Cash is King in the Miami Condo Market!
Two local business papers, Daily Business Review and South Florida Business Journal, published articles yesterday morning discussing the fact that some lenders have blacklisted certain condo developments in Miami.
However, a few condo developments have it worse than others in Miami. The Daily Business Review article revealed that sellers in condo buildings riddled with foreclosures find that it is nearly impossible for potential buyers to obtain financing. The article uses Vue at Brickell to illustrate the point and states that “the project is widely avoided in the lending industry”. The same holds true for other condo developments in Miami that have experienced a high number of foreclosures. The doors are now closed! Well, unless, of course, you are paying in full with the almighty greenback.
BankUnited seems to have blacklisted the entire Miami condo market with over 160 condo developments on its list that are located in Miami. I’m not even exaggerating. I went through the list and tried to find one well known condo building in Miami that wasn’t on the list. The list included everything from condo developments built in the 1980s to condo buildings that haven’t even broken ground yet, and some that probably never will. The only building that I could think of that isn’t on the list is Grovenor House. Anybody else find one? Here is the BankUnited blacklist.
Declining market value and high investor concentration are the top two reasons cited by BankUnited for various condo developments being on their list. However, the other reasons provided are actually much more interesting. How about the pending litigation concerning structural issues at The Mark on Brickell and The Palace? I’ve known about the structural issues at The Mark on Brickell for months but I hadn’t heard anything about The Palace.
The Washington Mutual blacklist was far less interesting and the Popular Mortgage blacklist had the usual suspects such as Vue at Brickell, The Club at Brickell Bay, Jade at Brickell Bay, Solaris at Brickell Bay and Emerald at Brickell.
As a contrarian investor, one might say that the best time to buy real estate is in a market where everyone is saying “Mercy! I give up”. Looks like a few banks are finally throwing in the towel on the Miami condo market. Once they all follow suit, then that’s when the real bargains in Miami will begin to enfold.
Miami Picture of the Day
Marina Blue – Closings to Begin This Week
The moment has finally arrived. Closings will begin at Marina Blue this week. I’m not quite sure which exact day they will begin but I know someone who has his closing scheduled for this Friday morning. My guess is that the first closing took place earlier today though.
I’ve been looking quite forward for Marina Blue to be completed. Architecturally, Marina Blue is my favorite of the new buildings that have arrived on the Miami condo market within the past 12 months, and of those that will arrive within the upcoming 12 months. Marina Blue is very impressive to look at while driving down Biscayne Boulevard or driving west over the MacArthur Causeway.
Everyone already knows that the views from within the Marina Blue condos are going to be some of the best in Miami. I can’t think of one other building in Miami that offers unobstructed, direct bay views from EVERY unit in the building. (Someone help me here…there has to be at least one other building in Miami that offers this). The 12 line may have slightly obstructed views but this remains to be seen.
If Marina Blue ends up meeting just 90 percent of everyone’s expectations then I think it’s going to be a winner!
Another Miami Condo Lawsuit
CBS4’s correspondent, David Sutta, reported tonight about yet another lawsuit involving a Miami condo developer. The lawsuit was filed against the Related Group of Florida by contract holders who decided to walk away from their 20 percent deposit at 50 Biscayne. Apparently, the contract agreement stipulates that contract holders are entitled to 25 percent of their deposit money if they decide not to close. The lawsuit was filed because this money was never returned.
From the details that I’ve heard about the lawsuit, the plaintiff has a strong case against the developer. It seems to be a simple oversight in not including certain language that may have otherwise protected the developer. We shall see if condo litigation specialist, Beck & Lee, will be successful in getting their clients their money back.
Opera Tower, LLC & Tibor Hollo Sues Me for $25M
As some of you may already know, my employment at EWM Realtors was terminated this afternoon. The Miami Herald published a story this evening on their website revealing that developer Tibor Hollo of Opera Tower has sued EWM, and myself, for $25M.
The interesting thing about this case is that I did not have my license hung with EWM when I wrote that post. In my opinion, Tibor Hollo and Opera Tower, LLC are coming after EWM because their parent company is owned by Warren Buffett’s Berkshire Hathaway. I have no ill feelings against EWM. I fully understand their position on the situation, given that they are owned by a much larger entity.
The reason why I wrote the post is because I was receiving a lot of phone calls from contract holders at Opera Tower telling me that they had no intention on closing on their condos. In my opinion, a blog is a vehicle to share opinions, thoughts and concerns. I was merely sharing these concerns with potential buyers and contract holders. About three weeks ago, a local newspaper disclosed a story about a class-action lawsuit against the developer filed by contract holders wanting to get out. This topic was an area of concern, and one that I felt needed to be addressed to my readers.
I had no malicious intent against Tibor Hollo nor the condo development. I was merely sharing my opinion with the readers of my Miami real estate blog and the concerns of current contract holders. I see myself as a real estate agent on the street that is sharing the concerns and opinions of others.
