Miami & Miami Beach Condo Trends – July 2009
July 28, 2009 by Lucas Lechuga
As many of you read earlier today, the Case-Shiller price index rose on a month-to-month basis for the first time in 3 years. 13 of the 20 cities in the index showed month-over-month price gains in May when compared with April 2009. However, Miami was not one of the 13 cities to show an improvement in prices. Home prices in Miami saw a decrease of .8 percent during that period.
There may not have been an increase in home prices in Miami but the figures below show a major improvement in the number of closed condo sales in the previous six months when compared to the closed condo sales in the six months prior to January 2009. For example, there were 3,551 closed condo sales in the six months leading up to January 2009 compared to the 5,007 closed condo sales that occurred within the past six months. That's an increase of 41 percent. The number of closed condo sales in Miami improved approximately 39 percent while closed condo sales in Miami Beach increased about 20 percent. As a result, the condo supply numbers for each showed considerable improvements as well.
View the entire workbook for this month's Miami & Miami Beach Condo Trends. The various spreadsheets and graphs are found at the bottom.
Below, you will find the Miami-Dade County condo inventory and supply figures for July 2009:
The following statistics encompass only those condos located throughout Miami (not other areas of Dade County such as Miami Beach, Aventura, Sunny Isles Beach, etc.):
The following statistics encompass only those condos located throughout Miami Beach:
This has been a very atypical year for real estate sales in South Florida. In most years, the vast majority of closed condo sales occur in the Winter months when snowbirds flock to Florida to shop for a vacation home to escape the dreaded cold. However, this past Winter season was unusually slow due to a number of reasons such as the paralyzing fear in the economy and a lack of financing. After the first 3 months of the year, I personally felt that 2009 was shaping up to be my worst year in real estate. However, at the beginning of April, business began to show life again. In fact, activity has drastically improved to the point where 2009 could end up being one of my best years. I personally feel that the Miami condo market is within 2-3 months of reaching the bottom. That's in no way saying that prices will begin to increase soon after. The overall market needs to move sideways for at least the next 12-24 months before we see any significant increase in sales prices.
Isn’t the condo/housing market really bifurcated at the jumbo loan cutoff amount which I think is about 500K?
It seems the bulk of any good news is in the lower to middle spectrum.
Another interesting related article from NYT:
http://www.nytimes.com/2009/07/29/business/economy/29housing.html?_r=1&hp
First of all, great work, Lucas. Much appreciated.
These numbers look better than I would have expected, but I’m still not sure there’s much good news in there for the market. Miami still has 22 months of inventory and Miami Beach has 28 months, and I’d bet those numbers really are at least 30 and 35, if all investor-held units were on the market (i.e., if there was no “shadow inventory” of which Renter Tom often speaks).
Further, the lack of action on units priced at $500,000 or higher seems like real estate Armageddon has hit Miami. The market has an astonishing 6 years’ worth of inventory for units $1 million to $2.5 mil, 7 years’ worth of inventory in the $2.5 mil to $5 mil range, and 5 years’ worth of inventory for units priced at $5 mil and higher. Those numbers are so unbelievable, I’d bet they’ve never before been matched in any r.e. market in the U.S. How the hell did so much high-end construction get financed in one of the poorest metro areas in the country?
Seems like a rich peoples problem and going to be like that for a long time.
Middle & Upper Middle class props (under 500k) are doing ok and may recover sooner.
So if you are in the market for a prop over 1 mil, then you can afford to wait and get your pick for the best price possible.
Well, those “rich people’s” property taxes comprise a large chunk of Miami-Dade’s budget, so it’s not just a “rich people’s problem.” With every dollar in price that those high-end condos fall, everyone else has to pick up the slack.
Another New York Times article. This one entitled “As Prices Plummet, Condo Sales in Miami Perk Up”. http://www.nytimes.com/2009/07/29/business/29miami.html
Interesting article from the NYT, Lucas. We have reached the point of capitulation in Miami, or are very close to it. I’ve been a nay-sayer on most of my few posts on this blog, but when prices hit below $200/SF I will be nosing around.
It’s interesting to read posts from two years ago saying that prices will fall below or will never fall below $200/SF, or that vulture investors will sweep in, or not (the vultures were too smart.)
I suspect the rest of 2009 will be a good year for realtors who have properly-priced-properties.
