Incredible Views from the 50th Floor at Marina Blue
April 30, 2008 by Lucas Lechuga
Once again, I visited Marina Blue yesterday afternoon. This time, clients accompanied me to see a 1,754 square foot 2 bedroom on the 50th floor. This is one of six units at Marina Blue with this floor plan.
Take a look at the views that you get from a condo this high. You see everything! Biscayne Bay, Miami Beach, the Atlantic Ocean and a number of islands such as Watson, San Marco, Palm, Hibiscus, Star and Fisher.
Later, we also saw a 2 bedroom loft unit which I had been looking forward to seeing for quite some time. Unfortunately, I wasn't very impressed. To me, the floor plan felt much smaller than the 1,457 square feet stated in its floor plan. Has anyone else had a chance to walk through one of the loft units at Marina Blue?
First!
“To me, the floor plan felt much smaller than the 1,457 square feet stated in its floor plan.”
Is the city codes office supposed to supervise footage accuracy? What stops a condo from shortchanging feet from the plans? I’ve always felt a lot of Miami condos were smaller than the claimed sq ft.
lucas…does the condo in your pics have a unfinished floor?
I have seen a lot of houses/condos lately where the owner either never got floors installed (bare concrete) or was in the process of getting new floors when they encountered financial difficulty.
Carbon,
A lot of developers have been taking the hip (and cheap) way out by calling their units “decorator ready”, which means you should bring in your own decorator to decide what sort of flooring you want.
The trend started at the higher end buildings when the new unit owners would rip out the ‘standard’ flooring and replace with their own, and the developers realized they could save all that money on flooring and still charge the same amount.
The views are stunning. What about the overall feel of the building? How does it compare to Ten Museum or 900?
Guys, if you think that these views are stunning, wait until you see the views from either Quantum or 1800 Club even from lower floors. It will blow your mind away. It does not have the ugly white round tin AAA in the foreground. Here are some pics I took from the 17,19,24 and 30th floors of Quantum and 1800 Club.
enjoy
http://picasaweb.google.com/biscaynebay/1800ClubQuantum
I would rather get it “designer ready” than with some cheap tile I would end up tearing up and replacing and spending even more money. However I really like how in the Plaza they deliver the Units with Carpet, that gives you a nice option to stay with the carpet and when you decide to put flooring it makes it very inexpensive to take out the carpet.
On another note those views are impressive
I forgot to mention that for comparison sake, I added some pics in that same album, I took from Marina Blue. You can recognize those pics, when you see the the AAA in the foreground. Also another not so great thing about the Marina Blue or Park West Building view is that you have all the port cranes in your face and in 1800Club and Quantum views, you have almost all water and Island views. If you look closely, you can see Samir in one of those pics!
Needless to say I am a complete fan of the 1800 and Quantum as far as location, views, facilities and everything else.
Once you click on the link and open up the Picasa web album, choose the slideshow option and do not individually click the pics. The pics look the largest in the slide show option. The time is set for 4seconds each pic but you can reduce it. there are 110 pics. The best pics are in the end, that I took from 1800 club.
If you have any questions about these 2 buildings, ask me.
whoever came up with the term “decorator ready” should be given a few mil from the developers. really, it’s the ultimate misnomer. nothing’s ready in these places other than you be reading to drop another 50k .
AJ, what do you think about the fit and finish and floor plans of 1800 Club? The views are awesome for sure. The large 1 bedroom unit (#11) on the south side on the building, did you happen to see the views from it?
THOSE ARE SOME REALLY NICE PICS… I AM VERY IMPRESSED WITH BOTH BUILDINGS. ON ANOTHER NOTE I WOULD ALSO LIKE TO KNOW THE ANSWERS TO JL’S QUESTIONS (COMMENT 2). CAN SOME PLEASE IF YOU KNOW, ANSWER THOSE…….
Hi Miami ’08, I did not see the 11 line, but i have seen all the bay facing 2 bed lines and i believe the fit and finishes are the same for all other units there too.
