Assessing the Neighborhoods and Condo Buildings of Miami
January 31, 2008 by Lucas Lechuga
The map above is a portion of a larger map that was created by the Miami Downtown Development Authority. It is a great resource for people to see where various condo buildings throughout Miami are located. I realize that it is very difficult to view the above image. I do, however, have a PDF of the map on my file sharing page. Click on the file called "Miami Developments Map Aug07". You may also want to view the file called "Miami Developments Report Aug07". There you will find profile pages for several condo developments in Miami.
The map does not encompass all of Miami, however. It basically covers just those neighborhoods in Miami that had the most condo development during our recent boom. It also doesn't show every condo development on the map. I'm not sure how far back it goes but my guess is that it only includes developments built since 2004.
The Neighborhoods of Miami
- Brickell - Brickell is also known as the financial district of Miami. A lot of large international banks are located in Brickell. Also, the majority of Miami's condos are located in Brickell. When you see a picture of the Miami skyline you are most likely looking at the various condo buildings in Brickell.This is considered by most to be an affluent neighborhood. There are some very high-end condo buildings located in this neighborhood such as Four Seasons Residences and Santa Maria.However, there is a large supply of condos that has recently begun to hit the market in Brickell. Buyers will definitely have good opportunities and a lot of options within the next couple of years. You really need to research these buildings considerably if you intend to buy. There are some condo developments in Brickell that I feel are overpriced and will likely come down over the next 2-3 years. There are others that I feel are appealing to end-users. I also wanted to note that there is only one waterfront lot left in Brickell.
- Brickell Key - Many would say that Brickell Key is viewed as an exclusive neighborhood with its gated entry into the neighborhood and its paved brick roads. There isn't much new inventory in Brickell Key that will hit the market within the next year. In fact, only 123 new condos will hit the market once Asia closes its units. Other than the small piece of land behind the Mandarin Oriental Hotel, there is no room left to build in Brickell Key which means that there probably won't be any new supply there for many years. Many might argue that the large supply of condos in Brickell will have an effect on prices of condos located in Brickell Key. However, some would tell you that they only want to live in Brickell Key.
- Downtown Miami - In my opinion, Downtown Miami needs more infrastructure before it can become a great neighborhood. It'll take some time but will eventually become a great place to live. My opinion is that until this becomes a realization current prices will be difficult to justify. Long-term though, I think Downtown Miami will be a very happening place to live.
- Park West - Park West is a small area of Miami that is located directly south of the MacArthur Causeway. It is currently comprised of four buildings. I've said it before and I'll say it again, I believe this neighborhood has the greatest long-term potential for various reasons that I've mentioned in other posts. In the short-run, however, I feel that prices won't go up until grocery stores, pharmacies, coffee shops, etc. become available in Park West. I've heard from various people that Gardener's Market is negotiating a lease to open a store at the base of 900 Biscayne. Park West needs more of this.
- Arts District and Edgewater - The Arts District is a fairly large area. I typically regard it as beginning at the Carnival Center for the Performing Arts and ending on NE 36 Street, although everyone has their own definition. In my opinion, this will be the last neighborhood to turn around. There is still a lot of room to build on waterfront lots because there are a lot of run-down buildings that could easily be knocked down. It does have Margaret Pace Park though which is a fantastic park. I think opportunities for investors to buy in bulk will become available in some of the new buildings in the Arts District. I currently know of one.
I'd love to hear everyone's thoughts and input.
Attn Samir, Wild Bill, jcrimes and others,
Thank you very much for all your comments. This is what I wanted to hear about Park West and other downtown areas… This is why I like this blog: opinions from all sides.
FYI I did my homework and after looking at this blog and others, took a plane (From Africa) and was from 8 till 31 Dec in Miami area just to see condo from Bal Harbour to Coconut Grove, Miami Beach, Miami, and eventually narrowed my choices to Marina Blue (and may be TMP, 50 Biscayne, and Brickell key ?) But again, as I am a foreigner, I do need local input, and thank you for that ! and also thank my friend Lucas for this blog… Keep the good work Lucas !
jcrimes, I don’t understand it. I just always ask and its always some guy doing research for a hedgefund interested in purchasing condos. How long they intend to hold I couldn’t really tell you. How serious they are I couldn’t tell you. But if I’m getting those calls (an I’m used to dealing with single property buyers), I’m sure others are as well.
