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%
Opera Tower Closings to Begin in September
In a previous post I stated that I heard closings at Opera Tower would begin in July. However, I confirmed today that this was inaccurate. Closings will begin in September for condo units on the first 21 floors of Opera Tower. I was told that closings on the remaining floors would begin in October. Opera Tower sent this letter to contract holders at the beginning of June. It provides important information regarding closings.
It will be interesting to see what happens there. Opera Tower has a total of 635 condo units made up of studios, one and two bedroom condos. That’s a lot of units coming onto the market given the current condition of the Miami real estate market. I think closings at Opera Tower will help reveal the true nature of the market at this time. It will act as a prologue to what will happen at other developments scheduled to begin closings in the next 12 months. It will be important to keep an eye on closings, or lack of closings, that occur at Opera Tower.
My prediction is that the developer of Opera Tower will get back a lot of units. It is a shame that the developer charges 13 percent of the sales price to contract holders who want to resell their contract. It would be in the best interest of the developer to help these contract holders, who are primarily investors, get their unit into the hands of an end-user. Many of these investors are looking to break-even or accept a small loss. With a 13 percent resale fee, however, it makes this nearly impossible. This will come back to bite the developer of Opera Tower in the ass. As of now, the best deal through the developer for an east facing unit is one priced at $509,000. It is on the 21st floor. That comes out to $485 per square foot. I think within six months we’ll see 2 bedrooms at Opera Tower priced below $400,000.
Midtown 2 was a recent large development to begin closings. Closings there began about a month and a half ago. Last week the South Florida Business Journal reported that 17 contract holders at Midtown 2, who want out of their contracts, filed a class action lawsuit against the developer. The attorney representing the plaintiffs is also planning a class action lawsuit representing contract holders of Midtown 4. This lawsuit could spell trouble for all developers if the judge rules in favor of the plaintiffs.
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.
2 Bedroom Foreclosure at Carbonell in Brickell Key
There’s a 2 bedroom/2.5 bath foreclosure that just became available over the weekend at Carbonell in Brickell Key. Built in 2005, Carbonell is Brickell Key’s most recent addition. The foreclosure unit is the best priced 2 bedroom unit in the entire building by quite a lot. It is listed at $649,900. The next best priced 2 bedroom at Carbonell is listed at $799,000. It is a bank owned property. Tax records show that there was an original mortgage on the property in the amount of $700,000. At the time of repossession, the mortgage amount owed was $699,627.
The foreclosure unit has 1,558 square feet of interior space, which equates to about $417 per square foot. The next best priced 2 bedroom condo at Carbonell is listed at $544 per square foot, located on the sixth floor, or one floor above the foreclosure unit. Taking a look at the Miami Condo Index for Brickell Key in June 2007 will reveal that Carbonell had an average list price of $592.56 per square foot, while having an average sales price $473.04 per square foot over the preceding six months.
In my experience, I’ve seen banks willing to accept what might seem like a crazy offer just to get the property off of their books. This could be a great opportunity to own a 2 bedroom at Carbonell for under $600,000. This past March, a 2 bedroom/2.5 bath sold for $700,000. It was located in the same line as the foreclosure unit, exactly one floor above it.
Update: Price was reduced to $634,900 on July 26, 2007.
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:
Quantum on the Bay – 2 Bedroom + Den/2.5 Bath
I was contacted last Friday by a lady who is looking to sell her 2 bedroom + den/2.5 bath in the north tower of the development known as Quantum on the Bay. She got in at original pricing and is looking to sell her unit prior to closing. The condo unit that she has under contract is the L floor plan which, in my opinion, is the best floor plan in the entire north tower. It offers unobstructed views of Biscayne Bay and overlooks the swimming pool. It is a large corner unit with 1,460 square feet of interior space and a 237 square foot wrap-around terrace.
The Quantum on the Bay website is a bit confusing when you view the floor plans. For some reason it decided to have the building site plan point east rather than north. Biscayne Bay would be located where the word “residence” is in the picture below.
The purchase price of the unit in question was $512,000, or $351 per square foot. She is looking to sell it for $575,000, or $394 per square foot, and do a simultaneous closing on the unit. You won’t find a better deal in the developer’s resale program since the developer requires that all units are priced at a minimum of 16 percent above the contract holder’s purchase price. In this instance, the price would need to be set at a minimum of $593,920. This is a great opportunity for someone looking to live at Quantum on the Bay after closing.
If you, or anyone you know has an interest in this condo at Quantum on the Bay, let me know and I will put you in touch with the contract holder.
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.
Pictorial & Video Review of The Fantastic Four in Miami
Today was a beautiful sunny day in Miami so I decided to revisit my favorite skyline-gazing spot at the southwestern tip of Watson Island, along with my trusty digital camcorder. It is the perfect location to view the progression of what I have dubbed The Fantastic Four, made up of, from left to right, Marina Blue, 900 Biscayne Bay, Ten Museum Park and Marquis. It may appear as though there are five developments but the smallest of the buildings is located further off of Biscayne Boulevard to the west. Wikipedia refers to these four developments as the Biscayne Wall, but to me it is far shy of a wall when you compare it to fully built-out skylines in cities such as New York City and Chicago.