These are the issues I have with 1800.
1. I dont like the decorator ready floors. i wish they at least had a carpet like the units in quantum.
2. i dont like the closet doors. They are flimsy
3. i dont like the fact that there is individual hot water boilers in each unit instead of a central unit for the building.
apart from these minor inconveniences,
a) 1800 club has the best views of all the buildings i have visited (the bayside, the city side is just OK as any other building).
b) 1800 and Quantum has the best amenities and facilities and coneveniences and common areas compared to all other new buildings I saw.
c) these buildings have the advantage of direct opposite location to the completely redevloped pace park which is truly a delightful place to watch, play, hang out, work out. you can even swim in the mini “beach” by the bay. The water is warm and crystal clear. Go a bit deep and you can even pet a manatee!
d) These are located at the entrance to venetian causeway and mc arthur, and puts them 5 mts away to the beach. I 95 is a minute away.
e) Carnival center and Metro mover station are 2 blocks away.
f) all in all it has all the benefits and none of the disadvantages of downtown, parkwest and brickell buildings.
I honestly think that the 5 blocks starting with Venetian, grand, Opera (yes even that failed building opera has the location advantage which will eventually benefit it once the dust settles), bay parc Plaza, 1800 Club, Quantum, Cite and finally Paramount Bay will be the most desired location to live in Miami in 5 years from now. With Paramount bay being very expensive, and opera in doldrums, I see that 1800 and Quantum are absolutely the way to go if you want to get into that area. There are some good deals there. so check it out.
I have a good feeling that these two buildings will weather this current storm pretty well considering all their strengths and if you are looking to get something in these two for $200 or less, you may be disappointed as those kind of rates might be expected in Brickell only.
Disclaimer: NO, I do not have an ulterior motive in plugging these two buildings. i do not have anything to sell in them. i am actually trying to purchase a unit in these buildings.
Lucas – can you update the condo deals page?
AJ, I have always been a big supporter of Quantum, I think it’s the best building out there considering location, views, etc. also the layouts for even the small 1/1 feel bigger than a lot of other 1/1’s. what I dont agree is that they will weather the storm, I think no building downtown will weather the storm, they are all gonna drop in price nose first.
You must be kidding swimming anywhere near near pace park[assuming you are not homeless.] Samir must be sharing his koolaid with you!
Thanks AJ. I do appreciate the pics and your honest observations. Wife and I are looking for a vacation and future retirement home here in Miami. Would love to get something by the beach but can’t afford the $. looking for a safe bet for the next 5 – 10 years+
Quantum and 1800 Club both have fantastic common areas with all the bells and whistles and the decorator left nothing for the new owners to buy. The long hallways got to me in 1800 Club. A lot of the units in both buildings have privacy issues with neighboring buildings close at hand.
AJ,
If you visit the area surrounding Quantum as well as Park West at night, you might reconsider going outside after dark. These are nice buildings in very ugly neighborhoods.
No way either area will surpass Brickell.
AJ,
JGM is not accurate. IT is perfectly safe at night around Quantum and Park West. If you have a 38 magnun handgun or large knife it will deter anyone from bothering you. Also, if you get a gun permit you can carry on a holster as you walk around your property. Very safe, no fear……….
The “Smart Money” may raise there price to $127.50 a sq ft as a premium for the view but don’t bank on it!
Wow, that kicked up quite a storm. settle down guys. You got to give the devil its due.
I have never been a fan of Brickell. I dont know why, but I just dont like it. It feels like paseo de colon in Buenos Aires or Bogota or such minus all the excitement. No views at all for most buildings. It doesnt give a homey feel. So are the buildings in parkwest.
From Key Biscayne to San Souci, the only place that caught my fancy is the Omni area around the pace park. It actually feels like a place you can live peacefully. i could even bike to SOBE on venetian causeway and be there in 5-10 mts. I do not subscribe to any buildings north of 21st street such as Onyx and star lofts etc. They are not the same as the buildings around pace.
