For years we have seen hopeful condo buyers, armed with pre-approval letters become frustrated with the financing process and give up or learn that their pre-approval letters are only valid in certain condo developments. The reality is that in order to purchase a condo, two approvals must happen.
First, the buyer must prove financially able to commit to the mortgage payment by submitting their credit and income details to the bank for review. Secondly, the condo development they wish to purchase in must also be approved by the financial institution.
FHA loans are very popular among buyers because of their less stringent qualification guidelines and because of the lower down payment requirements. In order for a building to become FHA approved, they must submit an application to the US Department of Housing and Urban Development (HUD), pay an application fee, and wait for 60-90 days for an answer. The application is long and cumbersome, the fee is high, and few buildings are approved. This has led to a diminishing number of buildings who are even willing to try for the approval.
For example, the current 95 page application has been submitted by 48 buildings in Miami Beach & Downtown Miami. Of those 48, only 2 buildings meet all of the criteria and have been awarded FHA approval.
If you are a buyer today with an FHA pre-approval, you would be able to purchase a condo in Brickell on the River North or Brickell on the River South. This remains to be the case no matter what your credit score is, how secure and high paying your job may be or how responsible you are. Those would be the two buildings you could choose from. You would be able to use the pre-approval letter to purchase a house, but those are the only two condo buildings that allow FHA mortgages currently.
At this year’s NAR conference in San Diego, an announcement was made by the Federal Housing Administration that changes are underway to the approval guidelines, making FHA mortgage more accessible to condo buyers going forward. Among these changes are restrictions on owner occupancy versus investor owners, commercial space percentage, FHA concentration and spot approvals. We commend NAR and HUD for their efforts in making home ownership more accessible and look forward to seeing the specifics of the changes.
In the meantime, if you are a condo buyer who prefers a lower down payment, there are loan programs in some buildings that allow for less than the standard 20% down payment and are happy to answer questions you may have about financing in condos.
The Brickell Rental Market Under a Microscope
The rental market is a very interesting segment of the real estate market, not only for potential tenants on the prowl for a new pad but also current landlords and would-be investors trying to assess the demand for rentals across various neighborhoods and, more specifically, across various condo developments. Only a few years ago, the supply of rentals in Miami far outpaced demand. As a result, rental prices plunged and renters ruled the day. Fast forward to the present and an entirely different rental market is upon us in Miami. Nowadays, rental inventory is being absorbed quickly and overall rental prices are on the rise. For those living in Miami, I’m sure this a message that you have not only read in the local paper but have also heard directly from friends and family who have experienced it firsthand.
Obviously, not all neighborhoods and condo developments are created equal. Factors such as price, location, views, quality and recommendations from peers help determine rental demand. As a result, one would assume that demand can vary greatly from building to building and even neighborhood to neighborhood. Which condo developments are the leaders when it comes to rental demand and which are the laggards? More importantly, which buildings should we expect to see prices climb in the near future?
In this first segment, I decided to analyze the Brickell rental market to answer the above questions. Below, you will find a spreadsheet containing rental data for various condo developments in Brickell. Click the link below the spreadsheet to view it in its entirety.
Brickell Rental Market as of March 01, 2011
Columns C through G show the number of available rentals pertaining to each condo development grouped by number of bedrooms. Column I displays the total number of rentals available in each condo development while column J shows the total number of units within that development. I debated whether or not to include column K, the number of available rentals over the total number of units in the development expressed as a percentage, because the figure can be deceiving in buildings where developer inventory remains which has neither been sold nor rented. This is the case in buildings such as Icon Brickell and Infinity at Brickell. Regardless, I decided to include the figure because it can provide additional insight in buildings where this is not the case.
The main objective in creating this spreadsheet was to calculate months of inventory for each condo development. This can be seen in column M. Months of inventory was calculated by dividing total units available for rent by the monthly average number of units rented over a 3-month period from November 16, 2010 to February 15, 2011. You may be wondering why I did not include closed rental data from the past two weeks in determining the monthly average. I have noticed that it can take real estate agents days, and even weeks, to change the status of a rental in the MLS from pending to rented. As a result, I felt that the average would be skewed to the downside and not be an accurate representation of the Brickell rental market. Furthermore, if I had to venture a guess, I would also say that it is highly likely that around 10 percent of the total number of units available for rent are in fact no longer available. In this case, the listing agent has yet to change the status from available to pending.
Regardless, a lot can be ascertained from the spreadsheet above. In my opinion, any building with 1.5 months of inventory or less has a solid rental market. 1060 Brickell, The Plaza on Brickell and Vue at Brickell are standouts with absorption rates hovering around one month. I expect rentals prices in these developments to continue to rise in the near future. For those in the market to lease a condo in one of these developments, I advise that you act quickly and put your best foot forward when making an offer.
According to the spreadsheet, there is currently 2.29 months of rental inventory available in Brickell. Some may expect this number to increase as more units from Icon Brickell and Infinity at Brickell hit the rental market. Of course, this will all depend on how quickly the units become available and at what pace demand absorbs them. Only time will tell, but I plan to watch Brickell rental market closely and post updates on a monthly basis.
