South Beach Vacation + Bargain Condos = Miami Condo Investments Tour
I’ve been kicking around this idea in the back of my mind for quite some time. I guess the timing just never felt right. Prices have now fallen to a more realistic level, however, and it may be time to at least discuss the idea to see if there would be any interest.
I’m proposing to hold a two-day tour of Miami and South Beach condos in June of this year. The tour would focus on the best condo deals in Brickell, Brickell Key, Downtown Miami, the Arts District of Miami and South Beach. The objective would be to educate nonlocal buyers, who may not be familiar with the various neighborhoods and condo developments, but may have an interest in buying here at some point in the future. It’s also an opportunity for local buyers to take a first-hand glimpse into the best condo investment deals in Miami. Weather-wise, June may not be the best time of the year to visit South Florida, but I expect the deals at that time to be even better than they are now.
The condo tour would be held on a Friday and Saturday, in which time we would visit 10 buildings and about 30 condo units. The tour package would include a 3-night stay at the Loews Hotel, a 4-star/4-diamond oceanfront hotel in South Beach; 3 breakfasts; 2 lunches; and the 2-day chartered bus tour. The cost would be $900 for one person or $1,500 for 2 people staying in one room. The 2-day chartered bus tour would also be open to local buyers who do not require hotel accommodations at a rate of $300 per person. To those who close on a condo that was placed under contract within 3 months of the tour, I would credit half the cost of the condo tour package at closing for those requiring hotel accommodations and the full cost to those paying the $300 rate.
I’d love to get your feedback about this idea, and I’m open to suggestions regarding the buildings that will be included in the tour. Please add your thoughts in the comments section and use the second poll below to vote on the buildings that you’d like to see on the tour (you may select multiple buildings when voting). I’m hoping to get around 20-25 interested parties in order to set this plan into motion.
[poll id=”7″] [poll id=”5″]
Drive Down Brickell Avenue and Biscayne Boulevard – Video
I must say that I’m very impressed with how far video technology has come along over the past year. Gone are the days of YouTube’s grainy video quality. YouTube now allows people to upload and view HD videos. Don’t expect the HD quality that you see on your HD TV but it’s still a big leap for Internet video.
Here are a couple of videos that I shot Friday night while driving down Brickell Avenue and Biscayne Boulevard. (It may take a while to load if you’re using a slow Internet connection). You’ll notice Icon Brickell, Epic and One Miami in the video below:
Brickell on the River South is a loft building that has one and two bedroom two-story lofts. It is located on the northern end of Brickell at 41 SE 5 Street Miami, FL 33131.
Just wanted to share some day and night photos that I shot earlier today of various newly constructed condo buildings along the Miami River while showing some units at Brickell on the River North.
Daytime shot of Epic. Closings at Epic began in November 2008.
Nighttime shot of Epic:
Daytime shot of Wind. Closings at Wind began in February 2008 and has residents living there.
Daytime shot of The Ivy at Riverfront. Closing at The Ivy at Riverfront began in June 2008 and also has residents inhabiting the condo building.
Daytime shot of The Mint at Riverfront. As far as I know, The Mint at Riverfront has not obtained its certificate of occupancy yet. From the looks of the picture below, it appears that the pool deck has not been completed. Expect closings to begin within the next 2-4 months.
Daytime shot of The Mint at Riverfront, The Ivy at Riverfront and Wind.
Nighttime shot of The Mint at Riverfront, The Ivy at Riverfront and Wind.
The following is not a building located on the Miami River but I wanted to share this great shot that I took of the Bank of America building from the pool deck of Brickell on the River North.
Brickell Condo Index – February 2009
A lot has changed since I last published the Brickell Condo Index three months ago. Condo foreclosures have continued to hit the market, financing has become extremely difficult to obtain and a few bulk condo deals have closed in that time. As a result, it should come as to no surprise that overall condo prices have continued to drop throughout Brickell within the past 3 months. The data used to compile the statistics below was collected on February 18, 2008 from the MLS. You may want to compare the following figures to those published three months ago in November 2008. Also, be sure to view the charts towards the bottom of this post to see how much Brickell condo prices have changed within the past 15 months.
The average asking prices of the 18 condo developments that comprise the Brickell Condo Index is currently $401.30 per square foot. This represents a 6.57 percent drop in average list prices over the past three months.
Average price per square foot of Brickell condos currently listed on the MLS:
The average price of Brickell condos sold over the past six months has gone up 1.51 percent to $296.00 per square foot from November’s average of $291.59. However, this is due to the fact that Four Seasons Residences had been excluded from the average in November due to no closings occurring within the previous six months. Four Seasons Residences has been reincluded in this month’s index as a result of a condo closing in December 2008. The average for Brickell condos sold over the past six months would have dropped 3.58 percent had it not been re-included. With the exception of Bristol Tower, average sales prices for each of the other Brickell condo developments dropped since the November update.
