Miami Condo Market Highlighted by the Major Media
February 22, 2008 by Lucas Lechuga
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Miami has evolved over the years. It was once regarded by many as a flashy and dangerous place to visit. It still remains flashy but it is no longer considered dangerous. The following video portrays the new Miami:
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For a different take on the Miami condo market, CNBC also interviewed Ron Shuffield, President of EWM, standing in Met 1, a Miami condo development slated to begin closings within the next month.
Prices have come down 25-30% since late 2005 to early 2006. Recently, some foreclosures have been purchased at a 50 percent discount. I receive phone calls every day from investors and end-users who want to buy at 50 cents on the dollar. If they want to buy at a 50 percent discount from today's prices then forget about it. That would amount to buying at 25 cents on the dollar from the height of the market. There are now opportunities to buy at 50 cents on the dollar from 2005/2006 prices.
Uh.. Your math is off. 50% off a market already off 25% would be 37.5% of original.
I guess it’s all price at the end of the day. Miami Beach’s inventory would clear in months if prices fell – SoBe – $500 a sq ft, rest of the beach $300-$450 a sq ft.
Problem is Miami Dade would go broke, and round and round we go…
You flatline at best from these levels – nothing wrong with that – but no rush if you don’t NEED.
I think it is useless to try to guess what percentage prices will fall, and then use that to make a decision on whether to buy or not.
Instead, how about using time-tested investment analysis to figure out whether the price makes sense? In the short run, the market can get out of whack from its fundamentals (see late-90’s stock market or 2000-2005’s real estate boom), but over the long run, prices always fall back in line with fundamentals.
So, if the condo you’re looking to buy is twice as expensive to own as it is to rent, guess what: it’s still overpriced. I don’t care if it has fallen 90% from its peak. That is completely irrelevant. The important thing is, if the price can not be justified by the underlying fundamentals of the market, then it will continue to fall.
Will the Miami real estate market recover eventually? Is it a nice place to live? Of course. But that does not mean that it makes sense to buy anytime soon.
Stop trying to guess where prices are going by using a “well, it’s already 30% off the 2005 ripoff price, so that must be a good deal” anaylsis and use some common sense analysis instead.
BFG – I agree. Just using zilbert.com to see recent sales prices on desired beachfront (so desired there’s 6 years of the stuff) versus offered prices and you can confirm your analysis.
Mosaic – $576 a sq ft last transaction, lowest offer price $650, most at $700-$900. No wonder over a 1/3rd of building for sale. Peak 2005/06 pricing anyone?
Similar at Akoya, Murano Grande etc
Lucas (and Kevin) – why don’t people get it? There are transactions, but the bid/offer spread is too wide.
Shouldn’t you as realtors (and more importantly your parent firms) first up say to a seller – the last transaction was at x. It happened 1 month ago, it took six months to get an offer. Now I won’t take your listing if you don’t price within 5% of that. Maybe another realtor will, but you won’t waste your time on it.
Oh and by the way, that bargain Mosaic condo is still going to cost you $35,000 + utility bills per year. A total joke.
I recorded the today show in HD on my Vista Media center and saw the entire show this morning. It was good. They showed miami in a positive light, but they were very “gentle” when talking about the real estate prices.
While the economy may not depend a lot on tourism, there is no industry in miami that will pay professionals six figure salaries (unless you are an exec for a bank or company HQed in miami). If you goto Chicago, you can easily get a six fig job in many industries from manufacturing to IT (if you are educated and have skills). Same person in miami does not have a chance of getting a similar job in Miami.
I personally work for a company based in Seattle and consider myself fortunate that I dont work for a Miami based company. I would probably make 1/3 what I make now. There are no good jobs in miami for professionals outside of banking/retail…and the jobs that do exist are few and far between.
Overall, the today show did a good job of exposing issues, but they glossed over the serious issues.
The CNBC video showed a guy who was dillusional. I dont recall his name, but he was saying something like you can buy 5 condos here for the price of 1 condo in NYC. yeah..so what? NYC is the financial capital of the world with REAL sustainable industry. NYC has been around for hundreds of years and has a stable mature sustainable job market. Miami is a new city (relatiely speaking) and has a long way to go to be like NYC.