I totally agree with Lucas that the market (at least for us poors) will move sideways for a while.
The highend market is not just hurting in Miami.
look at the stats of $1M+ sold in Miami Dade county and you get 2.9% of the total sales. Now look at the number of available properties at $1M+ and you get 8.3% of the total available.
I always pick on the higher end prices as it is easier to see the inflation there. I see this as even if people with more money start buying condos, the prices need to come down closer to what is selling.
I think it is great the market is starting to recover, I just hope people realize that we cannot see the large gains that we saw before or else we will be right back to 2007/2008.
Thanks Lucas for posting this. I would love to see some occupancy rates for the various condos around miami-dade.
As I’ve said before, when prices reach a low enough level, people will start buying again. It’s inevitable. Contrary to what many on here have said, people do still have money, and there are a lot of people with money watching this market intently. Once the price on anything drops enough to start being attractive, someone will come in and buy. It won’t happen over-night, but I think we’re starting to see the early stages of it.
Re: Lucas and post #6, congrats on being quoted in the NY Times.
However, that article is all kinds of ugly for the Miami market. I can’t believe how a lot of the people in that article (and others) are trying to polish a turd here and pretend things are looking up.
For one thing, the NYT article says just 31 out of 1,646 units at Icon Brickell have sold. 31 out of 1,646!!
For another, the NYT article says just 31% of the condos in downtown Miami are owner-occupied. That’s a god-awful percentage by any standard, and it essentially means there’s a 31% “shadow inventory” of units waiting to be sold 1-2 years down the road when the rental leases expire.
I’m starting to think this little mini-wave of r.e. articles is just the newspaper business going back to its old trick of whoring itself out to the r.e. businessin order to help sell r.e. ads. Otherwise, I just don’t see the good news people keep talking about. Four years’ worth of inventory? Almost no sales at $500,000 and above? Yuck.
This is stating the obvious – homes in the upper end are not moving very well anywhere in the country. One of the reasons is that Jumbo loans are very diificult to get and at much higher interest rates than conforming loans – at least 200 basis points difference, requiring 20% to 30% down, etc.
Charles, I am not in the market, but don’t you need 20-30% down on most anything these days?
What is interesting as the Great Deleveraging continues, country clubs, golf clubs, and other shared interest luxury real estate goes BK. It is happening all across the country, just wish newspapers would do a comprehensive story on what has been going on as members drop out, dues go unpaid, and these things get foreclosed upon…..just like the shared interest in condos, same thing really. It makes me think that debt is bad enough, but shared debt is far far worse. Here is one example:
I forgot to mention earlier that in Met 1 the developer has started leasing out units. Any other buildings doing the same?
Elvis, lots of the buildings here are now leasing.
Lucas… again, great data.
I don’t want to beat a dead horse, but your comments at the beginning are a bit misleading as it is using NON SEASONALLY ADJUSTED data. If you look at he C-S SEASONALLY ADJUSTED DATA, you will see that Miami actually saw a drop of 1.38%.
It is important to highlight that the monthly % drop is getting smaller, which are signs that recovery might not be that far away, but we are definitely not there yet.
I agree with Joe (#11). Plenty of bad things and your data just reinforces that.
Let’s take the units under $500k as I think that can be considered he middle of the market (80% of listings):
Units under $250k
Months of supply: 16.4
Unitts $250k – $499k
Moths of supply: 38.1
With the foreclosures adding up every month, how can we really say that the market is stabilizing? Stabilization usually means that supply is under 10 months and we are still far away from that in this market. 16 months? 34 months?
Sales volume might be picking up, but it’s due to reduced pricing. This will continue as you will see overall sales drop significantly in the fall and people will do whatever they can to move inventory. Add the foreclosures that are being processed now and you get further drops in pricing.
Joe,
I do agree regarding the rich paying a lot of prop taxes in Miami for their skyboxes. I guess that is the price to pay for living 4 to a floor or entering into your flat directly from a lift.
If the banks put there all foreclosed units on the market today the numbers would be horrible. If the flippers and bulk buyers listed all their stuck units today the number would be even worse.
What happens when these interest only loans change over to principal and interest? Nobody wants to refinance negative equity homes
Watch what happens when property taxes go up.
Nice push to get people into homes before the next property tax increases and the return of higher interest rates.
