Ten Highest Closed Sales Within the Past Six Months in Miami-Dade County
July 13, 2010 by Lucas Lechuga
The following are the 10 highest luxury condo sales that have closed in Miami-Dade County within the past six months:
- The Setai South Beach - Penthouse B - 4 bedroom/4 bath (6,208 square feet) - This condo sold for $15M, or $2,416 per square foot, on June 4, 2010. It was listed for $19,999,999.
- Santa Maria - Unit 4901 - 3 bedroom/5 bath (10,000 square feet) - This condo sold for $11M, or $1,100 per square foot, on May 21, 2010. It was listed for $12.9M.
- Fontaintebleau II - Penthouse NO - 5 bedroom/5 bath (4,500 square feet) - This condo sold for $9M, or $2,000 per square foot, on May 14, 2010. It was listed for $9.8M.
- One Bal Harbour - Penthouse 2108 - 4 bedroom/4.5 bath (5,262 square feet) - This condo sold for $8.7M, or 1,653 per square foot, on May 25, 2010. It was listed for $12M.
- Villa del Mare - Unit 7223 - 4 bedroom/5 bath/2 half bath (6,820 square feet) - This condo sold for $6.75M, or $990 per square foot, on March 1, 2010. It was listed for $8M.
- Apogee South Beach - Unit 904 - 4 bedroom/4.5 bath (4,154 square feet) - This condo sold for $6.55M, or $1,577 per square foot, on May 21, 2010. It was listed for $6.85M.
- Apogee South Beach - Unit 1801 - 4 bedroom/3 bath (4,154 square feet) - This condo sold for $5.9M, or $1,420 per square foot, on April 16, 2010. It was listed for $6,795,000.
- Apogee South Beach - Unit 604 - 4 bedroom/3.5 bath (4,154 square feet) - This condo sold for $5.8M, or $1,396 per square foot, on June 18, 2010. It was listed for $6.25M.
- Apogee South Beach - Unit 704 - 4 bedroom/3.5 bath (4,154 square feet) - This condo sold for $5.3M, or $1,276 per square foot, on March 18, 2010. It was listed for $5.8M.
- Ocean Tower One - Unit 501 - 4 bedroom/5.5 bath (5,403 square feet) - This condo sold for $5.2M, or $962 per square foot, on June 3, 2010. It was listed for $6.25M.
Lebron is here. The oil gush will be capped this week. The World is realizing what we locals already know – The bottom has come and gone in Miami. We (Miami) cannot be clubbed along with the rest of America. We have one thing what the rest don’t – Demand from foreigners. All in all, it is a beautiful day, week, month and a bright future for Miami.
Miami’s Downtown Comes Alive as Condos Fill With Renters
By Prashant Gopal – Jul 13, 2010
Miami Downtown Comes Alive as Young Renters Fill Condos
Brandon Klein has done what few Floridians can: go weeks without driving his car.
The 26-year-old tax accountant walks three blocks from his condominium tower on Biscayne Bay in Miami to his office at Deloitte LLP. On weekends, he and his friends hang out on the pool deck or share a cab to a local Irish pub.
He lives in Downtown, a neighborhood where young people are renting condos built during the 2004 to 2008 boom to attract second-home buyers. Thanks to the housing crash, Klein and two roommates pay about $900 a month each for a wraparound balcony, water views and access to a gym, spa and steam room.
“Five years ago you wouldn’t have kids fresh out of college living in luxury like this,” said Klein, sitting in front of the 24-hour concierge in the three-story lobby of his building at 50 Biscayne Boulevard, coordinating happy-hour plans by text message. His friends are concentrated in nearby Met I, which has 447 luxury units and a steakhouse on the first floor. They refer to the building as “Deloitte Dorm” because it’s home to so many employees of the accounting and consulting firm.
The 7,000 unsold condos in Miami’s core — a symbol of a building boom that collapsed and dragged the city into recession — are filling up and giving life to neighborhoods that previously closed after dark. New, year-round residents are cramming into restaurants, nightclubs and bars that didn’t exist a few years ago, and enjoying a lifestyle made possible in part by developers and banks seeking to recoup losses by renting luxury dwellings until the market recovers.