Average price per square foot of Brickell condos sold in the MLS within the past six months:
Atlantis – 2025 Brickell Ave | 33129 | $228.95
Brickell on the River – 31 SE 5 St | 33131 | $234.18
Solaris at Brickell – 186 SE 12 Ter | 33131 | $201.59
The Club at Brickell Bay – 1200 Brickell Bay Dr | 33131 | $188.28
The Mark on Brickell – 1155 Brickell Bay Dr | 33131 | $228.61
The Palace – 1541 Brickell Ave | 33129 | N/A
Villa Regina – 1581 Brickell Ave | 33129 | $256.71
Vue at Brickell – 1250 S Miami Ave | 33131 | $147.18
Below you will find some additional statistics. Click on the image to enlarge it.
The first column to the right of each condo development’s name is the difference in the average sales price and list price for this month, expressed as a percentage. An “N/A” is found next to Latitude on the River and The Palace since this percentage could not be computed as each building failed to have a closed sale within the past six months through the MLS. A high percentage indicates that there is a large discrepancy between the average asking price for condos currently on the market and what has actually sold within the past six months.
The second column is the number of active listings in each condo development currently in the MLS. The third column shows the percentage that these listings represent over the total number of condo units in each development. The cells highlighted in green reveal those condo developments that have active listings that represent less than 10 percent of the the overall units in the building. This is typically one indication of a sound condo building. Bristol Tower, Four Seasons Residences, Imperial at Brickell, Latitude on the River, The Palace and Villa Regina are the condo buildings highlighted in green. However, I think it’s too soon to use this rule of thumb for Latitude on the River. It’s too new of a development. Short-sales and foreclosures have just started to hit the market there. The ones highlighted in red reveal those condo developments that have active listings that represent over 20 percent of the overall units. There’s definitely underlying risk in buying in these condo developments and I’d only advise buying in one of these if the price justifies the risk. As in the November update, Solaris at Brickell is the only condo developments highlighted in red. This is usually a good indication that prices will fall further in future months.
The fourth column shows the number of condos currently pending sale. There are currently a total of 81 pending sales in the 18 condo buildings represented in the Brickell Condo Index. I did not include pending sales that went pending before November 1, 2008. The fifth column displays the number of closed condo sales within the past six months. The 18 Brickell condo developments have had a total of 198 condos close within that time frame. The vast majority of these closings occurred in just a handful of the condo developments. Latitude on the River and The Palace were the only two condo buildings that haven’t had a condo close within the past six months.
The sixth column shows the difference in the average list prices from this month’s and November’s, expressed as a percentage. Those highlighted in red reveal those condo developments which had a drop in their average list price while those highlighted in green show those that showed an increase. Bristol Tower was the only condo development that had an increase in asking prices since November. In just three month’s time, average asking prices fell about 15 percent at Imperial at Brickell and Solaris at Brickell, 14 percent at Vue at Brickell and 10 percent at Brickell on the River.
The seventh column reveals the difference in average sales prices from this month’s and November’s, expressed as a percentage. The Mark on Brickell saw the largest drop with a 20.95 percent decline. Brickell on the River, Emerald at Brickell, Imperial at Brickell and One Miami also had double digits drops. Average sales prices at Santa Maria increased about 14 percent but it should be noted that only one closed sale occurred within the past six months.
I thought it would be interesting to see how prices compare now to those we saw a year ago. Unfortunately, I didn’t publish a Brickell Condo Index 12 months ago. However, I used data from the November 2007 Brickell Condo Index to create the charts below to compare current prices to those we saw 15 months ago. Click on the images below to enlarge them.
(Below) Percentage Change in Average $/SqFt of List Prices Within 15 Months:
(Below) Percentage Change in Average $/SqFt of Sales Prices Within the Last 15 Months:
Keep in mind that condo prices in Miami peaked around the beginning of 2006. The graphs above would be all the more shocking if we were to cross compare current prices to those we saw at that time. By November 2007, Miami condo prices had already fallen significantly.
One positive thing to note is that the number of condos on the market in the condo buildings comprised in the Brickell Condo Index is down about 26 percent since November 2007. (This excludes Latitude on the River which had not been included in the Brickell Condo Index at that time.) Emerald at Brickell and Santa Maria are the only condo developments in the Brickell Condo Index that now have more condos listed than in November 2007. To put this into perspective, the number of listed condos at Vue at Brickell 15 months ago represented a little over 24 percent of the total condos in the building. Current inventory at Vue at Brickell represents slightly more than 13 percent.
Valentine Message at Espirito Santo
As Valentine’s Day weekend comes to a close, I wanted to share a thoughtful message made of Jello-O that was left on the glass-enclosed shower of one of the units at Espirito Santo. I showed the unit earlier today shortly after the previous guest had checked out. Espirito Santo is a condo-hotel residence located in the heart of Brickell at 1395 Brickell Avenue.
