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You are right I am one of the owners who bought at the highest in Marina Blue . Of course I also have the best unit in the building ,it is penthouse 5109 and I payed 600$ a sq foot. for it in 2006.
I made a mistake by not buying when they were selling so low, I would have
cut my loss but still I beleive it is the only building in downtown that has the best views from almost every unit and the best swimming pools and common areas of any other new construction. After all when ever you buy real estate what is the first thing you look at ? : location and the views.
Now I am renting out my unit but I am sure that in a few of years it will be worth a fortune.
I certainly do not understand what all the buzzis about hyping Marina Blue.
Anyone who knows anybody who lives there or has been to the building knows it is a big rental property nowadays, with all the common areas trashed by the tenants and current residents.
Nice project, but totally destroyed.
There is also a serious problem in the parking ramp.
I have to disagree with Annamaria…People do not live in a view and as fas as location goes, Marina Blue is far from being ideal.
If people can afford the luxury of time, though, I am totally on her side…in 10 years it will be worth a fortune, especially if they ever take their plans to redo downtown off the ground.
Nice website. What are the other 4 buildings on the works? will you eventually do a website for all the new buildings?
Congratulations to MCI on their success. Looks like your website is now growing globally popular.
I have been to Marina Blue a few times and I did not see the place was trashed by renters as suggested by someone. It looks just like the pictures shown on the website. I very much like the building and the location. I feel bad that Annamaria paid $600/sf in 2006. A friend of mine did the same in 2007. But that is life. As she said, in a few years, she will gain back all the paper loss of her unit and maybe more.
mishka said: “A friend of mine did the same in 2007. But that is life. As she said, in a few years, she will gain back all the paper loss of her unit and maybe more.”
– Boy did I need a laugh this afternoon. Thanks! Who know, “maybe more”!!! hahahahaha
It’s hard to believe that some are still drinking the kool aid. Figure your payments since 2006. Make sure you include condo dues, taxes and insurance, etc. Now come up with any appreciation rate you like starting today, go out “a few years” and tell me when you will be making the money on this deal.
hilton, maybe some people bought to live such as annmarie. Your website encourages people to walk away from their mortgages. So there is a conflict of interest in your statements here.
If annmarie can afford the payments and she is not interested in selling anytime soon, why should you bother? I am more bullish than Mishka that I will go ahead and predict that in 5-10 years, she will make up all her paper losses and not in 15 or 20 years.
why bother — Ann Marie clearly stated that she’s renting out the unit, not living in it. Do you actually read anything here or does reading fall under your “why bother” mentality?
Joe, you are correct. I missed that.
If that is the case, annmarie must be seriously subsidizing her renter and losing a lot of money every month especially at $600/sf purchase price. At that kind of price, even if she bought all cash, she might be losing some.
But if you saw the video where the Nigerian paid $300+/sf, assuming one can buy all cash at those levels, you can make positive cash flow at Marina Blue and many other buildings.
wow half the people do not pay their mortgage
Also according to case shiller NYC and Miami are the only 2 cities where prices fell in april.
why bother said: “If that is the case, annmarie must be seriously subsidizing her renter and losing a lot of money every month especially at $600/sf purchase price. At that kind of price, even if she bought all cash, she might be losing some.”
— That was my thought exactly. Frankly, I don’t see how she’s not losing money, unless she lucked into a very wealthy (and not very savvy) tenant.
The average mark-to-market loan-to-value ratios in Miami are 150 percent according to Fitch Ratings as reported in bizjournal. I guess Mercedes leasings aren’t doing too well lately…
The link below is a summary of a Fitch Ratings report that was also summarized by the Herald in computer consultant’s link, although the bizjournal link below specifically breaks out some numbers for Miami.
———
http://www.bizjournals.com/jacksonville/stories/2010/06/28/daily7.html
Fitch: Oil spills into bad FL mortgages
Fitch cited high delinquency rates and a significant percentage of homeowners who owe more than their home is worth. Half of all securitized non-agency mortgage loans in Florida 60 days or more delinquent, and nearly 40 percent of all Florida borrowers owe more than 150 percent of the value of their homes, the release said.
In the Miami and Orlando metropolitan statical areas, 85 percent of the homeowners are underwater, and their average mark-to-market loan-to-value ratios are 150 percent and 140 percent, respectively, according to the release.
Annamaria’s unit 5109 was rented on 5/13 for $5000 per the recent rentals page
Just found the direct link to the Fitch ratings Press Release
http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100628006019&newsLang=en
———
I’m genuinely suprised by this. If I’m reading this correctly, then 50% of all Prime FL loans (ie. over $417,000 = non-agency = above conforming Fannie/Freddie limits?) are 60 days+ delinquent???
I wish somebody would break down the % of $417K+ loans that are more than 6 months late. ie. We all know there are tons of active foreclosures in the pipeline in the middle-high ends of the market, but the important calculation is finding the % of mortgage holders that are so late in payments that they are obvious walkaways but aren’t being accounted for at this moment since they are “off the grid”… just living in their homes waiting for a bank notice to come in 2 years.
No you are not reading that (admittedly over complex) sentence correctly. Here is the sentence in question:
“Half of all securitized non-agency mortgage loans in Florida 60 days or more delinquent, and nearly 40 percent of all Florida borrowers owe more than 150 percent of the value of their homes, the release said.”
It does not say half of the loans ARE 60 days delinquent. What it is trying to say is that of the people who are delinquent, half of them owe more than 150% of the value of their homes.
http://www.miamitodaynews.com/news/100701/story2.shtml
http://www.miamitodaynews.com/news/100701/story3.shtml
Dave, read the direct Fitch Biz Wire release
http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100628006019&newsLang=en
“A recently completed study by Fitch shows half of all securitized non-agency mortgage loans in Florida are 60 days or more delinquent. Also among the study’s more notable findings…”
———–
Unless there’s a tremendous typo, that’s like saying:
Knock on every door in Venetian Islands or in Murano Grande, if the person has a mortgage, there is a 50% chance they have not paid their mortgage in the previous 2 months+
Most of the data that comes out about national housing or bulk deals in Hialeah are not very relevant to any of us here, but Florida data about the $417K+ housing market is very relelvant to me and most readers of this blog. I follow housing news pretty diligently, but I don’t think I’ve ever seen numbers that looked that bad for this market segment. Have I missed something the last few months or is this the first time anybody’s examined/presented data on the $417K+ Florida market.
