The Fate of Prices at Vue at Brickell and The Club at Brickell Bay
For months I’ve been writing about the rampant mortgage fraud that has occurred in certain buildings located in Brickell such as Vue at Brickell and The Club at Brickell Bay.
The August Brickell Condo Index revealed that over the last six months Vue at Brickell had closed sales with an average price per square foot of $522.37 while The Club at Brickell Bay sold at an average price per square foot of $723.35. Both averages have been inflated as a result of the mortgage fraud that has occurred in these two buildings. Both figures seem outrageous to me since both are non-waterfront buildings and, by most, would not be considered top buildings in Brickell.
It is inevitable that in upcoming months both figures will come down drastically. Both have a lot of short-sale and foreclosure units that are currently listed. For example, Vue at Brickell currently has 8 condos that are marked as either short-sale or foreclosures. The Club at Brickell Bay currently has only three but I suspect that many more will arise in upcoming months.
One bank-owned property at Vue at Brickell is listed at $325 per square foot while another is listed at $343 per square foot. These represent an almost $200 per square foot reduction compared to what has sold at Vue at Brickell over the last six months. That is a difference of over 35 percent. Keep in mind also that these are the list prices. They will ultimately sell for less. These transactions will bring the averages down to a more realistic figure. Anyone who purchased a condo in Vue at Brickell about a year ago won’t be able to refinance for many, many years. This will lead to more foreclosures which will bring down the average even more.
The best price per square foot currently offered of the foreclosure or short-sale units at The Club at Brickell Bay is $471. That is a difference of $252 per square foot when compared to what has sold in the past six months, or a little over 34 percent. I feel that there is a lot more room for this figure to drop. There are just too many other brand new non-waterfront units that will be coming onto the market in Brickell within the next 12 months that offer much better prices than those offered by some of the existing Brickell condo buildings that were riddled with mortgage fraud.
My prediction is that a year from now Vue at Brickell will have an average price per square foot of around $325 for units sold over the preceding six months while this figure for The Club at Brickell Bay will be around $375. Of course, this is just an average, so some will sell for less while some will sell for more. I don’t think this will be the bottom though for condos at The Club at Brickell Bay. They will likely plateau around $350 per square foot. The latest foreclosure and short-sale listings shed new light as to the fate of prices at Vue at Brickell and The Club at Brickell Bay.
I feel that other non-waterfront condo developments in Brickell are in jeopardy as well. A lot of people are talking about the thousands of new units that will be coming onto the market in Brickell within the next couple of years but many fail to mention that only two, Epic and Icon Brickell, are bayfront. The rest are either riverfront or non-waterfront buildings. The bayfront buildings will have a slight downward adjustment in prices but will fare well overall. Once those two developments are completed there will only be one bayfront parcel of land left for development.
Miami Condo Index – Brickell – August 2007
I just finished compiling the data for this month’s Miami Condo Index for Brickell. Last month I revealed that the 18 buildings below had a total of nine closed sales from June 19, 2007 to July 18, 2007. That number surprised myself and many others who follow the real estate market in Brickell. Be prepared to be surprised some more because this figure has dropped. There were a total of eight closed sales from July 19, 2007 to August 18, 2007 in the 18 condo buildings below throughout Brickell. Eight!
Of the eight closed sales, one appears to be yet another fraudulent transaction. A one bedroom/one bath condo with 825 square feet sold for $625,000, or $758 per square foot, on August 3, 2007 at The Club at Brickell Bay. It doesn’t even have a direct water view! The same broker represented the seller and buyer in the transaction. What is really crazy is that a different brokerage had the condo listed for $425,000 in May. It was later canceled and relisted with the broker who sold it for $625,000.
If you think that transaction has the word “fraud” written all over it then take a look at the one bedroom/one bath condo that closed on May 18, 2007 at The Club at Brickell Bay. It too had 825 square feet of interior space and a view of the water from the balcony. The buyer of that unit paid the full asking price of $680,000, or $824.24. The Club at Brickell Bay now has the highest price per square foot of condos sold in the past six months of the 18 buildings included in the index because of these fraudulent transactions. When is somebody going to step in and do something about this? Supposedly the Miami Herald and the FBI are investigating the situation but I’ve been hearing those rumors for months. What is taking so long?