About condo pricing, BFG is right on. You cannot look at a % drop to determine “real” value. The historical fundaments (rent vs carrying cost ratio) is an accurate historical way of accessing value. Lets see if values drop to the norms. I personally am having a hard time seeing values drop back to what they should be….if i owned a condo, I would not sell for 50% loss. I would hang on to it and wait for the market to improve. Investors and flippers are scr*wed, but people who actually live in the condos can ride out the storm.
Julian-
I agree with you on Mosaic. I was checking it out the other day.
Its a nice building, but what makes some of these people actually think their unit is worth $800-$1,100+ per sf?! Their agents are just wasting their time.
BFG
there are legal/financial jobs (aside from traditional banks) that start off in the low six figures as well. still, limited pool of jobs and more importantly, a lot were driven by the real estate boom.
BFG – you’re absolutely right. it reminds me of the heyday in the internet age when people were throwing financial fundamentals out the window…saying, revenues weren’t important, or or for that matter, profits, but instead, views on a webpage or other “synergies.” we know how that turned out. frankly, i think most of the speculators in internet stocks in the late 90’s/early 00 are the same boobs that make up today’s RE “investor.”
carbonblackcab: I agree with what you wrote, but want to point out that whether you own a condo to live in or are an investor or flipper you are screwed — out of fictitious gains if you bought before the bubble or out of “real money” if you bought during the bubble. It doesn’t matter WHY you bought, all prices are declining and will continue to do so until they are more in line with the long term fundamentals. Markets and gambling don’t care about the whys.
The “catch a falling knife” argument cuts both ways….for buyers and sellers. If you sell now, at least your loss will be over with and you can’t lose anymore, which is the smartest move. If you wanted to sell but decide to “ride out the storm” you’ll lose just like the investors and flippers since the “price catch up” is fictional….i.e., the price catch up is just inflation, not real. At some point the declines will curtail and inflation will catch up but all the while the loss continues….it is a death by a thousand cuts.
In the past, when home price declines were only shown in nominal dollars (unadjusted for inflation) people still thought they had gains since the prices didn’t drop below their actual nominal purchase price (the NAR marketing that homes always have gone up in value….nominal maybe, real nope) so the loss didn’t affect the homeowner psychology (which is mistakenly in nominal dollars since we don’t think in dollar terms, unless you’re an economist) and any thoughts of buyers regret (and 30 year debt obligation) was always soothed by the fact you home was a safe investment versus renting (pat yourself on the back for being so smart to buy instead of rent, makes me better than those renters, me so special). It is when home price declines actually crossed from REAL dollar terms (inflation adjusted dollars) to NOMINAL dollar declines that home owners (buyers, etc.) got really spooked. The loss in nominal dollar terms can’t be ignored and now people must psychologically confront the fact that they made a bad financial decision…..and it shook a long held paradigm that if you bought real estate your money was safe from losing value (nominally, usually that was true)…and widespread buyers remorse set in for the first time in real estate. It was a no lose game where the only thought was how much can I gain….a little or a lot. When there was a lot of “a lot” of gains, people rush into this safe investment like never before. “I can’t lose and I probably will make more in real estate than in the stock market anyway”.
When I look at the number of $1M+ homes/condos on the market, then review what people make in this market, the only conclusion is it is non-locals that HAVE TO BUY whether it be foreigners or northerners such as from high paying areas like NYC or Chicago. The market is TOTALLY dependent on purchasers from outside the local market. Those non-local purchasers, unlike local purchasers who actually need shelter, don’t have to buy, it is TOTALLY a DISCRETIONRY purchase….and the status of owning in Miami quickly fades when it makes you look like a financial fool. The “Miami is on sale” push is the last step before the substantial declines to come.
Think of it as a large store that has tapped out all of its possible customers through Christmas and post-Christmas sales. Once that is done, clearance time is next. Well, my friends, clearance time is just around the corner in the Miami housing market. Those that bought on sale will wish they had waited and bought on clearance. Just look at the level of foreclores, notice of defaults, and number of homes on the market….the clearance is coming. Holding costs are high and there are so many owners on the margin that it is going to get very ugly.