One factor that matters is the data is about securitized loans,
I believe securitized loans represent the vast bulk of loans that were made in the past 8 years but I can see some arguments that could be made that non-securitized loans (ie local bank loans held by the local bank) might be better performing… but then again, a lot of local banks made a lot of bad loans so maybe adding in non-securitized data would not change things much.
Lucas, this is similar to your stories about Walmart and Publix.
It is about Met3 coming together with wholefoods:
Scaled-down Met 3 downtown project revived
By Yudislaidy Fernandez
After putting downtown retail and residential project Met 3 on hold, MDM Development Group is reviving and retooling the project with plans to begin construction first quarter 2011.
The development group moves forward with a scaled-down version that seeks to meet two downtown needs: a supermarket and more parking.
Met 3’s first phase is to encompass a 40,000-square-foot supermarket and 2,000-space garage, said Tim Weller, MDM vice president.
Instead of a condominium, the second phase is to include an extended-stay hotel, he said, which would add to Brickell’s growing hotel inventory.
Met 3, at 200 SE Third Ave., is the missing piece of a conceived $1 billion Metropolitan Miami complex rising just over the Brickell Bridge.
Originally, Met 3 was to break ground in the first quarter of last year and would have included a Whole Foods Market. That January, the Texas-based natural and organic grocery chain pulled out after signing a lease more than two years prior.
But MDM hopes to bring the grocer back, Mr. Weller said.
“That’s our goal. Our intention is to have Whole Foods,” he said, adding “we are actively working on that.”
Negotiations could be under way, but Whole Foods didn’t confirm a store opening at Met 3, spokesman Liz Burkhart said. With 290 locations, she said, Whole Foods does have plans to continue growing rapidly.
International law firm Greenberg Traurig, which is leasing six floors at Met 2, considered the Met 3 development when selecting this building over competing new office towers.
“The amenities existing and proposed were very attractive for us,” said Rick Giusto, co-managing shareholder of Greenberg Traurig’s Miami office. “At the time we entered efforts to lease, Met 3 had slated Whole Foods to go in that space. That was very attractive for our employees, keeping consistent with affordable and healthy living.”
Aside from the supermarket and garage, initial plans for Met 3 called for a fitness center that has now been scratched. So have designs for a 74-story residential component.
Mr. Weller wouldn’t comment on the project’s financing.
After more than six years of designing and building, the envisioned Metropolitan Miami complex is coming together.
The 447-unit Met 1 condominium is occupied with new residents and home to Chophouse Miami on the ground floor. Met 2 is nearing completion, with office tenants expected to move in starting in July and the hotel to open in October.
Met 3’s amenities are to benefit not only residents, office tenants and hotel guests of nearby Met 1 and Met 2, Mr. Weller said, but serve the local community. Downtown’s business and residential neighborhoods don’t have a supermarket.
“It’s a great service to the downtown area, which has been lacking something like this forever,” he said.
A few years ago, all these new projects were drawings, but now many are finally a reality, Mr. Weller said, and those downtown condos are filling up.
The Met 3 project, he said, offers an “opportunity to take another look at the reality and viability of sustaining any retail in downtown.”
another interesting news from Miami Today Newspaper:
Condo glut turns the corner in a growing new urban lifestyle
By Michael Lewis
Commentary
It should have been obvious five years ago that we were vastly overbuilding condos in Miami’s core.
Nobody listened to repeated warnings — hate to say I told you so, but I told you so ad nauseam — that tens of thousands of high-priced condos rising at once was far too many, regardless of the economic boom we were enjoying.
Now, slowly coming out of deep and painful recession, let me again issue a warning about all those boom-time Brickell and downtown condos: the oversupply won’t last forever, nor will current prices.
As Yudislaidy Fernandez’s carefully balanced report in these pages last week was headlined, “End-users, long-term investors snap up downtown condos.”
Though the 22,079 condos that rose in Miami’s core during the boom were far more than the entire city could have absorbed in less than a decade, she found the condo collapse is close to stabilization. Only 5,664 units remain vacant.
Of course, “only” is a relative term. Recall that the record year for new housing in Miami before the boom was only about 4,000 units. Note also that the vast majority of Miami’s residents could never afford these condos, which cluster at the very high end of housing cost in the city.
These units targeted foreign buyers and a few local residents with wealth, not the ordinary Miamian. In that, we were vastly oversupplied.
But as the boom’s collapse forced prices down and speculators had to turn condos into rentals, the market of potential users has vastly expanded, turning unsalable condos into homes for younger Miamians to live and work downtown.
Stabilization comes earlier than predicted. Perversely, the recession that tumbled the condo tower of cards also made it possible to use the condos for other than flipping. As prices dove and speculators felt recession’s bite, they’ve been forced to rent below cost or hand over their units.
Replacing speculators are buyers at lower prices who intend to live in the condos or a different type of investor, one buying and holding for long-term appreciation.
Guess what? That long-term appreciation is a good bet. A decade from now we’re going to hear those who didn’t buy moan that they could have had one of those Brickell or downtown condos dirt cheap in 2010.
You read it here first.
Not that all are bargains. As the experts told Ms. Fernandez, pricing is all over the map. Some are still vastly overpriced. But not most.
As the economy picks up in years ahead, so will the value of the better core area condos — and their value will rise far faster than average residential pricing, if only because many core prices now are less than replacement cost.
But other causes will escalate the prices.
