Brickell Key Condo Index – June 2008
July 4, 2008 by Lucas Lechuga
The following data was collected on June 27, 2008. It's been quite some time since my last Brickell Key Condo Index. In fact, the last was published in January 2008, or 5 months ago. What's interesting is that it has been one year since I started the Brickell Key Condo Index, so in this update we'll be able to see how prices have fared over the past 12 months.
As many of you might have guessed, the average price per square foot of Brickell Key condos listed in the MLS has continued to go down since the January 2008 update. In fact, average list prices have gone down across the board throughout the 10 Brickell Key condo buildings represented in this index. I'll show you the percentage decreases in each building towards the bottom of this post. In January 2008, the average price per square foot of condos listed in Brickell Key was $486.07. The average now stands at $450.49. That’s about a 7.3% drop in list prices in 5 months. More interesting is the drop since June 2007. At that time, the average price of condos listed in Brickell Key was at $519.97. That means list prices in Brickell Key have come down a little over a 13% in 12 months.
Average price per square foot of Brickell Key condos currently listed on the MLS:
- Brickell Key I - 520 Brickell Key Drive | 33131 | $353.45
- Brickell Key II - 540 Brickell Key Drive | 33131 | $422.52
- Carbonell - 901 Brickell Key Drive | 33131 | $572.35
- Courts Brickell Key - 801 Brickell Key Drive | 33131 | $429.47
- Courvoisier Courts - 701 Brickell Key Drive | 33131 | $402.06
- Isola - 770 Claughton Island Drive | 33131 | $420.22
- One Tequesta Point - 888 Brickell Key Drive | 33131 | $431.74
- St. Louis - 800 Claughton Island Drive | 33131 | $458.38
- Three Tequesta Point - 848 Brickell Key Drive | 33131 | $508.11
- Two Tequesta Point - 808 Brickell Key Drive | 33131 | $506.64
The average price per square foot of condos that have sold within the past five months has gone down as well. This average dropped to $367.19 per square foot from the $416.92 that we saw in January 2008. This average stood at $445.59 in June 2007. That's a 11.9% drop within 5 months and a 17.6% drop within 12 months. The average price per square foot for closed units at St. Louis was not included in this month's index, however, because there haven't been any closed sales within the past 6 months. That's why you'll see the absence of a bar for St. Louis in the graph below. The percentage drop may have been smaller had there been closings at St. Louis but nobody knows for sure since we don't know where the market clearing value for these condos lies.
The average price per square foot of condos sold within the past six months:
- Brickell Key One - 520 Brickell Key Drive | 33131 | $321.16
- Brickell Key Two - 540 Brickell Key Drive | 33131 | $299.76
- Carbonell - 901 Brickell Key Drive | 33131 | $408.33
- Courts Brickell Key - 801 Brickell Key Drive | 33131 | $360.31
- Courvoisier Courts - 701 Brickell Key Drive | 33131 | $336.01
- Isola - 770 Claughton Island Drive | 33131 | $265.79
- One Tequesta Point - 888 Brickell Key Drive | 33131 | $392.33
- St. Louis - 800 Claughton Island Drive | 33131 | N/A
- Three Tequesta Point - 848 Brickell Key Drive | 33131 | $465.02
- Two Tequesta Point - 808 Brickell Key Drive | 33131 | $455.98
The chart below reveals additional statistics pertaining to the 10 aforementioned condo buildings in Brickell Key:
The first column to the right of each condo development is the difference in the average sales price and list price for this month, expressed as a percentage. As you can see, there is, in some cases, very large discrepancies in the average list price versus the average sales price for condos that have closed within the past six months. Notice the 36.75% difference in these two averages for Isola and about 29% differences for Brickell Key II and Carbonell. Wow! I guess list prices in these buildings still have a ways to go to catch up to price level where there's actual demand to buy.
The second column is the number of active listings in each development currently in the MLS. The third column shows the percentage that these listings represent over the total number of condo units in each development. If you compare this month's chart to the one published in January 2008, you'll notice that the majority of the Brickell Key condo buildings have had a slight increase in the number of available listings. The cells highlighted in green reveal those developments that have active listings that represent less than 10 percent of the the overall units in the building. As I’ve stated before, I find this to be a very healthy number. The ones highlighted in red reveal those developments that have active listings that represent over 20 percent of the overall units in the building. Proceed with caution if you're buying in a condo building where the available listings represents over 20 percent of the total number of units. Condo developments with active listings representing less than 10 percent of the overall condos are considered very safe, in my opinion, and anything in the 10-15 percent range is considered normal, even in a healthy market.
