New Miami Condos – Closing Rates for February 2008
This month, I decided to make two separate graphs to show the percentage of total units that each development has closed since closings began. The first graph, found immediately below, reveals the closing rates for Miami condos which had their first closing prior to November 1 2007. The condo developments are also now ordered according to when closings began, with the first to the left.
Below you will find the date that each condo development in the graph above began closings:
Not much has changed with this group of condos since the last update was provided in January. Ten Museum Park and Latitude on the River inched up about 2-3 percentage points. Star Lofts on the Bay remained the exact same and Onyx on the Bay was able to close one additional condo. The Loft Downtown 2 moved up a little over 5 percentage points and 50 Biscayne moved up almost 7 percentage points. A few different sources have told me that there have been about 200 defaulted condos at 50 Biscayne. This is in line with the 239 condos that are currently unaccounted for according to public records. Several people have left comments here stating that the developer has chosen to lease many of the defaulted condos and ride out the storm rather than sell to a bulk buyer. I’m sure other developers will follow suit, which will decrease the expected inventory levels for a few years.
Below you will find the date that each condo development in the graph above began closings:
The graph above includes a group of condos which began closings within the past three months. I was surprised to see that 1800 Club has fared the best, although it should be noted that it did begin closings first amongst this group. Brickell on the River 2 has made much progress since the end of January when closed condos represented about 4 1/2 percent. Quantum on the Bay has done well considering that it has only received a TCO on the first of its two towers. Driving by a few times within the last couple of weeks, I did notice more lights on at night than one would expect from a condo development that just started closings about a month and a half ago. Same goes with 1800 Club. With a closing rate of about 20 percent, Apogee South Beach is off to a good start. Prices there start at about $2.5M. Plaza on Brickell has also only received a TCO on the first of its two towers. We should see much improvement from most of the condo buildings in the above group within the next month or two.
You may have noticed that One Bal Harbour and Midtown 2 are not found in this month’s update. I chose not to include One Bal Harbour because the Regent condo-hotel units have now begun closings and I did not want to intermingle the two. I do know, however, that WCI Communities has been quite successful in closing units at One Bal Harbour. They’ve closed around 150-155 condos out of a total of 185. I also know that several have been reassigned and are currently under contract. I expect WCI to have only a couple developer units left at One Bal Harbour by the end of March.
I didn’t include 2 Midtown because I noticed that a bunch of deeds have been re-recorded there. It would have taken me forever to sort through that mess. The following was written along the left-hand side of the re-recorded deeds: “This deed is being re-recorded to correct vesting on title”.
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 gets recorded.
New Construction Condo Deals in the Arts District, Brickell, Downtown Miami, and South Beach
As closing dates for some of South Florida’s newest condo developments quickly approaches, the motivation from contract holders to sell is becoming increasingly apparent. I’ve been receiving a lot of phone calls and emails from contract holders, within the past couple of weeks, who are looking for me to help them find a replacement buyer.
In some cases the contract holders are willing to accept a loss on their contract price in order to retain a portion of the deposit that was made 3-4 years ago. Below you will find some of the better deals that I’ve come across:
Unit ??? – 2 bedroom/2.5 bath NW corner unit – 1,491 SF – $1.86M
Unit ??? – 2 bedroom/2.5 bath NW corner unit – 1,922SF – $3.35M
Unit ??? – 3 bedroom/3.5 bath NE corner – 3,497 SF (4 balconies) – $4.2M
If you’re a contract holder and you’re motivated to sell then feel free to email me details of your condo and the price that you are willing to accept. Most developer contracts do not allow you to market your unit outside the sales center, so I will post general information here on the blog to see if a buyer emerges.
I’ll match buyers and sellers together. The sales centers are in some cases charging higher than normal sales commissions and transfer fees which make it virtually impossible for contract holders to get their units into the hands of end-users. I’m hoping that this blog will help contract holders to get some of their money back, end-users to find a great deal and developers to have less defaulted units. The way I see it is a win-win-win situation for everyone involved.
By the way, I’ve added a link to this post on my “Deals” page and will be adding to the list above intermittently.
Advice to Miami Condo Sellers
I mentioned last week in the July Brickell condo index that only 9 closed condo sales occurred from June 19, 2007 to July 18, 2007, in the 18 buildings that comprise the Brickell Condo Index. A question was left for me in the comments section of the post about whether I felt that the lack of sales activity was a reflection of an overpriced condo market in Miami. A great conversation enfolded and I wanted to expand on that conversation with a post that will hopefully find its way to condo sellers throughout Miami.
