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Lucas… The pictures are beautiful!! I don’t live in the Miami area so it’s great to have a visual! I really appreciate all the work you do on your blog. It is very informative on what is going on in that area. Keep up the great work!!
Nice pics! I wanted to see the building in Feb but couldn’t get in. How does Marina Blue compare to Ten Museum? Will 900 prices be similiar to Marina and Ten?
Lucas,
What do you think prices at MB per square foot should be going for in your opinion in this market as of now.
For example the 01 Line.
Sorry to be off-topic, but this is disturbing. The County just posted March statistics for foreclosure filings. Here are the numbers:
2002 14,567
2003 11,605
2004 9,606
2005 7,829
2006 9,814
2007 26,391
2008
January 3,434
February 3,721
March 4,238
For those interested in owning on that block. You had better go to http://aaarena.com and click on event calender. Ask your real estate agent to show you a unit thirty minutes before an event starts. I guarantee if you take your car you will never come back.
I agree with the 900 versus Marina Blue comparo. 900 layouts make more sense although Marina Blue has a much nicer curb appeal.
However, the developers are just flooding way too many units into it at once. Ten Museum, Marina Blue, 900 Biscayne, Marquis are adding what, 1,500 “luxury” condos into 5 blocks of an “up and coming area”? Next door, Everglades is getting ready to release an additional 870 units? Remember, the flipping game is over so that means 2,400 well-off families are going to have to decide to move across the street from Bongo’s over the next couple years?
This is quite the social experiment that is unfolding before our eyes.
perez those numbers are misleading, the situation is probably much worse. Not sure if this was already posted:
April 4 (Bloomberg) — Banks are so overwhelmed by the U.S. housing crisis they’ve started to look the other way when homeowners stop paying their mortgages.
The number of borrowers at least 90 days late on their home loans rose to 3.6 percent at the end of December, the highest in at least five years, according to the Mortgage Bankers Association in Washington. That figure, for the first time, is almost double the 2 percent who have been foreclosed on.
Lenders who allow owners to stay in their homes are distorting the record foreclosure rate and delaying the worst of the housing decline, said Mark Zandi, chief economist at Moody’s Economy.com, a unit of New York-based Moody’s Corp. These borrowers will eventually push the number of delinquencies even higher and send more homes onto an already glutted market.
Has anyone heard an update about a pipe bursting on the 29th floor last night soaking a significant number of units and common areas causing quite a bit of damage at 50 Biscayne?
I heard their answer was heavy duty fans. lol
I know when the fire sprinkler pipe burst at the Opera Tower, they had a considerable amount of work, inspectors for mold, completely replaced carpets, sheet rock etc and extensive renovation that was completed from the 19th floor down to the twelfth.
Thx
I’ve wondered about that too Wild Bill. Traffic for all the Heat games and concerts has to be like madness around 6:30 every night. Then again at 10pm.
i will tell you right now that biscayne during the season pushes me to the verge of tears. really, the nights i decide to take biscayne to 395…as i turn the corner from my building onto biscayne i’m praying that i don’t end up in a parking lot. hell, even in the morning, biscayne absolutely sucks.
Wild Bill,
There is definitely a lot of traffic when there are events at night. However, in time, once Miami becomes more urbanized, this will actually be an attraction. It’ll be nice to be able to walk to events, night clubs, shops and restaurants. It’ll take quite some time, but that’s why I feel Park West has a lot of upside. Once the planned relocation of the local homeless shelter takes place, I think we’ll see Park West finally come into its own.
Lucas,
Great Blog!
I’ve had a few homeless people in Park West tell me that would rather sleep outside than risk being in that dangerous shelter. The shelter will move, but I don’t expect many homeless to vacate Park West. I’m not sure many people who needed the shelter actually used it.
Can anyone tell me any names of any retail stores or restaurants that plan on opening on ground floor of these condos or in the nearby area?
Wild Bill,
I’ve heard from several people, a few months ago, that Gardner’s Market was very close to signing a lease at 900 Biscayne Bay. That will fill a big void if it proves to be true.
Wild Bill,
I disagree. Some of the homeless may not use the shelter to sleep, but I’m pretty sure that they use the shelter to acquire a free meal. Once the shelter moves, I think most of the homeless will relocate themselves to be closer to their meal ticket.
Lucas, Thanks for the beautiful pics.
I do have my eyes set on the 08 line (not the 01 line) in Marina Blue. With prices the way they are, I would not touch it though. At least not now.
Lucas, can you please tell me what is the price per SF on that unit at preconstruction and was the project announced in 03/04 or 05?
With the realtors accusing many of us of talking bubble too much, how about lets talk something positive?
My question is why dont we post as to which are our favourite buildings that are coming up or came up and which unit you might buy if the prices settle down to an affordable and justifiable levels? I want all of us to let the realtors know that if they stop the spinmeister job and help stabilize this market to what it legitimately should be, we are all waiting to come back in.
Let me start, I like these buildings mostly for the location aspect, amenities and future possibilities. I will be definitely picking up a unit in one of these.
Park West:
1. Marina Blue: line 8
2. 900 Biscayne B3, B4
Edgewater? UES? Design District? Performing Arts District? Miami Arts district? (For gods sake, can some one tell me what this friggin place is called just west of the Margaret pace park?):
1. 1800 club: 03, 05, 07, 09 lines
2. Quantum : 01, 02, 04 lines of the south tower.
Miami river: No favourites
Brickell: No favourites
Midtown: May be that building next to the Target.
Now that I have come forward and said what I may be looking for, can others chip in too. Dont worry, showing desire is not going to firm up the prices of any of these units or similar units as there is literally a flood of them coming in the market in the next 6-10 months.
The following was reported in the Miami Sunpost regarding a recent auction of units at Ten Museum Park, some of you may be able to identify the specific units:
Miami-Dade properties included two penthouses at Ten Museum Park in downtown Miami, not previously offered for sale. A starting bid of $1 million failed to reach the opening reserve for a three-story, 2,500-square-foot unit with 1,800-square-foot terrace. Nor were there bidders starting at $2.5 million (below reserve) for a 5,400-square-foot plus 1,800-square-foot-terrace penthouse. However, acceptable offers for the units came in after the auction.
AJ
I agree with you. We are not blindly down on the RE market in Miami, just the price. We have some great buildings and great up and coming neighborhoods. In order to fulfill the potential of these buildings and neighborhoods, prices must drop to attract the people. Typical new buildings at the $250-$300 psf range will begin to attract attention. True luxury buildings probably at $400 psf. At those prices, the people will come. Otherwise people will feel they are overpaying, and even 5% overpaying on a $400k condo is too much for most to stomach at $20k. unless you have $20k to burn.
So my vote on buildings of interest are the Plaza, Avenue, Met 1 and Emerald. These buildings will get my business with the right price. Although my whims change on a monthly basis.
Wow…that’s impressive Perez….I think 10 Museum Park is my favorite building in Miami…
It would be nice to walk to work every morning.
Where are all these people that make 120K + a year? I just can’t figure out that rational….
I never thought that making less than 80K could out price the middle class.
I live in Canada and everytime I visit Miami (love the vibe and the beaches) I have a burning desire to buy a property. Although, when I return back home and I read articles about the US real estate economy and how the housing prices have not bottomed out, and prices are likely to come down for some time, I hesitate and wonder, do these economists know something that I don’t. The point is that prices have fallen and will continue to fall, but will the prices of today become tomorrow’s nightmare? Do you have any comments? Lucas, love your blog, and I will definetly contact you for advise on any future transaction.
AJ,
I live right across from Margaret Pace Park, and I personally refer to the area as Edgewater. Officially, the City of Miami calls it Wynwood/Edgewater, but I think the latter name will stick as time goes on. This will particularly be the case once Paramount Bay is complete, with its small retail/commercial component that is to be called Edgewater Square. I love the neighborhood. It feels like an urban village, and sometimes you forget that Biscayne is but a block away.
perez ,
Those are big numbers, but I wonder where all those properties get listed afterwards, I’m been checking the MLS for a couple of ZIP codes and I do not see that many REO listed in MLS.
do you know another way to get the listing of those foreclosured properties?
Great site. Do you know how many have closed and how many have walked at Marina Blue? Anybody know how many lawsuits are under way to recover deposits? Any resales lately and, if so, how much per foot? Has the developer resold any of the defaulted inventory?
