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.
Short-Sale at One Miami – 1 Bedroom/1Bath for $275K !!!
There’s a 1 bedroom/1 bath short-sale at One Miami that was reduced $44,900 today. It is now listed at $275,000 and has 846 square feet of living space. That’s a great deal! The unit is now listed at $325 per square foot. The Brickell condo index for July revealed that the average price per square foot of units sold at One Miami over the last six months is $453.66. There have been 8 one bedroom/one bath units that have closed at One Miami in the past six months. They have sold in the range of $349,000 to $430,000. Like I said, this is a great deal! Prices for one bedroom units at One Miami have come in significantly in recent months but this short-sale unit is the best priced of them all.
The unit comes with one assigned parking space and one complimentary valet space. Amenities at One Miami include: two swimming pools and hot tub, two clubs rooms, two fitness centers, business center, 24-hour security/concierge and valet parking. The maintenance fee is $389 per month. High-speed Internet, basic cable TV, water, sewer and garbage are included in the maintenance fee as well.
Take a look at the MLS listing for more information.
How Bad Can Things Get for the Miami Condo Market?
An article was released today on Bloomberg.com that exposed the seriousness of the overdevelopment problems that we have in the Miami condo market and the ensuing repercussions that will affect the Miami economy. The article was entitled “Miami Condo Glut Pushes Florida’s Economy to Brink of Recession”. To readers of my blog, however, the news presented in the article was nothing new.
As I’ve mentioned before, the bulk of the problems will stretch from Brickell to as far north as the Miami Arts District. That is where most of the development has occurred in the past three years. There will also be problems in Sunny Isles Beach along the beach. There is a ton of development there as well. Condos in Coral Gables have held strong and have actually gone up in some cases. South Beach condos have also held strong. The condos in older buildings throughout Miami will hold strong because speculative money doesn’t reside in those buildings. It resides in the buildings that were recently completed and those that are currently under construction.
Maintenance fees and ensuing special assessments are also an issue with new buildings. Jade recently had a special assessment to cover the maintenance money lost from the 17 foreclosure units in the building. Jade currently has the most foreclosures of all condo buildings in Miami. Imagine buying into a new building where only 50 percent of the units have closed. Could you imagine the type of special assessment that will get billed to those who have closed? The 17 units at Jade only represent a little over 5% of the overall units in the building. Imagine 50 percent! The upkeep of the building will be the first to go in these newer buildings.
I get a number of people who call me every week who are waiting on the sidelines for that spectacular deal. They know that I’ll find it. I have made it my job to find people the best deals possible at that particular time. That will always be my job and my ultimate goal. If anyone knows the seriousness of the condo market right now it is me. There are others in the industry who know it, but won’t acknowledge it.
That being said, those of you waiting to buy a condo 40 cents on the dollar, it won’t happen. For you at least. You may be able to attend a few auctions where you might be able to buy something at a significant discount but, for the most part, the bulk of the great deals will happen so fast that you’ll never hear about them. Let me be the first to spill the beans and let you all know how this will all go down in 10 steps:
A significant percentage of contract holders will walk away from their deposit money.
The developers will be left holding the short end of the stick and receive huge amounts of pressure from the banks in possession of the construction loans.
Developers will fold.
Developers will then pass the short end of the stick to the banks holding the construction loans.
Banks in possession of these construction loans will be in big trouble. They will then in turn look to sell these loans to vulture capital funds that are hovering the skies of Miami.
Vulture capital funds will buy these construction loans at a significant discount. 50 cents on the dollar or more is not out of the question due to the conditions that reside in the Miami condo market.
Vulture capital funds will then list these units with Realtors, such as I, who have a long list of people waiting on the sidelines to buy at a discount. They will then resell these units at a 15-30 percent discount from what they were originally purchased in 2004 and 2005.
Buyers, from all over the world, will buy condos in Miami at a 15-30 percent discount. Those who contact me will be at the top of this list to receive these significant discounts.
Vulture capital funds will pocket the 20-35 percent spread. Vulture capital funds have been hovering the skies of Miami for years. Their time has come. Patience is a virtue.
Miami condo prices will stabilize at the newly reduced level and business will go on as usual.
Condo overdevelopment throughout the country has become a problem. However, Miami is the epicenter of this problem. As the Bloomberg article states, banks were the first to lend money to Miami developers and the first to pull out. I’ve been contacted by at least five large vulture capital funds in the past month looking to profit from the enormous opportunities that will become available in the Miami condo market. All eyes are on Miami. A dark cloud hangs over Miami but opportunities will abound. As the saying goes, “This too shall pass”. But will you be prepared to take advantage of these opportunities?
