2 South Beach Loft Foreclosures on Meridian Avenue
Within the past week, I've come across two great bank-owned lofts on Meridian Avenue in South Beach. The first is located at 1700 Meridian Avenue in a development called Montclair Lofts. It is a bi-level 3 bedroom/3 bath loft with 2,300 square feet. The unit looks to be in great condition judging by the pictures that accompany the MLS listing. The bank is asking $749,900, or about $326 per square foot. According to public records, the judgment amount on this foreclosure was $1,050,855.
The second foreclosed loft is located at 2001 Meridian Avenue in a building called Meridian Lofts. It is a 1 bedroom/1 bath loft with 1,046 square feet of interior space. This loft also appears to be in great shape judging by the pictures accompanying the MLS listing. The bank is asking $391,900, or about $375 per square foot.
Both developments were built in 2005 and are within walking distance of world-famous Lincoln Road. I think both of these lofts represent good deals, even in this market.
great now I have anonymous people
commenting for me
Kevin, thats not my apology
I just included a “Disclaimer & Commenting Policy” link at the bottom of each page. It is right above the EWM and Christie’s Great Estates logos. Let’s try to get the comments back on track.
Brett – I wouldn’t say Kevin is ignorant – He does have a solid track record if you look at his recent sales history.
Lucas – Is this your most widely commented blog entry?
It probably is. I also had a lot of comments on a Platinum Condominiums post around the time of the auction.
I think Julian has a good point.
Price per square foot can be a useful measure, but it is only one of many things to look at. Price per square ft varies depending on the size of the unit, as well. Obviously, there is a diminishing value as a unit gets bigger. The smaller the unit, the higher the price per sq ft will be compared to an equivalent unit that is 2 or 3 times the size. So, you can only use that measure for comparably-sized units in the same area or building.
Also, a lot of the prices that were established during the boom were based on the idea that prices were going to keep going up at double-digit rates. So, price didn’t matter to the buyers because they figured that as long as they could get the loan (which they probably wouldn’t in today’s market), they would make a bunch of money off the appreciation.
Who cares what price you pay if it’s going to appreciate 20% in a year? In fact, the more expensive, the better. 20% of $1 million is a nicer profit than 20% of $750k. That was the mentality during the boom, and that is how we got to the price levels we saw in 2005 (combined with the lowest lending standards in the history of planet earth).
Now that the mentality has changed (buyers realize they can lose money on these things), that “get rich quick” element of the market is gone. Prices will have to go back to levels that are actually affordable to the people that live there. And foreign investors don’t want to buy a condo that is declining in value any more than someone that lives in the US. It is simply a bad investment decision. The weak dollar helps, but until we start to see a bottom, investors will stay away for the most part.
I think the simplest, time-tested metric for determining where prices are going is the rent vs own calculation. There is a historical relationship there. If it costs 2x to own vs rent (like it does in many places), something has to give. Either rents and income have to go way up (fat chance) or prices have to come way down. Simple as that.
A buyer shouldn’t look at what something costs compared to the 2005 price and declare it a “good deal” because it is 30% off that over-inflated price.
Maintenance and taxes on these two units are just too high in my humble opinion. I would be surprised if they sell for more than $300 a sq/ft primarily because of that. I also agree that it is not optimum location and think most people would prefer to pay more for a class A building with amenities.
I also believe people prefer to pay more for a class A building with amenities but when most people are looking to purchase in South Beach it is because they do not want to live somewhere else – Miami Beach, Sunny Isles, Downtown. So if there are not many large units available in South Beach even close to the price the options become limited and this becomes more attractive. In my experience buyers want to buy in Downtown because they know they are getting a bargain on properties with great bay-views due to increased inventory. Buyers looking in South Beach are not really comparing with the inventory available in Downtown because it is not the location they are looking for. Now if they are the type looking for a loft anywhere in Miami that is a different story but usually buyers know there is a difference in price between the two and are either looking for a loft in Downtown or a loft in South Beach, etc. You can be in a brand new 2008 construction today in Downtown with the best amenities and luxuries and a view or you can be in an older building in South Beach with maybe no luxuries and no view for the same price. This is where you make the sacrifice. You will never see South Beach luxury on the same price level as Downtown luxury. That was a little long-winded, I hope I made sense.