87 condos at Marina Blue have closed so far. There can be a 2-3 week delay though so the number is likely over 100.
Those buildings along Biscayne are dramatic and lovely. However, I can only imagine what life will be like there when events are taking place at AAA, Bayfront Park, etc. I have a friend who bought a place at Loft 2. I went to check out the apartment with him on a Friday night. We went up to the rooftop pool. There happened to be some musical event at the Bayfront Amphitheater, and you could hear the music on the pool deck. Mind you, this is a couple of blocks IN from the Boulevard, so I can only imagine how much the sound was affecting apartments that are actually along Biscayne. I couldn’t live in that environment, especially at those prices.
LUCAS and WILD BILL,
sort of on the fence regarding the traffic. if i lived in that area, i’d be ok with it because as Lucas mentioned, it could be ok having some hustle and bustle in the area (but i can see it be annoying after a while…especially if it bring people from hialeah, etc entering these areas and crapping all over them…IF this happens). I went to a Heat game last season and it was so horrendous that i left at the start of the 3rd quarter and it was still terrible leaving the area. they close down the 1st 2 lanes in front of the AA Arena for the “special” people and mass transit. I can’t imagine going through that for 40 games. After I went through that, i decided to not attend any more games.
….BUT they stink so bad right now that a fly barely farts around there during games 🙂
Richard, Thanks for clarifying the name. I think Edgewater sounds better. Hope it sticks. I am not sure where I will end up buying at this point. Park West seems a bit pricey.
Gables, You seem like a Brickell guy. I did not do much research on that. But this is my gameplan or rather my strategy.
If the units in a preconstruction building is sold by the developer to the public:
at 2003 prices – I am willing to pay close to those prices.
at 2004 prices – I will wait for a 20% discount.
at 2005 prices – I will wait for a 40% discount.
I am not here to argue with the realtors if the prices are ever going to settle at that level. If it does not happen, to heck with it. I will put my money in the emerging markets or may be even leave it in the bank but will not pay these existing prices in Miami RE. The current price levels and the state of the economy does not justify it.
I know that many investors are also hurting now who bought precons during 04/05. I know they are reading this blog. Even those who closed on the units hoping to recover their 20% deposits by putting those units back on the market are in for a long haul with absolutely no guarantees at all. Hopefully all this comes to a logical conclusion soon.
Neither of the two units at Ten Museum Park are REOs.
Lucas,
Thanks for the MarinaBlue pics. I’m a buyer/investor there and very excited. When you have time, would have the chance to give a shot from the North East tower? That’s where I’m buying and the views are amazing as well.
I’m a fully informed investor and know the Midtown and Dowtown areas back and forth, and without going into details, I see a huge upgrade in the near-future Park West.
One correction to your post…
MarinaBlue closed 200 units so far – not 87. I have been in close contact with the primary sources.
Thanks for a great blog. I’m an avid reader and hope you don’t mind my input now and then. Use it. I’m a good source of information.
AJ – It just seems that in this market, with high holding costs (since no income tax which hits out of staters harder), pricing could probably fall below 2003 prices as this thing unfolds. A big indicator will be what the market it like toward the end of the hurricane season….in my mind around that time we should get a sense as to where this market it headed over the next 2 years. My sense is prices will decline further over the next 2 years but the magnitude of the decline is uncertain…it could be a shallow further decline or it could continue fairly steep….but a decline none the less. If the decline is steep (indicating a 25% further drop in prices) things will get pretty darn desperate out there….
There is a big difference between those that say “I’m not going to sell at that price” and those that can’t float the high holding costs any longer. The later will determine the market prices.
Brahm,
I’ll try to get some shots from a high floor in the NE tower next time I’m in the building.
I get the closing numbers from public records. Like I said, there can be a 2-3 week delay. I actually spoke with someone at Marina Blue a little while ago and they did confirm that they’ve closed around 200 units. That’s amazing! I thought 87 units was good. 200 is outstanding!
Homeless issue in Park West should really be a 2-3 year issue. The city recently approved the final design for Museum Park, ppt with final design: http://www.ci.miami.fl.us/Planning/pages/urban_design/Bicentennial.asp, and it has now moved up to the next step.
MAM has said that they will be ready to break ground in 2009. Museum of Science is also getting their funding in place. So, it all seems to be real. Once the new park and museums are in place, the City will have to help relocate the shelter.
Long term value of this area is great, denying it would be short-sighted. My question is whether the prices are justifiable, they seem to already incorporate that future value. Miami downtown has the prices of a grown-up metropolis, when it’s just now starting on the path to become one (let alone the supply vs demand issue)
Not only prices, but holding costs are so high that it makes renting so appealing, much more so in a declining market. A terrible time for those, like me, that want to buy their first home, but are dazed by the economics.
Cyrus said: “I went to a Heat game last season and it was so horrendous that i left at the start of the 3rd quarter and it was still terrible leaving the area.”
I can see that being an issue if you lived right in front of the Arena.
As far as Heat games go, I’ve never had a big problem with traffic. Just don’t get on Biscayne. I take 2nd Ave off 395 to the “G3” city garage on the corner of 3rd St & 2nd Ave. It’s only $6 to park there – and plenty of spaces. It’s a couple of short blocks to the Arena from there. Then, when you leave, just take 2nd south to Flagler, cut over to Miami Ave, and go 1 block south to the I-95 on ramp. I don’t go to Heat games often, but when I do, I never encounter any problems. The people that try to park too close to the Arena are the ones who will get stuck in a jam (and unnecessarily pay way too much for parking).
BFG,
thanks for the info re: parking. i usually go to bayside and walk over…as you can imagine, it’s a nightmare.
…and sorry for the sidebar but i have to post this because of posts from Lucas’ other posts regarding DUBAI:
guy on cnbc just said that Dubai real estate is starting to crack a la Miami as projects are starting to fall apart and ‘investors’ are stuck holding the bag. same crap, different place. i would MUCH rather buy in miami right now than dumpy Dubai!
The homeless shelter is run by Camillus House. One day their new location by Jackson Memorial might be ready. Somebody can easily drive by the new location and take pictures. Maybe it’s still an empty lot. Some of the homeless work in those parking lots for events. Don’t expect them to relocate for a free sandwich and experimental health care at Jackson.
Why doesn’t somebody call the City of Miami Police Public Information Office at ask them how many new officers the City of Miami P.D. allocated to the new urbanized Park West area.
It would be interesting to see if the City of Miami really has a game plan for this area.
Does anyone know what psf prices were for direct bay view units at the Waverly in 2002 and 2003? How about psf prices at the Continuum in 02 and 03? I tried to look it up on zillow.com, but was unable to find the data. thanks.
In addition to heat games, there are events at bayshore park that will generate a lot of traffic. If miami gets more urganized, there will be even more traffic and congestion. Cities like Los Angeles, Chicago, etc have heavy traffic downtown, but there are plenty of ways to get traffic in and out.
I had the misfortune of going downtown to pick up a fedex package (S. Miami ave). I missed my turn and had to go around a few blocks near the court house and was amazed at how norrow the streets are and how badly traffic is managed.
Also, a lot of people here think that restaurants, bars, etc bring in the people. I think it is the opposite. A location with lots of people with dispensale income attract restaurants and bars and other businesses.
Mark. Check out this url on zillow: http://www.zillow.com/Charts.htm?chartDuration=10years&zpid=62923579
It shows a condo currently for sale for $1.2M. It sold for high 500K range in Jan 04. So it has doubled in price in last 4 years.
Prices at the Loft II are already back where they were in 2004 when the sale’s center opened.
The largest unit is line 13, a 2 bedroom with 1153 sqf. You can find a mid floor below $300k. Unit 1813 is currently listed at $290,000 that’s $251 a sqf.
Waverly when it turned condo around late 2003 was around $350 sq. foot for the best direct bay view line 01/02. It could have been $330 or $370, but not $400. Right now, the lowest 01/02 is asking $510/ft. I think.
Anyway, I remember developers telling me how outrageous that was for a middle lux building and that the market couldn’t go much farther from there and everything was going to pop. Well it took another 2 years and another doubling to Pop.
Basically, I doubt any property anywhere is going to get ‘safe” until it rolls back to 2002-2003. If you graphed 2003 pricing and stuck it in for 2008, it still would look quite out of place on a 30 year chart.