Miami Condo Index – Brickell – July 2007
You may have noticed that some of the June numbers have changed. This is because I originally took out the closed sales that were obviously due to mortgage fraud. I recently went back and included those sales because I wanted to present things just as they were. However, this made listings appear to be priced more accurately, which they aren’t. To condo owners, and to some Realtors not in the know, these fraudulent transactions have made their listings appear justified. They need to realize that these transactions are just that, fraudulent, and very inaccurate.
The average price per square foot of condo units listed in the 18 Brickell buildings covered in my index dropped $7.44 since last month. A drop in the price of condos listed in Brickell over the last month was highly expected. I actually thought that prices would have come down even more though. These 18 buildings in Brickell had an average price per square foot of $528.84 this month versus $536.28 in June. The weighted average price per square foot was $540.17 for July versus $547.06 in June.
The most shocking thing that the July Brickell condo index revealed was the number of transactions that occurred in one month’s time. There are a total of 5,348 condo units represented in the 18 buildings that comprise my Brickell condo index. Take a guess at how many units have closed from June 19, 2007 to July 18, 2007.
Had enough time to come up with a guesstimate? Nine. That’s the number of units that sold during that time period throughout the 18 buildings that make up the Brickell condo index. Everyone knows the market is slow but I don’t think anyone could have guessed to what extent. Nine! I still can’t get that out of my head. There are a total of 875 units available on the market right now in those 18 buildings. This equates to 16.36 percent of the total units. This number is actually much higher in many of the newer buildings. Many of the older buildings have 20 or less listings in the entire building. The instability lies in the newer buildings; the buildings that were heavily funded by speculators.
The average price per square foot of condos sold over the past six months in Brickell actually went up slightly. But keep in mind that there were nine transactions in all 18 buildings. Most Realtors would focus on the fact that prices are actually going up. However, I will tell you, first hand, that these numbers are attributed to fraudulent transactions. The price per square foot went from $471.76, in June, to $473.95, in July. Most of this was due to a transaction that appears to be fraudulent at The Sail on Brickell.
The reason why I feel that this transaction is fraudulent is for a number of reasons. One, the unit was sold at the highest price per square foot in the building with concrete floors, two, the broker is a discount broker who charges 4 percent per transaction, three, in every transaction he seems to find the buyer and already holds the listing, and four, he finds the buyer within four days. I did a search by the broker’s email to see what other transactions have occurred. I’m not going to name names but let’s just say that this broker has at least six transactions where this has occurred. The same exact thing. He finds a buyer to acquire a condo at The Sail on Brickell within four days at the highest price possible. Let me tell you, firsthand as a Realtor, that it is hard enough to find a buyer in this market to buy something at the best price available. How is this guy finding a buyer at the highest price available? Within 4 days? Like I said, I’m not going to name names but something fishy is going on there. If someone, like the Miami Herald, wants to investigate this thoroughly and name me as the source, then so be it, but I’m not divulging names. I don’t want to have a hit-man after me. Hopefully I’m wrong about what has occurred in The Sail at Brickell, but I doubt it.
Average price per square foot of units currently listed on the MLS:
Solaris at Brickell – 186 SE 12 Ter | 33131 | 14.86%
The Club at Brickell Bay – 1200 Brickell Bay Dr | 33131 | 2.70%
The Mark on Brickell – 1155 Brickell Bay Dr | 33131 | 1.01%
The Palace – 1541 Brickell Ave | 33129 | 8.68%
Villa Regina – 1581 Brickell Ave | 33129 | 30.64%
Vue at Brickell – 1250 S Miami Ave | 33131 | 1.53%
Imperial at Brickell Open House Tonight – Opportunity to Tour Six Beautiful Condos
Real Living Properties and Arch Realty are showcasing six beautiful condos tonight at Imperial at Brickell from 6pm-8pm. This is a great opportunity to see why Imperial at Brickell is one of the best values in the area. The building is currently undergoing a beautification project which was paid for through a recent special assessment. New owners will be able to enjoy the benefits of these improvements.
The Brickell Condo Index for June revealed that, over the previous six months, Imperial at Brickell offered the second best price per square foot of the major developments throughout Brickell. It had an average price per square foot of $319.56. Imperial at Brickell is well known for its large balconies, spacious layouts with powder rooms and having some of the lowest maintenance fees in the area. All in one of the most architecturally significant buildings in Miami. You have probably seen it on CSI: Miami if you watch that show.