The fourth column shows the number of pending sales while the fifth column displays the number of closed sales within the past six months in the MLS. All of the buildings have had at least 3 closed sales within the past six months except St. Louis, which laid a fat goose egg. Two Tequesta Point experienced the most closings in that time frame with 9.
The sixth column shows the difference in the average list prices from January 2008 and this month, expressed a percentage. Those highlighted in red reveal those condo developments which have had a drop in their average list price. As you can see, each of the 10 buildings in Brickell Key, represented in this index, have experienced a drop in their average list prices within the past five months.
The seventh column reveals the difference in average sales prices from January 2008 and this month, expressed as a percentage. Only Two Tequesta Point and Three Tequesta Point have had increases in their average price per square foot for units sold within the past six months. With 9 and 6 closed sales, respectively, within the past six months, perhaps these two buildings have established a floor? I guess time will tell.
It'll be interesting to see where prices for Brickell Key condos will reside in another 12 months. My take is that about 4 or 5 of these condo buildings are close to reaching their bottoms while the other half still needs at least another 4-6 months to reach that point.
Sorry to repeat this question. Before someone could answer to this in a previous thread, a new topic got posted. Can some wise person throw some light on this?
Which lien is inferior and which lien is superior?
Is it something in this order?
1. Prop Taxes
2. HOA
3. Mortgage (or)
1. Mortgage
2. HOA
3. Taxes (or)
1. HOA
2. Prop Taxes
3. Mortgage
Second Question:
Can any aggrieved party initiate the foreclosure proceedings, regardless of the inferiority of its lien?
Thanks
AJ,
TAXES (liens) are always superior (LOL)!
Any lien should be able to be foreclosed upon. The government is always has priority. Don’t they teach that to Realtors®?
Yes, and unlike the others you can go to jail for failure to pay taxes. My buddy Wesley
Snipes will fill you in.
moretroops,
Wesley Snipes didn’t pay his income taxes. That’s completely different. I don’t think they’ll throw you in jail for failure to pay your property taxes. They just take away your property and sell it to recover the money.
Not paying your income taxes isn’t the problem with Mr. Snipes, it is filing false returns or failing to file. You won’t go to jail for not paying property taxes…although you might need a cell for a place to sleep if you lose your house!
throwing people in jail for not paying property taxes might not be a bad idea. takes away the incentive for mortgage fraud since the higher sale price will correspond to higher assessment, and more jail time!
Lucas, thanks for the update on Brickell Key. Of particular use for us prospective RE buyers is the difference between list and sale price. This issue is creating a big drag on sideline buyers. List prices that are too high wont even get me to look twice at a property, even to negotiate lower. The more info we have to show the list prices should be lowered, the sooner we can get the RE market moving again.
You show an 18% year over year drop for Brickell Key, which my guess will hold its value better than Brickell Ave. What is your expected year over year drop for Brickell Ave then? What discount should we apply to current list prices in Brickell area?
AJ – I believe you got it right the first time: taxes, HOA, then mortgage.
Any one of them can foreclose on a property. However, if the bank wants to foreclose, there will still be oustanding liens for HOA and taxes. If the primary mortgage holder forecloses, then any secondary mortgages are, of course, wiped out.
If the HOA wants to foreclose, they don’t have to pay off the mortgage to do so.
When someone doesn’t pay their taxes in a given year, the amount of taxes owed, plus penalties, is rolled into a “tax certificate” that is auctioned off to investors every June in a tax certificate auction in each county. An investor buys the certificate at a certain interest rate determined by the auction process. In Florida, the interest rate can be as high as 18%. So, most certificate buyers are simply looking to earn interest on their money (like a CD of sorts).
So, the county and other taxing authorities get their tax money every year no matter what. The investor holds the certificate until it is paid off either by the the property owner himself or the bank holding the mortgage.
If it doesn’t get paid within 2 years from the date the certificate was purchased, the investor can instruct the county to bring the property to sale at a tax deed auction. If the tax certificate doesn’t get paid off before the auction, the property owner will lose to property to whoever had the highest bid at the tax deed auction. If there are no bids, the property goes to the tax certificate holder (though this rarely happens unless the property has something seriously wrong with it).
Lucas,
I have been proven right this whole time. When will you start listening to me? 🙂
Miami condo prices will still fall another 70% or so until prices are about 150 a sq foot/
Chris,
I don’t think anyone ever doubted that prices would continue to fall. In fact, a little less than a year ago I wrote a post entitled “Advice to Miami Condo Sellers” (http://www.miamicondoinvestments.com/2007/07/26/advice-to-miami-condo-sellers/) in which I encouraged condo sellers to be priced very aggressively if they wanted to sell their condos before prices fell further.