The average price per square foot of condos listed in the 18 Brickell buildings covered in the index went up slightly to $529.05. Last month this figure was $528.84. The weight-adjusted average, however, went down to $537.67 from last month’s weight-adjusted average of $540.17.
Average price per square foot of units currently listed on the MLS:
The average price per square foot of condos sold over the past 6 months actually went down slightly to $471.94 from June’s average of $473.95 despite the fraudulent transaction at The Club at Brickell Bay. Take note that The Club at Brickell Bay now has an average price per square foot of $720.15 for condos sold over the past six months. That is simply ridiculous. This average is based on the three transactions that have occurred at The Club at Brickell Bay over the past six months, two of which appear to be fraudulent. A little over 20 percent of the building is available for sale but nothing is moving. Hmmm…maybe it’s because the list prices there don’t make any f@&#ing sense!!!
Average price per square foot of units sold in the past 6 months:
Atlantis – 2025 Brickell Ave | 33129 | $335.12
Brickell on the River – 31 SE 5 St | 33131 | $409.44
Solaris at Brickell – 186 SE 12 Ter | 33131 | 14.30%
The Club at Brickell Bay – 1200 Brickell Bay Dr | 33131 | -11.98%
The Mark on Brickell – 1155 Brickell Bay Dr | 33131 | 4.41%
The Palace – 1541 Brickell Ave | 33129 | 3.39%
Villa Regina – 1581 Brickell Ave | 33129 | 36.73%
Vue at Brickell – 1250 S Miami Ave | 33131 | 2.85%
I noticed that a handful of fraudulent transactions will be falling off next month so I’m expecting the average price per square foot of condos sold over the past six months to go down in September. That is, however, assuming that other fraudulent transactions don’t appear in the next 30 days to take their place. We shall see.
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%
Miami Condo Index – Brickell – June 2007
Last week I mentioned that I was planning to create a Miami Condo Index to provide pricing insight to homebuyers in various neighborhoods in Miami and Miami Beach. This week I decided to kick things off with Brickell.
It was difficult to come up with a final list of buildings that should be included in the Brickell index. For example, is Neo Vertika in Brickell or should it be in a different category like West Brickell? Is One Miami part of downtown or should it be grouped with Brickell buildings? After much thought, I decided to include both. There simply aren’t enough buildings of interest in West Brickell or downtown to necessitate a separate neighborhood index for West Brickell and downtown. Eventually, One Miami will be grouped with downtown buildings as more developments are completed north of the Miami River. Another question remained as to whether buildings in Brickell Key should be grouped with buildings in Brickell to create a Brickell/Brickell Key index or should a separate index be created for each? I decided on the latter.
Earlier today, I finished crunching the numbers and evaluated my findings. Much of it was quite shocking. I took 18 prominent buildings in Brickell and created two separate spreadsheets. The first spreadsheet calculated the average price per square foot of units currently listed in the 18 buildings in Brickell. The second calculated the average price per square foot of units that have sold in those 18 buildings in the past six months. I also weighted each building according to how many units they had when compared to the sum of the units of all 18 buildings. This helped to arrive at a more accurate representation of the typicalBrickell condo.
First I’m going to show you the average price per square foot of the units currently listed on the market:
Some of those averages shocked the hell out of me. How can condo units at The Club at Brickell Bay have an average list price of over $650 per square foot? (I’ve heard reports of mortgage fraud in that building as well as at Jade and Vue at Brickell.) The average price per square foot for condos currently listed in Brickell using these 18 buildings came out to $536.28. The weight-adjusted average came out to $547.06. The Club at Brickell Bay, with 642 total units, skewed the weight-adjusted average higher than the regular average.
Next we’ll take a look at the average price per square foot in these buildings based on closed sales. Keep in mind that this is the average price per square foot. Condos that have a better view or are on a higher floor than the average condo in the building will obviously have a higher price per square foot. These figures were equally shocking.