Creating A City
“I’m a big city person, and I always thought Miami didn’t have a real city,” said Dejan Krsmanovic, a 39-year-old biomedical engineer who was on a first date at Segafredo, a busy Italian restaurant and bar that opened in 2008 in the adjacent Brickell neighborhood, where the same trend is playing out.
“Miami Beach is not a city, it’s a resort,” he said. “This is beginning to resemble a city.”
Full Story: http://www.bloomberg.com/news/2010-07-13/miami-downtown-comes-alive-as-unsold-condominiums-fill-with-young-renters.html
Is there a rhyme or reason why some foreclosures show up on the MLS but the vast majority do not? I would think they would try to put all the hi-end foreclosures on the MLS but that doesn’t seem to be the case. The foreclosure market is getting really active now but it’s a pain to navigate the Dade govt site.
I will see your article (thanks for the post, by-the-by) and raise you:
RealtyTrac: Foreclosures remain high
South Florida Business Journal – by Oscar Pedro Musibay
It’s more of the same for Florida in terms of foreclosures, which keeps the Sunshine State at No. 3 in the country, according to a new RealtyTrac report.
Florida registered the nation’s third-highest state foreclosure rate, with 3.15 percent of its housing units, or one in every 32, receiving a foreclosure filing during the first six months of the year.
But, in terms of the number of properties receiving foreclosure filings, its 277,073 ranked second in the U.S. That’s a 9 percent decrease from the prior six months, but a 3 percent rise from the first six months of 2009.
Miami-Dade had 38,395 foreclosure filings, or one in every 26 residences, just beating out Broward, which registered just under 38,000, or one in 21. Palm Beach came in a distant third, logging 18,083 foreclosure filings, or one in 35, according to the RealtyTrac report.
Palm Beach recorded a larger increase than its sister counties, however, when comparing the first six months of 2010 to the same time last year. Palm Beach recorded a 26 percent increase in properties with foreclosure filings, while Miami-Dade saw an 11.5 percent increase and Broward had a 4 percent increase.
Banks have also moved aggressively to repossess property in South Florida in the first six months of the year, according to a recent report from CondoVultures.com. During each month, banks took back an average of 4,000 South Florida properties, up 83 percent from the first half of 2009.
Peter Zalewski, managing principal of Bal Harbour-based real estate consultancy Condo Vultures LLC, said he expects the inventory will come onto the market in the near future as discounted REO product, putting further pressure on pricing.
Miami home prices continued to slip between March and April, according to Standard & Poor’s Case-Shiller Home Price Indices report. Only Miami and New York saw declines among the 20 cities in the index, which is seen as a leading measure of U.S. home prices.
Condo Vultures said Miami-Dade County led the surge in bank repossessions, experiencing a 125 percent spike on a year-over-year basis. Palm Beach experienced a 112 percent jump, while Broward repossessions increased 42 percent, according to the report based on circuit court records from Miami-Dade, Broward and Palm Beach.
At the current pace, nearly 50,000 properties would be repossessed in South Florida in 2010, which would outpace the modern day high of 30,400 in 2009, Condo Vultures reported. Just three years ago, only 10,100 were repossessed.
Zalewski has a different take on the data for South Florida, which has a positive story to tell.
According to CondoVultures.com, South Florida foreclosure filings are actually down 34 percent, to 34,500 in the first six months of 2010 from about 52,200 in 2009, 37,800 in 2008 and 8,000 in 2007. Zalewski said his numbers are accurate because he eliminates double counts that might affect the data of other companies.
His numbers puts the region on pace for less than 70,000 actions in 2010, down from 97,000 in 2009.
Despite the spike in repossessions, bank-owned properties still represent only about 6 percent of the 67,000 residences on the resale market in the three-county region as of July 12, according to Condo Vultures.
http://southflorida.bizjournals.com/southflorida/stories/2010/07/12/daily28.html
Check?
scriv
LMFAO!
The true value of a unit is basically (monthly rent) * (100).
So that condo the guy is renting for 900 a month is only worth $90,000 dollars. I bet the owner paid $250,ooo.
There is no doubt Miami is a desirable place to live, and the people renting these units at market value prove that.
The problem is that flippers, realtors, and “investors” are hoping that prices will return to 2005 levels and they never will again.
Figure out what a unit could rent out for per month. multiply that figure by 100 and thats what that unit is truly worth just to break even on your investment.