Maybe I’m not giving the average buyer who is an owner/user enough credit, but do you guys really think that Joe Schmoe is sophisticated enough to be looking for a home on a $/Sq.Ft. basis? I agree with Julian, especially now that many investors/speculators are in a holding pattern, the absolute value of the property carries much more weight than the $/Sq.Ft.
LUCAS,
LOL! … fart in the wind …
I’m sorry, but the maintenance fee of $662 is absolutely insulting. Even for a full-service building, it’s high. And this looks bare-bones.
This is a tough crowd, Lucas and Samir. Comments reflect the questions that skeptical buyers are asking in this uncertain market and the market is not accepting the offering prices on these units.
$/sq. ft. is used extensively in Boston where I am but also relevant is the price point. Many sacrifice total square footage for exceptional finishes and building amenities.
Regarding Montclair, spiral stairs went out in the 80’s and the floor looks warped. NOT quality in this market where buyers have so much to choose from.
I don’t think this term of Quantum is really any different than $sq/ft. When you provide each number with the appropriate context, you get the other so there is no argument really… they are different ways to state the math to demonstrate a point/trend.
If you say 2BR /2bath 2,000 sq foot new constructions aren’t selling at $400/sq.foot, it’s implicit that $800,000 2,000 sq. foot quantums aren’t selling.
If you say 600K 2 bedroom 2,000 sq foot townhouses are selling in the city, then you’re saying the market in that area for that type of layout is $300/sq foot.
If you say there is an oversupply of $800K 2BR /2bath 2,000 sq feet new constructions and they aren’t selling but people would buy it at $600K, then you’re basically saying people will buy at $300 sq/foot but not at $400 sq/foot.
When there is no buying/selling going on then obviously $sq/foot or asking prices have no meaning. When actual sales are going on, the $sq/foot is the most important trackable metric. (along with size, location, floor, view, year, quality, parking… ie. which condo building).
I think the reason it’s more popular here in South Florida than in other places is due to the importance of the large condo market. $sq/foot is the ruler you use when you track sales of identical/similar lines in a condo building and adjoining buildings. If Miami was made of 1,000,000 unique single family homes –instead of 1,000,000 very similar condo units- I think people would talk about $sq/foot less. But hey, if I live in 2901 in a building and 2801 and 3001 just sold for $350/sq. foot… I have a pretty good idea what my unit is worth… quantum and sq/foot-wise.
People are loosing their jobs left and right. Businesses are closing down. People are getting foreclosed. And houses are not selling. People will not buy 2nd home in today’s global economy due to the market worldwide slowdown. I do not want to hear the excuse that foreigners will buy these houses. Houses will sell once prices are back at the years of 2001-2003 price range.
Lucas,
When I see un-educated people posting comments on my blog, I delete them because it make my blog look bad…like homeless, iliterate people hang out on my blog.
I wonder for the peeps who have been throwing around the $200/ft number–they will be actually be able to purchase that crap across the bridge for that and keep all the rich, educated people over here on Miami Beach. Sorry….Platinum will be $200 /ft pretty soon.
LIVE IT UP THERE. Bring your mace, you’ll need it. But you only paid $200 a foot–amenities like a prostitute right out your front door, toothless too! Ahhh what $200 p/f gets you these days. Toodles cheap- a**e*!
I don’t have 1 single friend or family member or extended family member that has lost their job or closed their business. JoCo, do you know anyone in this situation? I do know that people are getting foreclosed on but that is not just due to market values going up that has something to do with mortgage fraud and bad mortgage brokers. Everyone talks about the economy going down the drain but not everyone is being affected equally. Sure many people will consider spending less. Of course not everyone can afford a $500,000 two bedroom but they were created to attract the buyer that can. I agree with Kevin, if you want $200 a sq ft go move to Palatka. Maybe you will find something for even $100 a sq ft. As far as platinum – that developer was stupid auctioning off the units. And it is a subpar location. But not all buildings in the area will suffer the same fate. Also for all others on here: If you want to live in a brand new condo with all the bells and whistles and on the water and on a high floor and without obstructions and a parking space and a breathtaking view then pay up and stop kidding yourselves. Sorry for the run-on.
Bottom line you get what you pay for and if you are very lucky you may steal a couple of cheapo’s that got screwed or over extended themselves in the boom. End of the day prime bldgs and spots will cost ya. Either pay or buy somewhere else there are plenty of options and building for evey tye of income. Just dont be thinking that a true mid-high luxury building will become a Platinum auction price point cause if you do you’re kidding yourself.