Housing Recovery: Sell Now Or Your Capital Will Be Trapped
http://www.oftwominds.com/blogjuly09/rates-capital-trap07-09.html
A request for all those living in OMNI-Pace, Edgewater, Midtown, Wynnwood:
There is a meeting on Monday August 3rd at La Provence French Bakery on Biscayne Blvd at 22nd street to talk and answer questions about new, major Biscayne Blvd construction planned starting next month. A DOT rep will be there too. It is a major project of significant importance for us living in this area as it is supposed to transform the already nice looking Biscayne Blvd into an extraordinary thoroughfare.
There is one point though that required to be raised. A waterfront walkway that has been planned for many years is mentioned in the said improvement but only as a “low priority project”. It is essential for as many citizens as possible to keep raising this issue in every possible forum to stress how important this waterfront walk way is for all of us, the entire neighborhood and the city of Miami. This walkway if I am not mistaken will eventually be connected to the Bicentennial Park via under the Mc Arthur.
Try and attend that meeting. It is also a good chance for you to experience La Provence. It is a very beautiful and delightful french bistro/bakery on the blvd.
Original email:
From: RICH STRELL
To: miamiwater@gmail.com
Subject: Meet Mon, La PROVENCE Bakery, 6:30 PM,
NEW LOCATION-
Aug. 3rd, first monday and 6:30 PM,
Our next meeting is at:
La Provence Bakey
2200 Biscayne Blvd,
Miami FL 33137
A rep from FDOT will come to talk and answer questions about new, major Biscayne Blvd construction planned starting next month for our area! Tell your condo boards this is happening, as well.
Wild Bill,
So what is wrong in controlling the markets? It has been happening since man started trading since the early times.
If China, India, South Korea and Japan start off loading their Dollar holdings all at once, our greenback would not even be worth as a toilet paper. So they are releasing it a bit by bit and slowly reducing their exposure to dollar by denominating their Foreign currency reserves into gold, euros, SDR and other instruments.
I applaud the banks for controlling the flow of foreclosure. Only anarchists who want a wholesale destruction of this economy would want a dam break flood of foreclosure units to happen. It is not good for anybody. It is even worse for those who are waiting to buy a flat on the cheap as the resulting consequences are going to be horrific and across the board. So what is happening is good and should be welcomed by all.
AJ #21 – Wrong. The sooner we get to a clearing price, the better it is for everyone. The analogy to holding US Dollars is wrong….they hold debt with specific maturity dates. There are others out there that would buy up the debt albeit at probably a higher interest rate.
Lucas
Whats missing here of course are graphs and charts similar to the ones posted on all of your previous reports. The true gauge or measure of how healthy the market is – would be the ratio of closings on Miami New Condos that started closings on or after the financial crisis of about October 08. You can slice and dice the above numbers all you want but they are irrelevant without the number of closings at the following buildings:
1 – Icon Brickell
2 – Everglades On The Bay
3 – Infinity
4 – Axis
5 – Epic
6 – 900 Biscayne
7 – Met One
RT, what do you think would happen to these banks if they dumped all the foreclosures onto the market at once?
They’d all collapse, just like the local housing market would. I really don’t see how that would be good for anyone.
DJ – The banks have dug their own graves. Many are already insolvent regardless of whether they start to unload their properties or not…that is the reality they are pretending to avoid. The banks should have unloaded properties from the beginning instead of holding back and now they have tons of properties…they dig their own graves. So what. A market clearing price IS the real market price…why wait, why pretend?
Banks don’t pay condominium maintenance fees.
Banks only pay property taxes.
A bank owned unit is the same a vacant unit.
A building will not have a balanced budget unless they have special assessments to make up for the vacant unit.
Real estate should not be looked at as an investment.
The sole purpose of the board is to protect and maintain the building and to make sure they collect the funds to do that.
They should not care if a unit sells for a dollar, they need somebody to pay the maintenance fees on the vacant unit.
Every condo in Florida should have to upload a PDF file of their yearly budget. This state is a joke.
New buyers are walking into a minefield.
Wild Bill,
I don’t understand “Every condo in Florida should have to upload a PDF file of their yearly budget. This state is a joke.
New buyers are walking into a minefield.”
Can you elaborate on this?
hey guys..always read this blog, but decided to join this time..Lucas, congrats on your great website!
does anyone have any input on this info from the NYT article?