Atlantis – 2025 Brickell Ave | 33129 | $335.12
Brickell on the River – 31 SE 5 St | 33131 | $411.79
Solaris at Brickell – 186 SE 12 Ter | 33131 | $436.21
The Club at Brickell Bay – 1200 Brickell Bay Dr | 33131 | $634.15
The Mark on Brickell – 1155 Brickelly Bay Dr | 33131 | $506.81
The Palace – 1541 Brickell Ave | 33129 | $350.88
Villa Regina – 1581 Brickell Ave | 33129 | $316.62
Vue at Brickell – 1250 S Miami Ave | 33131 | $556.59
Condo units at The Club at Brickell Bay had a higher average price per square foot than condos at Santa Maria when looking at closed sales. I had to double check my work once I saw that, but everything checked out.
I tried to eliminate any data that was irregular. For example, in the past six months Pharrell Williams purchased developer Ugo Colombo’s Penthouse unit at Bristol Tower for $13,950,000, or over $1,500 per square foot. I discarded it because it was deemed irregular.
The average price per square foot for these 18 buildings, based on closed sales, came out to $471.76. The weight-adjusted average came out to $495.13.
Using both data sets I also wanted to figure out how overpriced listings are in Brickell when compared to what they actually sell for, on average. I also was curious to find out which buildings were the most overpriced. Here is the data below:
Atlantis – 2025 Brickell Ave | 33129 | 0.73%
Brickell on the River – 31 SE 5 St | 33131 | 12.01%
Solaris at Brickell – 186 SE 12 Ter | 33131 | 16.09%
The Club at Brickell Bay – 1200 Brickell Bay Dr | 33131 | 3.63%
The Mark on Brickell – 1155 Brickelly Bay Dr | 33131 | 2.78%
The Palace – 1541 Brickell Ave | 33129 | 9.99%
Villa Regina – 1581 Brickell Ave | 33129 | 29.67%
Vue at Brickell – 1250 S Miami Ave | 33131 | -1.04%
On average, condo units at The Sail on Brickell have a list price that is 45.78% higher than the average sales price of units sold in the past six months. Either owners of units in that building have unrealistic expectations or agents conducting business there have not provided their clients with an accurate comparable market analysis.
On average, Brickell condo listings were priced 13.98% over the average sales price of units sold in the past six months in these 18 buildings. When using a weighted average, the typical Brickell condo is overpriced by 10.48%. The weighted average is lower because most of the large differences occur in smaller buildings such as The Sail on Brickell.
Keep in mind that statistical data is never perfect. It grows more accurate as additional data is incorporated. The same holds true for a major league baseball player. The first five at-bats in his major league career won’t dictate how the rest of his major league career will fair. The Miami Condo Index will shed more light as time goes on and patterns and trends begin to emerge in the data.
In the next two weeks I will reveal the findings for Brickell Key and South Beach. I will follow-up each neighborhood index report with a post highlighting any fantastic deals that I come across in the buildings covered.
Foreclosure Listings at Vue at Brickell Doubles in Three Weeks
On May 24, 2007 I posted an entry entitled, “Vue at Brickell – Overpriced or Insanely Overpriced?“, in which I questioned the average price per square foot of the condo units at a building called Vue at Brickell. I surmised that mortgage fraud may have been partly at fault for prices at Vue at Brickell reaching such irrational levels.
At that time there were three listed foreclosure units in the building. Now, there are a total of six. In three weeks the number of the listed units that are currently in the foreclosure process have doubled. Those are just the ones that are listed. I’m sure there are others. Below you will see those six listings, as well as relevant property information.
(FL#=floor number, #BEDS=number of bedrooms, #FB=number of full baths, #HB=number of half baths, LA=living area square footage, LP$=list price, LP$/SqFt=average price per square foot, #GAR=number of parking spaces, WTRFR=waterfront?)
I find it humorous that two of the listings categorize Vue at Brickell as being a waterfront building. It is far from being a waterfront building.