Nothing appreciated as dramatically as houses on Palm Island and if you see their price charts, it’s quite telling. This is typical, appreciated 7% a year from ’98 to 2001 then things went psychadelic.
house built in 1952
Feb 98 800K
Oct 2001 995K
July 2004 2 million
2006 Not sold but was asking 3.3 million
Now asking in the high 2 million range and is priced very competitively to other CURRENT asking prices.
Note, if we allowed that 800K property to increase 7% a year straight for 10 years from 1998 to 2008, we would be at about 1.6 million now and 1.6 million would be my guesstimate for a 2003 price on that house.
Forget percentage down and up. It’s just silly not to think a market can roll back prices from a bubble high (early 2006) to a point 3 years earlier (early 2003).
That would be a rational rollback and wouldn’t even be close to an overbuilt investor fueled Armageddon. Historically, you can easily lose 10 years of gains after a bubble pop. An Armageddon scenario is looking for 1996 prices. Looking for 2002-2003 prices right now just means going back to an abnormally high appreciation curve.
The biggest strikes against Miami is that all during the rapid rise, it has done little to nothing to justify any appreciation in prices. In what category did Miami outpace other cities the past 10 years? Education? High Paying Jobs? The weather’s always been the same. People talk about how much better Miami is now than before…. as if other cities haven’t gotten a Wild Oats and Starbucks in the last 10 years.
Lucas likes talking about how good the condo prices are in Miami. I bet he couldn’t even afford a cheap 600sq. ft. condo at the Miami district. What a shame. Grow up and admit that those condos are nothing but rip offs. Oh, nevermind, you are here for the commission. Goodluck realtor.
Joe
I don’t think you know anything about Lucas. If you followed his blog on a regular basis you would know that he tells it the way it is good or bad. If you recall just a few months ago, his honesty has even gotten him in trouble. It sounds to me like you might have some jealousy going, maybe its time you grow up.
Het let’s stick to the blog topic which was about Marina Blue not about parking or other things eveyone always wants to steer to.
carbonblackcab – thanks again. How did you navigate to the historical sales price? When I type in the address of a building into the search engine, it takes me to a page with current listings, and I can’t seem to find the historicals. Also, looking at the link you sent me, I assume the dollar sign is where/when the last transacted price was?
carbonblackcab – sorry, I just noticed the past sale information under the chart. still wondering how to navigate to that page though. thanks.
carbonblackcab – sorry again, i figured out how to navigate to the historical data. thanks.
Joe, take that bottle of milk out of your mouth and grow up…while you’re at it, remove your head from hole #2.
OnceAgain, parking in that area IS important info…especially if someone plans on living in any of those buildings.
Great article in Business week about Maimi
Title: How the beach ball burst.
Url: http://www.businessweek.com/magazine/content/08_16/b4080071341961.htm
Story:
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Christopher Silas Neal
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Illustrations by Christopher Silas Neal
Herewith, dear readers, an account of the epic South Florida real estate boom and bust of the 2000s, as witnessed by this longtime Miamian. Please note that certain names have been changed to protect the profligate. Screenplay proposals are welcome.
March, 2001. Fishing at my Uncle Gil’s house overlooking Biscayne Bay. The snapper and croakers are biting, as are our fresh wounds from doubling down on tech stocks. “The market is a fool’s game,” he says, tying a hook. “I’m telling you, man, the only real money is made in real estate.” He points across the water to a gorgeous, glassy skyline. “Miami’s at the tipping point. Get your head out of stocks, market boy.” I feel like Dustin Hoffman in The Graduate.
December, 2001. My parents’ neighbor quits his brokerage job and joins a subprime mortgage startup staffed by fellow Nasdaq refugees. “September 11 changed everything,” he tells me, pinning palm-leaf mistletoe to his freshly painted door. “Interest rates are going down, and houses will only cost more. We’re hiring, you know? Nice commissions.” He hands me a 2002 calendar magnet—complete with his airbrushed mug—for my fridge. He has affixed an even larger one to the door of his half-totaled clunker.
April, 2002. My dentist’s office in South Beach. An avowed value investor, the good doc threw in the towel thanks to the bear market. “I’ve never seen it so bad—not in ’87. Open…more, moreParagraph that’s good. So this patient of mine is buying old homes, gutting them, marking them up. Easy flip. I’m getting into that. You flossing?” When the hygienist comes in to take X-rays, she tucks a stack of business cards into my shirt pocket: “Cecilia Mendez. Independent real estate agent. Specializing in the Beaches and Downtown.” She places the lead shield on my chest. “I’m starting my own business. Give a few to your mom, and, you know, any peeps in New York who are tired of the cold.”
October, 2002. My old Bar Mitzvah teacher, having seen me on CNBC, drops me a line after Googling my e-mail address. After some small talk about how she misses the brunch vittles in Manhattan, she cuts to the chase: “You seem like the guy to ask, Mr. Television Expert: Why not just go for the interest-only mortgage and keep taking out cash? You can’t lose. I mean, you used to have to put so much down.”
November, 2002. North Miami agrees to let a developer turn much of a 291-acre coastal swath into a city-within-a-city with 100,000 square feet of office and retail space, up to 5,000 apartments, and a hotel. Biscayne Landing, as it will be called, is to be built atop an illegal former landfill whose 6 million cubic yards of content were so noxious that the EPA added the site to its Superfund list. Neighbors were sickened by a fire on the premises in 1990. “Oh,” I thought to myself, “so that’s why it smells like Michelob and limburger whenever it rains.”
March, 2003. I’m down from New York to do my taxes. My CPA takes one look at my capital-loss carryover and nudges me to consider real estate. Cruising down I-95, listening to Journey’s Greatest Hits, I count no fewer than 16 construction cranes on the downtown Miami skyline.
Thanksgiving, 2003. I start to notice newfangled neighborhood monikers like “Upper East Side” and “Midtown” invading the conversational lexicon. Ditto mortgage-speak like 2/28, collateral-lite HELOC, and “Countrywide (CFC), baby—yeah!”
July, 2004. My 10th high school reunion. Three guys nursing mojitos ask me to join their already profitable venture: a flipping syndicate. For their latest project, they’ve put down a $50,000 preconstruction deposit on an ocean-view condo, intending to sell the rights at a premium to a snowbird or Latin American. On the eve of grand openings, the three amigos will even camp out on the beach, cashier’s check in hand, to get first dibs.
January, 2005. My Ivy League-educated cousin, fresh from his stint on a reality show that bombed, decides to ditch his embryonic acting career to study for a real estate license.
October, 2005. Hurricane Wilma tears across Florida. Property insurance becomes prohibitively expensive for adjustable-rate newbies. The neighbor’s subprime startup “winds down” operations.
2006-2007. A deafening silence descends, save for all the billboards announcing “Office Condos,” the next great thing. “Why rent when you can own?” A high school pal calls to ask whether he should liquidate his 401(k) to pay off an underwater home equity loan. The local mantras: “It will come back” and “I’m not worried, the Europeans will come in.”
January, 2008. Area home prices fall 19% from a year ago. Meanwhile, back in Dump City, the mayor and developer spar over the project’s future amid plunging condo demand and a glut of new supply. Much of the site remains a yawning excavation.
March, 2008. Fishing again at my uncle’s place. I can see at least 50 idle construction cranes on the downtown and Miami Beach skylines. The front page of The Miami Herald features a brilliant yellow sticker advertising “200 Bank-Owned South Florida Homes Will Be Sold At Auction on April 12” and a profile of a prosperous foreclosure agent. My uncle is pacing, cell phone glued to his ear. “You get a week to come up with the rent,” he says. “Then you get three days to pack up and move out. I’m sorry.”
He hangs up and turns to me: “How about you and I rent a warehouse and buy up barrels of oil?”
Tax question:
If I buy one condo for let’s say 70% of the previous sale price, how are the taxes calculated?
Based on the new price? or in the old (or current valuation)?
thanks
How does Marina Blue compare to the others in the area, Ten Museum Park, 900 Biscayne, Marquis, etc???
Try zilbert.com to look at their floor plans. At the end of the day, they are all kind of comparable, which makes that area a big risk. Alot of the same coming to the market.
I think most will agree Marina Blue has the nicest curb appeal but I think their floorplans and Ten Musem’s floor plans stink. I like 900 Biscayne personally, but wouldn’t touch it unless I knew that building was going to be viable in this market.