Terry, it would helpful for us to all know if you are looking to buy a studio, 1, 2 or 3 bedroom. I was recently able to tour Marina Blue and the amenities deck actually looked very impressive. It was like an actual beach up there with tons of sand everywhere. You don’t see that everyday. How practical this is for the future I don’t know. It looks like it could be a lot of maintenance for the building staff. Ten Museum Park still has a ways to go, as far as what was expected. 50 Biscayne is one of my favorite buildings. I think the 2+dens facing East are great units. The den is big enough to convert to a 3rd bedroom and I actually like that idea more than an actual 3 bedroom unit at 50. I also like the fact that it is across the street from the park and close to bayside marketplace.
@Samir,
I have seen your pics of the skybeach at Marina Blue, and it looks terrific really. MB remains my favourite and if I can afford it I would follow your advice and get a 08 line high floors…
The problem remains: the neighborhood…
It is better around 50 Biscayne, and even better around Jade in Brickell, and best in Asia on B.K. but then who would want to get stuck out there ?
I know this area is not the focus of the blog, but I was curious what people’s thoughts were on areas outside of brickell/downtown? In particular, Coral Gables has new exisitng and new construction condos. Have you heard anything on the existing buildings (Andalusia, Aragon, Minorca, etc) as well as new construction (Ponce Tower, 55 Merrick, etc).
How will these fare in the future, particularly compared to brickell? If somebody is buying in the next 6 months, any recommendations? Have recently seen some softening in the prices in the gables but nothing like i have seen in brickell.
Thanks for a great blog Lucas! Keep up the honest assesments and you will be one of the few trees standing when all is said and done.
can anyone explain to me why they didn’t do the stairs right in the avenue in the two story units? i mean, yeah, everything is decorator ready these days, but they just left it barren…WTF? not to mention, laying a floor in these units is gonna be pricey – lots of cutting around on the second level.
the obvious difference betw all the new downtown buildings and the so called luxury condos south of fifth is that south beach is an actual community with a real infrastructure. thats why people want to live there and will pay millions to do so.
as for downtown, there is no there there. and there won’t be much there for many years. i suppose miami had to start somewhere with the condo towers. now somebody needs to build a real city all around them with 24-7 action like entertainment, retail, grocery, hardware etc.
even after a century, downtown miami remains a wilderness. the brickell corridor is all but devoid of real life, although mary brickell village is starting to add some.
brickell key? a graveyard. nada.
the only way to know how dead miami really is to live here. that’s why ‘foreign’ investors remain downtown’s best hope: they don’t know anything about life in miami and think it’s a great investment. maybe it is, compared to bogata.
the reality is if you buy downtown, you will spend all of your free time driving over to south beach for something to do. good luck w traffic and parking.
if you work in brickell, maybe renting over there makes sense. to buy a condo there? madness…
I think the capitulation in pricing is yet to come. People are holding on at the edge. Some temporary price supports have been put in place. Soon, it will dry up and the day of reckoning with be at hand. You just can’t fight the economics of this situation. It is like opening up a “Whole Foods” in the middle of a Super Wal-Mart. People will soon realize the lettuce is the same so why pay the 30% premium at Whole Foods just to “feel good”? When you’re talking about real money — hundreds of thousands that could be overpaid, people won’t do that as an impulse. The buyers now are basically from other countries with favorable exchange rates and don’t fully appreciate how terrible the market is (or their currency really is that strong so US dollar appreciate will offset any further losses).
I really think you will see the 40% change from peak to trough in real dollar terms. So, over time, that will be a 35% price drop from 2005/06 to 2010/12. That $1,000,000 condo will only command a $650,000 in 2010/12.
I may just be an optimist.
By the way….everything happens at the margin in economics. You don’t need to talk about everyone or even averages, it is what is happening at the margin. My friends, there are a lot of desperate people at the margin in South Florida real estate. That is seen by the number of people behind on their mortgages, foreclosures, and homes listed for sale. A 57 month supply in some areas with record foreclosures. I don’t need a crystal ball to see what tomorrow will bring.