Miami Condo Index – Brickell Key – January 2008
The Brickell Key Condo Index is back. I didn’t have time to provide a monthly update for December 2007. For those who have newly discovered this site, the Brickell Key Condo Index is a monthly post that provides important housing statistics pertaining to the 10 existing condo buildings located on Brickell Key. I also publish a monthly update pertaining to 17 well known buildings located in Brickell. Condos located in Downtown Miami and the Arts District of Miami will likely have their own index within the next six months. I’m just waiting for more buildings in those areas to be completed.
The average price per square foot of condos listed in Brickell Key has gone down since the November 2007 update. List prices have continued to drop each month since I began this index in June 2007. At that time, the average price per square foot of condos listed in Brickell was $519.97. It now stands at $486.07. That’s about a 6.5% drop in list prices in 7 months. These numbers are in line with the housing numbers that were released this past week. The weight-adjusted average also fell to $481.98 from November’s weight-adjusted average of $490.87.
Average price per square foot of Brickell Key condos currently listed on the MLS:
The average price per square foot of condos that have sold within the past six months has gone down as well. This average dropped to $416.92 per square foot from the $435.21 that we saw in November 2007. In June, this average stood at $445.59. The January average represents a 6.4% drop within the past 7 months. The weight-adjusted average also fell to $414.54 from November’s weight-adjusted average of $433.31.
The average price per square foot of condos sold within the past six months:
- Brickell Key One – 520 Brickell Key Drive | 33131 | $326.88
- Brickell Key Two – 540 Brickell Key Drive | 33131 | $398.70
- Carbonell – 901 Brickell Key Drive | 33131 | $481.29
- Courts Brickell Key – 801 Brickell Key Drive | 33131 | $466.49
- Courvoisier Courts – 701 Brickell Key Drive | 33131 | $444.20
- Isola – 770 Claughton Island Drive | 33131 | $342.72
- One Tequesta Point – 888 Brickell Key Drive | 33131 | $405.28
- St. Louis – 800 Claughton Island Drive | 33131 | $421.25
- Three Tequesta Point – 848 Brickell Key Drive | 33131 | $435.42
- Two Tequesta Point – 808 Brickell Key Drive | 33131 | $446.98
The chart below reveals additional statistics pertaining to the 10 existing condo buildings in Brickell Key:
The first column to the right of each condo development is the difference in the average sales price and list price for this month, expressed as a percentage. Courts Brickell Key was the only development that had a higher average sales price than list price.
The second column is the number of active listings in each 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 developments that have active listings that represent less than 10 percent of the the overall units in the building. As I’ve stated before, I find this to be a very healthy number. The ones highlighted in red reveal those developments that have active listings that represent over 20 percent of the overall units in the building. Proceed with caution! Condo developments with active listings representing less than 10 percent of the overall condos are considered very safe, in my opinion, and anything in the 10-15 percent range is considered normal, even in a healthy market.
The fourth column shows the number of pending sales while the fifth column displays the number of closed sales within the past two months. Since I didn’t have a December update, I decided to show the number of closed sales since November 28, 2007. As you can see, there have been 9 closed sales in Brickell Key within the past two months. There are currently 28 pending sales, however, 9 of these pending sales have been pending since August 2007 or longer. A few of them have been pending for over a year. I did notice that a good portion of the other 19 pending sales went pending within the first two weeks of the new year.
The sixth column shows the difference in the average list prices from November and this month, expressed a percentage. Those highlighted in red reveal those condo developments which have had a drop in their average list price while those highlighted in green reveal those that have had an increase. As you can see, Carbonell was the only condo building in Brickell Key that has had an increase in its average list price since November 2007. This is attributed to a penthouse condo that was listed the first week of December for around $1,500 per square foot!
The seventh column reveals the difference in average sales prices from November and this month, expressed as a percentage. Brickell Key I, Courts Brickell Key and Courvoisier Courts had average sales prices that were up from those found in November. The average at Isola dropped dramatically since November but not a lot can be made of it because only one closed sale in Isola has occurred within the past six months. It’s not a true average. However, three of the condos that have gone pending at Isola within the past three months have an average list price of $358 per square foot. This is close to the $342.72 price per square foot associated with the one condo that has sold within the past six months.
Santa Maria – Luxury Condo Living at its Finest
It is always a pleasure whenever I’m able to show a condo or two at Santa Maria. It is, by far, my favorite building in Brickell. Unquestionable quality, spectacular water views, fantastic amenities and spacious floor plans makes Santa Maria the best luxury condo building in Miami, in my opinion.