I would love to hear your thoughts and comments.
Brickell Condo Index – August 2010
The Brickell Condo Index is back! It has been a year and a half since I last published the Brickell Condo Index. Fortunately, eighteen months is a good reference point and definitely enough time where one would expect a lot to have changed with the condo market. For those of you who haven’t followed this blog that long, the Brickell Condo Index is an in-depth look at the various condo buildings in Brickell with various statistics included to illustrate the health or weakness of each building.
I hate to be the bearer of bad news but this will be the last Brickell Condo Index to appear on this blog. From here on out, the Brickell Condo Index, as well as other neighborhood indexes, will only be made available via email. Early next week, I will unveil a new version of the Miami Condo Investments website. The new website will be much easier to navigate, have a lot more content, load considerably faster and, most importantly, allow you to register to our Miami Condo Investments weekly newsletter. The weekly newsletter will contain the best condo deals of the week, relevant news stories and exclusive market data such as the neighborhood condo indexes. The neighborhood condo indexes will be emailed the Sunday following the 15th of each month, the day that I have chosen to collect and compile the data. Each neighborhood will be represented every six months as follows: Brickell this month, Brickell Key next month, Downtown Miami in October, the Edgewater in November, South Beach in December and the Miami River area in January. The cycle will then start all over so a neighborhood update is provided twice per year. In the meantime, if you’d like to be included on the newsletter list then simply send us an email at [email protected] and convey your interest to be placed on the list. The blog will not change and will continue to be updated but the market data reports will only be made available via our newsletter.
Before we get into this month’s numbers, let me discuss a few changes that I made to the Brickell Condo Index since the last update in February 2009. First, I excluded One Miami from the index. One Miami will be included in the Downtown Miami Condo Index in October. Second, Latitude on the River and Neo Vertika were also excluded. Both will appear in the Miami River Condo Index in January 2010. Third, I decided to include 1060 Brickell, 500 Brickell, Brickell on the River South and The Plaza on Brickell. Each has had enough closed resales to warrant their inclusion in the Brickell Condo Index. Fourth, I decided to bring back The Sail on Brickell. As of late, I’ve seen much more interest in the building due to its price point and it is much healthier than it was in October 2007 when I dropped it from the index. I guess you can say that it’s officially off the pink sheets. There are now a total of twenty buildings in the Brickell Condo Index whereas before there were eighteen. Last, but not least, I decided to round the price per square foot calculations. I think it makes everything easier to read and I honestly don’t think excluding the two decimal points makes the figures any less insightful.
As per the MLS, the average of the asking prices of the twenty condo buildings that now represent the Brickell Condo Index is $376 per square foot. The average asking price per square foot for each Brickell condo building individually can be found below:
1060 Brickell – 1050 & 1060 Brickell Ave – $375
500 Brickell – 500 Brickell Ave & 55 SE 6 St – $362
Atlantis on Brickell – 2025 Brickell Ave – $255
Brickell on the River North – 31 SE 5 St – $268
Brickell on the River South – 41 SE 5 St – $276
Bristol Tower – 2127 Brickell Ave – $471
Emerald at Brickell – 218 SE 14 St – $348
Four Seasons Residences – 1425 Brickell Ave – $954
Imperial at Brickell – 1627 Brickell Ave – $285
Jade Brickell – 1331 Brickell Bay Dr – $532
Santa Maria – 1643 Brickell Ave – $691
Skyline on Brickell – 2101 Brickell Ave – $352
Solaris at Brickell – 186 SE 12 Ter – $189
The Club at Brickell Bay – 1200 Brickell Bay Dr – $285
The Mark on Brickell – 1155 Brickell Bay Dr – $313
The Palace – 1541 Brickell Ave – $298
The Plaza on Brickell – 951 Brickell Ave & 950 Brickell Bay Dr – $394
The Sail on Brickell – 170 SE 14 St – $299
Villa Regina – 1581 Brickell Ave – $350
Vue at Brickell – 1250 S Miami Ave – $214
At the bottom of this post, I included a chart that shows how each of the above figures compares with those published in February 2009. Solaris at Brickell experienced the largest drop with average asking prices there falling slightly over 40 percent. Three of the buildings saw a slight increase in their average asking price per square foot within the past eighteen months. These were Bristol Tower, Four Seasons Residences and Villa Regina.
Below, you’ll find the average price per square foot for Brickell condos sold in the MLS within the six month period from February 1, 2010 to July 31, 2010. I decided to do it this way because I’ve noted that oftentimes it takes agents a few weeks to change the status of a listing in the MLS from pending to closed. The neighborhood as a whole sold at an average price per square foot of $285 during that time period.