I look at one place where I could rent a top luxury place for nearly one third of cash flow. ONE THIRD. Now if the condo was appreciating at 8%-16% per year then it would make sense to buy because of the unrealized capital gain. In a declining market no way….in fact in a declining market the actual cost of owning may be 4-5 times the cost to rent. These numbers are just insane and the only solution is for substantial price declines. It is what it is and any hope is misplaced.
Samir,
Don’t pay attention to Marcus. He obviously doesn’t “get it”. Does he really think that blogging doesn’t lead to sales?
Lucas,
I try not to pay attention. Of course with blogs it’s easy for any conversation to seem one sided. Just took some clients through the penthouses at Quantum and they were very impressed. Sure not everyone can purchase a penthouse these days but my clients appreciated the fact that today is the day they can get the best possible unit in a building if they fall in love with the building. It is definitely a status symbol and I’m not talking about the mid-range market.
Terry,
I do think the area immediately around 50 Biscayne is better as of right now. But that isn’t really my first preference if I was buying today either. Some of the neighborhood type locations (at least on the downtown side) like Brickell Village just don’t have the unobstructed bayviews you get in some of these new condos like MB, TMP, 50. I really find Brickell Village to be interesting. Just wish it was right on the water. I don’t like the feel of Brickell views much, I like it every now and then but I get over it quickly. You get the manhattan feeling but if I’m living in Miami, I might as well take advantage of the water views. I really like the area between 1800 Club and Paramount. It’s no Brickell Avenue but they views from East facing units are amazing. Also it is very close to Downtown but feels more like a neighborhood because the park is there now and not a promise like Museum Park.
Again with the misspellings. Does WordPress have a spell check pluggin? Now I’m going to have to look for one.
Samir and other agents/brokers,
How can you justify buying when cost of renting is ~1/2 the cost of owning? My rent is only a few hundred dollars more than property taxes plus property taxes. Add in the cost of servicing a mortgage, and I think my rent is covering at most 1/2 of the cost of ownership. Most of my friends are in similar situations.
The only justification for buying at current market prices is appreciation which is a tough sell. The following article from yahoo makes a case for 25% decline nationwide. Miami is likely to be even harder hit given its disproportionate appreciation over the past 5 years.
http://finance.yahoo.com/real-estate/article/104340/Housing-Meltdown;_ylt=Aj8UqCaN9VesLl9QmbFJZt1O7sMF
Lucas,
Are you having trouble w/ WordPress? I just posted something, and it hasn’t made it to the blog yet.
Renter,
No, WordPress has a built-in spam filter. Sometimes it will send comments into “waiting for moderation” mode if it suspects that it is spam but is not sure. I guess it suspected that because of the long link in your comment. I approved the comment.
QUESTION FOR THE EXPERT’S? A realestate show’s you a property,your not happy with their service.You like a property that they have shown you …but you don’t want to work with them.What are your legal option’s?? Any help with this would be much appreciated.
buy now
use someone else. you’re not locked in on the buyer’s side on who you use. if the seller’s broker raises a stink…well, too bad – they’re supposed to be looking after their client’s interest and not the original realtor who showed you the place.
buy now, it also depends on if you signed a buyer/broker agreement with that Realtor.
Thanks so much for sharing this, I’ve been to FL, but never to Miami. It was nice to see what’s out there in Miami.
Thank you jcrimes and Samir Patel I appreciate your comment’s and advice.
Samir your a real estate agent and I would not trust your commentary. Your on commission and no sale, no income. You don’t have a blog as far as I know, so your using Lucas’s blog to feed off of and try to get some leads. Problem is blogging does not lead to sales, and I don’t trust someone on commission. Lucas your blog is worthwhile, though at times you skew numbers by reporting out of date and incorrect info so you need to watch that. That could lead to further lawsuits a hate to say.