The name The Fantastic Four came to mind though as each of these four developments are fantastic ultra-luxury high-rise buildings revitalizing the Downtown Miami neighborhood now known as Park West. Park West was recently developed to be Miami’s equivalent to Manhattan’s Park Avenue. In years to come it will become known as Miami’s luxury neighborhood. It is located directly west of I-395, also known as the MacArthur Causeway, which leads straight into South Beach.Museum Park, formerly known as Bicentennial Park, which is the green piece of land directly east of the The Fantastic Four, will be redeveloped by the Miami Art Museum and the Miami Museum of Science and Planetarium to be transformed into a world-renowned park. It may not seem like a lot of land from the picture above but it is actually comprised of 30-plus acres. The luxury condo buildings in Park West are walking distance to the American Airlines Arena, the newly constructed Carnival Center for the Performing Arts and Bayside Marketplace.
In future months, as closing dates approach, there will be many opportunities to buy into these four buildings at discounted prices. Condo units in these buildings, as well as the thousands of other units coming to market in Miami over the next 18 months, were heavily purchased by investors. Their plan was to flip each condo unit for a profit prior to closing, but demand dried and prices headed south. Many will end up walking away from 20 percent deposits and instead write it off on their taxes. Closings at Ten Museum Park have already begun and Marina Blue should begin theirs towards the beginning of August.
The following pictorial review will give you a closer look at each of these buildings as they appear today:
Note: Watson Island offers the best views of both the Miami and Miami Beach skylines. With the exception of Parrot Jungle and the Miami Children’s Museum, it is a wonder how this land has remained vacant for so long. Flagstone Property Group is supposed to develop a mix-used project known as Island Gardens, with hotel, restaurant and retail space as well as a a “50-slip mega-yacht marina that would accommodate yachts of up 450-feet long”. I haven’t heard of any progress in over twelve months and it doesn’t appear as though anyone has broken ground on the land that I stood on today.
Ten Museum Park – Pricing & Availability Update with Pictures & Video
I revisited Ten Museum Park yesterday with another client. I was able to take a few pictures and shoot a short video but our time was very limited. You can find a picture slideshow at the end of this post along with a short video clip of a unit at Ten Museum Park.
I discovered that there have been a total of seven closings so far at Ten Museum Park. I also received an update on which of the units left to close are problematic cases. They are considered problematic because the contract holder either keeps delaying their closing date and/or they have voiced a strong desire not to close. These represent opportunities as they afford the best pricing currently available at Ten Museum Park. Keep in mind that the prices below only represent the list price. They are not firm prices. Contract holders who are truly motivated or those looking to possibly walk from their deposit may be willing to take a significant loss. They were required to deposit 20 percent of the purchase price into escrow. These were originally placed under contract in January 2004.
First I will show you the 1 bedroom/1.5 bathroom units that are available at Ten Museum Park. As you can see from the floor plan above, the 08 line has a southern exposure while the 05 line has a northern exposure. The one bedrooms have 858 square feet of interior space, a 143 square foot terrace and 10-foot ceilings with floor-to-ceiling glass. The following were originally purchased in the $350,000 to $400,000 price range in January 2004.
Next, we have the smaller 2 bedroom/2.5 bathroom units at Ten Museum Park. The 07 line has a southwest exposure while the 06 line has a northwest exposure. These units have 1,239 square feet of interior space, a 122 square foot terrace and 10-foot ceilings with floor-to-ceiling glass. These were originally purchased in the $450,000 to $505,000 price range in January 2004.
Finally, we have the large 2 bedroom/2.5 bathroom units at Ten Museum Park. These units have the best water views. The view from the southeast corner is my favorite, which is the 01 line. The 02 and 03 lines have a direct east exposure while the 04 has a northeast exposure. These units have 1,949 square feet of interior space, a 192 square foot terrace and 20-foot ceilings with a split-level floor plan and floor-to-ceiling glass. These were originally purchased in the $825,000 to $995,000 price range in January 2004.
The one bedroom units at Ten Museum Park come with one parking space while all two bedroom units come with two parking spaces. There are a total of four elevators to service six units per floor. The maintenance fee is 55 cents per square foot. The Clinique La Prairie spa will be located on the 8th and 9th floors of Ten Museum Park. Other amenities found on those floors include a yoga room, cardio room and weight room. The swimming pool deck has a total of five pools and Jacuzzi, cabanas and aromatherapy stations. A total of ten percent is required at contract signing with the balance due at closing.
The picture slideshow and video clip below are from one of the large 2 bedroom floor plans at Ten Museum Park. It has 1,949 square feet of interior space, a 192 square foot terrace and a split-level floor plan with 20-foot ceilings and floor-to-ceiling glass windows.
