Yesterday I was given the link to an interesting news article that was published in The New York Times on March 21, 1983 entitled, “Auctioneer’s Gavel Finally Moves Luxury Condominiums in Miami”. You can find that story below or by clicking the link above:
Three hundred people spent a sunny afternoon today in the shade of a big white tent listening to the patter of an auctioneer hawking luxury condominiums, many of which were sold at discounts of 30 to 45 cents on the dollar.
As the market for luxury condominiums remains soft, more developers are taking this route to dispose of their inventory to cut their losses.
About 60 units were sold for $125,000 to $190,000 in the first day of a four-day auction at Biscayne Cove, a luxury high-rise complex overlooking blue waters, nestled among other luxury dwellings in North Miami Beach.
“We decided to auction off and give the people a bargain,” said Morton Littlemen, a representative of the developers. “We want to give the people a condominium they can afford to own.”
One two-bedroom penthouse that was originally offered for $248,000 was sold for a high bid of $150,000. Condominium prices in the two-building complex range from $100,000 to $334,000.
Biscayne Cove is the fifth such auction that Martin Higgenbotham, an auctioneer, has handled in the last year for the developers, subsidiaries of Cadillac Fairview Corporation and Southeast Florida Properties. It is, Mr. Higgenbotham said, the largest single condominium auction in Florida: 225 units on the block at a value of $46 million. It is more than the total of 152 units sold at the other four complexes in Miami Beach and Hallandale.
The condominium auction business has been “heavy,” Mr. Higgenbotham said. In the last 12 months his company has sold about 1,000 condominiums at auction. Previously it handled 250 units in an average year.
The decision to auction the properties was not taken lightly, according to Lewis Goodkin, a real estate consultant whose firm conducted a marketing study for Biscayne Cove and recommended the auction for fast results. “The purpose is, let’s get out of this stuff and let’s get out of it fast,” he said. Normal advertising and deep discounting is “like a prolonged agony.”
Mr. Goodkin’s study concluded that, even under good conditions, it would take three years for the market to absorb existing inventory and that it did not pay for developers to hold onto the property. “We have in Miami today the most overbuilt luxury condominium market in the country,” Mr. Goodkin said.
He foresaw more auctions of this magnitude. “When the last recession hit us, we had a lot more inventory, but the inventory was more affordable,” he said. “A tremendous number of the public could respond. It could be absorbed. Today, our big invetory is in the luxury ranges where the market is not deep and you don’t have the response from the South American markets because their economy is weak or low.”
While the glut is most severe in Miami, it is not exclusive to this area, Mr. Goodkin said.
Is this the fate of the luxury condo units that will come to market in the next 12-24 months in Miami? 20,000! That is the number that has been thrown around for the number of new condo units that will close in 2007 and 2008. It is difficult to imagine that a supply of that magnitude can be absorbed in such a short period of time. It will be interesting to see what percentage of people walk away from deposits rather than close. If a significant portion walk then developers will likely be forced to take immediate action which could recall memories of 1983.
Update #2: 2 Bedroom Foreclosure @ The Cosmopolitan in South Beach
The list price of the 2 bedroom/2 bathroom foreclosure condo at The Cosmopolitan in South Beach has been reduced from $520,000 to $495,000. This is the second 2 bedroom foreclosure at The Cosmopolitan in the past month. The first condo unit went under contract after it was reduced to $485,000. That unit was inferior for several reasons. The first 2 bedroom foreclosure had one parking space, tiled and wood floors and no balcony. The most recent 2 bedroom foreclosure has two assigned parking spaces, marble floors and a balcony that offers a partial ocean view. The pictures below will show you the most recent 2 bedroom foreclosure at The Cosmopolitan.
In 2007, there have been two 2/2 condo units at The Cosmopolitan that have closed. They sold for $581 and $558 per square foot. This unit is being offered at $490 per square foot.
The Cosmopolitan was built in 2004 and is located two blocks from the beach at 110 Washington Avenue in South Beach. The map at the top will show you a street-level view of the building. Please refer to my first and second foreclosure postings on The Cosmopolitan for more information about the building and the neighborhood.
UPDATE: I finally got to see this condo at The Cosmopolitan for myself. I’ve seen a lot of condo units at The Cosmopolitan and this one holds up to or even surpasses what I’ve seen. Marble floors, 2 parkings spaces, granite countertops, stainless steel appliances, partial ocean view from the balcony and a spacious floor plan. What more does someone want in South of Fifth for under $500K? This one is a steal!