Huge inventories, high holding costs, discretionary buyers, no money down loans, etc. makes for an historic event. There will be examples of 50% off TODAY’s prices, how many we’ll see…. but there will be a lot if the global economy goes into recession…..let’s see do I really need to buy a discretionary purchase with a declining value and high holding costs that I will use a few times a year or will turn me into a floplord? Nope, I think I’ll pass….. Repeated by a million potential buyers.
Just watched the video — EWM is a joke if that joker is leading them. The economist is correct.
With real estate condominium developers finding themselves in severe financial difficulties triggered by the economy, a new breed of developers is feasting on the pioneers who led in the shaping of the Magic City. This new breed is the successor developer who is better described as the “clench developer.” The most infamous example is The Grand condo in Miami which, created by the genius of visionary developer Tibor Hollo, creator of the multi-use condo concept, wound up in the pockets of Québecois real estate promoter Pierre Heafey who made a deal with the banks that held title to this beautiful multi-use condo on the shores of Biscayne Bay. Heafey, who tested the clench developer concept successfully in Canada, with associate Gino Falsetto already added the Grove Garden Residences in Coconut Grove and the South Beach condo-hotels, The Bentley and Hilton Bentley Miami/South Beach to their portfolio, and more are targeted.
What is a “clench developer?” The clench developer is not satisfied with buying a condo unit at a bargain price. His object is control of the inner workings of the condo — the condominium association with a majority vote grip over the board of directors. He accomplishes his feat under the pretext of completing and saving the project.
Dr. Dinter,
At first blush, your posting seemed erratic and desultory at best — I thought you were kind of weird. I did follow your site, however, and am now keenly interested in your muck-raking endeavor against Tibor Hollo and Pierre Heafy. Very interesting indeed…
Dinter – Real estate can be ruthless. I know from personal experience. So, I had to learn how to be ruthless right back at the bullies. Condos and condo-hotels can be very very messy affairs. A lesson to learn is to not go into debt or at the very least know what you are getting into before jumping in. Condos, because of the common connections — you’re all in the same boat together, is like a big messy family with characters. etc. When these fights over control go to condo boards instead of just stocks, it gets emotional because it is your home and a large amount of ones net worth. Best to just get away.
Also of interest is the larger push to market Miami outside of Miami’s local area. The locals are beyond tapped out, only a large media blitz can bring in some buyers…..however those are limited too. Once the media hype is over, who else can they market these too?
Words right out of my mouth Mr Economist..I guess the interesting thing is that because it is such a huge 2nd home market, it will be a new precedent to see what can really be sustained. In a deep recession there’s no reason that new property (at the margin, being built today) couldn’t sell for firesale prices (I.e. Beach at 2000 prices)
Dinter – Your clench developers have another name in the UK – they are called Freeholders…only way to deal with this situation is to legislate their rights out of existence. Took 50 years or more to even get we are today.
RENT RENT RENT….forget about buying anything altogether for awhile.With price’s dropping like a lead balloon….why would a foreign investor with any brain’s buy in a market like this?You can rent for the few time’s and limited amount of time that they are going to use it.WAIT a few year’s ….and that’s when the bargain’s will be had.
I see a lot of talk here about the Mosaic, and am surprised because when I tried buying a unit there last year no one was selling for under $1.2 million, and there weren’t even too many of them on the market, how much lower are they today?
Mosaic is in a good neighborhood, of course, but pretty boring.
another lawsuit coming?
I was showing units to my clients there today…. the interior units (not corners are hovering right around $1M (about 2ooK below what they originally paid).
Just the facts, man.
A couple random comments:
-I met a guy from Atlanta in fall of _2006_ that had to move from Atlanta into his condo in the Mosaic due to a lack of financial alternatives.
-Miami (esp. Beach/Brickell) is enormously dependent on outside buyers – foreign, Northeast – if Fla. were to ever implement a state income tax, it would absolutely DESTROY the upper end of the market (ie – people pursuing income tax arbitrage who are “saving” themselves 7% NY State income tax {+City tax?} by having their primary residence in Florida)
-The only paying jobs in Miami (to my knowledge are: attorney, doctor, RE agent selling still overpriced RE, import/export trade company owner, banker, and city/county commissioner. BTW, now is a great time to start a bank, as capital impairments will cripple many local institutions in the next few years. All supporting jobs in these industries couldn’t cover the costs on a $100K condo.