Solution for fear or whoever you are, I am not a pussy. Never carried a weapon in my life and I have roamed fearlessly in Bed-stuy, East LA, The mean streets of Chicago, DC, Detroit, New Orleans. Compared to that the people in Miami are almost docile. Maybe you are that white lady who clutches her purse when passing a guy of not her color. Chill out! I have walked all over that area, including west of the Biscayne Boulevard, shopped multiple times at the food market on 2nd av and 19th st and it had always been a good experience.
If you cannot handle seeing a few minorities without clutching your gun or locking your cardoors and bolting through a red light, you should move to Finland or Iceland.
Miami ’08,
I have a pad on the beach, but I cannot imagine retiring there. It is also a 1 bed. That is why I am looking for a 2/2 in a less crazy place but accessible to all the craziness if I wanted to. These 2 buildings fit my requirement perfectly. If you are considering a non bayview unit due to the price factor, then definitely go for the 1800 Club, as that building has the best pool deck with a bayfront verandah and party room with great views. So even if you dont have water views from your unit, you can entertain your friends on the bayfront veranda just like it is your living room, enjoying the great views.
Hi Ace,
I dont want to argue with you. Maybe you are right. May be some units in some building might hit low numbers as you say. But the question is will you be able to get one? Do you have ready cash and the bargaining clout to snag a unit when such a thing happens?
I am talking everyday with industry insiders and there are vulture funds and hedge funds with millions of dollars ready to gobble up these units at pennies on the dollar. they have the money, the connections and the bargaining power. They get the first dibs on the market. All you will be left with is just scraps and leftovers. if you are thinking about financing, forget about it, no one will even look at you.
That is why my advise to those who are looking to buy a place for themselfs (end users), who are financing the loan and are not cash buyers, is to start looking now. You have the luxury of time. If you are waiting for the bottom to happen, and when it does indeed happen, you wont be able to compete with the big money and cash buyers. the big money will buy 200 units at a go, but all you are interested in is just one.
You want
a choice location,
a choice building,
a choice line,
a choice unit ,
a choice height or view and so on.
if you do not want to compromise on any of these, you cannot wait until the end. If you like a unit, hard bargain, ask for a good discount taking the downturn into consideration, and even if it goes down a little more after that, no sweat as you bought it to live in it. It will get its price back up soon.
I cannot compromise on the unit that I want and I am not a cash buyer. So I have to get into the market now.
Ace, I wish you luck, in finding your dream unit for $125/sf with out a view and $127.50/sf with a view. Definitely dont forget to invite me to your housewarming party.
AJ,
You are out of your mind!
The 25 year American credit expansion is over. There are THOUSANDS OF PROPERTIES BEING DUMPED ON MARKET!!! There is a gross oversupply at inflated asking prices. There are condo towers still under construction! Most of these condos have been blacklisted and banks won’t lend to buy. This is total insanity!
Those vulture funds will be crushed under the weight of their carrying costs. Have you ever looked at previous housing crashes? They aren’t V shaped! This isn’t like calling a bottom on the stock market. Houses won’t gain nominal value for at least 7 years! That means inflation is eating the real value of the purchase. These subprime vulture funds will default and the houses will be back on the market within a year.
Hedge funds are not buying Miami property. PIMCO, Blackstone, and Apollo Group are not buying overpriced Miami condos.They are buying and shorting bonds, commodities and the stock market.
George Soros, Warren Buffet, and Carl Icahn are not buying Miami condos. As a matter of fact, Warren Buffet – the world’s richest man- sold his mansion at the height of the bubble in 2006!
Foreigners, in any significant capacity, are not buying Miami condos. Spain, Italy, Ireland, England, Australia, Canada, Vietnam, and many others are just starting along their own deflationary spiral- their bubbles have popped. Do you think they are speculating over here?