ONLY 31 UNITS SOLD AT ICON BRICKELL???
When I was there to see the property, their agent told me that tower I was almost fully occupied and that tower II was going to be much more expensive!
Of course, I didn´t buy that, but only 31 units??
Prices there have been dramatically reduced, but it seems they still have a long way to fall!!
A state website should host records of condominium yearly budgets. Bank and prospective buyers should have easy view of them. Banks want to know about reserve figures. Seems only logical that when a budget is passed it should be posted on a official website where everybody can look it up.
Scan your condo budget for the last few years you will see how money is shuffled from one line item to the next. A ponzi scheme that will soon run its course.
That’s why many buildings are declaring bankruptcy. Time ran out, couldn’t get new suckers in fast enough to pay off for the losers that don’t pay. Some of those losers are banks.
Well I can see for some people no amount of data will convince them. Many of these are the same people still waiting for the S&P Index to hit 450 so they can start investing. Bottom line is that earlier this year things looked bleak, really bleak and many people were scared. Today, things look better much better there is hope where there was none 5 months ago. Markets are not were we would like them but the death spiral has stoped and it looks like the economy is digging it’s way back to some normalicy.
What get me upset is that people (like Lucas and others) who participate in the marketplace day in and day out have been telling readers things have improved somewaht but we have these serial bloggers who couldn’t transact a ham sandwich at the corner store get on here to question his credibality.
Markets over react on the up-side and on the down side that is a fact. Just look at the stock market in March. Many people got scared and decided to sell their entire holdings at that time instead of buying. I was experienced enough to know it was a great investing opportunity so I bought many financials and commodity while many experts were telling people to sell at S&P 650 calling for S&P to go down to 450. I see the real estae market as the same way. Prices in many places have over-corrected and many people are calling for the equavilent of SP 450. Maybe we get to the equavilent of SP450 wouldn’t you be getting a deal of a lifetime at this level?
Oh, yeah! I’m off to Costa Rica and Nicaragua while you guys wait for property tax hikes, lower condo prices, collapse of the dollar, Dow 3500, the Great Deleveraging and the US economy to implode . Please be sure to shoot me an email when it happens.
makes me think – You’re such a player you….congrats if you’re looking for positive feedback (sarcasm). Your misplaced optimism will get slapped down. Do you think the debt has just magically gone away? The federal govt needs to issue $3T in debt of which $1T is rollover debt and $2T in new debt instruments. Incomes are down across the board but debt service is at an all time high. Stocks will take a second dip this year…I am putting my money where my mouth is on that one.
According to the National Association of Realtors (CNBC graphic), the June 2008 to June 2009 transactions – year over year comparison nationwide….the action is on the LOW end, foreclosures and distressed sales:
$0-$100K: UP 39%
$100K-$250K: UP 9.4%
$250K-$500K: DOWN 11.5%
$500K-$1M: DOWN 15%
$1M-$2M: DOWN 28%
$2M+: DOWN 39%
We will see the mid and upper end prices continue to fall, of that, there is no doubt.
RT, it doesn’t matter, you read too many negative blogs.
$3T in debt, Wow! That’s too big a number for little o’l me to worry about. Since I can’t write a check for it and I can’t do anything about it, I’ll let you worry about it for me. In the mean time I’ll be in Central America. Shoot me an email when you have the problem solved.
anyone on icon brickell?is it really true only 31 units have been sold?
if that info is true, what will happen when more high end condos such as paramount and marquis hit the market ?
One thing is for sure…No way paramount bay developers will be able to sell a 2bd for over 1M as originally planned!
The market has certainly changed in the last 90 days. This much is certain.
Partly due to the fact tat FNMA is buying loans so liquidity is back and developers and lenders are facing reality so prices have dropped.
Take Avenue for example, closing over 150 units in 60 days. They are absolutely plowing through their remaining inventory. I mean, in a time period of 90-180 days there were only 115 closings in all of Brickell!
Its hard to believe prices will continue to drop much further if closings continue at this pace. Even more so that the winter snow birds are fast approaching.
HOWEVER, there is still a lot of unknowns in the market. Will Corus Bank go bellyup? Will lenders f/c and firesale a couple of major projects? All this could cause the market to implode very quickly.
Not saying this will happen but its certainly a possibility to keep in mind but not one to hold your hat on either.