RSVP is required because we will be featuring a different type of wine at each unit. Please call me at 786-247-6332. Imperial at Brickell is located at 1627 Brickell Avenue.
Where Will Prices Be 12-24 Months From Now in Brickell?
Most people would agree that as of right now Brickell and Brickell Key are the luxury neighborhoods of Miami for condominiums. This may change in the future as new luxury neighborhoods have begun to emerge, but as of right now Brickell and Brickell Key hold this title.
It is no secret that Brickell has a large number of condo units coming to market over the next 24 months. Some of these waterfront and non-waterfront preconstruction buildings in Brickell sold for prices well over $400, $500, and even $600 per square foot when sales were launched during the peak of the real estate market in 2005. Were these condo units sold too high? Where should prices be trading given that the supply far exceeds the demand over the next 24 months in Brickell? Where will prices end up for the new condo units that are coming to market over the next couple of years?
Let me try to dissect these questions. Most people would now answer yes to the first question. At the time, however, interest rates were low, prices were soaring and the market was fueled by speculators looking to profit from the buying frenzy. Two years later, the market is in a completely different state. Speculative investors are nowhere to be found, interest rates continue to climb and thousands of new condo units are set to close in the next 24 months. Earlier this week, ABCNews.com published an article entitled, “Real Estate Fool’s Gold”, which highlighted the overdevelopment problem that Miami is facing. Many investors have hired attorneys to find loopholes in their preconstruction contracts to find a way out, and in effect prevent them from losing money.
Prices will continue to go down until an equilibrium of supply and demand is reached. The question still remains though of “how far down will prices go?”. The Brickell condo index for June provided insight as to how inflated prices have become in Brickell. Some of this was due to the rampant mortgage fraud occurring throughout Brickell, but it was mainly fueled by speculators looking to flip their preconstruction condo contracts for a nice profit.
The South Beach condo index, published yesterday, revealed that prices there are almost one and a half times that of Brickell. However, prices in South Beach have far more stability due to the supply and demand relationship being much closer to equilibrium. An overdevelopment problem doesn’t exist in South Beach like we have in Brickell. This is largely due to the Historic Preservation Committee in South Beach keeping developers in check with stringent development guidelines. Demand to own South Beach property is also much higher. Less supply/more demand equals more stability and therefore less problematic pricing.
I feel that the buildings currently under construction in Brickell, set to be completed in the next 12-24 months, will have problems maintaining the price levels that units were sold for at the peak of the real estate bubble. There will be many opportunities in the months to come to buy at discounted prices in these new developments. This in turn will drive prices down throughout the overall neighborhood of Brickell. I feel that more pricing stability can be found in the buildings that have been around for over five years such as the ones found at the southern end of Brickell Avenue. These include such names as The Palace, Imperial at Brickell, Bristol Tower, Atlantis on Brickell, Santa Maria and Villa Regina.
Next week, I will reveal the second installment of the Brickell condo index. I have a feeling that prices have come down quite a bit in buildings such as Vue at Brickell, Club at Brickell Bay and Jade where much of the mortgage fraud occurred. As a result, each building now has quite a few foreclosures listings. This Miami real estate blog will continue to provide the unbiased insight that you seek.
Opportunity to Own a 1 Bedroom in Tower 2 of the Luxurious Icon Brickell
A few days ago I received an email from a gentleman who holds a preconstruction contract for a 1 bedroom in Tower 2 of Icon Brickell. He prefers not to close on the unit and wanted me to find out if there’s any interest in his unit from someone looking to acquire a condo at Icon Brickell. Even though the market has slowed, I still think there will be interest due to the reputation that the “Icon” brand has created. The “Icon” brand has become synonymous with ultra-luxury living and the Icon Brickell development will be one of the finest in all of Brickell.
The gentleman was originally supposed to receive a contract for a 1 bedroom in Tower 1 of Icon Brickell but due to high demand that tower quickly sold out. The developer, The Related Group, did however give him a 1 bedroom in Tower 2 at the same price that he was promised a 1 bedroom unit in Tower 1. It is a G floor plan with 984 square feet of interior space and a 137 square foot terrace. The unit is located on a high floor above the 30th.
