t understand ICON Brickell. what’s your take? I had a chance to see some of the units and amenities, and I think the place is very nice and the units are high end. the amenities are pretty stellar (gym, pool, spa, connections with viceroy). the location is meh, but it is not horrible (I’d rather it be further south like the Plaza, Jade, etc., or even in the more residential area of Brickell like Bristol Tower). However, it’s still a stone’s throw away from MBV, and I’d rather be on Brickell than somewhere around the AAA and a place like 900 Biscayne. the views are really not great though (i’d say poor), maybe that’s why the building is doomed. if you’re going to pay that kind of money, i guess you should expect better views. but overall the prices aren’t outrageous for that kind of high-end building. i’m stunned at the deplorable closing rate. does that have anything to do with the building just opening up and official closings not being recorded yet? are you hearing anything (good or bad) about ICON Brickell?
Thanks,
Renter H
BTW, I love your site, this is my first post.
The foreclosure numbers at the Miami-Dade County Clerk (who does not rely on models, but an actual count of foreclosure actions) hit an all time record in January. These foreclosure tracking websites are notoriously poor at what they are supposed to do.
Just so you guys do not think I am blowing smoke, check this property out in Waterford, MI.
2 Beds, 2 Baths, 992 sq foot for $24,900
The property taxes on this property are about $100 dollars a month, the mortgage on this property would be about $150 a month with 20% down.
http://www.realtor.com/realestateandhomes-detail/2850-Newberry-Rd_Waterford-Twp_MI_48329_1105763872
Trust me, This is not glamour or glitz by any means. But this home last sold for $65,000 in 2002. So with some new carpet and some paint you will not only be making making $500 a month positive cash flow, you will also be able to sell the property for twice what you paid in 3 years.
This is real estate investing.
Makes me think,
I get what you are saying. But there are also a million more ways to make money. Either you can make money with less effort, less stress and in style or unintelligently slog like a dog for it.
I can make $500/day, a few times a week with little to no investment and moderate stress in more hospitable and civilized places. Why should I buy a dump in a ghetto in Detroit for 19 or 24 K, do a paint job and rent it to low lifes for $800 and make $500 on it. Does Christopher and others think I am that desperate. Maybe some in this blog are. Good for them if they can make $500/month on 20K down. Not for me.
RT,
Credibility in your eyes!! Who are you to give FICO scores to bloggers on this site. Legend in your own mind yeah?
Go back and read my posts, NYC unit is free of Mortgage, not my last Miami acquisition. Probably you don’t read but shoot your mouth off. Otherwise how can you miss so many of my posts saying my debt on my recent Miami prop may get wiped off due to the impending hyperinflation.
SBKI,
I said I will disclose in Spring 2009. I intend to do that.
To all other dreamers,
From what I gather, there seem to be a lot of people here who like to hear what they want to hear. The emperors clothes syndrome. You can all declare the new price per sf in MB to be $200 and keep scratching your heads why no one can ever buy a decent higher floor for less than $350/sf.
I can very easily stop throwing some chilled water over your faces and waking you guys up into reality. OR I could just let you all live in your fantasy World you guys created for yourself. An Utopia where you can walk up and buy a water view flat for $200/sf.
If you have not realized this now , I am the lone owner/investor holdout amongst all the bloggers here. If you do not want to hear the opinion on the other side, suit yourself. In any case, almost all home owners and investors deserted this blog as they have realized that this site is populated with dreamers and those with stars in their eyes, nothing wrong with that except it is taking them away from reality and turning many into uncouth boors because they don’t want to hear the truth.
AJ don’t be an idiot.
North Miami is a ghetto. Kendall Fl or Homestead FL is not a ghetto, it is a suburb of said ghetto.
Detroit is a ghetto. Clarkston MI, or Waterford MI is a middle class suburb 70 miles north of said ghetto.
Get your facts checked.
New to blogging with a question for all of you.
Question:
I have recently come into a decent amount of cash, it has been my dream to buy a flat in Miami for several years now, but never had the resources. I am looking for something on the higher end. I have looked at all the buildings, Epic, 900 Biscayne, Icon, etc, etc. I began reading this blog probably 3 months ago to get the other side of the story. However, I find myself more confuse and hoping to get some advice.