I have to disagree with you though on your prediction for another 70% drop. Investors will step up to the plate long before that because the break-even cash flow scenario will be in play. That’s what everyone is waiting for and I don’t think we’re going to even get to that point on average for the market. There will be some break-even opportunities but I think they’ll be pretty rare, in the broad scope of things, and will be scooped up immediately. I think we’re about 3-6 months from moving sideways for a while, depending on the condo development.
I have gained a tremendous amount of good information on this site. Thanks to all the contributors. Here’s an article from CNN that I found interesting:
http://money.cnn.com/2008/06/30/real_estate/vulture_investors_take_flight/
Perhaps even more interesting… I’ve found a way to live in relative harmony at home with my parents and saving some $$ while I continue to study at UM Jackson. I’ve been looking out for some rental bargains and am planning to move Sept 1. Some of the popular rental properties previously mentioned on this site include the Plaza and Quantum. Any other places I ought to take a look at.
thanks again to all.
I have been watching a boutique condo building built about 2 decades ago. Several owners were trying to sell at X, then 75% of X, 55% of X, and now one unit is 27% of X listed right now (granted it is the lowest floor with the least desirable view in the building, but not a bad view, and was foreclosed upon being approved at that price by Countrywide….they or whoever is the actual mortgage holder are taking a hit..hoping to get 60 cents on the dollar). The seller for X was obviously wishful, but it was listed on the MLS in 2006 for that…and more than one owner was trying to get around X at that time. Needless to say, it will get interesting later this year as the acceptance phase comes full into play and prices get closer to where they should be.
I was of the opinion that prices would slide significantly this year, especially the second half which we have now entered and further declines in 2009. However, I have come to a further realization that the declines could be more significant than I had thought even a month ago. While Chris @ housingfear might be a bit extreme (just a bit?!?!) a return to 2001 pricing is not out of the range of realistic possibilities….back to 1999 pricing in REAL dollar terms is also possible for south Florida. Glad I am renting! 🙂
Another thing I had seen…Trump Tower Tampa developer filed for bankruptcy. Makes one wonder about the Trump Towers in Sunny Isles Beach where Trump lent his name to too….
Thanks to all who chipped in to clarify. Especially to BFG for an indepth perspective.
A freind of mine from Quantum asked me this question:
“Can I stop paying the maintenance dues because the developer is charging the dues and the HOA has not yet formed? What can the developer do?”
I advised him against any such thing. I presume, even if the HOA is not formed, the maintenance dues charged by the developer has the same sanctity as a HOA dues (?)
I love this chart:
http://mysite.verizon.net/vodkajim/housingbubble/miami.html
Just puts in perspective how ridiculous this market was and is. Pretty tough to tell where the bottom of the falling knife is going to be from looking at the chart.
My 2c is that there is another leg down, but not in the low or middle ends of the housing market. The next phase will be in the higher end of the housing market. ie. 500K+.
You see it in the toys. Boat prices drop then small yachts then middle sized yachts. Normal cars start faltering first and just recently the Ferrari F430’s.
I really do think there is a trickle up poverty effect. In a “recession”, the people at the lower end tend to have a smaller cushion and basic necessities tend to be a larger part of their income. When income drops, they are in trouble right away. If you make your own sandwiches and rarely eat out, how much can you cut your food expenses?
In the upper end, if you pare down expenses, you can ride things out longer especially if you have a cushion. However, unless the economy turns around, you will wind up in the same predicament as the lower end.
Anyway, that’s my 2c. The houses that are now being “given away” at 50-200K are pretty much at their bottoms. The higher end of the market is in some doo-doo unless the economy starts turning around. Has anybody else noticed there are 4 shuttered stores on the corner block of Lincoln Road where the movie theater is located… WOW.
The smart monies gunna party like it’s 1999
Renter Tom said: “Makes one wonder about the Trump Towers in Sunny Isles Beach where Trump lent his name to too….”
Several weeks ago, there was Miami Herald article mentiong some litigation against Related and the Dezer Brothers (the other “partners”). Sorry, I don’t recall the specifics but it mentioned the promised use of the “Trump brand”.
I guess if Trump takes a fade on the deal, it can officially rervert back to what the project really always was, to quote their ads, “Another Related Development”. Whoopee, Gourge, another town, another condo glut!
perhaps their slogan can become, “Yet Another Related Development.”