A key factor is that the balance seems to have tipped downtown. The influx of younger condo renters and buyers in the past few years, coupled with new restaurants and amenities and growing time spent driving in from suburbs, has turned the heart of Miami into a magnet for young executives.
Assuming that the retail mix continues to change to support young residents, that a new Publix to serve downtown does rise in the Omni area and that local government doesn’t take some misstep to reverse the change, the age of the core’s average resident will continue to dip and the core will continue its rejuvenation, returning to a true downtown.
That in turn will add to Miami’s tax base and make it possible to offer more urban services, thus accelerating change for the better — again, assuming city hall reinvests the added receipts downtown.
Will the young people be able to afford Brickell and downtown as this transformation raises the property values in condos that today are a glut on the market? In other words, will the core’s future success eventually prove its undoing again? That’s a real but quite distant concern.
For now, suffice to note that realism has returned to the urban residential market, that 5,664 vacant units represent more opportunity and that this time around, it’s not speculation to buy in the city’s core. It’s just sensible.
In 10 years you may be kicking yourself for not recognizing the bargains we have today and grabbing, if you can, an inexpensive slice of the new urban lifestyle.
The article in #20 has no coherent logic. First he laments that the condos weren’t built for locals, and then he claims that a few grocery stores will spur even more young people — i.e., people who generally have lower salaries — to move downtown. How the author adds all of that up and decides downtown r.e. will be booming soon is a mystery. Without an influx of good jobs, just how exactly are all of these young people going to afford luxury housing in the first place, let alone be able to bid so highly for condos as to create another r.e. boom?
“Representing both the buyer and the seller”. In my state, it is called dual agency. Your service to the buyer is a bit dubious, given that he paid a record amount and full asking price for his unit. Maybe someone from out of the country does not understand the nuances.
Just to be clear, while I’m still bearish on Miami r.e., my post above wasn’t meant to be entirely bearish. I’m just saying that if there *is* a downtown r.e. boom in the near future, I don’t see it being driven by locals, let alone *young* locals.
It’s amazing to me how Miami just came out of one of the biggest r.e. crashes in history, but a lot of the so-called experts and analysts still aren’t paying any attention to fundamentals. As I said above, without a huge influx of good jobs, how are Miami locals suddenly going to be able to afford tens of thousands of high-end condos on the resale market, as the writer in #20 is predicting? Answer: They won’t.
If the Fitch Ratings report is correct, I think these last 6 months will prove to be a dead cat bounce. People need to focus on that and not about supermarket openings.
Joe, Yes, it it a miracle. But it is happening. Mimai is not a major city with high paying jobs. The only explanation is that Miami has Worldwide fan following. They are lifting it up. As long as the Miami Mystique exists, there are enough willing people to buy and sustain this city.
Regarding your Q as to how these young people are able to afford these luxury condos, it is very simple; Owner subsidy, Doubling up with roommates. Don’t underestimate 2 people (either roommates or a couple) making the average lowly salary of 36K a year each can easily afford a rent of $1500-$2000 between the both of them for a 2Br Condo.
Joe, he mentioned investors and other speculators were able to buy at lower prices due to the bust. That in turn allow younger crowd to afford renting these condos from the people who bought. i thought he made it clear.
i believe a lot of people are deliberately falling behind on their mtg pmt to negotiate a modification of their loan. Banks won’t talk to you unless you are close to foreclosure.
i’ve heard of people getting int rates in the 2% range.
why bother, Makes Me Think — Did you guys actually read the article? The writer seems to be saying that today’s young renters will be tomorrow’s young BUYERS. The writer jumps from A to B based wholly on speculation. If young people need to rent — often with an owner subsidy — today, at the alleged bottom of the market, then how the hell will young people be able to BUY units in future years when prices are RISING? The article makes no sense. It’s just blatant r.e. cheerleading without any consideration for basic fundamentals.
Going delinquent on a loan hoping for a loan mod isn’t that popular of a strategy amongst able paying owners. You don’t risk your credit at a slim to none chance on something you are able to pay. Something really ominous and Florida-specific is going on with this 50% delinquency.
joe, you make no sense and you never do. maybe you need to read the article more than once. just because young people can’t afford to buy today doesn’t mean they won’t be able to buy 4 years from now.
Significant new condo law goes into effect today.
Now condo assns will be able to collect rent directly from tenants for those units in which owners are delinquent on maintenance fees.
The article is great news. IF we can make it work, this will certainly help provide stability in the condo buildings and reduce the risk of buying into the market. I have avoided a few buildings strictly because of the HOA concerns-this may now change. Unfortunately, it will create some new problems for renters who will get pulled into the battle between owners, banks and HOA over who gets what. I rent because it is supposed to be hassle free-this may change all of that. I think if the state introduces some clarity of the law with some guidelines answering questions in the article-like back dues-the law will become more effective. Renters typically cannot afford to get involved with litigation and will just move-then neither owners or HOA will get any cash for the unit.
gaables- Right. It could create some interesting conflicts and is likely to make landlord/tenant disputes much more common and more heated since the tenant is now thrown in the middle of condo fee disputes.
I suspect it could have a serious affect on occupancy rates as well. Now many landlords who have not been paying fees and collecting rent from tenants (there must be hundreds, if not more) will have no incentive to lease a unit if they know that rents will be going to the assn directly, in an amount correlating to the scope of the delinquency, the condo fees and the monthly rent amt. So the landlords will either (a) leave it vacant, or (b) attempt to remove the existing tenant since the landlord is receiving zero benefit of the lease anymore. What’s the point of having a tenant de-valuing your unit if you’re receiving nothing in return. (Of course, the landlord is guilty in the first place by failing to pay their condo fees, so they justly deserve whatever happens. But that’s another topic.)