900 Biscayne has a lot of upside with all that dedicated retail/restaurant space at the ground level, but in this market, that whole area might empty for a while. This leads me to wonder…
Does anybody know the answer to this? Let’s assume 900 Biscayne can’t find any tenants for their retail space for a while. Does that have any affect on Condo owner’s HOA directly? Or indirectly, is that just another drag on the parent company’s cash flow that would be similar to being unable to close on condo units.
Anybody have a way to gauge what kind of effect the retail space at 900 could have if it goes empty?
There are 2 associations in such buildings–one for the residential component and one for the commercial component. The residents, assuming that the association gets turned over to them, would not be responsible for financial issues associated with the commercial spaces. One caveat: if the developer has financial trouble before the residential association is turned over to unit owners, that could certainly impact the level of maintenance/amenities seen throughout the building.
I have heard from many sources that 900 has signd a lease with a speciality market that is based in Miami and/or Miami Beach. I am not familiar with the store and do not remember its name.
I am a purchaser of a unit at 900 and will be in Miami next week and I will try to stop by 900 ask which market it is.
Gardner’s Market is the name. I’ve heard the same. 2-3 months ago, I heard that they were very close to signing a lease.
Wow Lucas….these comments really go OFF topic.
Who’s the yahoo that posted the entire article in here?
900guy, something like that would be really good news. The concept of another large condo with a lot of units or alot of units and a restaurant is blah. The concept of having a large condo with a decent retail mix plus restaurants at the base is kind of neat for that location.
Kevin,
This blog is about Miami real estate in general and condo investments in particular. As usual, your comments and your presence are off-topic and negative.
I googled your name and came up with this (7th search result):
http://www.miamicondoinvestments.com/2007/06/08/kevin-tomlinson-project-glogger/
Apparently, Lucas bears you no ill will and wishes you well but you cannot seem to reciprocate. Instead, you poison every thread with negativity.
Bear in mind that many of your prospective clients will google you and, based on your postings on this blog and elsewhere, they may have serious doubts about your integrity.
And, your blog postings do not seem to generate one tenth the comments this blog generates. And the few comments posted on your blog do not begin to rise to the level of intelligence on Lucas’ blog.
If you are driven by envy, please keep the vitriol to yourself.
“If I buy one condo for let’s say 70% of the previous sale price, how are the taxes calculated?”
They are calculated based on what the appraiser thinks the unit is worth, based on comparable sales. In a condo building, usually all similar units are valued the same. If enough units sell at a lower price, then all the units will likely be revised downward as values fall.
But they do not put individual assessments on your unit based on what you paid. They base it on the general comps in that building. For example, if you get a great deal and buy a particular unit for $300k, and most of the other similar units that year sold for $500k, then $500k will be the market value of your unit.
Right on Sobe buyer.
90o Biscayne looks grotesque to me but as a personal preference, I hate building that are all glass. They lack architectural appeal to me.
On a somewhat related note: How will all these new condos coming on the market fair in a category 3 or 4 hurricane. I would not take the chance of sitting out a hurricane in a building made of all glass.
Storm,
The windows are given a design pressure rating not a “wind speed rating”. A hurricane creates different pressures, both positive and negative, on different surfaces of a structure. So, depending on where the window or door is placed, it may experience higher or lower wind pressures under the same wind speed conditions. The windows above 30 feet are designed to be able to take an impact from smaller objects. Impact glas does not mean the windows won’t crack and need to be replaced. As far as I know the balcony glass is only tempered and safety glass and will most likely shatter as pressures get too high.
I don’t expect the impact glass to fail, (debris intrusion-water intrusion)but I do expect many units having cracks or damaged glass which must be replaced.
Sorry if this is a silly question… do hurricanes have the potential to cause sufficient structural damage in tall structures to require outright condemnation or severe remediation?
If so, can anyone point to specific instances?
Thx.
Hurricanes tend to not cause actual structural integrity problems. Wind pressure on the building blows out the walls or windows which attract wind pressure before affecting the actual structural integrity of the building (the building sheds the elements that could attract load and cause it to fail). Thus the structural integrity will usually be fine.
The down side is the lost windows, while not a structural issue, allow moisture to enter the building. Also, once one window is breached, the air enters the building and blows out many other windows as it exits, further increasing moisture damage. The building is fine structurally, but the mold and window replacement could be time consuming and costly in itself.
Most new buildings in South Florida should hold up well if properly designed and build-but that is a big if on the part of the developer, designer and construction people.
Thanks!
Building: That was very, very good. Very cold and very real. Well done. Samson
Ruh – Roh, a foreclosure just hit Bel Aire on the Ocean….$329k. Thats $20k lower than the lowest short sale “bargain” on Lucas’ deals/steals page.
Hello Billy K (from Canada),
I see that you posed a question and did not recieve a response yet. Let me put in my 2 cents:
Right now I think there are 4 kinds of buyers in the market.
1. The first kind: Those who have so much money and so little brains that they dont care the consequences and will buy a unit if they like it even in this over inflated market. And there are the lemmings who just jump. Some buyers who are so chicken scared listening to some unscrupulous RE agent who tells him/her, if you dont buy now, you are going to regret, you will miss the bus etc…..yes even after what happened all these past 3 years, some RE agents still use that line and some buyers still fall for it (ofcourse, the first kind of buyers never read this blogpost. Mercifully their numbers are limited)
Expected discount from current prices: 0%
2. The second type are the end users looking for a bargain. These buyers are waiting to get a place of their own for a good discount. They are most likely to live in the unit for 5 or more years. For them a particular unit is more important and are willing to bet a little earlier than the botom.
Expected discount from current prices: 20%
3. The third type are investors like me. They need a little more cushion than the end users. They want a combination of a good and desired line in a building and a great price to justify the carrying costs.
Expected discount from the current prices: 30%
4. The fourth type are those who want an absolute kill. They are really waiting for the bottom. They could be an end user who cannot afford to buy a unit even at a 20% or 30% discount. Or they could be just a smart investor who will only pay 50 or 60 cents on the dollar. (Usually the kind who say “it is not a sale until it is half off”). The price levels may ot may not reach their desired levels. But they are holding tight. They will not budge unless they get it for an absolute minimum.
Expected discount from current levels 40%-50%
A type 2 buyer will not wait for 30% off as they know that eventually they will recoup any loss they suffer. A type 3 buyer like me will not wait for a 40% or 50%discount as at that level choicest units and lines may or may not be available.
When I say a discount of 20% or 30%, I mean accross the board, in the entire condo market and not just a distressed or foreclosed unit. Because, even as we speak, we have some distressed and foreclosed properties available for upto 40-50% off (they may or may not be the properties, you really want to buy)
That brings the question? Where do you belong. To which group. If you can identify that correctly, you have answered your own question. I would love to hear from you about your comfor levels and at what discount level you will come into the market.
Infact I would appreciate if as many of you reading this will come forward and tell your comfort level and at which discount level are you willing to buy a Miami Condo. That would make an interesting reading.
Thanks
AJ
I think people would be better served to look back over history and settle on a time horizon metric and not an absolute % drop from an arbitrary number. Looking for a % change is dangerous.
Personally, I’d feel comfortable with either of these 2 scenarios considering the circumstances of our unprecedented bubble in local RE values.
1) Pricing that predated the bubble top by 5 years. ie. if an area hit it’s bubble high in 2006, then I’d look for the pricing that was prevalent in the area in 2001.
2) 5 years after the bubble top. ie. if an area hit it’s high in 2006, then 2011 is when I would feel comfortable looking at that market.
There’s no magic bullet, but if you follow 1 or 2, you should prevent yourself from getting in way too early, and it’s highly unlikely you will be “missing any train”. In fact, if there is any risk, it’s still with being on the early side.
We’ve had 2 housing bubbles pop in recent post-war history. In 1979 and 1989, but they’ve been nothing on the scale of this bubble. In 1979 and in 1989, you would have been well served by following either points 1 or 2 above. However, this current housing bubble has been orders of magnitudes greater so taking a 5 or 5 approach may still not be nearly enough time for this mess too unwind.