Jo Co,
I think Kevin and Samir will agree with me that properties ARE SELLING in this market. Real estate prices have come down about 20-30% since the end of 2005 to beginning of 2006. I think all three of us would tell you that 2008 has already been a phenomenal year for us…and we’re still in January. There are some condo developments in Miami that will see declining prices in the next 12 months but that’s because they priced themselves too late in the game.
I also have to agree with Samir that the high-level of foreclosures that we’re experiencing in Miami is mainly attributed to mortgage fraud. The bulk of foreclosures are concentrated in a handful of buildings.
Samir/Jo Co
i don’t think i’m kidding myself by waiting in this market. the condo you describe will be available in a year from now…cheaper. it’s just plain fact.
as for premium spots for condos, i.e., certain stretches of collins, south pointe, well, that’s not my market.
Lucas
the bulk of foreclosures you’re seeing now are mostly in buildings that have already been completed or were completed during the boom. wait to see what happens with all the new inventory coming online. assuming these folks still choose to close. if not, do you really want to be in a building where the developer is looking to do a bulk sale to a buyer that’s gonna operate the units as rentals? would you advise a client to do that?
I just wanted to point out a simple, yet fundamental, observation that was posted here:
Quoting BFG: “A buyer shouldn’t look at what something costs compared to the 2005 price and declare it a ‘good deal’ because it is 30% off that over-inflated price.”
Those who don’t agree with the statement probably think that 70 bucks a barrel for oil (hit $99), 600 bucks for a troy oz. of gold (hit $900), and 12 bucks for a grey goose and tonic ($15-25 at most trendy bars/restaurants) are a great deal too.
I’m not saying that that the condo you buy a year from now may not go from $400/psf to $350 or even $330/psf. I’m just saying some have already come down from $400 – $300. That doesn’t mean that these will go from $300 to $200 because of the new product. Every building is different. Also not all units come down at the same time. If they are in the comfortable range they get picked up by buyers who have been keeping their eyes on that particular building.
jcrimes,
A lot of foreclosures recently are due to people who bought from a flipper during the boom. A lot of these new building may end up having original contract holders closing which bought very early. I wouldn’t expect people with the premium units just decide to walk away from deposits. I would expect people with no view to. But who would want those units anyway? You can’t directly compare the two.
It’s just about to get a little more affordable to purchase a home. Turn on your CNBC.
I really hope Kevin didn’t write that extremely elitist comment. If he did, my opinion of him just changed.
GT3,
Someone told me yesterday about a certain establishment in the Brickell area (no free plugs) that has “great drink prices”: “My Grey Goose with a splash of club and a twist of lime was only $10”.
I broke it down for her. She paid about $6.67/oz – assuming they poured a whole ounce and a half of vodka. A 750 ml bottle of Grey Goose runs for about $27.99 at any liquor store. That’s about $1.10/oz. A markup of 606%!
I don’t expect to pay $3.00 for a drink in Brickell, but since when is $10.00 for a (H2Oed down) drink a “great price”?
Her answer to my analysis? “You have to pay for ambiance!”
‘Nuff said.
“price per sq ft, 30% off 2005 prices, new construction with great amenities, great views” bottom line is supply and demand. The fact is we have a HUGE supply with these new buildings, 500, 600, 700 and up to 1,000 units . Until we have 50 story office towers filled with positions paying $100K + yearly where will the demand come from? Retirees and second home buyers are not going to fill Miami’s city towers. Real Buyers now have to actually qualify for mortgages and those Buyers are going to need a reason to move to these new buildings in unchartered areas. All I can see is deep, deep discounts.
I am closing on a unit in a new waterfront building next week. I contracted the unit pre-construction on Oct 17, 2003 (when I was younger and pretty) for $195K ($250 per ft). This is a price I feel comfortable at and where I believe values will settle in about 16-18 months. Real values are created by real demand and will be demonstrated as such.
I have heard Agents say (or use to sell) “look at Miami Beach or South Of Fifth”.
Pleeeeze, no comparison. The trends and “lifestyle purchases” that supported the boom to the beach and it’s few very timely towers will not apply to
the downtown location. None of the same dynamics apply. I feel sorry for the buyers who were sold on that pitch and believed it.