dan…not sure if 20% is even the right downward movement. i’m an optimist at heart (yeah, i know, it sures seems like it), but i don’t think people realize just how bad it is right now and how bad it’s going to be. i’m talking about the sheer level of speculation that was built in the RE market in general, and south florida in particular, from 2001 to 2005. without getting into it, my line of work affords me to work with someone who’s in the “know” – a guy who has decades of RE and more importantly, lending experience in south florida. i know my blanket statement means little on an anonymous chatboard, but really, he’s ace rothstein. so yesterday, we had a chance to talk about the buy vs. rent decision while working on something entirely different. although i thought i had some good reasons why the former was better than the latter, he really hammered the point home. his take, unless there is compelling, non-financial reason to buy, wait at least three years…or better yet, five years to be sure. the entire process over these past few years, from the day someone planned the building, to the guy who decided to purchase a unit, to the hedge fund who bought the MBS, has been entirely tilted. frankly, the mortgage foreclosures and walkaways on units are just a small part of a much bigger wave that is only now starting to materialize. you’re already seeing concern about whether bond insurers can withstand the breakdown in RMBS (and CMBS is the next shoe to drop…and let’s not even talk about ABS for construction loans and second lien and/or mezz debt market), no one even has a friggin clue about whether the $4 trillion cds market will hold up (the journal had an amazing article a little while back on who actually holds the counterparty liability on these instruments – needless to say, a lot of these folks probably won’t pay if called upon). if these two markets fall apart – and it doesn’t take a huge losses to do so, but rather, just the perception that there is a collapse – the credit markets will be in such a violent downturn that it will have a significant impact on hard assets, i.e., real estate, for years to come. yeah, john q home purchaser doesn’t think about this…but he should.
the FT does a better job (but not as good as ace)…
http://www.ft.com/cms/s/0/486fb178-c2b9-11dc-b617-0000779fd2ac.html
Marcus Bui, in fact I do have my own blog, I just don’t use it to report on market statistics or comment on market statistics. I think Lucas’s blog does a good job at that. As far as using Lucas’s blog to generate leads – you are way off base. I am a Broker, not an Associate. I run my own business and I am quite capable of generating my own leads through my various Internet sites and offline advertising. As far as not trusting my commentary, that’s fine. I would probably not chose to work with a client like you anyway. I like to work with decision makers. That’s just my style. I don’t care if my buyer buys tomorrow or 2 years from now as long as we’re both on the same page from day 1. My job is to bring my clients the best deals at the time they ask for them. I have worked with some clients for the last 2 years scouting properties and they are just now ready to buy. Furthermore, yes Realtors work on commission and you are in your own right to not use a Realtor to assist you in your property purchase if you ever do purchase. I would just wish you luck.
i don’t buy the hedge fund argument either…at least not any competent fund.
hedge funds, because of their compensation structure, are always looking to generate good annual returns. no way do you convince your investors to stay in on the premise of hey, let’s hold on to condos for several years and ride this out. there may be a few RE funds (vornado is a big player up north on a lot of bulk purchases or in certain instances and also makes plays on mezz pieces), but in the end, it’s a very limited group that can really ride the storm out and be profitable in this strategy.
Lucas-
Anyway you could update the Deals! section of the website more often? Also, if you do start to do more updates, is there anyway that you could reflect recent additions to the list on the home page of your site? Thanks again for this great webpage, we all appreciate your honest assesment of the Miami condo market.
dreaming,
Sounds like Miami is not for you…..
Great summary.
Do you have something similiar for the Miami Beach area, Sunny Isles, Bal Harbour etc.?
Do you think situatuation there is as bad as in downtown Miami?
Of course Downtown is not that great now. It is still a construction site.
I was visiting again yesterday 10 Museum Park and this building is ust great. When you invest in real estate, you don’t invest for the next 2 years. If you want that you can have some very nice opportunities in South Pointe in South Beach. But not at the same price.
And a few years ago when the Portofino Tower was built in South Pointe, they had too to be isolated from the grim outside them. And you still have this feeling of heavy security when you go there.
However a few years down the road, it is now one of the most wealthy and safe neighborhoods with many restaurants, etc. And the new buildings don’t even need this heavy security.
When you see all these buildings in Miami, you have to project yourself to imagine how they will be in 10 years.
Just check the number of people who can tell you that they could have bought tons of condos in South Beach for $20,000 many years ago. Ask them if they regret ?