We are entering a global economic slowdown. This crisis is going to last YEARS. It will culminate with Fannie Mae and Freddie Mac failing and being nationalized. The United States will lose it’s AAA credit rating and the resulting interest rates will shoot up to 20%. Even if somehow the GSEs do survive , foreigners are already slowing the purchase of treasuries. This will eventually force our govt to raise rates or face hyperinflation. Do you know what high interest rates will do to the resale value of your condo? Why don’t you turn off the American Idol and read some statements by Shiller or Roubini or the IMF.
Also, have you ever looked at the median income in Miami and Miami Beach? It’s like 30 thousand a year! I’m a medical doctor and I can’t comfortably afford these condo prices, what legal occupation can? Are there enough drug lords and celebrities that are buying $300,000, 2 BR condos? Hell no, they are buying $5 million penthouses for $1 million.
All the data indicates this problem is accelerating!
In conclusion, anyone that is buying now is either commiting fraud or will just plain default. Do you know why I am so certain? Because those that can do basic math or understand basic economics are the only ones actually earning enough to comfortably buy, and they are too smart to buy a depreciating, illiquid asset.
AJ,
Maybe these buildings will offer security escorts in order for residents to walk their dogs, or go biking, running, etc, etc…..
The omni area is literally one block away from overtown. Buy Brickell, Gables, Coconut Grove, but who in their right mind would want that area….
JGM, AJ,
With the economy going down, crime is going to go up as it always does. It takes a long time for neighborhoods to improve and given the population loss in miami, it will take even longer. The people who are leaving are not criminals, but average middle class type folks.
If you look at Zillow.com and look at prices for prime real estate on sobe or any area in south FL, you will be very suprised to see how affordabel all the nice areas were until about 2001/2002.
On a slightly different note, my financial advisor told me about a new strategy that I should think about for my investment income. He is advising me to pay down my mortgate instead of investing in the stock market. I have a lot of equity in my house in the grove and I bought in 2004 with 25% down. I have been making 4 extra payments a year for my mortgage and now my advisor is recommending 12 extra payments a year. His logic is that I am paying 5.4% interest on my loan and due to AMT, I am saving very little on taxes due to mortgage interest. If I pay down my mortgage ,I am guarenteed to make money.
Please note that I plan to stay in my house for a long time and even if I have to move, I intend to rent it out and not sell.
QUESTION, did anyone hear of national mortgage intrest rates dropping to about 2% ???? i was informed of this last night.
JR56. The 2% rate is the one that is charged between banks and federal reserve for overnight loans. That rate is not connected to mortgage rates directly.
30 yr fixed is around 5.8%. Check out http://www.bankrate.com/ for latest on mortgate rates
AJ
real hedge funds are not looking to buy condos in miami. the business model and fee structure of a hedge fund would make such an investment suicide. simply, you need to show year to year positive return to justify your 2/20 in fees.
what you’re talking about and from what i’ve seen on my end is groups of unsavvy wealthy people (doctors) saying “let’s start a fund and buy properties in bulk.” these people will get crushed. the big boys, i.e., the vornados of the world, who actually can buy in bulk and make it work, are not even venturing down this way yet and won’t until it makes economic sense to do so. right now the bid/ask gap between sellers and true bulk buyers (who actually know what they’re doing) is just as wide as the gap between individual sellers and buyers.
in all honesty, everyone keeps on talking about “funds” swooping in, but in actuality, how many bulk sales in new projects have been made? TMP supposedly dropped off 20/30 units to a bulk buyer (we’ll see how that plays out). what else?
Mo,
I’m gonna have to disagree with almost your whole argument. first of all you are way too pessimistic, life is too short to be bitter, you should know your a doctor. second of all if you do some research you will see that over 90% of loans are still being payed on time (In the United States as a whole), If that is the case I dont see how freddie mac or fannie mae can fail, and interest rates are not gonna shoot up to 20% . I agree that we are in a global economic downturn but it wont be as doomsday as you make it seem. We are still the most agile economy in the world, when the U.S. gets the flu the world get pneumonia….we just need some better fiscal policys and we’ll be ok. and by the way I can do basic math and undertsand economy very well, I think most people on this blog can too.