In a nutshell, yes, prices do need to come in significantly in order for buyers to be enticed to buy. There are a lot of “motivated” condo sellers right now who have their units listed with a Realtor who are having a very difficult time selling their condo. However, sellers need to realize that their situation will become progressively worse as time goes by and more condo units come onto the market throughout the overdeveloped areas of Miami that stretch from Brickell to the Arts District. Your condition can easily turn from “motivated” to “desperate” within a six month time period.
I will let the numbers do the talking. Within the next 7 months there will be five new condo developments that will be completed in Brickell. These five developments are: 500 Brickell (633 units), The Plaza on Brickell (1,000 units), 1060 Brickell (582 units), Brickell on the River South (322 units) and Latitude on the River (455 units). These five condo developments will bring 2,992 new condo units to the Brickell condo market within 7 months. 12 months after that, another four developments will be completed in Brickell. These developments are: Infinity (459 units), Axis (718 units), Icon Brickell (1,816 units) and Epic Miami (966 units). These four developments will add another 3,959 new condo units to the Brickell condo market. That is a total of 6,951 new condo units within 19 months from now.
Over 6,900 new condo units within the next 19 months in Brickell! If this sentence alone doesn’t make a seller see the light then maybe the following sentences will. The Brickell condo index is currently comprised of 18 condo buildings throughout Brickell which consists of a total of 5,348 condo units. This means that within 19 months we’ll see a 130% increase in the number of units that comprise the index. The total number of condo units represented in the Brickell condo index will increase from 5,348 condo units to 12,299 condo units within a 19 month period.
That is just within Brickell. Include the developments below that are within 4 miles north of the southern tip of Brickell and conditions become far worse. These developments should be completed within the same time period. A few of these buildings such as Onyx on the Bay, Platinum Condos, Midtown 2 and Ten Museum Park have already begun closings. The 23 buildings below will add another 9,119 new condo units residing within 4 miles of Brickell within the next 19 months.
This means that within the next 19 months there will a total of 16,070 new condo units that will come onto the market in the neighborhoods of Brickell, Brickell Key, Downtown Miami, Park West and the Performing Arts District. The bulk of the problems will be in Brickell, Downtown Miami, Park West and the Performing Arts District since Brickell Key will only add 123 units once Asia is built.
Let’s assume that 30% of the condo units in the five new developments that will be completed in Brickell within the next 7 months were purchased by speculators. That is a very conservative number. I have heard people suggest that this number could be as high as 70%. Let’s use 30% though to illustrate a point in a conservative manner. That means that of the 2,992 new condo units to come onto the market in Brickell, 898 of these will be listed for sale. As I mentioned at the beginning of this post, there were a total of 9 closed condo sales that occurred in Brickell from June 19, 2007 to July 18, 2007. This means that if market conditions remain the same, and this absorption rate continues, then it will take 100 months, or 8.33 years to absorb the new inventory in Brickell. This doesn’t take into account the existing inventory of 1,550 condo units on the market at this time in Brickell. It also only includes those units in Brickell that will be completed within the next 7 months, not the units scheduled for completion 12 months after. Nor does it take into account the negative impact that the units scheduled for completion in Brickell Key, Downtown Miami, Park West and the Performing Arts District will have on the condo inventory in Brickell.
My advice to condo owners who NEED to sell is to get out now! Today, Barbara Corcoran was on the Today Show and suggested that people who need to sell now should be priced 5% below the currently best priced property in the neighborhood. She was speaking about homes and the national real estate market, but I think that this advice is a great start for condo owners in Miami. To illustrate, last week, two days after our office held an Open House/Wine Tasting at The Imperial at Brickell, a pending contract resulted on one of the three bedroom units that were showcased. It was the best priced three bedroom in the building and was the nicest as well. By the way, for those of you who haven’t heard of Barbara Corcoran before, she is often referred to as “The Queen of Real Estate”. She is a Realtor in New York who has had tremendous success and has been asked to appear on many nationally televised segments for her invaluable insight.
Sellers may not like the idea of discounting the price of their condo to 95% of the best priced unit currently listed in the building. However, they will like the alternative scenario even less if they don’t. Keep in mind that once the new condo units come onto the market, you’ll end up lowering your price to that level anyways. But at that time, you will be priced in the middle of the pack rather than at the front.
If you are a truly motivated seller, who doesn’t have an exclusive listing agreement with another Miami Realtor, and want to sell your condo before the worst begins, then contact me today so we can devise a plan to get you out of this mess before condo inventories in Miami reach nightmare proportions.