Unfortuanatly prices are still way overvalued and have a long way to crash. The bottom has not come and gone…its only just beggining. 🙂
Chris, while I admire your twisting of facts, no one said the condos are renting for $900. They are saying, 2 roommates are paying $900 each. That is a rent of $1800. Now go back and do your math right with out cheating.
While I agree that 2005 prices are a long way off (in fact it is Summer 06 which saw the peak, not ’05-another one of your wrong assumption), unless there is a prolonged no growth in the economy, I predict that we will rebound to 06 levels in about 5-7 years provided there is no new construction between now and then.
why bother — You think Miami housing is going to double in price in the next 5-7 years? Really?
If you could find a way to bottle that optimism, you’d be filthy rich!
Chris #4- You hit the nail on the head. I’m renting for $1900 a month. Thus my unit should be valued at $190,000. In reality they are asking over 400k for units similar to mine. The bottom is still a long ways away. Even more so with the record wave of foreclosures Scriv mentioned above. Numbers do not lie.
Joe, Hope is what keeps this World moving. If you lose all hope, It is anarchy and mayhem.
Yes , I believe in what I said. But with 2 major conditions.
1. Economy should grow at a normal rate of 3% even if not at a good 4 or 5% . Presently we are at 1 or 1.5%. If it stays this low for a prolonged period, then all bets are off. No one seems to know where we are headed regarding the economy. Up, Down or Sideways.
2. No new construction should come on line from now until the next 5 years. This is quite a possible scenario.
Lets see what happens.
Nice one Joe!
scriv
Does this whore Zalewski ever shut up?
From an article in the South Fla Business Journal re Lebron living situation:
“Peter Zalewski, of Condo Vultures Realty, said James could buy an entire condominium project with the kind of money he is rumored to have offered for the Potamkin property. The average 1,000 square foot condo is selling for $200 a square foot.
Zalewski, who specializes in bulk deals, said it would make more sense given James’ age and the commute to Gables Estates for the superstar to invest in a group of condos on several floors, tearing down the walls to make one unit. He could rent the others.”
Sure, Pete. Sounds like a great idea, as long as you can structure the deal, get your fee, and can issue another wise, self-congratulatory quip in a press release. Never mind the logistical nightmare of trying to combine several units into one and the nightmare of gawking, harassing fans/paparazzi all over the condo 24 hrs a day. And like LeBron would want to be a landlord for a bunch of hanger-ons living next door.
Seriously, probably the stupidest idea I’ve ever heard of.
Drew…. couldn’t agree with you more…
Somebody PLEASE tell this so called “expert” to shut up
I just read about another bulk-buyer transaction. What fascinates me is the discount the buyer received and the percentage that the buyer owns in the development: 66 % is a big bet.
scriv
——————————————————-
Friday, July 16, 2010, 12:07pm EDT
Dizengoff buys 106 condo units for $8.2M
South Florida Business Journal
Dizengoff-Trading Group has acquired 106 condominium units at Bermuda Cay in Boynton Beach.
The Israeli firm, which has a U.S. office on Glades Road in Boca Raton, paid $8.2 million in cash for the units.
The 35-year-old complex, at Woolbright Road and Federal Highway on the Intracoastal Waterway, was converted from apartment units to condos five years ago.
Dizengoff said it paid $78 a square foot, which amounts to a 78 percent discount to the average selling price during the height of the real estate boom. With the purchase, Dizengoff controls 66 percent of the 160 units, most of which are already leased out.
http://southflorida.bizjournals.com/southflorida/stories/2010/07/12/daily48.html
Guys,
Here is my two cents about condo prices going back to 2006 levels……
I think regardless of how well the economy does and how low the supply of condos, I don’t think prices will rise back to those 2006 prices. At least not for the next 10-15 years.
For me as an end user and not an investor, I would be very happy just to see the day when all the new condos in my Brickell area are sold (or re-sold) to more end-users (for prime or 2nd home), so there will be less renters in these buildings.
Prices going up is good for the investors so they can sell their condos and make their required profit, but for me I rather see the condo prices stabilize and stay where they are, so my property taxes stay low.
I would like to see Brickell become more of a real community with more shops and businesses. (bookstores, movie houses, etc, not just bars and restaurants). Right now it’s just a bunch of new condo towers with amazing views of the bay and ocean. It would be great if someday it can become a community like areas of Boston.