Or they should say “A Related Development, but unrelated to Trump”. I guess the Donald doesn’t hesitate to divorce. I think Trump has indicated he may not renew the name license after construction is completed and turned over to the HOA, whatever that contract says… Will be interesting.
BTW JL, that graph would indicate we are 60% through the price declines in real dollar terms…back to 2004 real dollar pricing…will we get back to 2001? Or will it fall even further? Investment rule: things always return to the mean….
While Chris @ housingfear might be a bit extreme (just a bit?!?!) a return to 2001 pricing is not out of the range of realistic possibilities….back to 1999 pricing in REAL dollar terms is also possible for south Florida. Glad I am renting!
__________________________________
Prices were 150 a sq foot in 1999/2001 so I don’t know how I am being extreme. We are both predicting the same thing.
I guess people forget what real estate cost in Miami in 1999/2001.
a 70% drop from 400 a sq foot brings the price down 120 a sqaure foot.
I know that sounds scary but that is the reality as I see it.
I thought you had said an ADDITIONAL 70% drop from today’s pricing???
Ace and Chris (And MO if you are still around!),
I can only presume 2 things about you guys for constantly wishing $125 (now you changed the tune to $150)/SF
1. Either you are anarchists, you hate the governments, the world and established order and wish chaos and anarchy to rule the roost for no apparent reason other than you are jaded or confused
or
2. You want such a dramatic roll back of prices, so that you can finally afford to buy a condo that you guys never cared to buy 5-10 years ago by the way of saving and planning like how responsible people do.
If it is the first, you shopuld get help as quickly as possible. Anarchists have never succeeded in the past thousands of years and only ended up destroying themselves.
If it is the second, Be very careful what you wish for. It just might come true! There are 2 scenarios in which I can see a price crash to 98-99 levels:
a) The economy gets so decimated, that the price crash becomes imminent. OR
b) The price crash resulted in the economy getting decimated.
Any which way you look at it, When your wish comes true (God forbid) you most likely may not have a job to pay for it!
Hi JL, as per the chart, 2001 inflation adjusted prices are the same as 1989 prices. Is the inflation – the only parameter in measuring the housing price curve? Are there no other variables? It is convenient and easy just to compare the inflation, but there are so many other forces at play. Some points to ponder:
1. In 1989 the American population was : 232 Million
In 1998 it is 255 Million
in 2008 it is between 305 to 310 Million (Extrapolated from the 2005 figure of 300 Million).
Prices rolling back to 99 or 89 levels( Which by the way are higher than 99 levels) but 70 Million more souls are added to the population!
2. Pre 89 is the stone age (relatively speaking) and post 89 is the internet age (the enlightened era). I am not comfortable in comparing what happened prior to that era as it seems like another world. Even all the housing statistics only available after the start of the industrial revolution in the late 1800 and early 1900. If you have statistics to show to the period before, it will tell you another story. My point is that the post 1989 internet era is the new industrial revolution of our times (100 years after the first industrial revolution took place). So we are in uncharted territory and cannot compare to the stone age statistics.
3. And finally a simpler analysis. Have you seen the wretched buildings that were put up prior to 1989? They are absolutely no way in par with the new tech advanced buildings of today. Yes, for the most part, houses built in 1910 were alsmost similar to the houses built in 1989. But the houses and condos of today are light years apart from the cave dwellings of the past.
Hence I wiould like to conclude that inflation is not the only measure to compare the prices. There are umpteen other variables, and I only discussed 3 of them above. So these housing statistics from pre 1989 only tell a tiny part of the story.
Correction:
1. US population in 1989 is 246 Million
2. US pop in 1998 is 270 Million
I guess no one is factoring in the melt down of the stock market and evaporation of wealth. Wealth that has evaporated in blue chip stocks which has not happened since the great depression. The next great debacle will be the credit card crisis and the banks not being able to collect of credit card debt, throw in upside down car loans on trucks and Suv’s that no one will buy at any price. What you have is the perfect storm. You would have to a bit daff to buy right now, or have very deep pockets to hold on to real estate that will not come back in 3 to 5 years.
Regarding the chart:
http://mysite.verizon.net/vodkajim/housingbubble/miami.html
I wouldn’t try to argue the merits of any specific pricepoint for a bottom from looking at the chart. What I would say is it would be pretty odd for that slope to go flat in just another year.
I’m pegging another 2-3 years before you get something looking like a bottom and the brunt of the losses over the next 2-3 years will be skewed to the higher end stuff.
AJ
Wishing for 2001 prices is a good thing for the economy not a bad thing.