FYI – I rent a one bedroom, 15th floor 2 year old renovation direct ocean view for 1100; my across the hall neighbor pays around $900 — and he only pays taxes, insurance and maintenance on his father’s studio (built 1969).
Ryan – My biggest concern is the discretionary buyer market will run dry due to the falling prices and instant loss of equity if you buy today. Hence, if I buy today I could lose 20-30% which is something I am not willing to do at this point and would rent instead….although I’m not big on renting since I prefer to just own my own place even if it is a bit more than renting. I want to move to Florida to establish residency there since there is no income tax and the weather is nice (I’m lived up north all my life). If money was not a significant obstacle (i.e. buying a $1M condo is fine) where’s the best place to buy on the beach in your opinion? I’ve looked at Sunny Isles Beach but it seems to be a bit quite….and South Beach may be a bit too busy for my taste. Thanks for any help.
So Kevin, People paid over $1000 a sq ft original contract price for this nice building in a have-to-drive everywhere for everything location?
That seems unlikely.
Based on that Today show puff-piece on the Miami real estate market, I predict the next wave of suckers to get slaughtered in this market will be these “smart-money” cash buyers who believe the lie about how you can “clean up in this market”.
Let’s review:
– There is an increasing supply of an already huge oversupply of Miami condos (supply problem is getting worse).
– Florida has not done anything to solve the tax problem for new or recent buyers (reducing the number of potential buyers for years to come)
– For years to come, banks are only going to lend money to people that can actually afford to pay them back (what a concept!). The heyday of janitors buying $500k condos are gone (probably forever). This drastically reduces your pool of potential buyers over the next decade or so. Most of the “buyers” (or renters of money, as I like to call them) of the boom era are gone – never to return. They’re not “sitting on the sidelines” – they’ve left the stadium for good.
– Even though there ARE some cash buyers “sitting on the sidelines”, they are overwhelmingly outnumbered by people who have no chance of getting a mortgage now. There would have to be tons of these cash buyers to have an effect on prices. So, even though you, as a cash buyer, are able to buy something that other people can’t, does not mean that now is the time to do it. If things are going to get worse before they get better (which is the case), prices will continue to go down. Why overpay for something when you don’t have to?
– Miami, although a nice place to live, does not have the high-paying job base that other big cities have. Rents have barely budged throughout the boom and are still falling. Renting is actually quite expensive in the cities with high-paying jobs. If Miami had this base, rents would be higher. It doesn’t, so they’re not. That will not change anytime soon.
– The US is likely in (or about to be in) a recession. Almost everyone who knows what they’re talking about agrees that it will last longer and be a deeper recession than our previous two. So far, this thing is looking like 90’s Japan. Their recession lasted longer than a decade, and their real estate prices went down for 14 straight years. They are just now reaching a bottom. I wonder how many Japanese “smart money” cash buyers got burned trying to “scoop up deals” on that downslope. I’m gonna guess a whole bunch. I’m not saying we’re in for a repeat of that – just that a recovery and bottom in prices could be a whole lot further away than many people think.
– The US is not alone. Real estate bubbles formed all over the world. Some were almost as bad as Miami’s. The US led the way up, and we are leading the way down. Expect a lot of these “rich foreign investors” to start dwindling in numbers as the recession spreads, and bubbles start popping all over the world.
All of the above factors will contribute to Miami condo prices resetting back to levels that are supported by fundamentals (and probably push them even below that). If you think this will happen overnight, you need to take some history lessons of past financial booms and busts. This will take years to work itself out.
SO, in the face of all this, the “smart money” (according to real estate cheerleader Corcoran) really thinks that now is a good time to buy?
With everything pointing towards worsening conditions (and continuing price declines), now is a good time to “clean up” with your “smart money” cash? If you are one of these “smart” buyers, then good luck and godspeed.