This will be my primary home, and if I purchase will be a cash purchase. What do you people recommend, which building, etc. Any advice will be greatly appreciated.
AJ Post#70
Referring to your comment as being the last lone holdout blogger on this site, it appears that you are. As my previous posts from October and back indicate that I was indeed positive about the future of Downtown Miami for a variety of reasons. My position has changed. Not about Downtown Miami itself, but about the near future prospect (one to three years) of the turmoil that I now believe awaits us. Im referring to prices and the shakeout of who will end up owning these units. I believe you are now witnessing a very large game of “Chicken”, or “Musical Chairs”, between the developer, the bank lender of the project, and finally the contract holder, with regard to the buildings who only recently started closings or are about to. Who will say Uncle first? The contract holders are not closing and are .. willing to risk losing their deposits while asking the developer to re-adjust the price. The developers are are saying no while pretending that everything is OK – (NOT). And the bank lender is growing impatient. I changed my opinion back in October as the evidence of very serious economic issues became more clear. We all now know who and what – (Lehman Brothers, Merrill Lynch, AIG,Dow Jones Industrials, Citicorp,Wamu, etc. etc. etc.) Then with Fannie Mae changing the lending standards for Florida Condos, numerous existing condos in Miami-Dade with very substantial delinquency rates, and unemployment high and going higher and a negative GDP foretells problems with prices searching for a bottom for some time to come. Its called price discovery. Now throw in a huge amount of inventory along with a sour economy that some have stopped calling recessionary and have started using the D word. As regards to the projects that were fortunate enough to start closings much earlier and have sucessfully closed 70% + of their units the question remains as to whether that figure represents owner occupied or investors who did close but are waiting and hoping for a sale and when and if they throw in the towel, capitulate and thus force prices even lower. The bulk buyers may be too early here and the ones left holding the bag. After all, why would I purchase a condo only to find that too many of my neighbors are renting and that most banks have black -listed my building (Fannie Mae Guidelines). AJ, you seem like a decent chap and I have enjoyed your commentary and certainly wish you well, but can you tell why I am now wrong in my belated gloomy assessment considering everything mentioned above.
very informative site, thank you.
Hi Kramer,
Incorrigible Optimism! Add the fact that there is no place on earth like Miami. I have been to 65 odd countries and there is no place I would rather be. My wish (as told to my loved ones) is that, after the eventuality, my ashes should be scattered in Biscayne Bay!
Blind love for Miami aside, I am aware of the trough we are going through now, but a couple of years of misery is not going to shake my faith in the future of this great city. When all this is over we will all be just more than fine.
Miami is not your grand fathers resort town anymore. It is a vibrant megapolis (4th largest in US) on its way to even better times. And thanks to this building boom, eventually we will have more qualified people, businesses move in to this city due to affordable housing and office space.
Meanwhile the next couple of years are not a total washout. I am just letting things take their own course knowing fully well that all will be well and there is light at the end of the tunnel.
Sounds like the same old story “The RICH will get RICHER” the poor will get A LOT POORER.That pretty well sums it up wouldn’t you say AJ & KRAMER & LUCAS
MR
Murano Grande in South Beach or Blue/Green Diamond in mid-Beach.
AJ
i’ve explained it multiple times…but, in short, fortune 500 will never come to this city when considering the alternatives. for example, ATL and CLT are far better than MIA if a corp wanted to relocate in the south. both have cheaper housing stock, better institutions of higher learning in the vicinity and higher concentration of support services. the proof is in the numbers…look up how many fortune 500s are located in this city (4th largest using your stat) compared to ATL and CLT. not even close.
AJ,
Your unfettered optimism is commendable, if at times a little melodramatic “…ashes scattered in Biscayne Bay.” FYI – That’s also where cruise ships dump their shit.
It’s awesome that you love Miami and go to bat for this city time and again. You’re not even from here, right? Seriously, you should transform your club-promoting empire into a political campaign and clean this place up! I’d vote for you… I’m from Miami and after living in the northeast (philly, boston, nyc) and sf out west – sometimes it sucks to be back.