Come to Lincoln Road and imagine that a few years ago nobody wanted to come to this street. Now it is just packed day and night.
Miami is a great city, a magic city with great appeal and I believe strongly in its future.
this is the BEST blog.
projecting is one thing, but if you’re asking me to be an urban pioneer but pay good neighborhood prices in the process, that’s just absurd. really, how long do most people hold a condo for? i’ll take a guess and say less than seven years. and in the next seven years, park west will still be a bastard child of a neighborhood.
The area closest to the Central Business District surrounding 50 Biscayne, The Loft Downtown, The Loft 2, One Miami and soon Everglades on the Bay and The Met is definitely way ahead of Park West as a neighborhood.
I think that urban planners, the architects who designed those buildings, and The Related Group (is it a coincidence that 4 out of the 6 buildings mentioned above were developed by Jorge Perez’s – educated as an urban planner – group? ) did a much better job of incorporating the exterior elements and creating a pedestrian-friendlier experience.
Add to that the neighborhood’s mix of units at various socio-economic levels and its proximity to the Miami River (still a natural resource), Class A office space, Miami-Dade College’s Downtown Campus, Bayfront Park, Bayside (they got a Hooter’s AND a Chili’s – I know “woo hoo!”), Macy’s, La Epoca, Churchill’s Barber Shop and dining establishments like La Loggia, Rigatti’s Cafe, Soya E Pomodoro, and it’s clear as day that this neighborhood is way ahead of Park West RIGHT NOW.
Furthermore, its convenient location (much more so than Park West’s) within the Metromover’s inner loop (a la Chicago’s “the Loop”) will prove to be a major asset in the future once the area achieves its anticipated population density.
Park West, on the other hand, has a lot of catching up to do.
Right now Park West caters mostly to club goers who don’t live in the area and can only be seen in the wee (and not so wee) hours of Saturday and Sunday mornings. The rest of the time it’s a dead zone – pardon the expression.
The I-395 overpass is a killer (again, sorry) for Park West as it serves as a physical and psychological barrier for pedestrians. It totally severs it from the Arsht Center and the rest of the Arts District. Keep in mind that the erection of I-395 marked the start of Overtown’s demise. As long as the I-395 remains a raised highway, it will keep Park West from fulfilling its FULL potential.
Having the Cisneros Fontanals Art Foundation (cifo) move into the neighborhood (in the old Fight Club space) is a major step in the right direction. At one time (circa 2004), there were rumors that the Whitney Museum (of NY fame) was considering opening an annex in the neighborhood. I don’t know what the status of that is, but it’s probably safe to say that that’s not happening anytime soon, if ever.
I did notice that the person who offered his/her warehouse space rent-free to the Whitney, has purchased several units (11 or so) at Ten Museum Park – and they’re not even the premium 01-04 lines. We’re talking 05’s, which (in my opinion) is not a very good floor plan. That should, at the very least, make you say “Hmmm”.
I think that market forces will eventually (exactly when is anybody’s guess) make Park West the place that some envision.
Museum Park at Bicentennial or something of that magnitude is a must for Park West to realize its potential. Without that, you’re left with nothing but pretty buildings with views (for a select few) and confusing one-way street grids to anchor an entire neighborhood.
Nevertheless, I think that those interested in moving into these areas should experience the neighborhoods for themselves and not make their decisions based on a comment in someone’s blog.
Does anyone know the current mentaility of owners of Ten Museum Park who have their Units listed? (ie: See Mark Zilbert’s website) I haven’t looked long enough to see them lowering their prices. I’m baffled when I see huge price differences for the same Line 7. Sure, there should be a slight difference for higher floors but not by as much as the $50k to $100k+ I’m seeing. Are sellers just listing them for sale just for kicks to see if any desperate buyers come by? Or do they have too much money sunk and need close to asking price? Does anyone know any current owners and have input as to what their general situations are? I’m seeing 1 bedrooms at TMP listed for more than a 2bedroom. Why would someone pay a lot more for a 1 bedroom? Any current owners care to share there thoughts on TMP?