Food for thought:
http://www.mindfully.org/Reform/2007/Bust-Real-Estate13sep07a.gif
http://www.financialsense.com/fsu/editorials/martenson/2007/images/1217.h54.jpg
-(argues that 1979 and 1989 housing bubbles correlated with comparable income gains so the behavior of the 1979 and 1989 “orderly” bubble deflating may not be very applicable to this current situation where prices completely ran away with no comparable income growth)
AJ,
I agree with your assessment. I put myself in the #2 category. Right now I am looking at between a 20% and 30% drop to attract my attention to a unit. Thus a $400k unit this past winter must be offered in the $300k range for me to consider. I plan on keeping the unit for 5 years, so I need to buy into a price range which will ensure i do not take a loss on the unit (break even is fine with me). In todays credit crisis market, most units beyond $300k are not affordable to the working individual. This will approximate the market bottom (for nice new 2B condo) unless additional stress on the economy develop. Then all bets are off, because the carrying costs on these condos are too much of a risk in a significantly deteriorating economy.
Back on the thread topic, I do like the Marina Blue building. At first my favorite in the area was TMP, but the layout and parking issues really turned me off as an everyday user. Marina Blue would appear to be a wiser choice than TMP, although I do not know much about the other buildings.
The major drawback I see from these downtown units it the traffic issue (from arena events and a more prosperous economic future downtown). A revised downtown mass transit system would be helpful-a series of streetcars perhaps? Antiquated but effective.
Ruh Roh! wrote, “a foreclosure just hit Bel Aire on the Ocean….$329k. Thats $20k lower than the lowest short sale “bargain” on Lucas’ deals/steals page.”
That unit sold pre-construction for $272.5k (probably at discount as corp. purchased 3 other units) and closed 2/05. Abuyer purchased for $550k in 7/06. The bank was owed $484k in the foreclosure. It’s tax valued at $386k. The bank just acquired title on Thursday. I doubt the bank is selling a 2004 North Beach beachfront condo with direct beach views from the 16th floor for $410 sq ft.
Could someone post the MLS listing?
This seems like a very good price, does anyone agree?
For those interested in the foreclosure angle, the $550k purchase in 2006 was financed with a $440k 3/1 ARM at 8.1% with a balloon, same lender also provided a $110 15-year mortgage; so you have 100% financing to an investor trading in multiple properties, who had difficulty even paying the maintenance dues.
This lender deserves to lose thousands. It’s unfortunate other residents will also be affected.
Perezo – how are you seeing all the prior sales? I tried searching the county records and if a unit had more than one sale in any given year, you only see the latest sale. Do you have premium access to the county records site?
broward’s public records site and appraiser site are so much better.
i believe that prices will stabilize when comparative sales prices will closely resemble rents. to value a property on a per square footage is the wrong concept in todays market, i believe that prices should be on par or comparable to the rents, many will argue that there are tax benefits ( and i believe that there should be a slight premium). i think that Price per Sq. Ft. should be secondary. The condo fees and Taxes and proper mortgage (20 to 30% down at conventional mortgage rates, NOT interest only loans or Negative Amortization Loans) rates should be calculated on that basis. People are looking for price points and discounts from certain years as a base, and i think its wrong, look at the current rent on a comparable unit or that unit, anticipate where the rent will be in 2 years and 5 years and base your numbers on that. Over time units will come down to those levels or very close to those levels, obviously paying a slight premium for being on the beach, or other high demand areas or buildings.
Pending Foreclosures in Bel Aire
Property Address Plaintiff 1
6515 COLLINS AVE APT 1009 UBS REAL ESTATE SECURTIES INC
6515 COLLINS AVE APT 703 BANK OF NEW YORK
6515 COLLINS AVE APT 1407 COASTAL STATES MORTGAGE CORP.
6515 COLLINS AVE APT 707 WACHOVIA MORTGAGE CORP.
6515 COLLINS AVE 909 US BANK, NA
6515 COLLINS AVE 904 AURORA LOAN SVCS
6515 COLLINS AVE 1110 WELLS FARGO BANK
6515 COLLINS AVE 603 WACHOVIA MORT CORP.
6515 COLLINS AVE 609 HSBC BANK USA (NA)
6515 COLLINS AVE 701 WELLS FARGO BANK, NA
6515 COLLINS AVE 1606 DEUTSCHE BANK NATL
6515 COLLINS AVE 1208 HSBC BANK USA
Perez0 requested the MLS listing but it canot be posted on this blog but here is the info
6515 Collins Unit 1606
LA Sq Ft: 805
Maintenance is 587
Ocean View
Listing Price:$329,000
Remarks: Foreclosed Property!!! Incredible Ocean Views from living room, bedroom and oversized balcony. Brand new condition with marble flooring throughout, 9’4 floor-to-ceiling impact windows, designer Italian kitchen with granite counters & S/S appliances. The Bel-Aire offers resort pool, Jacuzzi, billiards, ftness center, beach access, and 24-hour concierge and valet. Walk to the park, beach, shops & restaurants. Letter of Intent is required for initial offer. Please contact listing agent for details.
Alejandro – HOLY CRAP!!! Thats an eye opener! This building is going to sell for below pre-construction prices if all those make the market.
Alejandro – what system gave you those results?
outside of being next to the beach, what is so impressive about this unit at bel aire? why not pick off something on the 76-78th st stretch on collins?
Nytimes.com wrote and an article about Hyperion developers. December 16, 2007
Google — Masterful Web Entrepreneurs Hit a Snag in Miami’s Condo Market —-
Pending foreclosures in Bel Aire is not unusually high. Most new buildings in Miami area have very high amount of pending legal activity.
Hows does one get information on foreclosure condos in Miami-Dade county. Is there a government website?
To be honest with you thats not bad at all, any building that was sold after 2003 will have foreclosures, while everyone here talks about a huge drop it is very hard like noted before to say a further 30% drop since prices are all over the place. This week I have put 5 offers which shows that at a certain pice point there is demand and 4 of these units are 50% or more discounted from their peak. The other one is probably 35% from the peak but it was in a building in the Grove where the prices never got crazy like brickell. Either way that apartment left you about a 5% IRR and was actually cash flow positive taking a 15% Credit and Vacancy Loss
It is my opinion each condo should be looked at a case by case basis and there are way too many unknowns in the market right now. We have seen huge Mark to market Writedowns on the financial brokerages but the lenders and banks that are holding these mortgages (Deutsche bank, US Bank, Indymac. CitiMortgage, Wachovia, Wells Fargo, Suntrust, etc) all use accrual accounting so this summer when they get all this inventory (I actually get to see the pipeline since I have been doing foreclosures only) they are going to need liquidity and they are going to need to unload all these distressed assets off their books…
There about 12 or 13 foreclosure filing in Bel Aire, however most of them are fairly new. I think in the last year and a half, only 2 units have actually been foreclosed on, which isn’t bad. With the 12 pending, prices are likely to be affected.
With $587 maintenance fee, and $669 taxes, let’s calculate at what price would it be comparable to rental value.
Daniel, what’s between 76 and 78th St on Collins? I think Ocean Blue is around there, but it’s not as convenient to commercial areas as Bel Aire’s location at 6515 Collins, and not as close to other luxury high rises like Akoya, Canyon Ranch, La Gorce, Mei, etc. (By the way what ever happened to Ocean Sound, and that project that was to be just South of the Deauville?)
Some of you like making those calculations, does anyone know what would be a fair rental value for that unit, then calculate holding costs assuming 20% down.
Assuming $ 557 Maintenance and $669 Taxes (I am just using numbers I am not saying that these assumptions are correct) that would total $1226 plus Mortgage of (300K Purchase price, 20% down you owe 240K a 6% Fized 30 year Conventional) would be 1,438.92 +1226= $2,664 Carrying Cost
I sually work it the other way around I multiply the monthly rent x 120 and it gives me a good estimate, if the price is close then I do an actual pro forma in excel. this rule of thumb is pretty easy, if it rents for 1,000 it should sell for around $120,000 if it rents for $2,000 it should sell for around $240,000 some maintenance fees in some buildings are so high that they throw you off when you do the actual calculation but this is a good general rule to start with
There’s a link to the 1 bedroom foreclosure at Bel Aire on the Ocean on my condo deals page. The view looks great and the unit looks to be in excellent condition.
Yes I do agree that price per sq ft, % discount etc are all too much of a generalization. Miami condo market is nothing compared to Chicago, SanDiego, Manhattan or Cincinnati. At the same time, locations in Miami differ wildly too. You may never see 40% price drop in SOBE or Gables. But I think, my calculations are a good estimate for the New construction in Downtown, Brickell and Midtown areas.