Miami is a beautiful town, but it lacks brains. Full of transients with no real love for the place, Miami fans are the most fickle of any professional sports teams (according to fluctuations in licensed merchandise sales – philly, by the way, has the most loyal fans). Our total, per-capita number of hours spent volunteering is the lowest of any major city.
Forbes just ranked Miami as the 9th most miserable city in the US – according to a misery index that takes into account unemployment, violent crime, commute time, taxes, weather, pollution, corruption etc. I hope there’s a future for this town outside of cocaine, prostitution, and fraud – but it’s going to take a long time. Perhaps the economic depression will flush out some of the opportunistic undesirables from south florida and replace them with civic-minded, cultured intellectuals who have respect for rule of law.
I don’t mean to be a doom and gloom naysayer – I’m going to enjoy the CG arts festival, the boat show and next weekend’s wine and food fair along with this great (albeit dry) weather. Suffice it to say we need more optimists like you and although I often disagree with what you say, I’m happy you’re as vocal and unrelenting as you are.
http://www.forbes.com/2009/02/06/most-miserable-cities-business-washington_0206_miserable_cities.html
“No. 9 Miami, Fla.
Miami has been crushed by the housing collapse. Moody’s Economy.com estimates that 26% of mortgages in Miami are delinquent or are likely to be written off as bad debt that can not be collected. Violent crime and corruption are also off the charts.”
[email protected]
Chris, do you see anything in South Florida similar to Waterford MI 48329?
I would really value your opinion. I am too close to the trees to see the forrest.
AJ, i appreciate your optimism. but be careful to not duplicate the idiot leaders of business and government over the past decade. they built empires based on the rosy predictions of sustained growth and success. not a single one ever considered downside risks-they did not want bothered with it and based their decisions on the fact it would not occur. all business leaders who did not consider these downside risks should be fired on the spot for negligence.
downside risk is right now much greater than upside risk, and to simply pretend it does not exist because it would slow down ones goals is criminal if you are in a leadership position. even in these great buildings, $400k may be a great bargain for a 2b unit-but the typical upper middle class cannot come close to affording it. fill the buildings with the wealthy if you want, but the majority population cannot live in the new construction in miami. my guess is most of the people on this blog, me included, cannot afford a $400k mortgage. i can either buy these new units at a significant discount, or they are simply out of my league. but current prices, even discounted as they are, are not affordable.
shwin,
I was in the navy for a few years in the 90’s. No discharge of any kind is allowed from any vessel with in 3 miles of the coast (and definitely not in the port) and a highly restricted list of discharges are permitted with in 12 miles off the coast.
Any water you see being discharged from the side of the ships is cooling water from the generators.
jcrimes,
I am not just banking on the fortune 500 alone. A city can thrive with lots of small and niche manufacturing and services . Considering the horrendous ATL traffic, don’t you think Miami looks attractive especially when the top tier management can live and work in Downtown?
gables,
Yes 400K is steep for a 2/2 for a middle class person. But as you said yourself, water views are not a priority for you. You can find a lot of 2/2’s with out water views for 200K now. Which other major city with such well laid infrastructure and conveniences offer you a 2/2 in a good building for 200K? And those who want to venture a little outside the greater downtown will see even drastic reduction in flat prices. But with some good footwork and homework, you may even snag a water view flat for almost a non water view price in the next 1-2 years in a foreclosure.
Any which way possible, I would like to see all the flats sold to end users like you and bulk buyers for what ever price in the next couple of years. I think those who will get in before all the inventory gets absorbed will reap rich rewards in the future.
I only have one concern. This market being so unpredictable, what happens if in one swell swoop, all the 10,000 flats excess inventory gets absorbed by a major governmental or non governmental entity? That would be a major game changer. The idea may not be far fetched. With the situation so dire, no small measures or piecemeal actions would be sufficient. Something major might happen. And if it does, Everyones predictions will get thrown out of the window including mine.