RT, you don’t have to tell me. I’m the guy trying to buy these foreclosed property. I’m not the guy on this blog reading about the economy I’m the one transacting in this economy, putting my money where my mouth is. I know one thing, if the economy get’s as bad as you say, I’ll have my choice of several homes (free and clear) to live in with enough land to grow my vegs and raise chickens with the shotgun to protect what’s mine. Don’t mean to be smug but i have more important things to worry about.
MMT, Your posts are hilarious. Funny thing is they are so true. Why split hairs over things such as the national debt that you have no control over? Anyway make sure you grow organic chickens, I will buy some from you, oh no, wait a minute, America will become an apocalyptic wasteland due to a total economic meltdown and there wont be any dollars anymore. I will barter some goats I plan to raise in the land that I own in Hernando and Citrus counties. For protection I will have minefields around the perimeter.
Wild Bill,
How is that a bad thing? I think it is the best thing the arse back Floriduh has done for while. When condo budgets are out in the open, there is a lesser chance to scam and skim. I hope all other states follow suit.
For once Florida leads in this issue instead of pioneer states like Cali or NY.
(OK when is the workplace smoking ban going to be effected in Florida? After the entire rest of the World does it?)
Wild Bill is right.
Buying a condo is like buying into a business with 300 strangers you have never met, with various levels of credit scores. So many buyers buy into a building “blind” not knowing what type of financial traps await them.
I pity the fools who buy in now, and get slapped with a nice $3000 special assessment in Nov/Dec to make up for the shortfall.
I know of one South Beach building that regularly has special assessments at the end of the year. Dues are low every month compared to nearby buildings, and thats what potential buying suckers see. Then each December they get a nice balloon bill.
Just to show you how bad the real estate market is even for single family homes”
In the second quarter of 2009 (that’s three months!) “builders started construction on a mere seven new single-family homes in Miami-Dade County”
Like I said, actual new home starts will be telling……… 🙂
MMT
Opinions like yours are like assholes – everybody has one. And yeah enjoy Honduras or whatever on yer visit south – I hear its lovely there this time of year!
intersting article from the NY Times, with Lucas being quoted, great job,
July 29, 2009
Square Feet
As Prices Plummet, Condo Sales in Miami Perk Up
By TERRY PRISTIN
Despite a vast oversupply of new condos in downtown Miami, sales have been brisk lately at 1060 Brickell Avenue, a twin-tower development with 570 units in the heart of the upscale Brickell neighborhood. The reason? Prices have been cut in half, to about $200 a square foot.
“We reset the prices at a sharp discount, and the units are flying off the shelves,” said Gary Barnett, the president of the Extell Development Company, the New York-based developer of 1060 Brickell, which was completed last year. More than 200 units have closed since the discount program began in April, he said.
Mr. Barnett, who has developed several new condominium projects in Manhattan, including 535 West End Avenue and the Rushmore, acknowledged that he and his backers lost their entire investment in 1060 Brickell, which is situated at Southeast First Avenue. He said some, but not all, of the mezzanine financing was also wiped out. But because more than 40 percent of the units sold at full price, Mr. Barnett was able to repay his $153 million first mortgage from TD Bank and iStar, a troubled finance company that bet heavily on the South Florida condo market.
Since 2003, nearly 23,000 new condo units have been added to the downtown skyline, from Brickell Avenue up through the more modest Biscayne Corridor — far more than this city of 400,000 people could absorb. About 9,400 remained unsold at the end of June, according to Peter Zalewski, the owner of Condo Vultures Realty, a local brokerage.
But Miami real estate brokers, lawyers and developers say the overbuilt condo market has entered a new phase. “Things are starting to move through the system,” said Adam Cappel, the president of CondoReports.com, a Miami research service.
Until recently, many real estate professionals expected investment funds seeking opportunities in distressed real estate to swoop down on Miami and buy condo units by the hundreds at wholesale prices and then rent them out until the market recovered.
A few bulk purchases have occurred — in the dozens rather than the hundreds — but most buyers have paid the current market price, not a wholesale price. For example, an investor from Colombia recently bought 31 units at 1060 Brickell for an average of $203 a square foot, according to Mr. Zalewski. Last week, however, a private equity group paid only $63 a square foot for 51 oceanfront condo-hotel units at the Regent Hotel in Miami Beach, he said. Previous units there had sold for $1,100 a square foot. But condo-hotel units are considered riskier and harder to finance than traditional condos.