Peterson – first of all I don’t push anything on my clients. I sell only what my clients desire to buy. If they want to buy today, then why should they wait a year. You assume everyone has a pure investor mentality and wants to buy units at $.50 on the dollar. Even you must know that is not possible unless you are looking to do a transaction for many units and I don’t mean 5-10. I don’t waste my time on buildings which obviously will drop in value. But even you must also realize that if someone bought a unit pre-construction for $500 a sq ft that you won’t ever see that unit advertised for $300 a sq ft unless it is actually in foreclosure. Do you think these people would happily forfeit $100,000 and in some cases $200,000 to give you a property? If they had the $100k or $200k don’t you think they would be in a possition to close and just decide to wait out the market? And furthermore, read my previous comment again. I suggested that Terry visit Miami and see the buildings in person and make his own judgement and not listen to anyone’s comment here. Some of us here may be more qualified to give advice but NO ONE here can predict the future. And if you think you can – then go buy us all some lottery tickets. In addition, my clients buy the best units at a discount when other buyers are wasting their times looking for ALL of the units in ALL of the buildings to drop in value. What does it mean to me if a unit in a $700 a sq ft building just dropped to $650 if I’m not looking in that price range? I am sure my clients will be happily enjoying their properties for many years to come and they will notice units in lower floors and with not as good views selling for more than they paid.
Gerry Hussey, without actually looking at the MLS photos, I would expect the price differences to reflect maybe raw and upgraded units. Some owners do not get it, they may dump $50-$100k into a unit and screw themselves. Sometimes a buyer just wants a great price and upgrade the unit to their own taste. Also those 2 bedrooms (06 and 07 lines) don’t have as great a view as the 1 bedroom (08 line) although do I think the view should outweigh the sq ft in this case? I don’t know just yet. I think TMP is great for the 01-04 and 08 lines. I also don’t expect TMP to really be a great address for a primary residence. I just don’t think the floorplans are practical for year-round living. For vacation use – yes it is definitely a unique building and the living spaces unique as well.
samir,
you’re a knowledgable realtor and have good insights in your posts. with all due respect, as you said ‘no one can predict the future’….i will say that in the NEAR future, prices will only go further down. if sellers can only remove the emotions and ‘hope’ out of the equation, it’s quite clear. there is just WAY too much inventory…and MUCH more to come in the next year or two. demand is close to dead for things under 2 mil (i would say things over 3 mil move better in this mkt). lack of credit which is not helped by lowered rates as far as new loans are concerned (though good for refi’s). undoubtedly we are in a recession (look at today’s payroll #…worst in almost 5 years). put down 20% and see what your carrying costs are…then compare it to the rental equivalent…still…WAY off. so unless a HUGE number of new residents arrive in miami for some reason (not investors…people who will live in the home/condo), demand will not pick up.
having said this…maybe in 4,5,10 years…things will improve…but real estate cycles are NEVER similar to those of stock markets. if you dont get into the stock market, it could exlode tomorrow….real estate takes a LONG time to wash out.
…so when you mentioned ‘predicting the future’…you’re correct, but you can certainly make a very calculated prediction – for the reasons i just mentioned. call it predicting the future or something else..
Cyrus,
It is true I am seeing a dropoff in sales between $370,000-$1,000,000. However there are still transactions taking place, its not completely dead. Many buyers have already been waiting for 2 years for buildings to just open so now they can walk inside and see the actual views. I firmly believe that not everyone will wait another 1-2 years to make their purchase and of course the best priced units at any given time will sell.
I am just stating that if I sell a waterfront unit for $300 per sq ft today and a similar unit priced at $400 per sq ft waits until 2 years to drop to $300 per sq ft, my buyer today still got a great deal and they can move in today thus making them happy. The deals are out there but it seems many of the commentors on this blog post as if the sky is falling. It is true no one can predict the future but of course people see the trend of downward pricing it is no secret, that doesn’t mean you can’t get a great deal on a unit today, why do you think you have Realtors out there? We have access to all of the inventory. An educated Realtor will find you what you are looking for at the price you are looking for. It is all about personal preference and taste. Not everyone wants a Trump building and is waiting for prices to go bust in a Trump building. Some want to buy because they need more space because of a new child in the family, or to be close to a family member who may have bought in a specific building, or to be closer to work. That’s all I’m saying. Based on this keep in mind that yes buyers will set the price in this market but if other buyers still will buy for the multitude of reasons out there, then expect prices to stabalize. Of course sellers are not going to leave money on the table if their neighbors just made a profit even in this market. If you are expecting a specific unit in a specific building to drop to a specific price per sq ft you may OR may not be in luck.