AJ, i share your concern regarding some type of large scale event changing the housing market in very unpredictable ways. that is why housing is not recovering quickly. stimulus is being proposed to write down principal and make existing mortgages more affordable. but how will this affect resales down the road-nobody will get an accurate estimate of housing value. my concern is some government action will be made to stop foreclosures and reduce mortgage payments to a level the current homedebtor can barely afford. but a new homebuyer like myself may consider the new price of the home, based on the modified mortgage, as not sufficiently low enough to purchase. then the plan blows up. we need to take our focus off of saving idiots who own a house they never truly wanted, just bought for investment and profit, and move towards providing incentives to end users like myself who aim to buy for the right reason. i refuse to bail out those who made poor decisions by paying an artificially created market price set by the government. at least we agree the time frame for action will now be in the years, not moths, so no great rush to reach the final equilibrium point.
Ok, now that I know that it works I will tell my story… I have being schedule for closing at Icon Brickell but don’t know what to do… I put down close to 100k for a 1b/1b unit and I don’t think the unit is worth it… I don’t know if I should go forward with the closing, pay for closing charges and deepen my investment and just wait until things get better, or just walk away… or try to negotiate the price… or maybe try to get some of my down payment back…
Thanks for your opinions…
Big cat
what type of icon contract do you have? i’ve heard of two icon contracts…one provides for some repayment of the deposit the other doesn’t.
in any event, based on your deposit, i assume your place is north of 450k purchase price. not sure how long it’s going to take for 1 bedrooms in brickell to be worth 450k… certainly not in the next three years. add up the ass’n dues, taxes, general mnt. and transaction costs on backend sale, you’re looking at blowing a big nut before you hit breakeven.
Thanks J!!!
The contract is the second one you have mentioned… and the north we are talking about is a 50K north…
Maybe the thing is not actually breaking even, but loosing less… maybe… What do you think?
AJ, A MEASLY 500 ?? IF YOU HAVE 10 HOUSES ITS NOT SO MEASLY, ??
J CRIMES, ATL YEAH, BUT THEY ALL MOVE TO BROWARD IF THEY WANT SOFLA/ OR NC SC ATL A MILLION PLACES ANYWHERE BUT MIAMI DADE/ DO U BLAME THEM/ MOST UNEDJUCATED WORKFORCE OF A MAJOR AMERICAN CITY (EAST COAST) YOU KNOW THE REST
GOVERNMENT INTERVENTION WILL JUST DELAY THE INEVITABLE
EVERYONE BUY GOLD BUY CHINESE STOCKS FXI THE STIMULOUS IS A JOKE THE MORTGAGE HELP PROGRAM IS 8000 PER HOUSE HOLD ENOUGH FOR A NEW BIGSCREEN, SOME CC BILLS, BALANCE FOR WIVES IMPLANTS, DOWNPAYMENT ON G F ‘S IMPLANTS, SOME LOOSE CHANGE 4 THE KIDS AND NOW YOU CNA FORCLOSE AFTER THEY RIP OUT EVERYTHING AND SELL FOR SCRAP
Drew, 10 houses with tenants = 10 times the headaches.
There are better ways to make $500/month.
Closing rate does not equate to actual numbers. Questions to ask is what is the foreclosure rate in each condo. Is the condo assoc. well funded to on the brink of insolvency? If the project is 50% to 70% and still ownes 25% of the condo it is still in control of the condo and the buyers are essentially held hostage to not only a worsening real estate market but the unpredictable financial conditions of the developer (who may also have other projects near collapse). There are so many variables that simply illustrating the closing rate is an inacurrate analysis and provides me no comfort. More condos projects are opening, for instance the Marguis, and a number a preparing for foreclosure or bankruptcy (from whast I hear The Carribean Condo on South Beach). Look at Canyon Ranch? That is a mess. Look at the Wind. That is a mess. Icon Brickell is going down as Perez has made that clear. I predict are sharp decline in the South Florida market in the next two years. This is far from over. The jobless rate is alo delcining locally so we must take that into consideration. I purchased 4 condos throughout South Florida and attorney David Philips, Esq. got me out of every contract. He is really experienced and was sucessful with the outcome of each one. My family is using him and recommend to all my friends. His contact info is http://www.philipslawflorida.com. and 305.403.0777.