Yes, Greedy speculators like yourself will take a bath because you bought in at the top of the market hoping to sell your unit to a greater fool for more money. However, the result of this epic price crash back to 2001 levels will mean that end users will actually be able to buy the units again for a price that is in line with the median income in the area and that will be a good thing for the economy.
Paying 50% – 70% of ones monthly income on a house/condo is bad for the economy and bad for the health, family, saving for retirement, just about everything.
Paying 30% of ones monthly income on a house or condo is good.
And you can deny it all you want but this is what will happen. Speculators and investors like yourself realize that no one is going to ever pay 250-300-400-500 a square foot ever again for these units because they realize the game is over and only real people who want to live in them will buy them.
The ponzi scheme came to an end and you were the last one holding the bag. That sucks for you, but you can let the unit go into foreclosure, stay current on your other debt, and in 3 years you will be able to buy the same unit at 1/2 the price you paid.
Or you can stay in your debt trap for the next 30 years just to break even.
The one thing is for sure. overpriced housing is not good for the economy. Affordable housing is.
And that is where we are headed.
Yes …I too believe that we will see $150-$175 a sq. foot very soon.Who would have believed $5.00 a gallon gas???It’s CUMMIN along with down to earth Miamo condo price’s.Anyone agree with that???
Chris,
I never denied the fact that affordable housing is good for the economy. In fact it is essential. Yes, teachers and fire fighters can still pay 30-50% of their incomes and live in Miami. No one is expecting them to be living in Marina Blue or 50 Biscayne. These buildings were never built for middle class people in the first place. There is plenty of affordable housing from Kendall to Doral and in between. So if you are expecting an electrician or plumber to get into a 1/1 or 2/2 in Icon Brickell, it is not going to happen. These buildings were made in the first place for wealthy retirees or as 2nd homes for well to do people from around the World. OK, the market got carried away and built 10 years worth of supply in 4 years. There is no further construction as of/since 2005-2006. By 2013, each and every one of these existing luxury condos will be absorbed by end users.
By the way, I am an investor, not a speculator. I hope you know the difference. You also called me Greedy? Hmm, let us see. Why are you even on this site talking down the market? Why do you have a housing bubble blog? What is your ulterior motive? Do you and all other wishful thinkers want to buy a unit in Marina Blue for $125 or $150 and all this effort of yours is a means towards that end? What does that make you all? Greedy? Opportunist? Bottom Feeders? Vultures?
So before you cast a stone, think about yourself for a second.
And a word of caution to all those who might be watching the unfortunate turn of economic events in this country and around the world with glee, salivating at the prospect of buying a unit in these new buildings for peanuts. If that ever happens, life in America will not look like the way you remember. JL said above, “Has anybody else noticed there are 4 shuttered stores on the corner block of Lincoln Road where the movie theater is located… WOW.”
You can multiply that by a 10,000 fold. All of you seriously start praying that it is not going to happen.
Amen to that!
I just finished the latest condo closing rate update. I should have it up either tomorrow night or the next day.
AJ
It might be of interest for you.
In Quantum they installed allover mirrors in the garage !
AJ,
Not only did they start installing mirrors, but we took your advice and formed our own “association” by distributing flyers under the doors as management wasn’t very cooperative to say the least. You can’t imagine how many people turned up. Suffice it to say, we are taking matters into our own hands and as we speak there are a lot of Quantum owners working very hard to make Quantum a great place to live. We met on the 1st of july and we will be meeting on the 15th again. We had over 50 homeowners show up; we created four committees that are working on individual items and finally we are speaking with a unified voice. I, for one, thank you for your advice and for the push that you gave us… It turned out that everyone was fired up and they were just waiting for a spark to take action. I’ll keep you posted on how Terra responds to us.
AJ,
I am wishing for dirt cheap condo prices because i am greedy for a good price on a long term deal. last time i checked, nobody who was contributing to the unchecked increase in prices was worried about long term stability-it was all about how much can i make flipping this unit to the next sucker. these people have cost me because rents suddenly increased to match the mortgage, taxes etc that were driven up by speculators. i had to pay for those through rent, and could not even take a tax deduction on them.
i have deliberately saved through the years and not bought into the excess because i felt it could not be sustained. i fully expected a correction to occur, and will make my move at that time. let the tough corrections occur-those without debt will be able to ride it out even if the waters are rough. i have no sympathy for the irresponsible people who led us to this position-its a tough world, now learn to deal with it. responsible people have saved money for down payments and retirement funds. how many of these speculators had a dime of either when they overpaid for the RE they now want nothing to do with? at the same time, i do believe in the ingenuity of the American entrepreneur, who will overcome another Great Depression scenario.