As the article notes, I anticipate attempts to avoid the new law…
If the assn doesn’t have a copy of the lease or is unaware of a tenant’s monthy rent, then there’s an opportunity for the landlord and tenant to collude and keep rent checks flowing to the landlord and underpaying the assn, e.g. tenant falsely claims to have a below-market rent ($800/month) when in fact he may have $2000/month rent . Tenant obviously is not going to pay the assn for any amt beyond his monthly rent, so only pays the assn $800. In turn the tenant just cuts the difference ($1200) back to the landlord. Landlord could further play with the #’s in order to entice tenant to engage in this practice in order to create a benefit to the tenant.
Should be very interesting to see how it plays out and how aggressive these associations act.
You guys are really funny. You actually think an owner would rather put a tenant out and receive no money if he could no longer avoid paying his HOA fees???
You own a 1 bedroom condo and carrying cost are $2000 a month but you can only get $1500 in rent. So you try to skip out on you HOA fees to the tune of $500 so you break even. So then they institute this law and go to your renter and tell them they need to hand over 3 months of their rent to the HOA to pay the $4500 you owe in back HOA fees and then after three months they need to turn over $500 of their $1500 rent directly to cover the HOA fees that the owner isn’t paying. You’re telling me the owner is going to simply kick the tenant out and instead of increasing the amount he’s short to $1000 a month he would simply rather be short the whole $2000 a month because he’ll have less wear and tear on his condo????
I’m curious to how you came to the conclusion that they would be receiving nothing in return. You’re on the hook for you mortgage and the HOA fees. I seriously doubt anyone is renting an unit for LESS than the HOA amount. Even if you lose most the rent to the HOA fee and only had $500 left over to go towards you’re mortgage that’s still $500 more than with no renter in the unit.
People here seem to think of things in terms of TODAY only. If a guy is losing money on a unit today and hasn’t already walked away then I would assume he’s trying to make the best of the situation and do as much as he can to get back into the black.
The plural “you guys” is not correct, since only two comments made on this topic, and i didn’t say what you stated.
BUT, it is probably a good assumption that a landlord not paying HOA dues will not be a condo owner for long. my guess is at that point he will not be paying much, if any, mortgage as well. just waiting for somebody to act on the property-HOA or bank. my limited experience in this arena with friends has shown these landlords just play the game to their benefit as long as possible. partial payments on the mortgage does not occur because these owners really have no means or incentive to try to make the arrangement work long term-they are accidental landlords caught in the housing flip-flop. two friends have been forced out of nice condos due to foreclosures-one had lost access to building amenities due to lack of payment of HOA dues.
my comment to you gixxer, is that once these owners reach delinquency levels on HOA and mortgages, they really do not act the way you described-financially responsible to pay off their debts. if they cannot pay off their debts with a current rent paying tenant, the property is just in a holding pattern to foreclosure, waiting for bank action.
Joe,
The article specifically addressed your issue.
“Will the young people be able to afford Brickell and downtown as this transformation raises the property values in condos that today are a glut on the market? In other words, will the core’s future success eventually prove its undoing again? That’s a real but quite distant concern.”
This obviously is an issue, but its a long term issue.
Essentially because of price declines, bulk buyers, etc., the rents of these condos have dropped to a point where young professionals can afford them. As a result the occupancy downtown is growing rapidly. All of the people moving downtown are providing customers for business. I posted articles showing downtown has added at least 40 new business each year during the downtown with no signs of slowing down. As the people and business move into downtown this will cause the prices to slowly and steadily go up. So 10 years from now if Miami doesn’t improve it’s economy to a point where these people would be able to afford the increases then the population either starts to decline or transform into mainly part time wealthy residents who wont need the local services and therefore reverse the growth.
Now obviously no one has a crystal ball so we don’t know what the economy will look like in 2020. But its a safer bet that the downtown population increase will continue in the short term.
Another benefit in the short term is that downtown is becoming a more desirable place not just among young people but wealthy people as well.
“coupled with new restaurants and amenities and growing time spent driving in from suburbs, has turned the heart of Miami into a magnet for young executives.”
As Miami becomes more urban young executives are becoming more comfortable living downtown. These people obviously aren’t going to be prices out.
As I’ve said before you cant just look at the average numbers for Miami as a whole and then apply that to everywhere in Miami. Downtown Miami has gone through a major transformation and is not going back. It’s already home to about 200,000 jobs and as people flock downtown that number will only increase. With traffic, tolls, etc. increasing it makes a lot of sense to simply live downtown.
Interview with Principal from the Miami WorldCenter developers from about 9 months ago.
http://www.youtube.com/watch?v=hwrrOiO2deY&feature=PlayList&p=4891B866F9A346BC&playnext_from=PL&index=0&playnext=1
There are three parts but this is just part 1. Notice at about 1:37 where he promotes the fact that he lives in Brickell and works in Park West.
I can tell you that being a student accepted to Columbia during my visits with current students you can tell that downtown Miami is starting to get a Manhattan like vibe.
I interviewed with Carlisle Development a couple of weeks ago and the owner is a 31 year old young professional that graduated from Columbia in the program I got accepted to. Young professionals are starting to see downtown Miami as a place where they can go and live the city life and jot just a place to go and retire.
Why is World Center being mentioned? Isn’t that vaporware or has something changed recently?
http://blogs.miaminewtimes.com/riptide/2010/04/miami_world_center_front_man_m.php
gables,
“my comment to you gixxer, is that once these owners reach delinquency levels on HOA and mortgages, they really do not act the way you described-financially responsible to pay off their debts. if they cannot pay off their debts with a current rent paying tenant, the property is just in a holding pattern to foreclosure, waiting for bank action.”
I agree this is this is the case in some situations. But I also believe that in some situations some people were only losing a certain amount each month but were still able to maintain. Then when they realized that other people weren’t paying their HOA fees and nothing was happening they figured they might as well not pay either. So you have a guy losing $800 a month on his investment and other owners aren’t paying their fees so he figures if I don’t pay the HOA fees of $600 then I’ll only be losing $200 a month. Maybe I get away and never have to pay it back or maybe I settle in the future for only a portion of the payments.