The biggest surprise in the figures above when compared to those in February 2009 is Jade Brickell. The average price per square foot for closed sales during the previous six months increased a little over 14 percent when compared to the figures published eighteen months ago. Other buildings that experienced an increase are Skyline on Brickell, The Mark on Brickell, Villa Regina and Vue at Brickell. With the exception of Villa Regina, these buildings were some of the hardest hit in Brickell when the market collapsed mainly due to the large amount of mortgage fraud that took place in these buildings. The Club at Brickell Bay and Solaris at Brickell are two other buildings in Brickell that were heavily victimized by mortgage fraud. The Club at Brickell Bay saw about a 1 percent decrease in average closed sales prices while prices at Solaris at Brickell fell slightly over 9 percent. This actually makes sense since the fallout at Solaris at Brickell didn’t take place until about a year after the others. Also worth mentioning, prices at Santa Maria fell a little over 4 percent within the past eighteen months but the numbers were a bit skewed due to Penthouse 4901 recently selling for $1,100 per square foot. The average for the past six months would have been much lower had it not been for that sale.
Below you will find some additional statistics. Click on the image to enlarge it.
The first column to the right of each condo development name is the difference in the average sales price and list price for this month, expressed as a percentage. 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. In other words, many of the sellers in these buildings are delusional and are in need of a reality check. For example, 1060 Brickell has a very large discrepancy because there are quite a few units asking over $400 per square foot and even some asking over $560 per square foot while closed sales have averaged around $208 per square foot within the past six months.
The second column shows the number of active listings currently in the MLS for each condo development. 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 that represent less than 10 percent of the overall units in the building. This is typically one indication of a sound condo building. When I first started doing the Brickell Condo Index in 2007 many of the cells in this column were highlighted in red, indicating that active listings represented over 20 percent of the building. This was always a good indication that prices would fall further in these buildings. For example, in February 2009, active listings at Solaris at Brickell represented slightly over 20 percent of the building. That was the largest percentage of listings at that time and it is not a coincidence that eighteen months later prices fell the most at Solaris at Brickell of all the buildings represented in the Brickell Condo Index.
The fourth column reveals the number of condos currently pending sale in each building. The Club at Brickell Bay has a whopping 42 pending sales at this time and there are a total of 155 pending sales in all of the buildings combined. In February 2009, there were only 81 pending sales although a total of twenty buildings are now present in the Brickell Condo Index rather than eighteen. The fifth column displays the number of closed sales from February 1, 2010 to July 31, 2010. Once again, The Club at Brickell Bay leads the way with a total of 38 closed sales in that time period. It’s interesting to note that there were 20 more closed sales in the six months prior to February 2009 when compared to the current closing numbers even though the index now has two additional buildings.
The sixth column shows the difference in the average list prices from this month’s and February 2009’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 experienced an increase.
The seventh column reveals the difference in average sales prices from this month’s and February 2009’s, expressed a percentage. Once again, those highlighted in green represent an increase while those highlighted in red represent a decrease.
Well, that’s all for today. Have fun with the numbers. Time for me to get back to work on the new website.
Fannie Mae Approved Condo Buildings in Florida
As of June 1, 2009, Fannie Mae updated their website to reflect the condo developments in Florida that are now approved for financing.
The following is a list of recent condo developments in South Florida that are now Fannie Mae approved:
Brickell on the River South Receives Approval From Fannie Mae
As of yesterday, Brickell on the River South became a Fannie Mae approved development. As a result, creditworthy buyers will now be able to acquire financing. This should help Brickell on the River South to bolster sales of its remaining lofts. 1 bedroom lofts start at $180,000 while 2 bedrooms start at $272,000.
I know of a few other condo developments in Brickell that have applied for Fannie Mae approval and should be receiving approval soon. A lack of financing for new condos in Miami has hindered sales drastically since the new Fannie Mae guidelines went into effect in January. It’ll be nice to finally see financing back in play once more condo developments have been reviewed and approved.
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.
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.
Brickell on the River South Closeout Sale
I received an email earlier this week about a developer closeout sale at Brickell on the River South. Prices of units include flooring and paint. The sale will open to the public January 14, 2009.
The ad states that they have “a limited amount of one bedrooms from $180,000 and two bedrooms from $213,000”.
New Miami Condos – Closing Rates for December 2008
It’s been almost three months since my last Miami condo closing rate update. The last one was published on September 22, 2008. Unfortunately, there has not been a lot of progress in closings for most of the condo developments below since that time.
Below, you will find the date that each condo development began closings followed by the number of closed units in each condo development:
Latitude on the River had three new closings since the last update, Onyx on the Bay had three new closed condos and 50 Biscayne had two. Ten Museum Park and Loft Downtown 2 were both unchanged since the last update.
Quantum on the Bay and Plaza on Brickell each had an impressive number of closings, since the last update, considering how long ago closings began. Quantum on the Bay had 28 new condo closings while Plaza on Brickell was able to close 46.
On Friday, the Miami Herald reported that the developer of 1060 Brickell is looking to sell around 60 percent of its condos in bulk. Closings at 1060 Brickell recently reached the 40 percent mark meaning that this represents the developer’s remaining inventory.
900 Biscayne Bay and Ivy have now each reached the 40 percent mark. I’m actually quite surprised that not one of the condo developments in this last group has been able to hit the 50 percent mark. Enough time has certainly gone by. To rev up sales, 500 Brickell recently held a 4-day promotion offering a free Mini Cooper with any condo purchase from the developer’s inventory.
The next update will include Icon Brickell, Everglades on the Bay (now known as Vizcayne) and Infinity at Brickell which recently began closings.
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.