His price per square foot of $486 is pretty amazing given that units in that same line sold for slightly over $750 per square foot. I spoke with a sales representative at Icon Brickell today to get a feel for how pricing will be once resales begin. She notified me that The Related Group has no plans to launch a resale program for Icon Brickell. I asked her why and she said that resale programs are only launched for their projects when they feel that the market can absorb it. She continued to add that because the market is currently soft they don’t feel that this is the case at this time. Icon Brickell has been sold out of one bedroom units in Towers 1 and 2 for quite some time. I asked her if she could remember what a G line unit was selling for before they sold out. She told me that there was a G line unit on the 46th floor that sold for $750,000.
The gentleman who contacted me is looking to resell his 1 bedroom at Icon Brickell. His asking price is $599,000. A simultaneous closing would need to be done since the developer is not allowing contracts to be assigned at this time. Icon Brickell is scheduled to begin closings towards the end of 2008. If you or someone you know has an interest in acquiring this unit, please drop me an email or give me a call.
Check out the picture slideshow below for more renderings of the Icon Brickell project:
Latitude on the River in Brickell
The picture above shows Latitude on the River and Latitude One. Latitude on the River is a residential condominium building comprised of 427 units on 44 floors while Latitude One is a condo office building made up of 217,000 square feet spread across 22 floors. Latitude on the River is located along the Miami River directly west of Neo Vertika at 615 SW 2 Avenue.
Many local Miamians have expressed an interest to me in acquiring a condo at Latitude on the River because the pricing is attractive and because the neighborhood has come a long way since sales initially began. It is difficult not to take notice of Latitude on the River while driving down the southern end of I-95 as it towers over all surrounding buildings. It reminds me of an NFL lineman with broad shoulders and a thick upper body.
There are a total of five listings in the MLS right now, two of which are from the developer. The other three listings appeared 2-3 weeks ago. Closings will begin towards the end of August.
I visited with a sales agent representing the developer of Latitude on the River a few months ago with a client of mine to see what was available. The prices were all over the place but there seemed to be a few well priced units. For example, you could get a one bedroom for around $270,000 on a relatively high floor with a view of Biscayne Bay. My client decided to wait a while though until closings began as we both felt that better opportunities would become available at that time. The five listings currently on the MLS, however, are far from opportunistic as many are well above $400, and even, $500 per square foot. I feel that prices will settle around $300-$375 per square foot as more people realize the true condition of the real estate market at this time.
At the beginning of 2005, when I initially visited the sales center of Latitude on the River, I was pretty impressed with what I saw, given the price point. The amenities of the building as well as the vision for that neighborhood is what really grabbed me. However, there were a few aspects of the neighborhood that were difficult to look past, and are worth mentioning. For one, the large electrical plant across the river directly north of Latitude on the River was one eyesore. Condo units facing south that clear the Latitude One condo offices should hold a higher value than those facing north. Those units will have a nice view of Biscayne Bay.
The second eyesore is the Pleasure Emporium III that you’ll see as you make your way into the entrance of Latitude on the River on SW 6 Street. It is literally a half a block west of Latitude on the River and is something you will see daily if you live there.
The neighborhood does have its appeals, however. The shops and restaurants at Mary Brickell Village that are within walking distance are a definite plus, as it provides convenience. Latitude on the River, as the name insinuates, is also directly on the Miami River and offers a riverwalk that will eventually connect as far east to the river promenade now in place at the entrance of One Miami. It will be great once the planned restaurants along the Miami River are complete and the planned water taxi system goes into effect. Latitude on the River is also conveniently located near I-95, making it a cinch to get to South Beach, Miami International Airport, Coral Gables, Coconut Grove and other areas of interest throughout the Miamiland area.
I will keep everyone posted when good deals become available at Latitude on the River once more units are listed in the MLS.
Villa Magna Project Still a Possibility
Reports surfaced a few weeks ago that the Brickell luxury condominium project known as Villa Magna was canceled. Miami Today News reported earlier today that the project may move forward but with a significant change in the development plan. Villa Magna developer, Tibor Hollo, wants to replace 178,506 square feet of condominiums with hotel suites.
The 2.5 acre development site of the $200 million project known as Villa Magna is located at 1201 Brickell Bay Drive. It is the last bayfront parcel in Brickell. The previous plan called for 1,120 total condominium units.
The article mentions that local hospitality experts feel that competing with nearby luxury hotel brands such as the Mandarin Oriental and the Four Seasons Hotel would be a bad move by Mr. Hollo.
It will be interesting to see what becomes of this valuable parcel of land in the coming months. I will keep you posted as new information becomes available.