Many argue that rents do not match the cost of ownership in Miami. It is true. Owning is exhorbitant at this time. But you should also remember that for an ousider, a Miami condo purchase is done 80% with heart and 20% with brains. There is a lot of emotional purchasing involved. An European or a North East tourist falls in love with SOBE on a trip and makes some irrational decisions to buy in Miami without much thought. That is the single biggest factor going in favor of Miami. As long as there are some impulse buyers out there, they will just prolong the eventual bottoming out.
Even though I honestly believe that only 2001 price levels are justified, we may or may not see those levels. That is why I am betting on 2003 levels. If they do indeed go back to 2001 levels due to a prolonged slump, that is a risk I am willing to take. But then as I said before, it all depends on your comfort & risk level and at what point, who blinks first, the buyer or the seller.
I went to see Bel Aire this week based on seeing some good deals happening…and I came away very dissapointed.
1) The complex is cutting corners left and right. In the pool area, there’s a grill area, *BUT NO GRILL*. its done very shoddily too. I think there will be some serious special assessments to fix this
2) Building is already rusting and peeling paint all over the place. Bad sign. Its like when buying a sailboat and there’s a dirty and oily bilge. Tells you that the owner isn’t taking care of it too well
3) The lobby is so plain jane, it could be a college dorm (hold on to that analogy)
4) The beach in front of this unit is extremely eroded. Its no more than 30 yards deep. Scary what will happen after one storm, will there be a beach at all?!! So much for your nice beachfront property
5) The developer truly cut corners on amenities….or the HOA is now. There is a ping pong table in one of the rooms..but no paddles or balls. *GREAT* common facility. Much like a….college dorm? Where’s the tv/theatre room? What are we paying $580 a month in HOA dues for?
6) The gym is a huge room….with only about 10 pieces of equipment in there. They’re not even arranged to look out onto the pool/beach area. Mid/low end equipment too
7) The billiards room….ha. One pool table and no stools/chairs anything. Everything here is done on the cheap
8) The hallways of this building look like a college dorm again. Tight narrow hallways, cheap paint and carpeting, flourescent lighting and nothing but door after door after door. Very clausterphobic.
9) Units themselves are done on the cheap. Crown moldings are crooked, tile is chipping, bathroom fittings installed crooked.
Overall, I’m not impressed. $400/sq foot for college dorm is what you get…view in the 02, 03, 04, 05, 06 series wont be bad…if they dont build on the south side. The so called “park” thats being put there goes up for revewi every 10 years to a developer. On the north building (the 01, 08, 09, 10 series) there will be a building blocking your view soon enough…the land to the north is already being cleared out/lot for sale.
akoya ain’t a luxuyr building. not even close.
on 76 to 78 there’s ocean blue, vilasol, vilazul and vilamur (or something like that).
Perez-
Ocean Sound is still just dirt, and Renzi developers has a for sale sign on the fence surrounding the property. No one picks up the phone at the number listed, nor does anyone return voicemail.
It’s a nice piece of dirt, oceanfront and so close to Publix and Canyon Ranch, but it will not be developed for another 5 years, given the current market conditions. It reminds me of the lot where Beach House Hotel used to be, up Collins in the 90’s. Same situation, nice oceanfront lot so close to high end real estate, but conceived/planned/sold too late in the boom cycle.
Condo Type-
I got the same impression of Bel Aire on the Ocean as well. I toured this building about 2 years ago when prices were much higher. I knew they would not last.
I was really disappointed in the pool area. Its such an afterthought. Very plain, small, cheap looking chairs, etc. Looks like something found at a hotel by the airport. This is Miami and and beachfront – the least thing you can skimp on is the pool.
AJ said: “Even though I honestly believe that only 2001 price levels are justified, we may or may not see those levels. That is why I am betting on 2003 levels.”
The problem with that is the prices started acting funny in 1999 then doubled in most mid and high lux areas from 2001-2003. Then they doubled again from 2003-2005. It’s easier to track houses because a lot of the condos this site looks at are fairly new and thus were built way after the market started getting irrational in 1999.
You had houses that sold for 900K in 2001 that sold at $1.7 million in 2003 and $3.4 million in 2005. Taking condos back to 2003 pricing gets you to the “$1.7 million metrics” and mindset, which is still far away from the “900K metrics”.
Something people have to watch out for is this notion that when buildings approach their constructions costs, that becomes a floor in pricing. In a free market, that’s all phooey. No industry is guaranteed to make profits. Car companies, PC companies, watch companies… every discretionary asset can go under construction costs and quite often do. Condos/RE in Miami are discretionary assets. A primary multifamily house in the suburbs of New Hampshire is a necessity. Construction costs can serve as a floor in real estate that is a necessity.
In real estate that is discretionary, construction costs serve as a pricing floor as much as construction costs serve as a floor to the price of an automobile… and we all know that automobiles can never sell below their construction costs… right?
Yes but if there is over construction there is an oversupply of housing, add to that a credit crunch and vewry very tight lending standards tht gives you a a shortage in demand since while the demand might be there it cannot be accounted if they cannot get financing or have the cash, add to that that lenders are asking higher down payments and that produces less buyers. SO JL what does that mean? That means that if there was demand then construction would only happen if the price the consumers were willing to pay was higher than the construction cost so that no developer would do a project if it was going to sell for under construction cost, So you just proved that there willnot be any new construction for residential RE in the next couple of years but to say construction or replacement cost create a floor makes no sense in a market where oversupply exists
WOW JL I just reread your post and realized you were being sarcastic when you said that automobiles could never sell below their construction costs. I guess I have been hearing so much that construction costs serve as a floor from developers that I misunderstood, my apologies
Hi JL,
A Very smart post indeed. If true, it is a worrysome aspect. The thought that the prices can dip below construction and land costs is unsettling. It is not a good thing though. That will wreak havoc on a lot of people. Your wishing and my wishing wouldnt change the ground realities that much. It will be interesting to see where this market is heading in the next 7 months. I own a Condo in Miami, paid for at 2004 prices. I stand to lose some value. But I also will be able to get back in the market again which I avoided for the past 3 years. Brace yourself for a wild ride.
My barber bought a 1 bed unit in 50 biscayne and paid 70K deposit. A Russian Jewish guy living in Queens and has a small unassuming shop on Long Island (I didnt know barbers made that kind of money. May be I should consider a career change).
Today he told me he is walking away from his deposit but the developer keeps sending him letter after letter urging him to close.
I asked him, why dont you bargain with the developer to give you a 20% off on your contracted pre-con price (Even then it will not be attractive, but at least he can close and try to save his deposit). He said he already tried that but the developer stonewalls any requests on price reductions on the contracted price.
I think every project built and sold on or after 2004 should offer at least 20% off to the buyers to help them close. After that even if the units lose more value, at least it will be a tolerable loss.
The developers will be liquid again, the banks will get their money back and there will be less foreclosures. The banks should offer to eat half (10%) of that loss in their own interest. That way the developer bears 10% and the bank bears 10% and the owner having already put down 20% down will only have to come up with 60% to close.
Just a simple minded thought.
Quoting AJ: “I asked him, why dont you bargain with the developer to give you a 20% off on your contracted pre-con price”
His developer is, of course, GOURGE Perez. Without the barber’s (and a lot of other people’s) deposits, he wouldn’t be able to fight 100+ lawsuits.
Also, he wouldn’t be releasing a new book (only 20,000 printed) on “How I Made a Billion Dollars in Condos”! No, I am NOT KIDDING.
Maybe, just maybe the “R” group will have to “reorganize” and your barber can get his escrowed portion (50%) of his deposit back from the B-word court!
I must tell my barber to fight for his half deposit. He has no idea, that he has any rights at all. Any idea who will take up a case such as this? Can he join a class or hire a lawyer himself? After the legal fees, will he be left with any? I think he mentioned that he was offered just 5% out of the 20% sometime back. Everything is so murky right now.
I almost wanted to scold him and tell him, he had no business to go and buy condos in Miami. For a brief second I visualized my haircut after that scenario and just held my tongue.
Is it the same related group that demolished the Sheraton Hotel and putting up 3 huge towers called ICON Brickell? Is that project going forward?