I just got back this week from a business trip in Boston, WOW what a beautiful city! It is well maintained and perfect. I guess Boston had many years to make herself perfect.
Boston compared to the very young disorganized city of Miami, is like a beautiful mature wealthy woman who has it all together. While Miami is like a very beautiful young 18 year old poor girl who has only her beauty and nothing else, so she whores herself out to anyone just to survive.
It looks like Boston has a large upper middle class, compared to Miami’s small middle class. It’s too bad Boston gets cold and doesn’t have the beautiful beaches that Miami has. However I better get used to the cold in Boston because next week I will be starting the management of a long term project for a large retailer in the area.
During the winter there I will be in my temp apt next to the heater and will be crying wishing I was back in Miami. But being self employed, I have to go where the money is.
“I would like to see Brickell become more of a real community with more shops and businesses. ” – – ownerinfinity
Amen brother.
scriv
I have to say I don’t see prices going back to previous peak prices soon either. I’d guess recent reports that indicated prices won’t reach previous highs until 2030 are proabably the best guess. If prices hit previous highs in 2030 that would mean an average of about 4% appreciation per year over the next 20 years. For prices to hit previous highs in the next five years you’re talking about 15% appreciation per year. Than is not happening.
why bother, there is no way that no new construction wont come on line in the next 5 years. Developers are out buying land right now at insanely low prices and will be building on this land within a year. If I recall correctly the Sklyine at Mary Brickell condos to be built on top of the current garage is ready to go any minute now.
I interviewed with a developer that is building projects right now.
from what i understand, hard costs for building a high-rise condo are roughly $180/foot. include soft costs like marketing and sales, and we’re talking closer to $250/foot. so for a developer to make it worth his while prices need to be in the $400/foot range. this may make sense for beachfront properties, but for middle of the road buildings like most new construction in brickell and dowtown, this price seems a long way off.
so my prediction is that we wont see any new high rise construction until condo values go up substantially, very close to peak prices…. while having no new construction will help raise prices faster as demand goes down… lets see how this plays out.
supply** goes down
slothdale, new construction will return-perhaps at very low prices as well. construction is a major part of the economy and cannot stay dormant-but deflation can decrease construction cost in the future.
interestingly, luxury buildings today who have filled with renters to cover carrying costs of investors. how will they fare against new building 5 years from now? if you are a buyer, do you buy a brand spanking new building-where rules may very well limit rentals from the very beginning based on our past experience? or do you buy into largely investor rental community for your home? could be an interesting scenario 5 years from now for our current crop of luxury buildings, unless you are on the water.
“Pending financing, Miami’s overheated condo market will get its latest infusion when the Mediterranean-style building is completed at the end of 2011. As the first residential building built in the Brickell corridor since the condo glut began, its developers hope it will pump new life into the area’s real estate market.”
“We want to be one of the only products available in the market upon delivery that’s new,” said Isos Stamelos-Monroe, 30, SkyPalace’s vice president of sales.
Also when you look at cost you also have to remember that land values have obviously gone down. So while it may not make sense for a developer that bought the land defore the boom to build thats not going to stop a new developer from coming in and purchasing the land at todays prices to build.
Also considering rent prices are going up and the lack of dedicated rental buildings I would expect that some developers would be eyeing this market as a nice place to start building. As you have all these people moving into the market your going to have to develop some moderately priced housing for them to stay if you want the growth downtown to be sustained.
I called Camden Brickell to see how much they were renting units for and because of the location they were charging as much as most condos with much nicer finishes.
Another article about Lebron’s arrival energizing the downtown market:
http://southflorida.bizjournals.com/southflorida/stories/2010/07/19/story7.html?b=1279512000^3651841
Article about the HOA initiating foreclosures:
http://www.cnbc.com//id/38260141
I just put an offer in on a house in the suburbs of Detroit, Michigan. It is a middle class-upper middle class area (Think Kendall, FL) to give you an idea.
The house sold for $210,000 in 2004.
It is 1635 square feet, 4 bedrooms and 2 baths. In a really nice subdivision with a great school district.
They are asking $105,000 in July 2010. That is a 5o% decrease.
Now before you say…Detroit is a ghetto…blah blah blah…which is true. The suburbs are kind of their own seperate entity and are very nice.
How does this relate to you?