I keep hearing the old saying from market bulls that “when there is blood in the streets, that is when the smart money buys”. They usually roll that line out right as the downturn begins and continue to say it all the way down to the bottom. I’m sorry, but there is no “blood in the streets” yet in Miami. Not even close. Negative market forces will get worse and stay that way for quite some time.
It’s basic economics: when supply exceeds demand, prices fall. That is the case in Miami, and will continue to be until the prices make sense again and the supply is back to normal levels. Don’t expect that anytime soon.
Great post BFG
“cheerleader Corcoran” has been on many shows on CNBC giving advice. While I think she is smart, we’re all smart in a rising market, she is more optimistic than what is currently warranted. And she is kinda hemmed in by her past statements recommending buying…I think she thinks this thing will just turn around and all will be rosy. Cheerleading is fun and people like that I suppose, they clap and cheer and run up and ask you for advice after the show. Although it is “smart” to not have bought at the peak, it is even “smarter” to wait for the bottom. Unlike a stock, most people use borrowed money in real estate which can really be a debt-trap.
The oh, you don’t know when the bottom will occur so just jump in argument makes no sense. In real estate, if you miss the exact bottom after it hits, the loss is minimal or is offset by inflation anyway. If you buy before the bottom the loss could be huge….huge enough to put you into a very long and painful debt-trap which delays or ruins your retirement or possibly bankrupts you.
I’m still calling for a significant decline during the hurricane season when the holding costs really start to hurt, the realization solidifies that I am stuck with a declining asset and have lost all of my equity, that rents won’t tide me over, that there are no buyers to bail me out, that there are foreclosures in my luxury new building, that tax payments are coming due soon, that I am totally helpless and subject to market forces beyond my control, that the U.S. economy is not doing well enough to turn this market around any time soon, that banks have permanently tightened lending standards closer to traditional lending standards, that I am upside down on my mortgage, etc….. then if an actual hurricane hits, all bets are off.
The smart money rents….there simply is no urgent need to buy unless you can buy at 2001 or earlier prices. Don’t jump in, the water is not fine, the others in the water are just hoping enough of you jump in to raise the water level so they can climb out of the pool since they are currently drowning.
the last 2 comments were very well written and i agree 100% with them.
I see just a few solutions to solve the crisis, one is to pass a law for no property taxes in the state of florida, rising sales tax, and eliminating the taxes on the homeastead home. This will lower the cost of living in all this new buildings. and make rent maybe cover the mortgage expenses of the investors/owners.
i still dont know what will developers do with all the units that they are not closing????
i wish there was a site with info of all defaults and lawsuits listed by every building. A blog for that would be great.
Lucas, i am still waiting for the 1060 at brickell report… you are doing an amazing job, so i will just wait for your opinion on that particular building.
keep looking foward to some more interesting material.. and i really hope miami will get a strong market demand soon, it really is a nice city with a lot of potencial …
thank you!!!!
Daniel.
Those interior 2 bedrooms at Mosaic will finally move around $700k-$800k. The original owners unfortunately bought at boom 2004 prices. The should have bought at Setai or Continuum at those $1000+/sf prices back then.
I dont think the location is that bad, probably a $5 cab ride to Lincoln and not everyone wants to live in the middle of the tourist trap. The building doesn’t have much curb appeal though. The entrance is hidden along the side.
The pendulum swung, so it’s not surprising that this blog is often hijacked by pessimism.
Despite all the rational financial argument being reiterated in this blog by a constant set of individuals about why these prices are still horrible and why doomsday is upon us, I do find it interesting that many of these same individuals have declared as “wanting to buy” and even “being able to afford current prices”, so Ms Corcoran seems to be right about “pent-up” demand in the works… if the passionate group of nay-say’ers in this blog can be considered a sample.
The financials matter a lot, but you can’t forget that owning a condo in Miami isn’t always just a financial decision (anyone that has bought a Range Rover instead of a Toyota understands that). There has been a lot wealth created in the world in the past years at many different levels, for a lot of that wealth owning a second-home condo in Miami where to store your bikini and zunga is also a lifestyle and even symbolic decision.
Clearly, the market is about supply and demand. There is over-supply and a big part of demand is constrained by economics, but I think the current prices in some of these new buildings are already starting to make sense for certain types of buyers.