To FD-Condo’s comment about South Point and Portofino Tower.
Portafino was completed in 1996, that would be more than a few years ago and it’s average price per foot was $250,000. The area was still somewhat questionable four years later when in 2000 I purchased my first property on Ocean Dr “South Of Fifth”.. Back then there was plans to build out all of the waterfront lots with luxury towers and that they did. All of the buildings were true luxury with 190 to 331 units and each delivered in a timely fashion. Two keys to South of Fifth success is that Ocean Drive leads right into it and Ocean Drive is a part of it. Ocean Drive at the time and somewhat today is perceived as one of the most fashionable and desired addresses. I personal feel that glamour has faded although the addresses South Of Fifth still demand top dollar. The other key is the area is contained and manageable. The City Of Miami Beach repaired sidewalks, streest and planted streetscapes. Let me add a third key, FISHER ISLAND, the wealthiest enclave in the USA. South Of Fifth is a whisper away and the next best thing without being isolated on an island.
How does any of this compare to the locations of the downtown properties? The downtown buildings will all be delivered within about a year. Thousands of units in buildings with 500, 600 and 700 units and the majority are not true luxury. At it’s back doors is the second poorest city in the USA (CNN MONEY 2007). I agree the area will improve but why the heck would you want to pay today’s prices. If you want to live there then rent at half of what it will cost you to purchase then buy when the prices are down to $250 — $300 a foot.
As a Realtor I purchased units and sold units downtown in 2003. This was five years ago and before EVERYONE wanted in. We paid $230 to $250 a foot, a fare price for then and my opinion know. In 2004 when EVERYONE wanted in and was willing to pay $300, $400 and $500 I decided it was time to get out. Soon after I was able to secure resale contracts for my client friends and now that the buildings are closing they are receiving checks above there deposits up to $100,000. I personally received a nice check myself this week. I believe in downtown and just closed on unit that I had contracted in 2003 and paid less than $230 per foot. The price was right and the opportunity to get others in at the right price is coming.
I suggest anyone thinking about buying for personal residence or seeking an opportunity check out the location, visit at different hours or the day and night. Sit in the lobby of the building and talk to residents.
Then maybe you will hear the truth. Believe me I have heard the “hype,” I have been served the fancy cocktails and seen the glossy sale packages. My advice “Don’t drink the Koolaid”.
One last note. Miami had 3,600 fillings for foreclosure in January 2008.
I say “do the math.”
Furthermore, like most Realtors and Brokers out there I wish we could bridge the gap between sellers and buyers quicker. No one likes this stalemate.
Sorry,, Portofino started at $250 per foot..
Mr Waverly, you say that many of the downtown buildings are not true luxury. If you try to build some of the same new buildings you get in downtown – 50 Biscayne, Marina Blue, 900, Marquis, Ten Museum Park in South Beach what would you expect to pay pre-construction? Would you even be able to find a lot to build on and get approved for with the height? Also now go into the older buildings in South Beach – Floridian, Waverly – these buildings are horrible if you are comparing to the newest downtown buildings. Would you pay $450 per sq ft to live at Floridian where you have to worry you will get some huge building assessment one day or would you rather spend the money on a unit at 900 Biscayne on one of the highest floors? Many people in South Beach are now realizing if they want to buy something totally brand new and affordable (compared to new in South Beach) they have no where else to go besides downtown and the arts district.
This market has never been seen before. Prices went up at a ridiculous rate over the last 10 years. Now the easy financing is dead and will never return like it was….banks have lost billions and billions of dollars. The speculator frenzy is gone and will not be repeated. The number of foreclosures are the highest since the Great Depression. This is very serious stuff here. Rental rates are half the cost of ownership. The economics of the situation can not be denied. Real estate is not a momentum investment (nor are stocks really either). The supply of homes compared to demand is unprecedented. This is not just another real estate bust people.