Hey Lucas do you get royalties when people post their advertisments here? If not you should charge. haha.
Mo,
I agree with most of your post, but not:
“It will culminate with Fannie Mae and Freddie Mac failing and being nationalized. The United States will lose it’s AAA credit rating and the resulting interest rates will shoot up to 20%. Even if somehow the GSEs do survive , foreigners are already slowing the purchase of treasuries. This will eventually force our govt to raise rates or face hyperinflation.”
I think there will be a global slowdown and the US has always been a safe harbor for investing. So, I don’t see the calamity that you outlined. I do agree that it’ll take 7 years to get out of this thing and we’re about 2.5 years into it. Prices will decline in 2008 substantially, less so in 2009, and then pretty much remain flat (but declining in real dollar terms) for a few years. Peak to trough in the Miami area is already at a 28% decline, probably will end up being 40%+ when all is said and done. Worst case, 50% (or at least I hope that is the worst case). Minimum will be a 1/3 decline.
“They are too smart to buy a depreciating, illiquid asset.” I am that smart too…and decided to rent for a year or two and watch how this thing plays out.
raffi…i agree. Economy is not going to collapse and things will return to normal in a few years. I am seeing people mentioned hoarding food and buying gold coins to prepare for the great depression on other blogs. hahahaha.
No doubt, there will be a lot of pain felt in the miami real estate market, but things will bottom out and people will start buying once prices drop to affordable levels.
Purchased a 1/1 for cash at Quantum and closed last month. It’s a vacation/retirement residence . So far we consider the view, building and location to be great. In the morning it’s coffee on the terrace watching the boaters heading to Picnic Island and in the evneing it cocktails overlooking the evening soccer games in Pace Park. We’re just a small sample in a challenging market but this slice of Miami seems to work for us.
I agree with raffi, Life is too short to be bitter and pessimistic. i used to be a subscriber to the doomsday scenarios but I am a believer in human endurance. Earth and earthlings have managed to survive and prosper against all odds over a million years when theoretically they almost had no chance. barring an Apocalypse Now, we should be ok for quite a while.
Up until the 80’s we were kind of medieval in existance, relatively speaking. Then cam ethe internet and revolutionised the way we live and work. All this prosperity that you see since the 90’s is a direct result of that revolution. We are in a transition period now and hence a lull. When we start deriving benefits from all the experimental stages of Nano technology, Biometrics, stem cell research, Genome project, cloning, alternative fuels etc, there will be next revolution which will carry us through a prosperity cycle for another 50 years until the next big thing arrives and so on.
Economy and economics is basically a play of numbers and perception. It spins in the direction of a spinmeister who can influence minds and attitudes. I am not afraid of a ethereal subject. I am afraid of reality. And reality my friend, is that SOBE might be in kneedeep water at every high tide in 50 -100 years from now. Anyone has a solution to that?
Mo,
What is American Idol?
NJ,
Exactly why I loved those 2 buildings. Can you tell us how much you closed for and how much is the asking price and price per SF. It helps the other bloggers here. tks
The truth is that “some” bought at high price believing higher price in the future-but the contracty happened.
And now “some” are not buying believing lower future price- ….let’s see what will happen.
Many are expecting lower prices to buy, but nobody is taking on account that as soon as sales increase price will go up…Last, nobody is taking in consideration interest rate which is in the low 6 right now and was around 5.5 a few months ago.
gustavo – I think it is clear that prices will continue to decline throughout 2008. There will be no quick turnaround in housing. Price declines were actually ACCELERATING Feb-Mar MoM numbers. The bottom line is SUPPLY is what will determine prices, and supplies are rising as non-owner occupied homes come on the market (for whatever reason, foreclosures etc.). Financing — at any rate — is minimal. I heard a story of a $4.5M condo purchase with 50% down that could not get financed so the unit is back on the market….unbelievable.