So, for our pessimist friends in this blog, you are right about the current momentum and direction, but I think soon you will have to recognize the emergence of demand… and that some of the new development may well be worth the current price.
For those who want to buy, -at the very least- we seem to be in a phase where an informed purchase decision will no longer risk being a horrible decision. There may be better or worse decisions in the future, but I’ll leave that to the market oracles in these blog.
Nay-sayers, I know you want to buy dirt cheap, but if you expect 2001 prices in some of the new cool buildings with the right fundamentals, you may be smoking the same thing smoked by those that screwed up the market in the first place.
Closing date is 3 weeks away and this post has been informative.
After visiting Miami each winter for the last 10 years we finally placed a 20% deposit on a bay-view 1B/1B at the end of ’03 with intentions for it to be a vacation get away. I’m not worried about me affording the unit but now I am concerned about the balance of the others in the building (Quantum), and the builder (Terra).
2cents – That is a fair opinion. One thing to point out is the optimism (or even the frenzy) that prices would go up, real estate was a safe investment, etc. that created a false demand….a demand that housing was an investment, not a shelter. The run up was historic, now we’re left with a historic over supply….years and years and years worth. The investment component isn’t waiting on the sidelines, it is simply is gone. No one wants to invest in a non-liquid asset that is declining in value every day with no end in sight and at the mercy of the market. So, we are let with only the shelter buyers. The full-time residents need shelter. The part-time residents might just decide on hotels instead. What I am utterly shocked at is the fact that so many developments chased the luxury buyers….those buyers, for the most part, will only pay those prices if the real estate is appreciating. Those $1M-$5M+ units will be hit and hit hard in my opinion. There just aren’t enough of the lifestyle buyers that will buy these units on impulse to hang their bikinis at those prices.
The worst is yet to come. Wait and see where we are at this time next year to make your move.
I’m not sure how much “pent-up demand” there really is. I think that demand is really just a below normal demand that is being made to wait. That demand is far far outweighed by the “pent-up supply”. The “pent-up supply” is historic while the “pent-up demand” is below normal. Just wait and see, the “pent-up supply” will overwhelm the “pent-up demand” by 2, 3, 4 times the amount. There are many owners that are about to give up or go under. The supply will just keep growing and growing and growing. I’m already seeing rental rates declining to 1/2, 1/3 and even 1/4 the cash holding costs.
This is a historic melt down and we’re not even half way through it. Who knows, we could hit a 100 months supply in some areas??? It really could get that bad.
With another 25,000 units coming on the market the bottom will not occur for another year or so.
When it happens 70% off peak prices will be reality.
For example, one unit I was reviewing was marked down $100K, then another $100K and now can be leased fully furnished (very well furnished I might add) and recently remodeled with high end finishes for $2500/month right on the beach. This was a unit that listed at $900K just a few months ago and probably would have been listed at $1.2+ during the bubble. The $2500/month just covers the taxes and HOA dues. If you can’t sell, you can’t lease, and you’re not the one living there, you could be in serious trouble or at the very least made one heck of a big financial mistake that will delay your retirement plans. Wal-Mart Greeters will be in oversupply too soon.
2 Cents –
People are not going to buy when the know that dozens of new empty condos are about to hit the market here in 2008 and 2009. Downtown Miami and Sunny Isles/Aventura are about to see a huge leap in supply, which will further reduce prices.
I am looking to buy a condo in downtown miami and hold it for at least 10 years. i will be buying all cash.
i just saw the building poll and saw that:
Avenue at Brickell 20% (48 votes) is the number one choice for now…
i will go ahead and review that particular building this week.
any comments on this?
thank you.
BFG/Econ Reality. I agree with much of what you are writing, and I think people need to differentiate the lifestyle purchase element with the cost of carry.
Let’s be honest, there are cash buyers who may or may not want to spend $1m on a condo. What they will not do is spend $35k – $40k a year on taxes, utility bills and HOA. It simply doesn’t make sense, and I, for one, would rather be enjoying myself around the world than tied to such a costly asset.