As you can see, the average price per square foot of the listed foreclosure units at Vue at Brickell is currently $475.81. The non-foreclosure units in the building have a much higher price per square foot. Only one of the six listings penetrated the $400 per square foot mark on the downside. Mark my words, within 18 months the majority of condo listings in Vue at Brickell, both foreclosure and non-foreclosure, will be under $400 per square foot. The availability of such a large number of newly constructed condo units within the next 18 months, in much higher-end buildings, will be the driving force. These buildings already offer price points below $400 per square foot and the growing supply will push those prices even lower.
It now more important than ever that you research various buildings in the neighborhood and receive a comparative market analysis when making a home purchase to ensure that you are making a wise investment. You know what they say…”Buying a home is the most important investment that you’ll make in your life”.
Vue at Brickell – Overpriced or Insanely Overpriced?
I’d have to go with the latter on this one. A look at the current inventory of condo units for sale at the Vue at Brickell will show that the average price per square foot that these units are currently listed for is over $550. $550 per square foot! That’s for a non-waterfront condo unit, with partial bay views at best, in a building that is, by most standards, NOT a luxury high-rise building. In fact, Vue at Brickell was formerly known as Summit Brickell View when it was a rental building. The acquisition of the Summit Brickell View was made in December 2004 and conversion of the 323 units to condos began quickly thereafter. Grant it, the Summit Brickell View had recently been completed when the acquisition was made, and almost 70% of the units had never been occupied. Either way, it had, and in most cases still has, the features of a rental building. The majority of the units currently for sale still have the ceramic tile and carpeting throughout just the way they were sold when the units were sold as condos. The pictures below will show you a typical unit at Vue at Brickell.
Keep in mind that this is a typical unit at Vue at Brickell. I realize that some units have upgraded flooring and appliances, but the majority of units listed at Vue at Brickell look like this. Some units are even listed at over $700 per square foot! Those better come with marble floors, a Sub-Zero refrigerator, a Miele dishwasher, and a butler and maid! But they don’t even come close. In fact, two of those listings priced at over $700 per square foot come with ceramic tile and carpeting throughout, just as they were when the building was known as Summit Brickell View. One of those listings says “motivated sellers”. Motivated? Maybe they’re motivated to WAIT. Even the three bank-owned listings in this building are overpriced, ranging from $436 to $510 per square foot.
So what made this building so insanely overpriced? Did everyone get together and smoke the wacky tobacky without me or is something more afoul going on here? A look at closed sales for 2007 in the building reveal that mortgage fraud may have been the culprit. Three of the eight closed sales in 2007 sold for prices much higher than the asking price. Here they are below:
List price: $549,995
Sales price: $720,000
List price: $619,000
Sales price: $770,000
List price: $647,000
Sales price: $830,000
These types of cash-back deals have been the focus of a recent mortgage fraud investigation throughout the country. A cash-back scam occurs when a buyer offers to pay a significant amount more than the asking price, with the difference returned to them at closing. Most banks like to keep the cash-back amount to no more than 3% of the purchase price, and almost all lenders have a ceiling of 6%. In most cases, the seller and the listing agent are not aware that anything wrong is occuring and are just happy to have finally sold the property. Lenders, on the otherhand, are unaware of these large cash-back payments because the details of the arrangement are concealed within an addendum that does not get submitted to the bank along with the rest of the sales contract. Unscrupulous appraisers are often used to justify the inflated value of the property and the bank lends based on the purchase price stated on the contract after review of the appraisal.
It is no secret that Florida is well known for the mortgage fraud that has been running rampant throughout the state. In fact, according to a report released by the Mortgage Bankers Association, Florida led the nation in mortgage fraud in 2006. Hopefully, the mortgage fraud investigation throughout the state, and the rest of the country, will put an end to this nonsense so property values can return to an equilibrium state as dictated by the law of supply and demand.
If my assumptions are correct, and previous condo owners at the Vue at Brickell did fall prey to this sort of cash-back scam, then prices there will come in for a crash landing. There’s another building in Brickell that I feel may have a similar fate but I’ll leave that for an upcoming blog entry.