For the most part, bulk condo sales have yet to catch on. With the steep decline in values, developers of newer buildings are no longer in control of their projects and must defer to their lenders. “The lenders did not want to take the hit that the bulk purchasers were offering,” said Martin A. Schwartz, a partner at Bilzin Sumberg, a Miami law firm that represents developers.
Another obstacle is that under Florida law, anyone who buys seven condos in a building with 70 or more units may be assuming all the liabilities of a developer, Mr. Schwartz said. “There is an element of risk,” he said. Mr. Barnett, for example, was unable to arrange a bulk sale for 346 units at 1060 Brickell last year at $200 a square foot.
Robert Kaplan, a principal of Olympian Capital Group, a Miami mortgage brokerage, said the focus had shifted away from bulk sales to retail sales because lenders were not willing to take $100 to $125 a square foot when they could get $175 or more. “Every condo lender is considering market-rate sales,” he said. “They have no choice.”
Bargains are being offered for under $200 a square foot at Brickell on the River South, near Southeast Fifth Street. At 500 Brickell, developed by the Related Group of Florida, the industry leader, prices for one-bedroom apartments have dropped to $180,000, from $260,000, said Lucas Lechuga, an agent for Keller Williams Realty in Miami. “The buildings that have slashed their prices are doing pretty well now,” he said.
If demand does not keep up, prices will have to adjust, Mr. Kaplan said. “But we’re not seeing that yet,” he added. “We’re seeing velocity at the new lower prices,”
According to Ronald A. Shuffield, the president of Esslinger-Wooten-Maxwell, a local brokerage, condo sales in new buildings increased to 82 a month, from an average of 50 a month, since April.
Jack McCabe, the chief executive of McCabe Research and Consulting in Deerfield Beach, Fla., said, however, that he thought prices were likely to drop a lot further because of the high volume of foreclosures. “There are a lot of buildings where 30 to 35 percent of the units are in foreclosure,” he said. He predicted that bulk sales at prices as low as $100 a square foot would eventually occur, especially for inland properties. “It’s still early,” he said.
In newer buildings with many unsold condos, developers are negotiating uncontested, or “friendly,” foreclosures with their lenders, sparing them the expense of a protracted battle. Last month, the Related Group surrendered its 420-unit CityPlace South development in West Palm Beach, Fla., where only 39 sales had been completed, to a group of lenders led by the Bank of Nova Scotia. Related paid an undisclosed sum to cancel its $119 million construction loan and other liabilities and won the right to continue to manage and maintain the project and run the sales operation — all for lucrative fees.
According to recent news reports, Related hopes to work out a similar arrangement within the next couple of months to retire about $1.5 billion in outstanding debt on other South Florida condo projects, including the company’s showpiece, Icon Brickell, where only 31 of 1,646 units have sold. Related executives did not return telephone calls.
Thomas R. Lehman, a Miami lawyer who has been negotiating several friendly foreclosures, said many developers had already quietly turned over the keys to their projects. “The wave has started,” said Mr. Lehman, the managing partner at Tew Cardenas. “Public records are catching up to what’s already been negotiated. Lenders are realizing that no one is going to buy their loans and they might as well get their projects back and put them on the market.” He said developers often were trying to preserve other assets they might have put up as collateral for their construction loan.
But what has been a catastrophe for developers has been a bonanza for renters. According to a report commissioned by the Miami Downtown Development Authority, a quasi-independent city agency, 62 percent of the already completed new downtown condo units are occupied, split evenly between renters and owners. Monthly rents have declined 15 to 20 percent in Miami, with the median rate at $1.64 a square foot, Mr. Zalewski said.
The Related Group has instituted an unusual rent-to-own program, in which no price is set in advance and all of the rental payments count toward a down payment, if the unit is purchased within a year.
Joe Higgins, the owner of Grove Town Properties, a local brokerage, said about one-quarter of his rental clients were University of Miami law students doubling up with roommates, but the rest were professionals working downtown.
With so many new buildings on the market, tenants have become choosy and now demand features like an updated kitchen, Mr. Higgins said. “Renters don’t want the older buildings,” he said. “They want the granite; they want the stainless steel.”