If the person is on their way towards foreclosure then Drew’s example is pointless.
I was under the impression that this new law was supposed to give piece of mind to the tenants so that if they pay the portion to the HOA they can’t be kicked out and bulk buyers as it shields them from successive developers liability.
Why Bother #6 & #9— The pillar of reading comprehension… reading is fundamental.
gixxer, on the surface the law should be friendly to tenants-but unintented consequences abound. HOA really cant give the tenant the boot-so they are safe in that respect. even locking out tenants from amenities is dubious legally. its the banks that can move you out of the house-and the law doesnt address that issue. but now the law directly pulls the tenant into the thick of things-who and what amount should their “rent” check be distributed? the idea was noble at least.
your comments on owners paying part of the mortgage vs HOA still has problems on the ground. the months that were missed paying HOA will be recouped, quite possibly, by placing a lien on the property. pay now or pay later-unless it is foreclosed upon. just seems like a really messy situation once one falls behind chronically on HOA dues.
cant disagree with you regarding the change in atmosphere for miami condos-more cosmopolitan. still has a ways to go downtown, however, change is in the right direction. spend an afternoon in downtown coral gables and then downtown miami or brickell. you will see a big difference in the vibe today. the gables (and grove) are more bustling today. but in 10 years there should be more activity in Miami-they should have 10 times the number of residents by then!
Makes Me Think said: “joe, you make no sense and you never do. maybe you need to read the article more than once. just because young people can’t afford to buy today doesn’t mean they won’t be able to buy 4 years from now.”
— Um, please explain. Absent an influx of good jobs, how will young Miami residents be able to afford condos in 4 years that young residents can’t afford today? That’s a simple question that should Make You Think.
Gixxer #36 — I saw the disclaimer in the article above, but the article is still a bunch of nonsense. The article’s entire premise is that there’s going to be a new condo boom downtown because of all the young people moving in and buying units. The one-paragraph disclaimer saying, “But, gee, it’s possible young people won’t be able to afford these condos after all” basically renders the entire article/premise moot.
I’m glad more people are living downtown, but no one here has explained how downtown will go from a huge rental colony to a young homeowner’s paradise.
Many unit owners have never paid a dime in condo fees and as a result have huge liens for SEVERAL thousand dollars that have accrued for a few years…in which it may take a year’s worth of tenant rent to balance that owner’s account. So, what’s the point of renting it out any further. All monies will be going to the association for a long time.
# 39:
“I was under the impression that this new law was supposed to give piece of mind to the tenants so that if they pay the portion to the HOA they can’t be kicked out and bulk buyers as it shields them from successive developers liability.”
I have no idea what you’re trying to say. Its nonsensical. I’m sure your admissions officer at Columbia would agree.
Joe-“young homeowner’s paradise”
Joe, in 10 years, the 20 and 30 something youngsters renting these places will turn 30s and 40s. They would be the ones buying these. It wont be young anymore, but they will all be homeowners unless they are all truth twisting Angels or the Goebbels which I don’t think is the case.
Why Bother # 45— That post makes no sense. People in their 30’s and early 40’s are recently married or just starting a family and they want a single fmaily home in the burbs. They do not want to live in downtown. Downtown is no place to raise a family. I look at all my neighbors and all of them are young single professionals such as myself. Few are married and none have kids. We all live in downtown because we like the downtown vibe, bars, clubs etc. As people get older, get married and decide to have kids they will not stay here in downtown. This is not only my own opinion but is backed up by the numerous conversations I have had with my neighbors. In fact, I have yet to see a family living in my building. I’m sure there might be a few but I have yet to see them. Where would one even send their kids to school if they had a child and lived in downtown? There are no good schools around here, that is for sure. As people get older and have families they move out of downtown, not buy in downtown.
Angel
Thanks for making the above point. All very true, and often not taken into consideration by the housing bulls here. Most Miami condo residents view it as a temporary status. Its transitional, representing a phase of one’s life, with no plans to stay there longer than 5-10 years, albeit a better chance of returning to condos when retired/empty nesters. As you mention, its not conducive to raising children. Of course, you only have to spend $20-25k a year and send your kids to Gulliver or Ransom in order to avoid public schools downtown.
What a great piece of news!
Home sales in S. Fla. buck trend
Pending home sales in South Florida have held up, despite the expiration of the federal tax credit, which left national sales plunging.
By TOLUSE OLORUNNIPA
[email protected]
Thanks to the ongoing appetite of international and cash buyers, South Florida’s real estate market was shielded from a national drop-off in sales.
Because those buyers were not eligible for a tax credit, their desire for real estate didn’t taper off after the benefit expired at the end of April, like it did for others who rushed to get in on the deal.
It’s true that in the two months since the tax credit expired, pending sales in Miami-Dade and Broward have fallen 2.6 percent, according to the Realtor Association of Greater Miami and the Beaches.
But that decrease is relatively mild when compared with the swift drop-off in sales that took place nationally after the federal subsidy expired. The first post-tax-credit pending sales numbers, released Thursday, show a 15.9 percent decrease in pending sales in May, figures from the National Association of Realtors show. Year-over-year, pending sales plunged 30 percent.
In June, potential homebuyers in Miami-Dade County signed 10,366 sales contracts — an increase of 53 percent when compared to the same month last year, but a 1 percent decrease from May, according to figures released Thursday by the Realtor Association of Greater Miami and the Beaches. In Broward, pending sales were up 28.7 percent since June 2009 but down 2.7 percent for the month to 8,031.
Helen Jeanne Nicastri, a Realtor and president of the Miami-based Master Brokers Forum, said interest from Mexican, Brazilian and European buyers has helped her move luxury properties in recent months.
“That’s what I’m seeing — strong international buyers coming into the marketplace,” said Nicastri, who has a $12.9 million deal pending with an international buyer. “They’re attracted to the U.S. for our prices, as this one of the states in the nation that has been affected most. Our prices are amazing.”