Observations: I live in Quantum, is nice to live here next to Pace park, more residential, the sea breeze, close to everything in downtown. BUT, I am paying $701 in maintenance, while in the condo next door, 1800 Club, a similar sized unit pays only $480. An extra parking space will cost $20,000 in 1800, I paid $25,000 at Quantum for an extra parking spot, and got assigned parking on the 12th level, THAT SUCKS! Do you know what is like to get in and out of the 12th parking level? …around and around and around… I think we got shorchanged in Quantum, where is the steam room promissed? Where is public roof terrace? I don’t know what the pitfalls of 1800 are, but they have a steam room, a jacuzzi hot tub next to the pool and lower maintenance fees (for now???). I have furnished my unit, …guess what? The bedroom furniture is from Vietnam, the Sofas from Italy, the LCD TV from Japan, the dining room and living room tables from China…and everything I bought at Beds & Baths is made in China, enough for the wonderful US consumer economy, in particular the South Florida economy, which sucks big time!!!. I am bracing myself for the property tax bill… and thinking of moving to a third world country at some point to afford my retirement.
I think sayig that Fannie Mae and Freddie Mac will tank and get nationalized is a possibility but only if the government steps in and forces these agencies to buy the papaer from the lenders as a bail out since we will see many banks go bankrupt as all these REO’s hit their books. Regular banks thatgive out loans do not have mark to mark accounting as the financial brokerages so this inventory will be coming all this year and going on their balance sheets, which will cause them a liquidity problem and they will fail
Unless that happens I really doubt Fannie Mae and Freddie Mac will fail as they had a limit of conventional loans to $416,000 (this was recently changed to about 720K in some areas by the stimulus package) and they required full doc loans with no more than about 32% of monthly income for Principal, insurance, taxes, interest and Homeowners association so AI dont see them being at risk in fact Im going to pick up some shares later this year
AJ – We paid $350 psf for the 4oth floor and the Atlantic Ocean looks good from here.
AL – Got a space on the 4th floor parking but do understand the round and round thing would get tedious. I don’t recall evers seeing in writing anything about a roof top terrace or steam room, but a yes on the sauna which is in place. Told verbally a small storage locker in the garage was part of the deal, but turned out it was an option at close 4 years later. More life lessons.
Mo, that must have been some good scotch you were drinking while writing your post at 2:45 this morning. Still recovering?
Thanks NJ, That is about right. In this economy, a good water view should be worth between $300-$350/SF. They were initailly priced at $450-$500/SF at preconstruction prices of 04/05. So you got a decent deal. This is how I justify the $300-$350 price tag for water view units:
Sure there is a condo glut and there is more to come. but there is one point that people are forgetting; for every 20 units that are coming up with partial or no water/bay view, there is just 1 unit with clear and unobstructed water/bayview. (alright, I pulled this number right out of my a$$, but if you sceintifically count all the units coming up in Brickell, Midtown, Parkwest, DownTown, Omni, Miami River etc, the number wont be that far off).
The units with clear and good water/bayview will always hold its value, few in number, are more desirable, first to get sold, last to be offered for sale and the views are so hypnotic, that even rational people stop thinking and just want to have it no matter what.
Hence when people like Ace and all talk about 125 or 150/sf, I only guess that they are talking about the 19 out of the 20 units with minimal or no water views. i bet my last red cent that you cannot find a clear unobstructed water view for 200 or 250/sf.
My advise to anyone on the lokout for a unobstructed water view unit, 1. Start looking at a unit priced at $350/sf very seriouly. at this level, you may the only bidder. 2. At $325/sf, you may be the one among 4 bidders. 3. At $300/sf level, you will have serious competition from other buyers including cash buyers.
For clear water view units, I predict the bottom to reach at $300 and no more. But waiting for that bottom, unless you are a cash buyer may result in you not getting the choice unit you want.