I lived in Miami in 1999. During that time real estate prices in the suburbs of detroit and suburbs of Miami were very similiar. IN FACT IT WAS ACTUALLY CHEAPER TO BUY A HOUSE IN MIAMI IN 1999.
During the housing bubble Prices in Michigan rose about 50%…In Miami they rose about 300%.
I still believe that prices in Miami will continue to crash untill they lose their 300% housing bubble gains.
When you see 85-90 a sq foot for a house in Kendall you will know the crash is over. I believe houses are still selling for like 150 a sq foot in Kendall (have not followed it in a while) so I believe you have a long way to go.
Just wanted to give you a visual example.
Here is a 1851 sq foot house in Miami Florida selling for $270,000. A price of 146 dollars a square foot.
http://www.realtor.com/realestateandhomes-detail/12870-Sw-60-Te_Miami_FL_33183_1118324662
Here is a much larger 2172 sq foot house in Oakland Township, Michigan selling for $174,900. A price of $80.oo a square foot.
http://www.realtor.com/realestateandhomes-detail/3040-Bridlewood_Oakland-Twp_MI_48306_1118805437
Still don’t believe me???
Look at the Sales history on zillow…in 1990 the Miami house sold for $106,900 or $57 dollars a square foot. This house was worth 80.00 a square foot in 1999 and thats the price it has to fall back too.
http://www.zillow.com/homedetails/12870-SW-60th-Ter-Miami-FL-33183/44255978_zpid/
Conclusion….Detroit real estate market is at or near the bottom and now is a great time to buy. However, The Miami Market still has to fall another 40% before the bottom is reached!
RE scrivener # 12
the discount from app $400 a foot is so large because as a 35 year old rather conventional project -meaning not a luxury hi rise-it was never worth the $400 a foot they tried for.
Recall 3-4 years ago I read an ” insider’s” offering circular for a 2-3 story glorified garden apartment building located in Broken Sound in Boca where the insider price was app $300 a foot : told my lawyer friend who kept a 700 sq ft unit there that was priced at app $ 225 th to run for the hills and not look back.
Owner at infinity #13
Are you involved with the attempted revival of the mixed use project that was going to replace the now shuttered Filenes-and the famous original basement store across from the old Jordan Marsh-likely now a Macys ?
The area looked seedy last time I was there : the real growth will be Cambridge with hi tech, medical leading the way.
george ,
Owner at infinity #13
Are you involved with the attempted revival of the mixed use project that was going to replace the now shuttered Filenes-and the famous original basement store across from the old Jordan Marsh-likely now a Macys ?
The area looked seedy last time I was there : the real growth will be Cambridge with hi tech, medical leading the way.
===> No, I am not involved in that. The project that I will manage in the Boston area is for a large retailer that wants to extend their retail stores further into the European market.
Parts of the CNBC HOA foreclosure story Gixxer 1000 posted in #21 above don’t seem to add up (especially the scenario outlined in the third-to-last paragraph). How can there be a judicial transfer of title in which the existing mortgage(s) aren’t cleared at the same time? It seems ludicrous that an HOA could take title to a property over a delinquent $500 HOA balance, then evict the mortgage-holder and rent the place out for a year or more while the original mortgage remains in place under the evictee’s name. I know Florida courts and laws are often a joke, but a foreclosure process that doesn’t yield a clean title seems like a waste of time (and an invitation for all sorts of fraud and abuse).
After reading “housingfear chris” I had to laugh.
His premise is so far off it is ridiculous.
Communities rise and fall and that influences prices. Are you going to argue that $2000 sq. foot on Central Park West is overpriced?
Detroit is unfortunately a slum exacerbated by the fall of the auto industry. I don’t see the city recovering anytime soon. On the other hand, Miami is progressive, an international business center. There is no argument that Miami has suffered from the real estate bubble causing prices to decline due to oversupply. But the inventory over time will be absorbed and prices will recover.
What does Detroit offer that will contribute to price appreciation in the years ahead?
Ask that question regarding Miami and the answer is easy.
I live in the NYC metropolitan area. Compared to prices here I can’t believe the quality of living for $200 sq. foot in the likes of Brickell.
Comparing Detroit to Miami is no different than comparing apples to oranges.
Gixxer, Re#15, I think you guys are right. I may have gone overboard in predicting the return to 2006 prices between 2015-2020. It could be more like 2025.