South Florida sales also have managed to hold because of depressed prices, low interest rates and a pool of buyers that includes bulk investors and cash-wielding foreigners, said Jack McCabe, CEO of McCabe Research & Consulting.
“We have a buyers pool that encompasses all four points on the compass, while many other markets rely only on U.S. buyers,” he said.
The figures were released one day after Congress passed a bill that would give homebuyers an extra three months to close on a home and still qualify for a tax credit of up to $8,000. Many buyers who went to contract on homes before the April 30 deadline were unable to close on the purchase before June 30, the original cutoff date for closing. The measure, which President Barack Obama is expected to sign, would extend that cutoff date to Sept. 30, though no new contracts would qualify.
Locally, condominium sales were stronger than single-family homes sales, with large increases year-over-year and slight decreases for the month. In Miami-Dade, 5,876 contracts were signed, up 76.4 percent since May 2009 — but down 0.64 percent since April 2010.
In Broward, the 4,429 pending condo sales in June represent an increase of 56 percent for the year, but a decrease of 2.3 percent for the month.
Though the tax credits are gone, low prices helped keep buyers interested. Condo prices remain far below their peak, with May median sales prices standing at $81,500 in Broward and $126,100 in Miami-Dade, where prices dropped another 10 percent from May 2009.
Single-family home prices are up slightly, rising to $196,700 in Miami-Dade, and $216,400 in Broward in May. Those prices are up 1 percent and 18 percent, respectively, since May 2009.
In Miami-Dade, pending sales of single-family homes increased 31 percent in June from the previous year, to 4,490, but dropped 1.15 percent from May.
In Broward, June pending sales of single-family homes rose 20.6 percent year-over-year, but dropped 2.7 percent month-over-month. Broward buyers signed 3,602 contracts in June, down from 3,719 in May.
Pathetic.
http://miamitodaynews.com/news/100701/story7.shtml
“But, gee, it’s possible young people won’t be able to afford these condos after all” basically renders the entire article/premise moot.
joe anything is possible. just because something is possible doesn’t make his argument moot.
let’s just imagine Grixx and his girlfriend moves to Miami. Grixx attends UM while he works part time and his fiancee finds a job somewhere close by. Let’s assume they are able to rent one of those condos but only barely. After a few years Grixx graduates and find a full time job in his field of study and his fiancee advances in her profession. Can you see where it is possible that today’s young renters may be able to afford to buy a condo in downtown Miami in 4 years. Is it at all likely that in 4,5,6 or 10 years from now the young couple will be more established in their profession and making more money, thereby able to afford to buy that condo they are renting today? Let’s assume they haven’t advanced as much as they thought. Is it possible that they can save enough money over the years (4,5,7 or 10 years)for a handsome down payment on the condo, thereby allowing them to afford the condo?
JL,
“Why is World Center being mentioned? Isn’t that vaporware or has something changed recently?”
The project like most other projects is on hold. The land was just purchased in September of 2009 and something will eventually happen, it’s just a matter of when and how different it will be from the current plans.
MMT, does your scenario above assume the condo appreciates in value or not? what is the value of the condo today vs tomorrow when he buys? how does the rent behave? in theory, without numbers, i dont dispute what you are saying. but once you work with the numbers the scenario is not so clear cut. remember the bulls on here who say buy today because in a few years the affordability will be gone. how affordable to you think miami condos will be in 5 years? 10 years? does gixxer get locked out of the market by then? you cannot be bullish on RE but expect bearish results for the next 5 years to achieve the young professionals argument.
Joe,
“I’m glad more people are living downtown, but no one here has explained how downtown will go from a huge rental colony to a young homeowner’s paradise.”
I’m not saying it will ever turn into a “young homeowner’s paradise”. I could care less if they buy or not, because it’s irrelevant. If downtown fills up and business keep moving in, property values will go up. If young homeowners cant afford to buy then they simply will continue to rent and investors will continue to reap the benefit of the appreciation without them.
“remember the bulls on here who say buy today because in a few years the affordability will be gone.”
I don’t see where anyone is saying that and I know I’m definitely not. If home prices increase at 3%-4% how will the affordability be gone. You’re income should be increasing at about the same rate so affordability should remain constant. This whole “you have to buy now or be priced out” is a realtor gimmick.
All I’m saying is that if you plan to buy then the sooner you buy the sooner you reap the benefit being able to lock in the current price and reduce the principal.
Ex. You make $100k and feel you can afford a $250k condo. So you would have a price to income ratio of 2.5 (250/100 = 2.5). So if you waited 10 years to buy this same property and it appreciated at about 3.5% a year then 10 years from now it would be worth about $352k. But 10 years from now your income should have gone up also by an average of about 3.5% a year so you would be making about $141k. Therefore if you bought the same house 10 years from now the price to income ration would still be 2.5 (352/141 = 2.5). So affordability hasn’t changed.
The only difference is that if you were to buy the property now you would lock in your payment based on the today’s value of $250k.
Again the main benefit of real estate is the ability to keep the expense constant while the income increases.
3% – 4% ISN’T bullish. All were (or at least I’m) saying is that appreciation will keep the value constant with inflation. Therefore IF you plan to live at the same place for a long period then buying simply allows you to continue to pay the same price while everything else (rents, income, food, gas, etc.) continue to increase. Which is why it’s basically a no brainer if you’re buying for the long term.
This is basic and simply but somehow during the last housing boom people were convinced that houses were ATM’s and now after the bust they have a hard time going back to normal.
Drew,
“I have no idea what you’re trying to say. Its nonsensical. I’m sure your admissions officer at Columbia would agree.”
It’s called successor developer liability, look it up. If a bulk buyer purchases so many units in building then technically he would be considered a developer and therefore render themself liable for flaws in the building even though they didn’t build it. Since they want to encourage additional bulk buying this legislation gives assurance that bulk buyers wont be liable.