To be honest at $700-$1000 a sq ft (or $1000-$1500 tax equalised), I’d rather buy in the South of France.
Incidentally, what was South Beach and Mid Beach oceanfront price per sq ft in 2000, 2001, 2002 and 2003 for low end (Roney), mid end and high end?
I am guessing 2001 – Roney – $250, Mid End -$350, South Beach High end – $450?
or I am way too high?
Julian, I agree with you completely as I am the exact example of what you describe. I am Canadian and as I saw the value of the Canadian dollar begin to rise vs the USD around 2004, I became very interested in owning a beachfront condo in the Miami area. I have followed the market very closely, made several visits to Miami to see some units and even made some lowball bids on units in One Bal Harbor, which were refused. Even though prices have dropped and I am still willing to spend up to 1.2 million, what holds me back are the astronomical HOA costs and taxes. I came to the same conclusion you have, i.e. why spend 45 – 50,000.00 / year in carrying costs when I can spend less staying in a luxury hotel for a month? (My wife and I actually did rent a luxury villa in the south of France for 2 months last fall for about $30,000.00) . If prices were rising by at least 5 – 6% beyond inflation per year, then the calculation would be different as this would balance out the carrying costs. So for now, I too am on the sidelines, waiting for either prices to drop substantially or, more unlikely, for significant changes in the property tax situation.
Juan Carlos – I would suggest Quantum on the Bay. If you are buying to hold for 10 years I would buy a condo with a direct bay view or ocean view. This will yield you the highest return in the future.
Samir – don’t you own and live in Quantum?? Full disclosure! haha 🙂
Yes full disclosure – I do own a unit in Quantum. But you have to admit it is the best new building in the area and only affordable new construction with bayviews.
Lucas,
in your post you mentioned that several buildings/units are now at 50% discount to 2005/06 prices. could you post which buildings or units this has occured in? i think this would be of great interst and if you posted them in your “deals” section, it would be visited more often. thanks…keep up the great work.
Just a reminder: I still think the Opera Tower sucks since it was over priced and poorly managed by that Tibor Hollo guy. Just thought I’d remind everybody of my opinion on matter.
One Bal Harbour is very nice
I’m sticking with BENDOC….those Canadian’s really know what there doing up there.They don’t call them “SNOWBIRD’S” for nothing.BENDOC is 100% right ….wait it out and see what happen’s.What’s the RUSH.The same condo’s are going to be there next year…and the year after that….only CHEAPER.
ECON REALTY AND BFG
With regard to market-timing, there is a whole heck of a lot of hullabullu in here.
There wasn’t any of this kinda talk late 2004/early 2005. I would CLEARLY feel more comfortable purchasing now as opposed to then.
Cheerleading aside, it may not be the ULTIMATE best time to buy but:
1. it depends on where/what you are buying. I just sold a unit at Apogee and the flippers are still making money hand over fist, same goes for Canyon Ranch. Clearly the best product in the best location in the best buildings are still doing very well.
2. I’d rather buy now than in 2004. 🙂
Kevin Tomlinson – Are you a Realtor® or someone with a vested interest in real estate transactions? I bet you are. Of course it is better to buy now at a lower price than in late 2004/early 2005 when prices were higher…just as it will be beter to buy in late 2008/early 2009 than in early 2008. Likewise, better to buy in 2010. The simple fact is the home price declines and inventory numbers are increasing…in some areas at an accelerating rate! The investor-buyers are pretty much gone unless they aren’t too bright and are buying at false bottoms (have we even hit one of those yet?) or justify the prices based on false inflated prices of the past (more likely). Just today there are reports that banks have significantly tightened appraisals….they no longer agree with the appraised prices and are factoring in further declines. The “buy now, the best properties will be gone” argument is getting pretty old and tired. They just keep on building more of this “best properties” all the time – just look at Sunny Isles, they’ve got thousands of them. Beach front may be limited but when you knock down one structure and replace it with 300 units, like magic there is “more” beachfront homes. The number of homes on the market just keeps going up and up and up with no end in sight. In some parts of the country the number of foreclosures have been outnumbering the number of sales in a given month….and the foreclosure rate is accelerating!