Michael, Chris@housing fear claims are so outlandish, I did not even care to respond. Anyone who reads it would have seen it.
I have visited Farmington Hills, MI many times. It is a suburb of Detroit. It is a suburb exactly like what Chris is describing. He claims that suburbs are great even though the City of Detroit is rotting. Not so Fast. Suburbs do not sustain unless there is a robust city center. Detroit is a failed city if not a failing city. Maybe in future when Chevy Volt becomes a World car and the auto industry fortunes are reversed, it maybe a different story. But as of now, there is no hope for Detroit or its suburbs.
Compare that to Miami, a sunrise city with sunrise industry taking root. Business, education is also taking off. It is shaping up to be an International financial center in the likeness of New York, London, Hong Kong eventhough not in that scale and prominence.
The beauty and weather of the city and its international appeal is just a bonus and the Icing on the cake. There is no city like Miami in Americas and there will never be.
You comparing Manhatten NYC to Miami is the most laughable thing I have ever read.
Manhatten real estate is out of land. There is no land left to build on. It is the greatest city in America. You can’t even compare it.
And like I said…I am not comparing Detroit to Miami. I am comparing the suburbs of Detroit. If you actually clicked on the picture I showed you. You would see the house in Oakland Township is somthing that would cost close to 1 million dollars on long island Ny so please don’t call it a slum or you will make yourself look stupid.
http://www.realtor.com/realestateandhomes-detail/3040-Bridlewood_Oakland-Twp_MI_48306_1118805437
^Are you still going to be ignorant and say its a slum? Its nicer then most places in Miami. I know I lived in both cities.
I am sorry you made a horrible investment, it sucks, but just be ready for another 40-50% drop in price. Its already destined to happen.
Read my blog if you don’t believe me.
I HAVE BEEN RIGHT ON EVERY SINGLE INVESTMENT AND REAL ESTATE PREDICTION I HAVE MADE SINCE 2008. MY TRACK HISTORY IS THERE IN WRITING.
Chris@housingfear, how did you come to the conclusion that housing prices should go back to that of 1999? why not 1984 or 1995, Is there anything significant about that year, how about inflation how was that accounted in your calc?
Does the cost of materials, labor and a modest profit for the builder have anything to do with factoring the true cost of a house, what about demand for that product?
I just don’t get the reasoning of how some people come up with their estimates about the value of housing. Some people say housing will be stagnant for 30 years but everything is based on supply and demand. Can anyone tell me what the population of Miami will be in 30 years and where will it’s residents live, what will be the cost of building shelter for these residents. Can anyone tell me with any level of certainty that there won’t be another hurricane David like event in Miami over the next 30 years. I bet if Miami gets one direct hit form a nice cat 3 hurricane over the next few years then we will see a nice appreciation in homes prices of the ones left standing.
Michael,
You make a lot of sense with your post number 27.
That $200 per square foot in Brickell is what I paid for my place on the 50 and 51 floors with an amazing east city/bay/ocean view.
It will be interesting to see what becomes of all these new condos in Brickell 10-20 years from now. I wonder what type of people will be living in them at that time.
For me I just needed a home base, someplace BRAND NEW, but small, in a warn area of the country, with a hell of a view of water. For my needs my condo in Brickell is the best value anywhere in world and it’s in a place of beauty.
When I am between projects and not working, I have a great deal of free time on my hands.
Although I am not into the Miami nightlife at all, Miami is a great place to ride my bicycle and to enjoy the outdoor lifestyle, (fishing, boating, ocean, beach, etc) that a place like Miami offers.
Plus Miami has an international airport 20-25 mins from my condo building that takes me anywhere in the USA for my projects and takes me anywhere in the world (that is warm) for my bicycle trips in other countries.
I wonder what reasons other folks with have to make a Miami Condo their home in the next 10-15 years……
Chris,
Concerning the pricing in Miami falling another 40-50%…..Just FYI since I purchased my condo in Brickell from the developer at the end of 2009, the developer has sold 9 condos the same size as mine for $30,000 to $40,000 more then I paid for mine. And these 9 condos where mostly on lower floors then mine. So, I guess that 40-50% drop in prices wasn’t happen yet, at least in my building.
For a healthy RE market over the real long term, you need to get a handle on high-paying job growth coming into the area.