The housing units that were purchased as investments will decline in price at a steady pace over the next two years as the reality of the market with the high holding costs hits the “investors”. The prices will come down to match the rental rates that the market commands at present for non-owner occupied housing since the rental rates are the truest determiner of the economics of housing. As I have advised people who want to get into residential rental real estate – buy stock in apartment companies, don’t become a landlord. That was good advice then, and it is good advice now.
Even the choice views in buildings will decline significantly. None will be spared, period. I know realtors don’t like to hear that, but it is the truth. You do not want to try to catch a falling knife here unless you don’t mind losing 20% of your equity and will actually get that much enjoyment out of the house. Right now, residential real estate is the worst investment you could make. If you can rent, then rent, you’ll be richer for it. You can not fight the economics of the situation, so why even entertain doing so….it is futile.
At some point, people will find that they really don’t have to live in South Beach and prices will drop. The justification to pay such high prices was that you’d at least get your money back out of it, worst case scenario. Well, that is no longer the case. Realtors may try and try to hold up the market, but they can’t fight the economics of each person acting in their best interests. And a significant number will act rationally enough that prices will fall, and in many areas fall by a heck of a lot. 40% from top to bottom. It is what it is.
Why do you buy a car? To use right? Do you invest in a car to bring you a return? Everyone got into their heads that a house is a great investment. Yes for the LOOOOOOOOOOOONG term. If anyone buys today do you think they are thinking of selling in a year? I think people are a little wiser than that. Or maybe I am giving people too much credit. Not everyone is looking at real estate as a short term investment.
I think we should do a poll to find out how many here are trying to catch the bottom.
The analogy to a car is a false one. Cars have a very limited useful life and are priced accordingly. If real estate was priced as a consumable, then the prices would be much much less. Other than the structure, land does not get consumed and remains useful. If you buy before the bottom, you will have to wait a LOOOOOOOOOOOOONG time to get to at least break even. It is reckless to not at least take into account the “investment” aspect of such a large purchase since most people don’t keep that piece of real estate until they die. You are taking the true wisdom that you buy a house to live in, not as an investment, and applying it to the current speculative investment house prices. That doesn’t work. If you buy it as a place to live in, then it should be priced accordingly…and that is at least another 20% less than current pricing. This is an unprecedented real estate market bubble and the economics of the situation clearly indicate that prices will significantly decline further. Do you really think banks would go back to those lending standards ever again? That is one thing I can guarantee won’t happen.
In real estate, you don’t need to catch the bottom, you just need to avoid the slide. After the bottom, the increases will be gradual and you can get in then….six months after the bottom won’t hurt one bit. Do not confuse the investment behavior of the stock market with real estate…eps. when you just stated real estate is not an investment but a place to live in.
Dan, you just threw out “another 20% less than current pricing”. Of what pricing? 20% less than the units that are clearly overpriced in a building? 20% less than the lowest priced units in a building? What do you mean? It is the generalization in numbers like this which I don’t agree with. Not every unit within a building is priced the same. And not every building should be valued the same.
Gerry & Samir,
I just discovered something very, very interesting about the one bedrooms at Ten Museum Park! Samir, go into the MLS and pull up only the one bedroom units. See anything similar about the listings?
About six weeks ago there was an investment group that bought about 15-20 one bedrooms units at Ten Museum Park. The reason why I knew this was because my client’s unit was one of the 15-20 units. His, however, was the only they bought as a resale. If you pull up closed sales at Ten Museum Park you’ll see that my listing is the only that has sold as a resale. I think they bought the rest from the developer as defaults or took over people’s contract probably giving the contract holders a small loss. My client’s unit number was 1105. I closed on that unit on January 3, 2008 and the purchase price was $295,000. It is now back on the market for $435,000, not even a month later. It appears that the other units that this investment group purchased are also back on the market listed at prices that exceed $435,000. The units all look the same. They now have finished floors, closets, and a sliding glass door. It looks like this investment group decided to finish off a bunch of these units and flip them for a big profit. I think I just answered why the one bedroom units are so close in price to the two bedroom units.
I agree with you Samir that there are good deals for people looking to buy, not as an investment, but because they want to buy something to live in for 5+ years.
The market won’t support more flippers though.