The Icon Brickell project is well underway and should be completed within the next year and a half or so. All it will do is dump another 1000+ condos onto the downtown market…
This might be a bit off topic.Does anyone have anything to say (as far as nice newer condo’s) in Aventura area??Any info. would be nice to hear,I’m just starting to look in that area.Thank you
Alejandro-
You have to keep in mind that the construction projects were already financed and they have to complete, regardless the stage that they are in. they will keep building for the next 3 years. The real estate market is not the stock market it doesn’t correct it self overnight, real estate transactions take much longer, and there is the rubber band effect.
There will be many buyers along the way both on the ascend and the descend, that believe that have the correct financial formula for profit. Only time will tell.
The built housing market is beginning to show some signs of strain. A recent zillow search in the gables area showed many houses now selling at the 2003-2004 price point. And some of these houses sold in the past year at high points and are offered at almost 40% discounts to that purchase price.
Condos will be more vulnerable to price drops than existing housing stock. The idea of preconstruction sale price or construction cost forming the bottom will not hold up for the condo industry as time marches on, as JL noted. This price point will create resistance (which i have already observed in some struggling buildings) but by no means serves as a bottom. My guess is that we will see a 10% drop below that price point in order to create interest with buyers, with some bargains had at 20% off. Deals become too good below 20% for the market to tank below that level though. As a buyer, construction costs serve as a marker, but by now means will that hinder me from offering below that value-i am not the one losing money here. I am the one with the capital.
Lucas,
The format of this web site is not adapted for so many comments. Why don’t you open a forum section where discussions can be arranged by subject?
AJ,
I do not think that you have a right to tell your barber not to buy at all. So many very wise people got cought in this whole mess. Even if he negotiates with a developer and even if the developer drops the price by 10% it still does not make this investment a good one. Prices were too high. He will still carry a huge negative. He did not buy it for himself. It was supposed to be an investment property. I would say it is better to walk away and get back 5% of the purchase price than carry it for many years.
Condo Investment Group,
What is your problem? This blog is everyone to express opinions.
AJ,
On 50 Biscayne, this is what I know. If your barber is in NY state, there have been a number of lawsuits filed regarding not only deposit returns but also =potential violations of NY State securities laws. The following is an article from the So. Florida Business Journal (03-23-08):
N.Y. AG bureau chief asks Related to release contracts
South Florida Business Journal – by Paul Brinkmann
The New York Attorney General’s Office has requested Miami-based developer Related Group let New York condo buyers out of contracts at its 50 Biscayne and Harbour House properties in Miami.
In a letter written March 19, an attorney with the New York AG’s office alleges that Related was illegally marketing and selling condos in New York without registering them as securities in that state. Such a lapse would constitute a violation of the Martin Act in New York, according to letter-writer Lewis Polishook, chief of enforcement for the AG’s Real Estate Finance Bureau.
“The complainants have informed [the AG] that they seek to rescind the purchase agreement they signed,” Polishook wrote. “Because the Harbour House Condominium sale to them was made in violation of New York General Business Law statute 352-e, they are entitled to a rescission. Please allow them to rescind and return all monies they have paid to you.”
Polishook was responding to complaints filed with his office by New Yorkers who bought Related condos and now wish to back out of their contracts.
Related Group said in a statement that it is investigating the request from the AG’s office and cooperating with the New York State’s Attorney’s Office. The company said it will respond with all requested documentation related to the New York buyers “as we categorically expect the New York Attorney General to conclude that we have violated no New York State law.”
An attorney for the company also told the Business Journal in October that it was possible a broker – not a company employee – could have been selling units in New York.
Aventura attorney Robert Cooper said he represents more than 65 buyers at the two Related properties, and he estimates more than 5 percent of buyers at both locations are New York residents.
Cooper made the Martin Act allegations a count of a lawsuit filed against the company’s 50 Biscayne entity, TRG Columbus Venture Ltd. The Related entity behind Harbour house is TRG-Harbour House Ltd.
Cooper said he thinks the AG’s letter will spell trouble for Related, even if it denies the AG’s allegations or intends to ignore the letter.
“Now that we have the AG opinion letter, I wonder what the effect is on Florida courts,” he said. “I don’t think the courts will ignore this, even if Related Group does.”
Attorney Cooper’s info is:
PHONE: 305.7924343
E-Mail: [email protected]
************
Secondly, there is a new suit recently filed and open to other buyers over the return of 25% of the deposits at 50 Biscayne. Related has refused to return the 25% portion EVEN THOUGH THAT AMOUNT IS TO BE RETURNED AS STATED IN THE PURCHASE AGREEMENT. You can contact the lawyer at this Internet link as his wife is the attorney on the lawsuit:
http://beckandlee.wordpress.com/about-jared-beck/
Suggest you read his blog.
Elizabeth Beck: Phone: 305.7890072
E-Mail: [email protected]
Tell your barber that he is far from “out of the game”! Hope this helps.
Here is something I found helpful in evaluating the wide spectrum of condos in South Florida:
Cap Rate=NOI(net operating income)/cost of condo
While each building and even each unit in the same building can have a different cap rate, it helps to evaluate them apples to apples on a cash flow bases.
After determining the current cap rate, I look at risk of maintaining this rate. For example, can Marina Blue or Brickell condos maintain its current NOI in the face of the additional inventory coming to market. Compare this risk to Bel Aire on the beach or any other unit in Miami. Its not an exact science(as who really knows how the additional inventory will exactly affect the entire South Florida condo market or unknown special assessments, or changing neighbourhoods) but I found it helpful in evaluating different condo markets. For example, I initially found it strange that the bay view Waverly had a better cap rate than the oceanview/front Bel Aire but it seems that the Waverly has a wider spectrum of renters as it appeals more to the younger crowd who want to be closer to SoBe than the older crowd that typically live in NoBe.
Lastly, I’ve also recently seen Bel Aire and while the above comments are correct, the unit is still the best value Miami beach ocean front, prime ocean view, relatively new condo on the market. Any ocean front is less risk than an inland condo, due to less likelihood of additional inventory coming to its neighborhood(cost of construction higher(particularily on the beach) than current market price of condos).
Overall, my sense of the market is that fear of overpaying in a downward market is settling in. Its like trying to catch a falling knife…….you have to be alittle lucky.
But if you set your cap rate, have some balls, you may just do ok in this opportunity market.
Just my two cents and hope this helps others in their search for the big kahuna…….
the great legal mind of robert cooper v. greenberg…hmmm, i’ll take greenberg in that fight.
Jcrimes- do you not recommend cooper? Anyone have experience with this guy? Who is recommended to go against related?
RG
i won’t recommend any of the above cited attorneys. they can make their own pitches.
as for dealing with related, realize:
1. if you try to push on getting all your money back, related will push this to the very end at the trial court and appellate level. there will be no deal and the final result will be years in the offing. and of course, you could lose. remember, related has the money to bring in the best (that’s not necessarily an endorsement of GT though).
2. if you’re willing to take some money back and walk from the rest (i.e., less than 50%), then why hire a lawyer? work with the developer directly. if you hire a lawyer, you’ll probably settle at the end of the day for less than a 100 cents on the dollar. throw your attorney’s fees and costs on top of this amount (these guys are taking these cases on a contingency), and you’ll be getting back 15 to 20% of your deposit, at best. factor in the time and headache of litigation, and the end result is for naught.
does anyone know the status of any of these suits? i’m too lazy to pull up the dockets, but i wouldn’t be surprised that related is insisting on deposing every contract holder, is fighting class status in the 50 biscayne lawsuit (i’m assuming that the class action certification has not been granted…i could be wrong) and is fighting on all procedural and pleading issues.
Anyone the condo situation in North Bay Village, such as the 360, Space 01, Lexi, Bridgewater?
FYI…an interesting thread on FL on the housinbubbleblog.
http://thehousingbubbleblog.com/?p=4388
jcrimes,
In a world where the developer (Related) honored its purchase contracts (particularily Paragraph 4 – Deposits), one-quarter of you 20% deposit, about $20,000, would be returned to the “buyer” who did not close, with a letter and a smile.
Over 200 people (50 Biscayne) wrote, called, faxed, etc. requesting this to no avail. So some of them sued. IMHO, Related will lose these suits when a judge reads the contract.
Realize what you are dealing with here….Related has sued over a dozen RE agents for a clawback of commissions paid to the if buyer didn’t close.