Why would the admissions officer who admitted me to Columbia agree with you uneducated opinions.
Gables, I almost never take appreciation into account. I assume things stay the same or goes down somewhat. i know inflation tends to make things appreciate but i don’t know how much or how soon. I also know people tend to panic at times of crisis and they have short memories. I have a general rule though, things are never as bad as they seem and never as good as they appear. I am a skeptic at heart about everything. I guess you can call me a contrarian investor. All I know, housing may bottom and stay at a bottom for 10 years. That is why i try to stay away from discussion about appreciation. I am bullish on Miami RE in general for the long term because the south Florida area is Unique to me. In the discussion above you have to assume that prices remain the same or go down because Joe’s argument is that the people living in them won’t be able to afford to buy them.
Gixxer,
“The only difference is that if you were to buy the property now you would lock in your payment”
You’ve said this at least twice now. It is an erroneous assumption. Condo fees go up, real estate taxes go up, utility costs go up, adjustable rate mortgages go up.
Buying today would lock in a payment on a fixed rate mortgage only, nothing else.
Regarding downtown living appealing to families, it never will as long as the product is limited to 1100 square foot two bedrooms. Families require three bedrooms and more square footage. The beach offers more of this product in the mix, there is very little downtown. I believe that is a fundamental mistake made by the developers.
gixxer, housing and income do not scale quite the way you state. income has a graded tax system, so while your gross income increases in scale, your take home pay does not move quite the same. you will fall behind from an income perspective over time when you look at affordability. but i agree locking in current economic conditions is a great reason to buy and live in a unit long term-assuming you do not move into a deflationary environment and you buy value. but deflation has occurred over the past few years, so it is not an imaginary argument which will cannot occur in the future (ask japan). and current government securities with such low yield indicate a concern over risk and/or deflationary concerns. that said, a 2B condo for under $250k is probably a good deal long term for miami and worth the risk-about equal to renting. at $300k+ probably better to continue-not talking the luxury units here, just typical units.
MMT, if you assume prices decrease or remain flat, then why would you buy real estate as an investment? that will also keep rents down as well-further hurting your investment. and you are willing to accept that for 10 years-with all the carrying costs? that only works if you are cash flow positive from day one. and as many have argued on this board-from both sides-that typically does not happen. thats a risk free investment. zero appreciation also would indicate pretty bad economic conditions for the country as well, not good for those trying to move up from renters to buyers. your bullish and bearish views on items are not compatible.
BillP,
in complete agreement regarding the 2B issue. developers really did a piss poor job with respect to parking (one per unit) and distribution of larger units for families-opting to make many larger units luxury penthouse units. Many downtown units may be starter homes for small families (one child under 4). but older or more children? it appears to present some issues. this is a very unfortunate situation, and planning could have addressed this issue better.
MMT,
Reminds me of that quote:
“Be fearful when others are greedy and greedy when others are fearful”
BillP,
“Buying today would lock in a payment on a fixed rate mortgage only, nothing else.”
Last time I checked the payment on the fixed rate mortgage makes up the majority most peoples monthly housing payment.
Utility cost are irrelevant as they would have to be paid regardless of whether you rent or own.
Taxes as I previous stated can go up by at MOST 3% per year.
Condo fees can go up, I agree but again the condo fees should be the largest part of your payment.
Ex. You buy a $250k house today with 20% down.
$1073 Mortgage
$500 HOA
$333 Taxes
$1906 Total
Let’s assume the HOA fees have rose to $1000 10 years later and assume the max 3% increase in taxes each year:
$1073 Mortgage
$1000 HOA
$447 Taxes
$2520 Total
Now lets see what our payment would be if we simply waited to buy 10 years later when the house is now worth $352k:
$1780 Mortgage (assuming 6.5% which is doubtful)
$1000 HOA
$563 Taxes
$3343 Total
And that doesn’t include the $100k worth of equity you have.
There is no way around it, if you plan to sit tight for a long time you’re going to come out well ahead owning. Now if you know that you’re going to need to move in say 5 years then that’s a different story.
Gixxer, let’s do this again. You said:
“I was under the impression that this new law was supposed to give piece of mind to the tenants so that if they pay the portion to the HOA they can’t be kicked out and bulk buyers as it shields them from successive developers liability.”
1. Yes, I am aware of successor developer liability. Thanks.
2. We’ve been discussing one component of the overall bill, namely the tenant/HOA issue, and nothing related to successor developer issues.
3. Because your writing style is so poor and disjointed, it is often difficult to decipher what you mean and what you’re even referring to.
4. “give piece of mind to the tenants so that if they pay the portion to the HOA they can’t be kicked out.” Kicked out? By whom? If a tenant is going to be “kicked out” by anyone, its the owner’s lender in the event of foreclosure. What bearing does HOA pmt have on a tenant’s likelihood of being evicted? If you think the association will foreclose on the unit for delinquent assessments then you’re completely naive to the way things actually transpire…Again, nonsensical ramblings.
5. I would think a self-described Columbia-caliber student would have better writing skills, because yours are atrocious. I’m starting to think that you intentionally write like a 4th grader (poor sentence structure, ambiguity, blatant grammatical errors) in order to neatly refute others when they contest your statements. If you’re the only one who can correctly interpret your statements, then you’re always right! How convenient.
Re: article from #49… Beyond pathetic – abject apathy and the community will suffer for it. This is what you get when you buy into a neighborhood where almost nobody has any civic mindedness or sense of community. You’re right, Miami is a resort and most transients treat it as such – totally heartbreaking. Now we cannot complain that there are no quality schools in the area because like a bunch of jackasses we didn’t convey to the federal government our population or our needs. I’m happy to live in 900 Biscayne where the building management liased with census workers and threw a pool party catered by chophouse and botequim carioca – offering discounted poolside massages once your census form was completed. I have a feeling that with museum park, city square project and whatever will become of world center the park west area will rebound nicely after this “double dip” and it may only take around 8-10 years (2 yrs for camillus house relocation, 4-6 yrs for museum park, city square and miami world center projects to get built and mature into nice places to go.