Tell you what, I’ll buy a $1M condo right now if you will post a bond to protect me from further price declines (in real dollar terms) over the next 3 years. If in 3 years the price went up, I’ll gladly give you the difference in cash. Likewise, if the price went down, you’d need to pay up.
You can’t live off the hype and expect that you won’t have to answer to the declines. This is an historic decline and we’re not even half way through yet.
And you should become a condo flipper and so you can join in “making money hand over fist”… Yep, why don’t you jump in and buy up a bunch now.
My guess is KT like Realtors® were telling people in late 2004/early 2005 that the prices weren’t high, we’re not in a bubble, real estate holds its value even in a recession, buy now before prices go higher, this is a unique property,….etc.
The market signs are certain that real estate is in a recession if not a depression in many areas. For goodness sake, even the Federal Government is trying to intervene to slow the foreclosure rate (they can’t).
According to one post, brand new high-end Trump beachfront is going for $420/s.f. Sub $400 s.f. is around the corner as demand continues to dry up while supplies pile up.
I think everyone has forgotten that the local economy has never been what keeps miami going. money from south america and central america have always been a driving force of the condo market. Now that the dollar is so weak the europeans and canadians will start to buy up some condos. 350 sq ft may seem expensive for a local for a condo near the beach but for foreigners that pay MUCH higher prices in their countries for real estate it will still look like a baragin for them. especially since they keep their properties 10yrs +. Don’t fool yourselfs there is A LOT of money in Miami. will price go down? of course. did they overbuild? no doubt. but miami beach, downtown, and brickell will rebound in a few years. this isn’t early 90’s Japan just like everyone on this site is hoping so they can go buy a beachfront property for 100 sq ft.
Yes that’s right TRUMP CONDO’S for UNDER $400 sq. ft. and probably going down even lower.I don’t know what all the hype’s about WAIT WAIT thing’s are going down even lower.
And yet again the realtor contributors won’t explain why there is six years plus inventory in Miami Beach. At least explain it, we might not agree, we might not share the view, but denying it exists makes people who make a living out of selling real estate foolish.
No one doubts that in any real estate market, there are transactions and people make money. But please don’t use 2 examples when we have 34 at Bath Club and 34 at Mosaic which tell otherwise (i.e. 1/3rd to 1/2 of units for sale).
So let’s go back to a debate based at least in part on facts?
1. in 1998-2003, what was the typical monthly or annual sales volume in Miami Beach? So what kind of volumes is normal? To my mind, this is the heart of the problem.
2. What were low, mid, high end prices in 2001 for beachfront condos. The Real Reality points out that densities have changed on the beach. That’s also key to understand.
3. Raffi. I believe you miss the point. I live in London. I pay $2000 a sq ft+ for homes where I live. Like Bendoc therefore, it’s not the issue of whether $350 a sq ft or $1m or $2m or $3m is too expensive (though we all have our views given demand, supply, second home ownership’s discretionary nature) – it’s just that no-one is used to or will tolerate whether from Brazil, UK, France paying $35,0000 a year in “fees” for second home occasional usage – and to cap it all, Residents who uses the services 365 days a year are paying substantially less. It’s simple really.
Julian,
I agree with you about the yearly fees, I think HOA is ridiculous at these new buildings and we all know Florida has a real estate tax problem. but the HOA will get fixed once people fill up these buildings, managment will get the money they need to maintain the building because 85% of building will be paying for HOA instead of the 35% of the building that is paying now, and the tax system will get fixed because people have been complaining about it for a long time and the florida government is starting to listen. just last month florida residents voted to get the taxes on our homestead lowered so more help should be coming soon. aside from all that, people from other countries take much longer vacations then we do in the U.S. I am from Argentina and everyone there takes month long vacations (that doesn’t exist for people in the U.S.) so If you come for a month to Miami Beach and stay at a nice hotel you are going to spend a good 10k. most people with that kind of money to spend rather own because when you eventually sell at least you get something back. and also an asset on Miami Beach never hurts, especially if you have the money for it.
if you have $2,000 to spend per sq ft than who cares if you buy now at 450 sq ft or “maybe” 300 sq ft in one year. if you keep it as a vacation house for long enough you’ll never lose.