We need this cycle to stabilize a healthy market. Once in balance we can truly determine value, until then there is to much uncertainty.
Great analysis Adrian!
Adrian: I have to question your analogy there.
Buying a bottle of Grey Goose and drinking it at home and going to a club and drinking it there are not the same thing, and therefore can not be compared to each other.
I assume you were trying to make the point that people are willing to pay more for a condo in a luxury area because of how nice it is to live there. Nobody–not even the biggest market bear–would argue with that. Of course a beachfront condo on South Beach is going to be worth more than a similar unit in a less desirable area. That is not the point that GT3 was trying to make.
He was simply saying that just because something goes up in price 100% in a very short period of time and then comes down 30%, doesn’t mean that it is now a good deal. It may still be over-valued, and most likely is.
A better analogy to your story would be if the club raised the drink price tommorrow to $20 per drink. Then a week later, lowers it to $15. Anyone who think’s it a good deal simply because it is 25% less than the $20 price has a very short memory. You’re still getting the same drink, the same “ambiance” that you had when it was $10 only a week earlier, but you’re paying 50% more for it now.
That was GT3’s point: 25-30% off of an already rip-off price does not make something a good deal.
Fundamentals (income, rents, etc) are the key in financial markets. There will always be bubbles and market manias (like Miami experienced during the boom), but the markets always come back down to their fundamental values. Always.
Prices adhered to fundamentals back in 2000. After that, they stopped making sense – and still don’t. Prices won’t stop going down until they do make sense again fundamentally.
BFG,
I understood GT3’s (and your) point perfectly well.
Nevertheless, thanks for your analysis of his analysis of your analysis and for improving my “analogy”.
The only “point” I was trying to make was that this particular (real-life) individual thought that $10 for a drink was a “great price”.
That’s it.
David,
Kevin did write that elitist comment–you know why? It’s the truth.
You say elitist like it is a bad thing ; ).
That’s the thing with me — some people may not LIKE what I say, but I can assure you whatever I do say, it is the truth.
Elitist, yes.
Integrity, BIG TIME.
See, so David, I agree with you.
“Prices adhered to fundamentals back in 2000. After that, they stopped making sense – and still don’t. Prices won’t stop going down until they do make sense again fundamentally.”
That line above and these charts tell you all you need to know about what a bubble looks like and what happens when the market gets back to making sense.
http://mysite.verizon.net/vodkajim/housingbubble/miami.png
http://www.justsearching.co.uk/JustBlog/wp-content/nasdaq.gif
Real Estate obviously goes up and down at a slower rate, but you can get the gist of what SHOULD happen to the RE market in a NORMAL corrective phase.
No fundamentals can explain that move from 2001 and onward. What’s ironic is when a Developer suggests he may ride it out and rent out units etc… If we revert back to the mean –as we should exiting a time of irrational exuberance/mortgage fraud- and come out of a housing recession in a normal manner, that’s like saying a developer/bank is confident in taking on the RISK that their property holdings MAY go down about 40% from today (with a coinciding drop in rental rates), and possibly get back that 40% they might have lost from here in another decade. ie. “dead money’ for 10 years.
No investor/developer/bank, can afford “dead money” for 10 years. Any investor/developer/bank who says this is a housing recession and they’re willing to RISK riding it out is just lying. At the institutional level, you don’t assume this type of “dead money” risk.
Adrian,
Sorry if I misunderstood you. I’ve been hearing real estate cheerleaders bantering on about how Miami is different from the rest of the world and how it exists in its own little microcosm where even the basic law of gravity doesn’t exist. A short while ago, we had some shill from WCI on this blog proclaiming his building’s “immunity” from the real estate downturn; how its superior amenities and location would protect it from the real estate meltdown.
I thought your comment was a round-about variation on that same theme. Again, sorry for the misunderstanding.
People need to be honest to themselves and ask who can really afford these high priced real estate market.
Jobs are not paying much and the rate of foreclosures are not going down anytime soon. Lower interest rates might just save a couple hundred in taxes a year, maybe.
In other terms, I believe that the high real estate market led our nation into this so called, “recession.” You see, people were living check by check and not buying enough other goods and services except paying their mortgage.
No need for an apology, BFG. I don’t take myself so seriously.