Hi DLJ,
I am so happy that you guys have formed a group to make your building a great place. Congratulations and good luck.
I have left 1800 and came back to NYC but I hear that the laundry list we gave to the developer is being worked on seriously and quite a few jobs have been tackled from that list.
I think what is good for 18 is good for Q and Vice Versa as they are more or less, twin buildings joined at the hip with a lot of influence on each other. Looking forward to working with your group in future so that we can make the Pace Park/OMNI area the envy of Miami.
Gables,
I completely understand.
What I don’t agree is the likes of Chris who say that the greed of speculators who buy low to sell high is some how unacceptable but the greed of his ilk who will buy low from a desperate person is somehow kosher.
When a speculator is selling high, the willing person who is buying is not a victim.
When Chris is waiting to buy low from someone who is down and out or taking advantage of the situation and squeezing evermore concessions from a person who is moving out of state, job loss or any such compulsions, it does not make that kind of greed any more superior.
Remember, it is not just the speculators that are selling the houses. It could be that person who bought a unit in 2003 to live in it and now has to sell for a vereity of reasons and speculation is not one of them. He or she might be more than glad to sell their house for no profit. But expecting to buy the unit for 2001 or 1998 prices is nothing but greed too.
I am not an economist, but for the sake of both buyers and sellers, I fervently wish that the bottom is reached at 2003 prices. That is just right for the health of this country. Any further losses would decimate the economy of this nation. When the housing prices started to rise in 2001, until the end of 2003 it was an acceptable rise. The prices at 2003 levels were not crazy at all. The ass holes started coming into the market starting Summer 2004 and screwed up everything until the end of 06. That is the reason why I have been strongly advocating that the prices should fall back to 03-04 levels, even though I could have been the beneficiary of such a runaway speculation.
I have said this before and let me say it again one more time.
All those who are wishing for a bloodbath in the real estate so that they can buy a unit for a song, think again. Think very carefully. The repercussions of such a scenario is mindblowing. Think about some of the years of the 70’s and 80’s when no one but losers will live in Manhattan because it has become so wretched due to a distressed economy. You could buy a flat in Manhattan for a few thousand dollars. No one even cared. Because living in Chelsea or lower east side or anywhere else is just so undesirable. The fact that a million dollars now may barely get you a 2 BR looking into a brick wall in these places is another story.
So please do not hope for a blood bath in the real estate. Even if your wish comes true, you may not want to buy or live where blight is going to be universal.
I for one will not think it is going to happen, no matter how many wishful thinkers sitdown and meditate and pray. I am betting on the 2003-2004 prices to be the bottom. Not 2001 or 1999. We will all know by Christmas for sure.
Lucas, what do you mean by “break-even cash flow scenario”?
AJ,
I certainly appreciate your thoughts and actually tend to agree with you for the most part. You are absolutely correct about being careful what you wish for as the outcome could be terrible. I just dont think that will occur. Most of the rest of the country could revert to 2001 prices without significant losses to those holding the property. Most of these properties did not experience a significant bubble and thus the loss, while real, would not be life altering.
The price appreciation in places like Miami,Vegas and LA were mind boggling and extremely unhealthy. These are the markets that must get crushed in order to return to health in the future. Unlike a Boston or New York, Miami does not have a local economy which can afford the expensive condos. You are correct that they target the wealthy foreigners, 2nd home buyers, etc. But there is still an oversupply. A nice new 2B condo should not cost over $300k-that would be a realistic upper value. Prices need to correct to reflect that point. And a significant portion of current owners will take a bloodbath in order for that to be achieved. Its either them or me, and I am not the one holding the declining asset. How fiscally responsible is a $100k per year earner in buying a $500k+ condo? The American dream is earned over time and not overnight.
I have found great information on Miami homes for sale using this website that has a google maps/mls mash-up and also lets you search specific areas. I actually was able to find more information on this listing, which you provided some great stats for. Thanks for doing all that work! It helps a lot to see some hard numbers.
Hi Gables, I agree with you on all except the line “thus the loss, while real, would not be life altering”.
Most home owners in this country refied or cashed out some of the gains. I am not too sympathetic towards those who cashed out the ugly gains of 04-06 (I call it the blood money), but a vast majority have taken out equity and the gains built up until 2003 for college, home improvement, a wedding or even everyday living. Now millions of those home owners will have an upside down home (worth less than the mortgage) if prices fall to below 03 levels. These are just ordinary folk. They don’t even know the word ‘speculation’ to begin with.