As far as the remaining 19 out of the 20 units with out clear water views, I dare not predict when the bottom would reach and at what level of price/SF. It could be $150-$250 anywhere between sept 08 to dec 09. who knows? I am not in the market for one of those units and I do not care.
Al, I am sorry about your predicament. That is one reason I like 1800 more than Quantum. Their pool is really nice, great bayfront verandah, steamroom along with sauna, jacuzzi, Better management, Set more to the bayfront than quantum. But I do not expect the low HOA in 1800 to last long. So breath easy there. as far as the 12th floor, parking, you did not do some hard bargaining. At 25K, you should have demanded that you be accomodated in a lower floor. the developer has them but kept them reseved for some hard nosed customers or friends. Sorry about that. But barring those Quantum is a nice building. If i do get in 1800, I will let you use the steam room, jacuzzi, bayfront verabda, heated pool and you let me use the nice common areas of Quantum and some of the additional gym equipment that you guys have by exchanging the FOB keys! Or even better, as both buildings are identical in facilities and demographics, one day they should put steps to join both pool decks and combine the resources. That would be great. Get on the board and start talking to others!
For those of you that think FNM and FRE can’t fail, you’re drinking the Kool Aid.
http://market-ticker.denninger.net/2008/04/fannie-and-freddie-short-to-zero.html
http://online.wsj.com/article/SB120818189112412691.html
Gustavo,
As sales increase I think you will see price declines until excess inventory is burned off. This is because prices drops stimulate sales increases especially for mid prices and low priced houses and as more mid-end market low-end market homes sell, they influence the average down.
Regarding Fannie and Freddie tanking/failing and requiring a government bailout, it’s possible. And if Congress continues to push these GSEs to take more risk than is prudent, odds of failure are better than even.
Read this to understand why Fannie and Freddie are at risk of failure
The article I linked above to was written well before both GSEs reported billions of dollars in loses early this year.
In 2003, the NY Times wrote ( Fannie Mae’s Loss Risk Is Larger, Computer Models Show): http://query.nytimes.com/gst/fullpage.html?res=9A07E5DD1731F934A3575BC0A9659C8B63
And, last December, Bloomberg wrote (Fannie Mae Has $3.55 Billion Fourth-Quarter Loss):
Most folks do not realize that Fannie/Freddie wrote nonprime loans (aka expanded approval mortgages). Some of Fannie Mae’s traditional agency fixed refinance products did NOT require income documentation or even an appraisal. For people with “good credit” and high declared (but not verified) liquid assets, income documentation AND appraisals were waived by Fannie’s automated underwriting system.
The “smart money” says that Fannie Mae’s risk of default has increased significantly and Fannie’s borrowing costs have increased. That’s why the spreads between Fannie Mae’s paper and U.S. treasuries have widened significantly.
At this time there is an infinite supply of condos as there are more coming on the market monthly than getting sold. I would not be sitting around waiting for a bounce back up to sell and I would not be in a hurry to buy fearing I missed a bottom.
Unfortunately, the incredibly negative “national” housing news is nothing for South Florida because we are so special with all of our celebrities, foreign buyers, yadayadayada…
Take the the negative national news and amplify it accordingly to take into account the gross excesses that took place here.
It has nothing to do with a doomsday scenario but everything to do with a reality check that was missing for years.
Supply is only half of the problem. True demand is all but non-existence. The direction and severity is obvious only the extent is uncertain. Too predict 30%, 40% or 50% is a fool’s game.
Only time will tell and unfortunately, I do not think it will be pretty.
I play the fool’s game. In South Florida, I predict that home prices will drop BELOW 2003 prices in nominal dollar terms. We have seen a historic 28% price drop so far. A total price drop will easily exceed 1/3 for sure…I’d bet all of my money on that. Probably a 43% price drop is what will happen for South Florida when the bottom is reached (note: it is actually much higher in REAL dollar terms). Put me on the record for that. So, take peak prices, multiply by 0.57 and there you go…
By the way, what do people think of direct ocean front new condos in Sunny Isles Beach???