Makes Me Think #50 — The scenario you described is already playing out every day. It’s not like Gixxer 1000 will be the first grad student at U. of M. As I keep saying, without an increase in the number of good-paying jobs for young people, it’s simply not possible that young people will have a lot more buying power in the 2015 or 2020 Miami r.e. market than they do today. Otherwise, where will their money come from? (And as gables pointed out in #52, you can’t be bullish on the market from now to 2015 but then claim young people — who are mostly renting today — will be able to buy at 2015’s even *higher* prices. It makes no sense.)
——
Gixxer 1000 #54 — Assuming 3-4% annual appreciation for Miami r.e. from here on out is definitely bullish given that the average Florida homeowner is underwater and more than 50% of all Florida homeowners with a mortgage are at least 60 days delinquent.
——
Makes Me Think #56 — I didn’t read the article above as claiming a massive rent-to-own conversion would be taking place in the Miami market. I read it to mean that young people in the future — i.e., a different set of young people than the ones currently renting downtown — would suddenly be buying condos downtown. But regardless of whether it’s new young people or the current renters, I doubt the stats on people going from renters to owners in condos are all that impressive. As people have said above, condos are mostly for young, single professionals and empty nesters.
I only skimmed the Census article above, but does anyone know if the Census is supposed to count anyone who spends time in a Miami condo, or is it only for people who make their primary residence in Miami?
At first glance, the 48% return rate seems awful, but if downtown occupancy is still in the 75% range, and if a large % of recent buyers have been foreigners (a lot of whom ostensibly aren’t full-time Miami residents), is the 48% really that bad? It seems like it might only be off by 5 or 10%, if that.
joe, it appears the article just noted return rates. all residences are supposed to return the census-whether part time, foreigner, etc. it is not a count of citizenship. it is a count of people who live in a community, either year round or part time. within the census questions may be asked in more detail-but its the return that counts.
” MMT, if you assume prices decrease or remain flat, then why would you buy real estate as an investment?”
I suppose if rents for 3 bed 2 bath homes approaches zero I might be in some trouble but even then i will be able to pay someone to board up the homes and pay the annual taxes, insurance and keep the grass cut. I suppose lots of investors like myself would rather board up their houses than rent it out for something less than what their time is worth. Besides, i don’t invest for the worst case scenario. I invest based on likely outcomes.
Drew,
“Kicked out? By whom? If a tenant is going to be “kicked out” by anyone, its the owner’s lender in the event of foreclosure. What bearing does HOA pmt have on a tenant’s likelihood of being evicted? If you think the association will foreclose on the unit for delinquent assessments then you’re completely naive to the way things actually transpire…Again, nonsensical ramblings. ”
Wow you sure are clueless. This bill now gives the association the right to EVICT the tenants of a unit if HOA fees are not paid. If the tenant turns over the portion of their rent that covers the HOA fees they are protected from eviction from both the condo association and the unit owner, meaning they cant get caught in the middle.
And it seems that the person quoted in the exact article you posted has the same nonsensical ramblings:
“It gives the tenants more peace of mind,” said Jon Mann, owner of Five Star International Realty in Miami. “They can pay the association a portion of their rent and they know they won’t be kicked out.”
gables — Thanks. I’ve been out of the U.S. for the entire time of the Census, so I haven’t even seen a Census form.
——
Gixxer 1000 — Settle down. It’s not even a given that this new law will withstand legal scrutiny, as it’s highly unusual (and usually not permissible) to impose changes to existing contracts ex post facto.
Joe,
This is a change to the Florida statutes and nothing to do with changing anyone’s contract. This is now the law and 100% enforceable. But as the Miami Herald article pointed out, people are not afraid of breaking the law.
Why are people jumping to the defense of deadbeat landlords? This is a good law that will strengthen condominium association finances and protect tenants.
I agree with BillP.
Joe, even if you assume your argument for a second, the lease contracts have only a life of one year. At renewal, they will all be subject to the new rule.
Gixxer 1000, BillP, why bother — I’m not defending deadbeat landlords in the least. I’m simply pointing out that the law does, in fact, change existing contracts by forcing tenants to start redirecting rent money, which is currently being paid to landlords (deadbeat or otherwise) under *existing* landlord-tenant agreements, to the HOA — a clear breach of said existing contracts.
“why bother” might be right that future rental or renewal contracts can be modified, but that doesn’t change my original point. It’s highly unusual, and almost always illegal, to come in and compel private parties to change the terms of existing contracts. Just because Tallahassee passed it means nothing. Legislatures pass bad bills all the time. That’s one of the main reasons we have courts.
come on joe, quit with your right wing babble. Again you just repeat what is fed to you by the mainstream media (fox news) without even using a single brain cell to process it. The tenant has to pay rent as far as he is concerned his contract hasn’t changed instead of sending the check to p o box 223 he sends it to p. o. box 334. Court orders all for creditors to garnish employee wages all the time, are you going to claim that is a change in terms of existing contracts?
Stop being a mindless zombie only capable of repeating what is told to you and start thinking for yourself.
Makes Me Think — “As far as he is concerned”? Really? I guess you’re not a lawyer (and generally don’t know much about business).
Contracts mean something, whether you like it or not.
joe, don’t be rediculious. You are beyond reason.
so why bother.
Joe, it has withstood the legal test in Massachusetts.
Happy fourth!
Makes Me Think — Do you have some sort of psychological or intellectual deficiency? The Distressed Condominium Relief Act was passed by two REPUBLICAN-led chambers of the Florida legislature. Given that, how do you figure my comments expressing concern for the legality of certain aspects of the law are “right-wing talking points”?
Congratulations — you’ve become the biggest troll on this site. At least Ace and AJ could be funny. You’re just insufferable.
yes! i just realized i must be both.
Thank you for finally helping me realize i have a problem.