At the $64 sq. ft. price we saw last week the inventory would shrink to near zero overnight. Absolute auction sales also clear inventory instantly. Only 1-2 percent of households earn over $250,000 which is what is needed to support a million dollar condo. Buyers in California now get a form disclosing exactly what their dollar share is for unfunded reserves prior to closing.
How sweet is this news?
Dozens charged in $40 million mortgage-fraud scheme
Forty-one people were involved in a $40 million mortgage-fraud scheme, the acting U.S. attorney said.
Federal prosecutors say 41 people have been charged in the latest round of South Florida mortgage fraud schemes.
The charges stem from six separate cases involving about $41 million in fraudulent mortgages. Some cases involve fraud at nearly every level of the transaction, from purchasers to lenders to title companies.
Acting Miami U.S. Attorney Jeffrey Sloman says an anti-fraud initiative in South Florida has resulted in charges against 218 people since 2007. The total fraud was pegged at more than $268 million.
Forty-one people are facing a variety of charges involving some $40 million in bogus loans in schemes that underscore an epidemic of mortgage fraud in South Florida, federal prosecutors said Tuesday.
The six separate cases illustrate the pervasive nature of fraud that often runs the gamut of the mortgage industry, from purchasers to mortgage brokers to real estate agents to lawyers, said acting Miami U.S. Attorney Jeffrey Sloman.
“Obviously, there is a profit motive for everybody involved in these cases,” Sloman said at a news conference.
State regulators are pressing their case against four South Florida foreclosure rescue companies this week, as federal regulators crack down on an industry they say is taking millions from desperate homeowners but doing little or nothing for them.
A Palm Beach Circuit Court judge granted the Florida Attorney General’s Office an emergency ruling Friday, requiring four mortgage modification operations to cease doing business: FHA All Day.Com, Safety Financial Services, Housing Assistance Law Center and Housing Assistance Now.
Investigators last week went to a Deerfield Beach storefront that once was the address for at least two of the businesses and found bags of shredded paperwork, said Regional Deputy Attorney General Cindy Guerra.
To neighboring residents, the string of rapid-fire sales at a Coral Gables home was emblematic of the cause and consequences of South Florida’s housing bust. The four-bedroom house, now vacant and deteriorating, was sold, bought and foreclosed on three times in less than three years.
Neighbors always suspected ”something wasn’t right with the milk” at 330 Alesio Ave. as the value of the home more than doubled to $1.2 million in the short time span. It turns out they were on to something.
This week a federal judge sentenced Jose G. Martin, who had onced posed as a renter in the home, to 65 months in prison for orchestrating a $6.6 million mortgage fraud scheme involving the Alesio property and six other homes in Miami-Dade County.
By LUIS ANDRES HENAO
lhenao@MiamiHerald.com
Forty-one people have been charged with taking part in a $40 million mortgage-fraud scheme, federal authorities said Tuesday in Miami.
Acting U.S. Attorney Jeffrey Sloman said the fraud involved a network of fake purchasers, crooked mortgage brokers and cooperative bank employees who arranged for inflated mortgages.
In mortgage-fraud scams typical during the boom, a team of mortgage professionals — often including attorneys, mortgage brokers and appraisers — would pay stand-in buyers to use their identities to get mortgages for the purchase of inflated properties. They would often never make payments on the loans and the homes would soon enter foreclosure.
At a news conference, Sloman said the 41 people — all but one are from South Florida — were the most recent in an investigation of mortgage fraud that began in September 2007 with a multiagency task force, including the U.S. Secret Service, the Postal Inspection Service, FBI, Federal Deposit Insurance Corp., the U.S. Department of Housing and Urban Development, and state and local police agencies.
“The success of the Federal-State Mortgage Fraud Strike Force and our mortgage fraud crackdown is evident in the staggering number of prosecutions we have brought to date,” Sloman said. “Mortgage fraud investigations will continue to be one of our top priorities.”
Others involved in the scam included title agents and attorneys, Sloman said.
“As we can see from this case mortgage fraud reaches every aspect of the mortgage industry,” Sloman said.
Since the task force’s creation, a total of 218 people in Florida have been charged with participating in mortgage-fraud schemes resulting in nearly $300 million in bogus mortgage loans. The FBI is investigating 2,100 cases nationwide, according to Sloman — who said that number was five times the number being probed last year.