Pre-foreclosure @ Flamingo South Beach
A 1 bedroom pre-foreclosure unit at Flamingo South Beach has recently been listed in the MLS. I think this is going to be the first of many pre-foreclosures and foreclosures that we’ll be seeing at Flamingo South Beach in the next 12 months. In my opinion, Flamingo South Beach will turn out to be a solid investment in the long-term, but with 1,688 total units in the three towers that comprise Flamingo South Beach and current real estate market conditions, it is going to take a long while for the demand to catch up with the supply.
Flamingo South Beach is the largest condo-conversion ever to occur in the United States. MCZ Development Corp has completed the conversion of the south tower, which total 562 units, and has recently begun the sale of the 614 units in the north tower. MCZ Development Corp will likely begin the sale of the remaining 512 units in the center tower early next year, if they choose to exercise their option to purchase that tower.
Unfortunately, the recently listed 1 bedroom pre-foreclosure at Flaming South Beach is grossly overpriced. At a list price of $369,000, and an average price per square foot of over $500, it isn’t even close to being the best priced resale in the south tower. With minimal views from the third floor facing the open courtyard, I think we’ll see this unit move once the owner becomes truly motivated to avoid foreclosure.
Prediction…a list price of under $300K will get it sold. View all South Beach condos.
The video below will show you a typical 2 bedroom at Flamingo South Beach to give you an idea of how the interior of the units look. This is NOT the pre-foreclosure unit. The unit in the video is much larger and has fantastic views of Biscayne Bay, Star Island and the Miami skyline from a much higher floor.
One of best amenities at Flamingo South Beach is the 15,000 square foot, state-of-the-art fitness center. It has recently become the newest addition to the David Barton Gym chain and has been renamed accordingly. The video below will show you the fitness before the transition was made from being called the Flamingo Athletic Club to David Barton Gym.
Update: 2 Bedroom Foreclosure @ The Cosmopolitan in South Beach
The 2 bedroom foreclosure at The Cosmopolitan in South Beach that I blogged about two days ago is under contract. However, there is a second 2 bedroom foreclosure in the building that is currently listed at $520,000. The previous owner of this South Beach condo paid $590,000 in September 2006, according to the Miami-Dade property search. This one has a balcony and a partial view of the ocean. The pictures below are from the MLS listing for that unit.
2 Bedroom Foreclosure @ The Cosmopolitan in South Beach is Prime for the Picking
There’s a 2 bedroom foreclosure at The Cosmopolitan in South Beach that is prime for the picking. Located on the corner of 1st Street and Washington Avenue, The Cosmopolitan is two blocks from Ocean Drive and the beach. Having been built in 2004, The Cosmopolitan is one of the more recent additions to the South Beach neighborhood known as South of Fifth, commonly referred to by locals as SoFi. South of Fifth is arguably the best neighborhood in South Beach, and with a few exceptions, such as The Setai, has the most expensive real estate in South Beach. The neighborhood is also home to some of the hottest nightlife spots in South Beach, such as Nikki Beach, Pearl, Prive, and Opium Garden, and has top restaurants, such as the world-famous Joe’s Stone Crab, Monty’s Raw Bar, China Grill and Smith & Wollensky.
Earlier this year, the bank took possession of this 2 bedroom/2 bathroom condo unit, with 1,010 square feet, and has recently listed it with a traditional real estate agent. On May 1, 2007 it was listed at $560,000. At that price, it was the second best priced 2 bedroom unit at The Cosmopolitan but still far from being considered a true bargain. The owner of this unit paid $545,000 in July 2006. Two days later, on May 3, 2007, the price of the property was reduced $40,000 to $520,000 which, according to closed sales figures in the MLS, is the lowest that a 2 bedroom unit at The Cosmopolitan has ever been resold. Still no takers. On May 15, 2007, the bank once again dropped the price to $485,000. In the past six months, only one 2 bedroom/2 bathroom unit with the same square footage has sold in The Cosmopolitan. It closed in January 2007 for $587,500. Another 2 bedroom/2 bathroom unit that was 186 square feet larger sold for $668,000 in April 2007.
In my opinion, this is one price drop away from being considered an excellent deal. The only problem is that if another price drop should occur, several South Beach real estate investors, with their money on the sidelines, will likely submit offers on this property. The better option is to make an offer now, below the current list price, to avoid being in a multiple-offer situation. I don’t know about you, but anything under $450,000 sounds pretty juicy to me.
I’m going to try to take pictures and video footage of this unit tomorrow and post them here if I can. It may take a few days since it says that the unit is currently tenant-occupied.
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.