In December, Lucas shared with us his great value at Silver Bluff townhouses at $515,000, 2782 SW 33 Avenue. Some of us were criticized for suggesting that it wasn’t such a good value. Please note that the price is now $475,000, and Lucas has lost the listing.
These posters have a lot of wisdom and all are better served to listen to the comments. To suggest that the posters are ignorant or less informed because there are differences of opinion, is more a reflection upon the self- proclaimed elitist brokers than posters of this blog.
By the way, the spelling is illiterate, not iliterate. My opinion of him has changed too, Dave.
Bill,
I love how you make up things. I never said anywhere in the post of the townhouse that it was a “great value”. Additionally, I didn’t “lose” the listing. When I left my former office I asked them if they wanted to keep it.
Julian –
Thanks for posting your thoughts about ‘quantum’. I did not know that term, but it was what I had in mind.
Samir –
You are entirely correct, while many might think these prices are way overblown, it is irrelevant if they do sell at those levels. As long as the market is free and fair (no fraud), nobody is allowed to complain.
“if they do sell at those levels”
that’s one big caveat
Bill P,
I do not know what it is but sellers don’t see that society REALLY can’t afford the prices of today’s home! It is not that we are cheap, is that we don’t make enough for the payments. Sorry
I’ve noticed an increase in activity during the holidays and through the month of January. I would bet Lucas and the other agents/brokers on this blog would agree. I am seeing buying interest from California, New York and New Jersey. The buyers I have dealt with in the last 3 months have paid with cash or financed only 60%, to me this seems like they are not worried about the market in the short term. Anyone that has met me in person will tell you that I don’t give you that sales pitch to close the deal. If you want to buy I’ll find you the best opportunity today. If you want to wait that’s fine. But there are people buying in these buildings now that they are open even at the prices today and with confidence. Just my 2 cents. Side note: one of my recent buyers waited for the last year for prices to come down and yes they did. But the value of his home on the west coast also came down. So now he must sell his house for less in order to move. Just something to consider if you are thinking of waiting and you need to sell.
Hello Lucas,
Love your site!
I have an off topic question, I will be looking to re-locate my SoBe based business to a new location. Where can I find listings of commercial real estate properties for sale or lease in SoBe?
That is a horrible location. The unit is about 10 feet from Dade Blvd, which is a highly traveled road cutting through south beach. Very noisy and there is a stop light right outside the window.
Its actually 3 blocks from Lincoln Road, but those are 3 VERY LONG blocks. It spans the entire convention center plus the big parking deck to reach Lincoln. Thats a very long walk.
I was talking about Montclair – one block from Lincoln.
Oh I see. I was referring to Meridian. I drive by there all the time and wonder how those people sleep up there. They have a 2nd building that looks nearly complete as well. They get that convention center traffic as well.
Maybe not $200 PSF but I think closer to the $250 range. That is a great location (with or without the noise). Its walking distance to restaurants, a movie theater, and public transportation. I definitely can’t say the same thing for the downtown projects where the $200 PSF is becoming less unrealistic. Anyone know what the maintenance is on the 17th street unit?
Lets not get carried away with the $/sqft figures here. These units are not SO-FI, they are not beachfront, they are not bayfront, you can not dock a boat anywhere and every time there is an event in the convention center its pandemonium on your doorstep.
$300/sqft would be amazing for something on the water. For this? Not so much.
While not getting carried away with the $/sqft please realize that the market sets a price. You may think it is worth only $200 per sq ft but if buyers are buying units in the building at $350 per sq ft (I’m not saying they are or aren’t) even in this market then the market value of the building will be near $350 per sq ft no matter what a buyer or seller thinks. Its only when we start to see a trend as a result of actual sales that I think we can start talking about $/sqft. There will always be sellers that have a lot of pride and are stubborn on price and always buyers who like a property for some reason and decide to buy.
The Montclair looks out onto the Miami Beach Convention Center parking lot:
http://tinyurl.com/2hx58j
I imagine that would be a relatively noisy place to live.
Well… People got themselves into mortages they could barely afford. Since paying the mortage comes first(we don’t wanna live under a bridge), people couldn’t afford spending their left over money on other goods and services as much as before. So our economy went into a recession. Now we can finally thank those developers, realtors, bankers, contruction companies and contractors for screwing up our present economy. Everyone wants a piece of the pie without working hard at it.
Also, like an above poster mentioned, this was a condo conversion.
It was built in 1954.