Hey Lucas,
Since no one seems to have any info on the ” only 31 units sold at icon brickell” as quoted on the NYT article, could you elaborate on this? Any insider’s indo? Thanks
This is an amusing article-
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Downtown Fort Myers condo has 32 stories, and one lonely tale
Condo can get spooky for tower’s only family
DICK HOGAN
dhogan@news-press.com
Victor Vangelakos lives in a luxury condominium tower on the Caloosahatchee River. He never has to worry about the neighbors making too much noise.
There are no neighbors.
Vangelakos, 45, his wife Cathy and their three children are the only residents in the 32-story Oasis I condo on the east edge of downtown Fort Myers.
The 45-year-old Weehawken, N.J., firefighter bought the condo from Miami-based The Related Group for $430,000 and closed on it in November. He planned to make it a vacation getaway and eventually his full-time residence when he retires in four years.
But prices have fallen hard since the real estate bubble burst in early 2006. Only a handful of those who put down deposits on the tower’s units actually closed on the deal. Those who did have swapped their Oasis I units for condos in Oasis II next door.
Vangelakos didn’t, because he was unable to convince his lender to agree to the swap, said Betsy Lu McCoy, vice president and associate corporate counsel for Related.
That leaves the Vangelakos family splitting their time between New Jersey and a creepy, surreal life in Oasis I.
They’re the only ones using a well-appointed clubhouse, but they can’t watch the big plasma TV.
“We haven’t found the remote controls,” Victor said.
Pause for a moment anywhere in the building during the day and the silence is deafening.
At night, Vangelakos said, they often hear people on the grounds or even inside the building itself. It’s not hard to break in one of the many entrances.
Once, late at night, “Somebody banged on our door,” Vanelakos said.
It wouldn’t have been hard to find the person in the otherwise darkened building.
“At night,” he said, “you can see our TV from the street.”
Especially popular for intruders is the swimming pool, Vangelakos said. They heard people there one night “and the next day all our chairs were in the pool.”
His relationship with Related is testy at best. Once, he said, when management turned off his water to fix a leak in a pipe, “we came back 10 days later and the water was off but our TV was on.”
Now, after months of exchanging letters with Related about building maintenance and other issues, Vangelakos said he just wants out.
He hasn’t filed a lawsuit but his attorney, Fort Lauderdale-based John Ewing, said Related hasn’t delivered the marina, pro shop and fancy restaurants that were promised.
“They have the ability to buy him out,” Ewing said. “They can resolve this in a fair way.”
McCoy said it’s not that simple.
“His concerns have not fallen on deaf ears,” she said, but it isn’t Related’s fault he hasn’t been able to persuade his lender, JP Morgan Chase Bank, to transfer the mortgage to a unit in Oasis II.
“What he paid went to our lender, it didn’t come to us,” McCoy noted, so Related would have to pay off the mortgage before it got the unit back.
Besides, she said, the situation is the result of market forces beyond anyone’s control.
“We did not foresee, nor did anyone else foresee, the collapse of the real estate business and the concurrent collapse of the lending industry,” McCoy said. “They’re caught and we’re caught.”
DREW
Ho-Hum another firefighter retires while still in his forties Im gonna cash in my kids college saving plan and and then payoff somebody to get him in Miami-Dade fire-police union when he turns 18. He should be able to retire when he is 42 yrs old and collect his $100,000. pension for the rest of his life. Sweet!
MCO
Your question about closing rates at Icon Brickell ( and Epic -Everglades – Infinity – etc. ) is the most important question being asked here. The answer is DEAD SILENCE. Lucas for over two years has provided closing rates on monthly or bi-monthly basis as each new building downtown started closings. Very disappointing.
Kramer>
Its b/c ICON was supposed to be the Crown Jewel from TRG and it is turned out to be the biggest Miami residential real estate debacle ever and I can only assume Jorge Perez is so humiliated, embarassed and perplexed that he has threatened Lucas, et al that any negative publicity by Realtors will be met with crippling litigation or kidnapping.
Drew
the trials and tribulations of ICON are well documented. there are no closings to report of. and i don’t think jorge is humiliated. he’s doing much better than a lot of other folks in this downturn. the end game is he will turn over the keys to the project to his lenders and get a managment fee going forward. not a bad deal.
btw, the girls in the sales office for icon are top notch. catalina and her crunchy perm hair harkens back to 80s music video hot.