BTW, Related has recently “stocked up” on in-house counsels so they could lessen their costs at Greenberg. See below:
*******
Friday, March 14, 2008
Related Group preps in-house army against mounting lawsuits
South Florida Business Journal – by Paul Brinkmann and Julia Neyman
Jorge Perez smiled brightly as he walked the red carpet for the opening of Plaza at Brickell, a 1.000-unit luxury condo development in the middle of Miami’s financial district. But behind the festive veneer, legal troubles are mounting for the Related Group, the region’s largest condo developer.
The Miami-based company has been hit with more than 100 lawsuits in the last year, and hired three general counsels within the last nine months to cope.
Longtime Miami attorney and University of Miami professor Doug Bischoff joined the Related Group in July to help with transactional work. Tampa attorney Betsy McCoy joined in January to head up litigation, and a third attorney, whom the company will not name yet, comes on board March 17 to handle work in Latin America.
“Litigation is becoming a huge problem,” Perez said at the Plaza fête. “There are a lot of ambulance chasers. We’re getting all these people who are suing for the most ridiculous reasons, and we’re fighting those people to the end.”
The majority of lawsuits revolve around two areas: buyers seeking to abandon contracts or recover deposits and zoning disputes.
The Related Group’s legal woes aren’t disproportional, experts said. After all, it’s a huge developer at the height of a major housing slump.
Scott Norberg, a University of Miami professor who teaches contract and commercial law, said real estate buyers are bound by contracts, even if property values have dropped.
“It’s not uncommon at all for people to look for a way out during a market downturn,” hr said. “But, it’s one of the overall purposes of contract law to require that people honor agreements entered into. It’s difficult to get out of [a purchase contract], outside of bankruptcy. Courts are – and should be – reluctant to let people get out of deals just because they don’t like them anymore.”
A different view :
Plaintiffs and attorneys suing Related have a different view of their legal claims. Miami attorney Jared Beck is trying to certify a class action for contract holders at Related’s 50 Biscayne condo tower in downtown Miami. According to Beck, he and his client, Mitchell Becker of New York, got little response to requests for a deposit refund until they filed suit.
“We sent letters, e-mails, phone calls,” said Beck, of Beck & Lee. “We just got the same stonewall answer every single time. From our end, it was their attorneys that were giving us basically no answer.”
Bischoff said beefing up in-house counsel is a way to save money. Previously, the Related Group relied on a dozen or so outside counsel and drew heavily from Greenberg Traurig, but much of the litigation work will be transferred to McCoy, Bischoff said.
“Part of my responsibility is to figure out what we’re spending and to bring our costs down,” said McCoy, who has run a solo practice in Tampa for the last 20 years. “I’m planning to handle as many contract rescission cases as I can handle responsibly.”
In response to Beck’s claim about difficulty communicating, McCoy said most of Beck’s contact was with outside counsel.
“We have offered that money to Mr. Beck’s clients, and they refused to accept it and want to proceed with the lawsuit that doesn’t have merit,” he said.
unrelated
if that’s the case, then how much do you think people will be getting back on their deposit after attorney’s fees and costs are factored in? figure a deposit of 80k. throw in a contingency fee of 30% and costs of another 3 to 5%, and you’re looking at best, at a recovery of 50k. and of course related will appeal any trial court decision, which will then get de novo review at the appellate level.
This looks great!.
jcrimes,
In the State of Florida, if the Plaintiff wins a judgement in a lawsuit, the Defendant is responsible for the amount awarded, plus attorney fees and court costs.
If Defendant appeals and loses, the original award may be larger. The appelate courts do NOT necessarily even have to take up the Defendant’s appeal, if they feel it is nothing more than a stall tactic.
As far as cases over “the 25% of the deposit owed back to “buyer” and so stated in the Purchase Agreement, the original court in which the case for recovery COULD find for Plaintiffs in a Summary Judgement motion or refer it to mediation, which obviously would be found in favor of the Plaintiffs. Here again, “loser” pays attorney fees and costs of “winner”.
1 shot dead, 1 hurt at Miami nightclub.
Park West is looking better every day.
Looks like that upscale live rock club couldn’t make it a promoted a hip-hop event which led the upscale club to be another murder scene. Good luck Park West residents.
unrelated
you don’t know what you’re talking about. the american rule applies in florida. there’s statutory provisions that allow for fees, but that’s not guaranteed and up to the court. contract, which i imagine here is no different, could provide for fees, but if you settle, as most suits do, that won’t be the case.
Un Related,
thanks for the info. I will pass it on to my barber. hopefully he can benefit from this. I am sure he will appreciate this help/concern for him.
jcrimes,
Sorry, but your “you don’t know what you’re talking about” exemplifies the pitfalls of arguing with strangers on the Internet. The fact of the matter is that I have already recouped and unloaded a couple of Brickell units, months before closing notices ever went out on the building! Who’s your daddy now?
Un-Related,
Did you use an attorney if so who? How much of your 20% deposits have you been able to recoup. If you could please tell us of your experiences it would be much appreciated.Thanks
RG,
Yes, open this link: http://mjsjd.com/
It will depend on the property involved.
Wish I could be of more assistance.
un-related
spare me – if you’re pointing to schlessinger than i definitely know who wins on the battle of intellect..since you’re pointing to him, ask jgood ole imbo why he’s no longer at kluger. now that’s a good story.
The pics of Marina Blue look very average….the back of the buidling is really ugly, the lighting is too bright and looks sub par compared to its sister, Blue
Lucas! You’re a better blogger than you are a photographer! the pix of marinablue do not do the building justice. you missed the awesome industrial-chic lobby, the funky lounge by the beach (not sure if it has a name), the rock garden… even the sexy curvy front of the bldg (which i heard are actually lofts, i thought it was retail space). the bldg is gorgeous – please re-shoot!!!! otherwise,,, great job.
jcrimes:
What did you mean by :
if you’re pointing to schlessinger than i definitely know who wins on the battle of intellect..since you’re pointing to him, ask jgood ole imbo why he’s no longer at kluger. now that’s a good story. ?
No one has addressed the greed of these developers and how many times the pre-consturction units were ‘flipped’ by the developers by just handing the sales contract from one buyer to the next at $100K or more profit. Just like the pyrimid schemes of old when the guy at the ‘top’ gets stuck holding the unit at a totally inflated price and having to close. Some of these buildings were resold 3 & 4 times before any closings were done. Of course, friends & family were the first ones to get in and were laughing all the way to the bank.
Does anyone know how many law suits Hyperion has against them? The famous hi tech guys who made billions in Silicon Valley then came to Miami thinking they were ‘builders’ to get more money—greed! NY Times article Nytimes.com wrote and an article about Hyperion developers. December 16, 2007
Google — Masterful Web Entrepreneurs Hit a Snag in Miami’s Condo Market —-
They all deserve what they reep–Karma
Perez included
greedydevelopers said: They all deserve what they reep–Karma Perez included”
I see in the Herald that Gourge’s new “How to Make a Billion” book is out.
A couple of posters made me laugh:
Hoss: “As a set of principles, the text may ramble a bit, but the author is very consistent in his admonitions and exhortations for conducting business in an honest, ethical and upright manner.”
“Yeah right, like the “honest, ethical and upright manner” he used to buy the commissioners’ vote to approve his condo project next to Mercy Hospital. He is corrupt, he just wears a suit and doesn’t get his hands dirty.”
F Duran: “He also could have written: “The errors of overestimating market trends and how to screw investors”
Rev. Wright: “Related’s chickens are coming home to roost!”
I suggest he puts a free copy in each and every one of his condos, like a Gideon Bible. After all, he has to use up the publication run and who better to inform that all the short-term renters that will occupy his structures.
Maybe Perez’s books could be recycled as T/P for the bathrooms of all his overly inflated buildings–you know he & Trump are buds–they all deserve each other!! I wish some of these fat cats including Hyperion developers were all out on the streets trying to get financing for the over inflated mortgages on the concrete boxes that they have all dumped on the ‘little’ guy!! They sold us all a bill of goods! Sizzle sells!! & suckers buy!! These bums should be helping people with their credit crises–they put us into these positions by selling investors 5 & 10 units at a time & then saying ‘we didn’t know they were investors’! Ppplease!!
Any idea of law suits on Hyperion–?? Hope it is many! They don’t finish their projects either!
[…] a month ago, I shared a bunch of pictures that I shot while touring Marina Blue. Someone left a comment remarking that my amateur eye […]
marina blue is apartment are good, people are not good, pls dont rent aparment on 3rd floor, too much noise and vale parking also making too much noise, so pls dont take 3rd floor.