New Miami Condos – Closing Rates for February 2009
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.
Can the Current Financial Crisis Be a Blessing in Disguise for Condo Contract Holders Scheduled to Close?
Last Friday, I had the pleasure of having lunch with Jared Beck and Elizabeth Lee Beck of the business litigation law firm, Beck & Lee. Jared Beck, who pens The Magic City Harvard Lawyer blog, raised an interesting question: Can contract holders of condos in Miami scheduled to close in the coming months use the current financial crisis and inability to acquire financing as a valid argument for nonperformance of their contractual obligation?
I know, I know…preconstruction condo contracts clearly state that performance is not contingent upon financing. However, a recent federal ruling in Hoosier Energy Rural Electric Cooperative, Inc. v. John Hancock Life Insurance Co., contains language that may assist condo contract holders who are scheduled to close in the near future.
Here’s some background on the federal case, as provided by Jared Beck’s recent blog post entitled, “Federal Court Endorses Financial Crisis As Basis For Relief From Pre-Existing Contractual Duties; Could Real Estate Contracts Be Affected?”:
The background is somewhat complex but essentially involves the owner of an electrical generating plant in Indiana, Hoosier Energy, which in 2002 entered into a complex lease-back arrangement over some of its assets with an insurance company, John Hancock, aimed at creating a tax shelter for John Hancock. As part of the deal, Hoosier Energy was required to obtain what amounted to a line of credit from Ambac, a financial institution called a “swap provider.”
Until 2008, Hoosier Energy made all of its scheduled payments under the agreement. Then, global financial crisis ensued, and the credit rating of Hoosier Energy’s swap provider sunk like a stone. Hoosier Energy was unable to find another swap provider with a suitable credit rating who could be substituted in a timely manner. John Hancock declared Hoosier Energy to be in default and demanded a large termination payment, shortly after which Hoosier Energy filed suit, requesting a protective injunction.
Mr. Beck went on to say in his blog post that “Hoosier Energy argued that the extraordinary freeze in the global credit markets at least partially excused it from performing under the contract as an instance of ‘commercial impracticability,’ mitigating the default declared by John Hancock”. The court agreed with Hoosier Energy’s argument.
Mr. Beck concluded his post with the following:
How could this newly articulated doctrine be more broadly applied? One possibility rests with the large number of individuals who signed preconstruction real estate contracts several years ago, with the intention of obtaining mortgage financing once the project was finished. Now that many of those projects have been or will soon be competed, those buyers are unable to close because, owing to the global credit crunch, banks will no longer extend mortgage financing for certain new real estate construction at 2004 or 2005 prices.
While many of these purchase contracts were drafted with clauses stating that they were not contingent upon the buyer qualifying for a mortgage, it could be argued, on the basis of the reasoning set forth in Hoosier Energy, that the deals were signed under both parties’ reasonable assumption that financing would actually be available from somewhereonce construction was completed. To quote the Southern District of Indiana in Hoosier Energy, “The crisis was not anticipated by the most senior economists in the country.” If that is true, why should the defense of commercial impracticability, based on the lack of accessible credit, be any less available to the individual real estate buyer seeking to mitigate the effect of a pre-existing contract then it would be to an electrical generating plant operator dealing at arms length with a multibillion dollar insurer? (To some degree, the question overlaps the analysis of whether “bailout” principles should apply equally to financial institutions and individual homeowners, both of whom are victims of their own inability to foresee the mortgage crisis).
The newly revised Fannie Mae guidelines, which went into effect on January 15, state that the government-controlled entity will no longer fund loans for new Florida condos if at least 70 percent of the total units in the development have not be conveyed or under a bona fide contract for purchase to either principal residence or second home purchasers. Contract holders who require financing and are scheduled to close in coming months are basically out of luck. It’ll be interesting to see how the courts handle this argument in 2009.
2 Bedroom Foreclosure at Latitude on the River – $266,000
Within the past three months, I’ve seen a handful of short-sale condos at Latitude on the River become available on the MLS. Earlier today, however, I came across the first bank-owned foreclosure condo in the building to appear.
The foreclosure condo is a 2 bedroom/2.5 bath with 1,212 square feet of interior and a 196 square foot balcony. The condo comes “decorator-ready” with concrete floors, as delivered by the developer, and is located on the southwest corner of the 20th floor. The list price is $266,000, or $219 per square foot. The most recent Brickell Condo Index published in November 2008 revealed that the average list price of condos available at Latitude on the River was $366 per square foot. There had not been any closed sales in the building at the time within the prior six months and there haven’t been any since. Lack of closed sales clearly means that prices of available condos at Latitude on the River haven’t yet fallen to a level that will attract buyers. It’ll be interesting to see if the 2 bedroom foreclosure condo at Latitude on the River will spark the interest of buyers.
View the pictures and listing information for the 2 bedroom condo foreclosure at Latitude on the River.