Yesterday, I was able to show a client about four condos at Santa Maria. I didn’t have time to get shots of the units that we saw but I was able to get some good pictures of the lobby and the amazing views from the Penthouse-level fitness center and spa. Most developers wouldn’t think twice about selling the Penthouse level at the highest price per square foot and instead placing the fitness center and spa on a much lower floor. Instead, the developer of Santa Maria, Ugo Columbo, brilliantly decided to allow all residents at Santa Maria to enjoy the panoramic views from the Penthouse level. Ugo Columbo also developed Bristol Tower (also on Brickell Avenue) and Grovenor House (in Coconut Grove), both spectacular developments as well.
Miami & Miami Beach Condo Trends – January 2008
In the last update of the Miami & Miami Beach Condo Trends in November 2007, I promised that the Miami and Miami Beach Condo Trends would be a monthly update. I hate breaking promises but December turned out to be much busier for me than I had expected. With the holidays on top of everything, it was a promise that I had to break.
I also mentioned the inclusion of a condo rental index. I still plan to include these stats within the next couple of months.
Below, you will find the January figures. The first box to the left shows the total number of condos that are currently available for sale on the MLS in Miami-Dade County. These include condos located in Miami, Miami Beach, Aventura, Homestead, Kendall, Coral Gables, Coconut Grove, etc. Keep in mind that these numbers do not include single family homes, just condos, townhomes and lofts. What surprised me is that the total number of listed condos has gone down since the November report. It dropped about 2 percent. However, the number of closed sales in the previous month fell sharply, down about 22 percent. The current condo inventory now represents 5.72 years of supply. That is roughly a 20 percent increase over the November figure. Thousands of new condos are ready to be delivered within the coming months, so we should see subsequent increases in upcoming months. Most of this increase will be throughout Miami, as opposed to Miami Beach or other areas of Miami-Dade County. You’ll notice that the figures are also broken down by price range to give you a better idea of which part of the condo market has been affected the most.
Below you’ll find the same statistics but these only encompass condos located in Miami. In November, the existing condo inventory represented 4.04 years of supply. Now, just two months later, we’re sitting on 6.01 years of condo supply. This represents approximately a whopping 49 percent increase! This is mainly attributed to a large drop-off in closed sales in the previous month.
The following statistics encompass condos located throughout Miami Beach. The increase of inventory in Miami Beach isn’t so startling. Miami Beach now has 6.15 years of condo supply compared to the 5.89 years of condo supply that we saw in November. This represents an increase of about 4.5 percent. There were only 3 fewer sales in December compared with the number of closed condos in October.
The inventory levels, as of right now, for condos located in Miami and Miami Beach are relatively close. I think by next month you’ll see Miami pulling ahead. What’s your prediction for the inventory levels that we’ll see for Miami condos in July 2008?
New Miami Condos – Closings Rates for January 2008
The chart below will show you the percentage of total units that each development has closed since closings began. Click on the following links to view the updates in November and December:
Below you will find the date that each development began closings:
Before anybody says it, I realize that One Bal Harbour is not a “Miami Condo”. I didn’t want to change the title of the post just to reflect the fact that One Bal Harbour is located in Bal Harbour. I also didn’t want to exclude it from the list because there is much interest in One Bal Harbour, and besides, One Bal Harbour owners would criticize me for not providing an update when the closing rate has jumped since the last update.
The closing rate at One Bal Harbour has hit the 70 percent mark. This is a significant increase since last month’s update. The stock price of WCI surged about 15 percent in the regular session on Wall Street and another 19 percent in after-hours trading on Wednesday after it reported that it has successfully been able to amend its credit and loan agreements. The news story was not publicly disclosed until after the bell. There are currently 55 condo units that have not closed, according to public records. The news reveals that WCI now has a considerable amount of time to sell these last remaining condos.
Ten Museum Park has had about a 7 percent increase in its closing rate while 50 Biscayne has had about an 18 percent increase, since the December update. With the exception of One Bal Harbour, Ten Museum Park and 50 Biscayne, none of the other developments have had an increase of over 5 percent. The two new entries to this month’s update are Loft Downtown 2 and Quantum on the Bay. Loft Downtown 2 should have been included in the November update since closings began in September but it simply slipped my mind. Sporting a 74 percent closing rate, however, makes Loft Downtown 2 appear quite successful in comparison to the other Miami condos. The Grand Opening Party for Loft Downtown 2 is scheduled for Thursday evening.
Closings at Quantum on the Bay began earlier this month and as I’ve stated many times before, closings can take up to 2-3 weeks before they are recorded with the county (however, I have heard that as of January 1, 2008, this is no longer the case. A reliable source told me that a step that sometimes delays the process is no longer required. Closings should now be recorded within 1-2 days after the condo has closed. Can a title agent elaborate on this for me?). Don’t take too much away from the low closing rate at Quantum on the Bay. I mainly included it to act as a stepping stone for next month’s update and let everyone know that it is now on my radar.