If the price fall is arrested at 2003 levels, we can come out of this bruising economy with just some minor scars. Anything beyond, we all will bleed with a thousand cuts, both the home owners and the potential home buyers. No one is immune and no one will be spared.
Expecting to buy units at 2001 prices isn’t exactly “greed”. It’s just good sense. A lot of people were priced out of affordable housing for the past few years, and yes, we’re quite happy to see people suffering; because the people who are suffering are (for the most part) carpetbaggers and opportunists who don’t live here and have denied us a realistic chance at home ownership the past 4 years.
Yes, Brickell units aren’t exactly built for people living on teachers’ salaries, but Midtown shouldn’t exactly be out of a teacher’s reach, either. I make $70K/year (which, from my understanding is about twice the average Miami-Dade household income) with no kids and very little debt. I’m not exactly in the Brickell condo target market, but I figure I would be a target for the downtown/upper east side condo mongers. And I couldn’t see myself paying $275,000 for a condo with $500-600/month maintenance fees on top of that. To me, that’s insane. After taxes, that thing would eat up 1 entire paycheck and creep over into another – not even counting what I would have to set aside for property taxes.
If anyone’s response to what I’ve just said is that all the downtown/Brickell/beach condo construction is strictly for wealthy retirees, Europeans, and South Americans, then you’re out of your minds. I’ve heard those statements a bunch of times, and they’re patently ridiculous. All of South America and Europe cannot move here. That’s just not going to happen, ever. Even if there was a chance of it happening 9/11 pretty much took care of that. Plus, I don’t see rich old NYC Jewish retirees wanting to move to Miami to stay in Quantum or Neo Vertika. Plus the job market here is not (and never has been) strong enough to entice a well-to-do (but still working) northeast resident to move here for a break on the real estate. So, forgive me if I seem like a vulture or a jerk for wallowing in the misery of others, but I guess all you condo sellers are stuck with us poor lil’ ol’ Miami residents and our crappy salaries looking to pay a more realistic $150-$175/sq. ft for a place.
AJ,
You set up a false choice: boarded up businesses and anarchy (!) one one hand, and luxury living at $300/sq. ft. on the other.
I reject those choices. There is a middle ground: affordable housing for the middle class, with condo investors (a wholly new species anyway) and conspicuous-overconsumers as casualties.
In other words, if affordable housing means that ” life in America will not look like the way [I] remember,” then so be it. I don’t remember life in America being particularly great the past few years anyway. Materialism, debt spending, and criminal incuriosity sucks.
But that’s just my opinion; I realize it’s not yours.
Bender,
There are quite a few misconceptions and wrong finger pointing in your diatribe.
1. Carpet baggers and opportunists who do not live here: In fact for every one investor/speculator that I know of from say Chicago, New York or Toronto, I know of two who actually are either Miamians or Long Term residents of Miami!
2.$500-$600 maintenace fees: Give me your $275 K, I will pocket $50K and with the rest I will buy you a beautiful single family home in a very good neighborhood. You dont have to pay a penny in maintenance 🙂 . If condo living is your style, I will find you a beautiful condo, some with even lake views for $150K from Cutler Ridge to Miramar. The maintenance will be $100/month in these places.
In any case the high maintenance on these luxury condos has got to do with the Insurance. Blame the hurricanes, Florida Geography or your “own” local born and bred spineless, corrupt and good for nothing politicians for not doing a jack about it.
3.Property taxes: Repeat again, Blame your “own” local born and bred spineless, corrupt and good for nothing politicians ( poor lil’ ol’ Miami residents ) for not doing a jack about it.
And finally, Miami will not be Miami as you know and as everyone loves if not for all these carpetbaggers. You will just be another Birmingham, Alabama by the sea. And if not for the carpetbaggers, your services might not even be needed in Miami and you will be without a job and probably looking for work in New York right now. So stop whining for god’s sake.
Moretroops,
Yes, I am all for a middle ground. You said it, not me. If the prices started rising slowly in 2000 and rapidly in 2004 and peaked in 2006, I am very right in calling for a middle ground of 2003. 2001 or 1999 is not middle.
Yes, I 100% agree with the ugly American attitudes of Debt spending and materialism. But what has happened has happened. I think the ugly American is learning a bit. Americans who constitute 20% of the World population using 80% of its resources are now getting the taste of their own medicine. When the rest of the World lives like them, everyone has to pay with hell. So attitudes are changing slowly, Hummers are being sent to the scrapyard, just give some time. My point is why do you want to kick the ugly American when he/she is already down?