Foreign nationals/US residents might be buying distressed 100-300K property now as vacation homes or renting $1k-$2K as students/YUPs… but that doesn’t translate into a steady future of buying inventory over 300K+. You need decent jobs for that.
The crux of the matter is that the reason people come to Miami -to screw around-, is the same reason that high paying non-hospitality/RE business avoids Miami.
Chris@housingfear,
you are by far the biggest dimwit who ever appeared on this blog.
Even Joe and Drew must be scratching their heads in amazement…
Great entertainment, though, have to give you that.
Please write more.
Wow, guess you killed this post.
In real terms, the average person in Miami is only 2% wealthier than he or she was in 1980 (or was it ’85?), when Time magazine did its infamous front-page article on Miami. This notion of Miami being a “growing” “international business center” is utter rubbish. If that’s true, how about listing all of the major companies that have moved their HQs to Miami and/or have added huge numbers of jobs in Miami?
Detroit has been a dead city since the race riots of the 60’s. Yet the suburbs have continued to thrive. The Suburbs have their own seperate economy and most people never set foot in Detroit unless it is to attend the casino’s or a sporting event.
Maybe in 99% of America you would have a valid point…but here you are dead wrong.
Detroit has nothing to do with the economy of the suburbs. It is a completely segregated, both racially and economically.
Its like saying Havannah Cuba has an effect on the Miami Economy. Not really.
The reason I selected 1999 is because that is the last year before the housing bubble began to expand and house prices deviated from their historical trend line keeping pace with inflation.
2010 house/condo prices should = (1999 prices) + (annual rate of inflation)
as it stands now in Miami…2010 prices = (1999 prices) + (150% increase)
The bubble expanded 300% and it will continue to collapse untill prices return to their historical norms adjusted for inflation.
The people who say that it will take 20-30 years for Miami real estate to reach 2006 prices again are absolutly correct. It will be 2025 before 1999 prices + annual inflation return to the artificial bubble prices of 2006.
Just like water seeks and equilibrium…house prices seek an equilibrium…they will return to their historical norms adjusted for annual inflation.
Miami is doomed….it will drop another 40%…then it will slowly recover with inflation over the next 2 decades.
Real estate is not an “investment” it is an expense that keeps pace with inflation.
“Real estate is not an “investment” it is an expense that keeps pace with inflation.” – – Chris@housingfear
YES!!!
DING! DING! DING!
YOU ARE CORRECT SIR!
WELL SAID!
And I would add that in addition to being an “expense,” real estate, particularly condos, is a depreciating asset. Although the value of land may appreciate over time; the value of the structure or dwelling on that land … not so much.
I am not so sure I agree with your statement concerning real estate “keep[ing] pace with inflation” because that assumes a certain degree of market efficiency that is clearly not present in today’s market and real estate transactions; particularly the bulk sales. Eventually, we will get to that point. But it won’t be today, and tomorrow certainly does not look much better.
“Miami is doomed….it will drop another 40%…then it will slowly recover with inflation over the next 2 decades.”
True, but perhaps your time table is a bit aggressive/optomistic. Granted, the supply and demand curves in the Miami market are way out of wack. But for correction to occur – – for the market to pull back from the point of diminishing returns in which it is presently located – – a lot of sellers are going to have to take a serious “haircuts” in terms of price at which they are willing to part with their precious condo or second home(s).
And these bulk sales at pre-arranged “discounts” only complicate the problem and delay the recovery because these bulk buyers – – absent probative and conclusive evidence to the contrary: and I note; if you have it, BRING IT! (wink) – – do not represent the kind of buyer that will lead the Miami real estate market into recovery because they are merely another group of investors/speculators, not unlike the flippers of days past.
Thus, the reason I view your “over the next 2 decades” comment is that it remains unclear how long it will take these holders of overpriced, over-hyped real estate holdings to reach this decision or, equally important, for these bulk buyers to be replaced by “real purchasers.” Be it “2 decades” or more, it is going to be fun to watch.
scriv
Chris…
If Miami prices drop another 40% the return on equity would be way out of line.
At current prices, those who buy with cash are cash flow positive.
Therefore, if prices were to plunge as you prognosticate, rents would have to also drop.
However, rental prices have not only stabilized, but have begun to rise.
Scriv,
Just a quick question.