Crisis Looming in the Arts District of Miami?
I busted out my camcorder today and headed out to beautiful Margaret Pace Park to take in the nice Memorial Day scenery. Okay, okay…so I had another agenda on my mind. I wanted to give everyone a firsthand look at the condo developments in Edgewater Miami along North Bayshore Drive.
Margaret Pace Park is a large park situated along Biscayne Bay from NE 17th Street to NE 20st Street. (The picture above doesn’t quite encompass the entire park). A variety of activities can be enjoyed there such as tennis, volleyball, basketball, running/walking/jogging, BBQing and condo construction watching. Along this park, from NE 17th Street to NE 20th Street, there are three major condo developments under construction: Opera Tower, The 1800 Club and Quantum on the Bay. Combined, these three condo developments will bring a total of 1,856 new condo units to the Miami real estate market by year’s end. That is just within three blocks! The picture slideshow below will show you a variety of pictures that I took of these three condo developments. The video footage that I shot can be found at the end of this post.
OPERA TOWER Opera Tower, located on the corner of 17th Street and North Bayshore Drive, will bring a total of 635 new condo units to the Miami real estate market. Closings are scheduled to begin in July.
THE 1800 CLUB The 1800 Club, which stretches from 18th Street to 19th Street along North Bayshore Drive, will bring a total of 469 new condo units. Closings are likely to begin around September.
QUANTUM ON THE BAY Quantum on the Bay, which is comprised of two towers and stretches from 19th Street to 20th Street along North Bayshore Drive, will bring a total of 752 new condo units to the Miami real estate market. Closings will likely occur by year’s end.
Last week, The New York Times published an article entitled, “As Condos Rise in South Florida, Nervous Investors Try to Flee”, which discusses how panicked investors are increasingly looking for ways to get out of their preconstruction contracts. When those hopes vanish, many end up walking away from hefty deposits. The article notes that an attorney in Boca Raton, Florida receives two to three phone calls a day from investors looking for some way out of their contract. A second attorney, working on behalf of developers in Miami, also added that “in some projects, up to 20 percent of buyers want their money back”. The article states that 8,000 new condos units are expected to be completed by the end of the year in Miami-Dade County alone. Another 12,000 condo units are expected to be completed by the end of 2008.
It seems that Opera Tower, The 1800 Club and Quantum on the Bay will represent a little over 20 percent of the 8,000 new condo units mentioned in the article for 2007. That is a huge chunk, especially when those units are located within three blocks of one another.
There will definitely be some great deals available in the coming months in Edgewater, as well as other Miami neighborhoods. I will do my best to report these deals as I find them. If you, or anyone you know, purchased a preconstruction condo and is looking to find a replacement buyer to close, please feel free to contact me.
The video below will show you the footage that I shot of Opera Tower, The 1800 Club and Quantum on the Bay. Notice how close the buildings are to one another.
The following is a video of Margaret Pace Park. The park runs along Biscayne Bay, so any condo units facing east in any of the buildings directly across from the park will have unobstructed water views.
Judgment Day Just Around the Corner for the Miami Condo Market
There are a number of premier condo buildings that are scheduled for completion in the next six months throughout Miami. These include, but are not limited to, the following:
It will be interesting to see, in the coming months, where prices will go from here. The number of distressed properties has been climbing throughout Miami-Dade County and that number should escalate as these new units hit the market. A year ago properties in Miami were selling like hotcakes. 12 months later the market has cooled considerably in Miami, as has the overall national real estate market. Vulture capitalists have been circling the skies of Miami for over two years, waiting for the right moment to swoop in and scavenge the real estate market here in Miami. 12 months ago vulture capitalists were told that their moment would never come as some real estate markets, throughout the United States, turned in double-digit growth. However, the next six months might be just the moment that they have been waiting for as national foreclosure filings has increased 35 percent over the previous year, according to RealtyTrac. Coupled with the increasing number of new properties that will come on board in the coming months, Miami may be ripe for the picking. The question is “Will the vulture capitalists provide a cushioned bottom for the inevitable judgment day that awaits the condo market?”. “Can their deep pockets provide the support that this market needs or will we find out just how deep the rabbit-hole goes?”
As the day of judgment comes we, here at Miami Condo Investments, will be ready to seek out the best opportunities and pass them along to our faithful blog subscribers. We plan to provide a complete analysis on all condo investment opportunities that meet our criteria, along with a comparative market analysis, pictures of the properties and, in some cases, video so our subscribers can fully grasp the opportunity.