Bender,
You actually got me thinking. A few years ago, when I was making 40K/year, I bought my first co-op in New York. 2 years later, when I changed my job and my salary went up to 60K/year, I bought a vacation home in Miami. I do not have a inheritance from a rich dad either. How is it that I can do things with my limited income when you guys cannot buy a simple condo all these years with a pretty decent income?
OK. Let us see. If you let me, I will get you into a 1 BR condo in either 1800 or Quantum. You dont even have to go to the Midtown and wait another 5-10 years for its gentrification. The 1 BR in Quantum actually has a little water view too! The one in 1800 is west facing though.
850 SF apt for 200K
down payment 40K (20%)
financed 160K
A 30 year mortgage at 6.5% is approximately $1000/month
Monthly maintenance $350
Taxes $333/month
total monthly payments $1683
Assuming that you are making 70K per year, your take home pay per month should be $4200/month. So affording a 1/1 should be cake.
Let us consider a 2/2 also. If you want to buy a 2/2 in Q or 18 with some partial water views, There are some available for sub 400K range. I calculated that your monthly expenditure can be as little as $2500. With your comfortable salary, you can do a 2/2 also. So why all the griping and bitterness? Don’t you know how to manage your money well?
AJ, notice I said carpetbaggers AND opportunists. I am aware that there were South Floridians that also got burned, and what I said goes double for them. It didn’t take too much common sense for someone down here to say to themselves, “Hey, if people down here can’t afford to live here at these prices, then who’s going to buy this condo off of me?”
Sure, I could pay $200K and get a very nice house in Homestead…if I want to waste 3 hours/day out of my life in traffic. For that matter, I could probably get a good deal over in Naples, too. If I worked in South Dade or West Broward, I would be looking at Cutler Ridge or Miramar. But since I work in Miami, that’s not exactly a realistic option with $4+/gallon gas and a drive time would make for a very poor quality of life. You love the false choices, don’t you?
The maintenance is the maintenance and the property taxes are the property taxes. I have no complaints about them per se because you can’t really do all that much about them, but a condo owner can’t exactly not be mindful of those things when trying to sell some schmuck on a $300/sq. foot selling price.
Oh, and since I don’t work in the tourism industry, I don’t exactly depend on carpetbaggers to pay for my bills, thankyouverymuch. Also, if I recall correctly, Miami didn’t exactly spring up from being Birmingham-by-the-sea in the past 5 years when speculators (both local and abroad) were gleefully trying to make a killing off the average Miami joe. If you want to stop the whining, how about you quit whining because you’re not going to make the killing you had expected to make 2 or 3 years ago?
AJ, do you even believe what you’re writing? Why on Earth would I, or anyone, lay out $1700/month for a 1-bed place? Rental rates aren’t even close to that. I’m living comfortably in a 1 BR right now for $950/month. So, I’m spending an extra $800/month for what, exactly? No, thanks, I’ll continue to pocket it.
I’m looking to move up to a 2 br/2 ba place, so I can have an extra room for family and friends to stay when they come visit me. I figure an outlay of $1500-$1700/month total, while a significant jump over what I pay now, would be about right especially if I’m moving to a better area. Spending $2500+/month on a 2Br place is crazy. Rental rates aren’t going to come anywhere near that in the next 10 years.
I don’t know where the “all the griping and bitterness” comment comes from, considering this is post # 3 on this blog. I figured I would have to post on here a while at least to get a rep, but I’ve been reading your comments for a while and I figured you had to be a developer or an agent because you’re always advocating that people make bad moves into real estate down here – and what you’re advocating makes bad financial sense.
Bender,
Renters are gladly paying $2200/month for a 2/2 in the 1800. Don’t ask me why, go to the pace park in the evening and ask some of those renters why they are paying so much. They will tell you.
And a lot of secretaries drive BMW 3-series cars down here and have zero savings while living with roommates or mommy and daddy. It’s being “Miami Fabulous”. People like that deserve the financial woes that they’re bringing upon themselves, but at the same time, responsible people shouldn’t be made to pay for their extravagance, either. It looks like people are finally waking up, and I say good for them.
Bender – You should go to the 826 North Miami Beach Wal-Mart and see what people are buying on foodstamps…then getting into expensive cars to drive off. It is absurd. I don’t know the criteria for qualifying for public assistance but it sure seems like a lot of fraud to me. All the food stamps seem to do for many is free up cash for gold teeth, pedicures, and SUV’s. One way or the other, it always seems the responsible taxpayers end up getting stuck supporting these freeloaders. I don’t want anyone in the U.S. to starve, but for goodness sakes you should spend your own d*mn money on food before you buy gold teeth (i.e. grills, not actual teeth per se I guess).