Would not the title insurance cover in case there are issues with title/deed?
I am not sure how people come up with the prediction of housing prices in Miami will appreciate in 40 years. What we do know is that people have a love affair with homes.
This has been going on from the beginning of time, just look at all the great palaces and castles that have been built since the beginning of recorded history. We also know that housing is cyclical and there have been many periods of boom and bust (especially in s. FL) We also know that the housing cycle is about 7-10 years and that Americans have very short memories. Given all these factors, I find it hard to believe we will go 30-40 years before speculative greed takes over again and create another housing bubble.
I would bet good money there will be another housing bubble in the next 12 years especially if prices were to drop another 30% in the next few years as many predict. Our new economy is one of boom and bust and right now we are just waiting to see where the next bubble will be. Housing turn will come again, real soon.
When you figure “cash flow positive” you also have to include taxes, association fee’s, monthly repair fee’s, in addition to mortgage carrying costs.
I find it hard to believe that even with rising rents (which I agree with you is happening) you would have enough revenue to pay your mortgage, taxes, ins, assocition fee’s etc and still make enough money where it would justify not just putting the money in a mutual fund or even a money market account.
Americans have a love affair with MONEY…not houses.
The reason for the housing boom is because people wanted to sell their house in 2 years for a huge amount of MONEY.
The reason people are letting their homes go into forclosure is because they realize their neighbor is buying the home next door for 1/2 of what they paid a few years ago causing them to capitulate.
If people really loved houses….people would do everything possible to not let their home go into default. Instead, you see people no doing “strategic defaults”.
Why?…..because people love money…not houses.
“Real estate is not an “investment” it is an expense that keeps pace with inflation.”
If you buy with cash, know where to look and make smart decisions, its possible to yield 10% renting out your downtown CONDO. The best performing public residential REITS perform much better than that. I would consider that a pretty good investment.
Chris, keep sitting on the sidelines. Better yet, put your money in the stock market. Seems like you’re intelligent enough to make money there.
computer consultant:
Maybe yes. Maybe no. Title insurance insures the title. What we were talking about – – if I am recalling this discussion correctly – – is the form and choice of deed – – and the protections it provides.
The point is: do you want the head ache? Do you want to have to take time out of your life to clean up a defect in title or a bad deed? Or, do you want to protect yourself from these kind of problems by placing the duty on the seller to covey good title and a proper deed?
Chance favors the prepared mind.
scriv
Yes Chris people love money, that goes without saying but people also love the idea of having a nice big home with granite counter tops and marble floors and the nice lawn. Why else did they spend so much money on making upgrades that returned less than the money spent. People dream about owning homes in coral gables or coconut grove, most people don’t dream about renting there, it is all part of the American dream.
10% yield? is that annual or for the decade?
because I cannot come up with such returns no matter how I look at it.
250k cash can buy you a decent condo in a nice enough area that could yield $1,500/month rent or so.
after taking out a conservative annual tax estimate of 5k, and an average maintenance for an upscale building of $600/mo, and a months rent to cover for any assesment/repairs or empty month (and I think these are all likely best case scenarios), you are left with $4,300 return/year on your quarter million investment (~1.72% annual return), which is about as much as you’ll get if you put your money in a bank and walk away.
Can you please elaborate how this is still a good investment or how you come up with 10% return on a cash deal?
thank you
jorge
jorge,
With your scenario you are only considering the return from income and not the return from appreciation. And you’re also not figuring the annual increases in rent. A place that rents for $1500 today will likely rent for $2200 10 years from now.
Add the $10k in appreciation and your first year return goes from 1.72% to 5.72%. And we haven’t looked at any of the tax benefits yet.
Once you add in these factors most core real estate investments average 10% – 12% annual return over a 10 year period.
“Can you please elaborate how this is still a good investment or how you come up with 10% return on a cash deal?” Jorge
Can’t do it. Sorry.
Not gonna lie to you.
I can say that if you had taken that same $250k and invested it in a diversified portfolio – – say, for example, shares of CAT (for the juicy monthly dividend), GE (a solid investment), FAST (for the growth) and, let’s say, a developing markets fund – — you would be easily earning 20%.
scriv
Scrive,
Pardon my ignorance but i thought that deed and title were basically the same thing.
I do know what you mean about saving yourself the headache.