Miami & Miami Beach Condo Trends – October 2008
October 22, 2008 by Lucas Lechuga
The overall supply of condos listed in the MLS in Miami-Dade County has dropped from 25,461 to 24,788 since May 2008. On the flip side, the number of closed sales in the previous month has gone up from 474 to 527 creating a 12.51 percent drop in the years of inventory in Miami-Dade County since the last update. It's once again surprising that inventory levels have dropped despite the thousands of new condos that have been completed and delivered in 2008.
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 supply of condos in the MLS in Miami has dropped from 10,281 to 9,903 since May 2008. The number of closed sales in the previous month has gone up from 161 to 192 creating a 19.21 percent drop in years of inventory in Miami since the last update. As you can see, a large portion of these closed sales occurred in the $0-$249,999 price range. The inventory levels of the $500,000+ categories, however, have increased.
The following statistics encompass only those condos located throughout Miami Beach:
The supply of condos in the MLS in Miami Beach has dropped from 4,109 to 3,949 since May 2008. However, the number of closed sales in the previous month has also dropped from 113 to 98 creating a 10.82 percent increase in years of inventory for condos in Miami Beach since the last update. In fact, with the exception of the $500,000-$999,999 price range, the years of inventory has risen for each category.
SO you use one month’s worth of statistics (very volatile) to extrapolate the months of supply. Even a novice statistician can tell you that you should use the last 3, 6, or even 9 months averaged out at the very least to normalize the number.
this is good and interesting!
“It’s once again surprising that inventory levels have dropped despite the thousands of new condos that have been completed and delivered in 2008.”
I believe the term is “ghost inventory”. ALL those UNITS sitting in the shadows that have not closed.
Regarding the inventory lowering.. Some of the 4000 to 5000 units being foreclosed monthly in Dade county possibly were listed for sale prior to those foreclosure judgements.
“It’s once again surprising that inventory levels have dropped despite the thousands of new condos that have been completed and delivered in 2008.”
It’s due to people taking condos off the sales market or not putting them on the sales market and rather shifting the units over to the rental market hoping to ride it out.
I’m sure a lot of people want to sell but are too far under water to afford to sell. The only option for them is to rent it and hope for a miracle soon or just let it foreclose when they run out of time.
If you could get data on condos entering the rental market, I get a feeling that’s where you’re going to find most of the missing inventory parked.
A certain bearish blogger has posted a very interesting case shiller graph which shows how far Miami has to crash before this thing is over.
Am I correct in assuming that pre-construction unit sales are not included in the MLS numbers? That is, the inventory for sale by developers is not or not fully listed on the MLS? I agree with Mr. Waverly’s post that there is a shadow inventory out there so these numbers are “conservative”.
I’d be curious to know where that graph is Mark Not Z…could you post the link? Thanks.
Linking to that site is banned. You have commented on the site before.
I can’t believe that in this day and age that anyone would rely on the realtor controlled MLS numbers, the shadow inventory alone doubles the number of vacant Condo’s for sale in Miami.
The Smart Money just purchased 176 Condo’s in Tampa at an average price of $125.00 per square foot and we predict that this magic number will become common place in Miami by early 2009.
The Smart Money
Lucas, thanks for cranking the numbers. I think we were getting a little spoiled with your previous posting that provided more number crunching. Of course, I think we would all love to see the numbers for a longer period of time if/when you get a chance.
As for “how low will it go” link, I am not sure which web site was banned from this site, but MSNBC had an article that touches on this: http://articles.moneycentral.msn.com/Banking/HomeFinancing/nearly-1-in-6-homeowners-underwater.aspx. According to that article prices need to fall about 40% from their current levels. Of course, with the all the inventory (MLS plus shadow inventory) I would think that prices might dip further than 40%?
As for the shadow invetory, I also remember seeing an article on MSNBC (couldn’t find the link at this moment) that said in Miami there is just as many homes in foreclosure (and not listed on MLS) as there are on MLS. I am not sure how the people who have taken their home off the market and are renting it out affects that number?
Jason Nadrowski – If that is the case, then there are 8-10 years of supply and counting….
Mark (Not Zilbert) /Oct 22, 2008 at 11:23 pm Vote:
A certain bearish blogger has posted a very interesting case shiller graph which shows how far Miami has to crash before this thing is over.
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http://www.data360.org/dsg.aspx?Data_Set_Group_Id=1940
the site I speak of has a much more detailed graph
mark, Why do you keep hinting at this graph and how great it is and then you cant tell us how to look at it?
WHen you leave a comment mark you can copy the url and paste it onto the part where it says website, that way you can click on your name when you post and it would take you to that link….
The site has the words miami then condo and then forum. It’s a dot com. Mentioning the blog seems to be banned as I have tried it before. This post will probably be deleted by the censors.
I am starting a new tracking.
I picked one representative building each in Pace Park/OMNI, Park West and Downtown.
I ignored the 1 BR (entry level), 3 BR (established level) and only tracked the asking prices of all the 2/2’s with direct and unobstructed bayviews. I also ignored the extreme high and low asking prices and rounded off to the nearest round figure.
This is what I found:
1.
Location: Pace Park/OMNI
Building: 1800 Club
2/2 Bayview Lines: 03, 05, 07, 09
Lowest-Highest asking prices/SF: $415-$460
Average asking price/SF: $440
2.
Location: Park West
Building: Marina Blue
2/2 Bayview Lines: 04, 05, 08, 09
Lowest-Highest asking prices/SF: $400-$590
Average asking price/SF: $495
3.
Location: Downtown
Building: 50 Biscayne
2/2 Bayview Lines: 04, 06, 08
Lowest-Highest asking prices/SF: $445-$550
Average asking price/SF: $500
I believe the above 3 are very representative of the new construction and the areas they are located in and the level of ‘Luxury’. I also strongly believe that no matter what happens in the housing market or the economy in general, these flats in these buildings and similar product in other buildings will hold their value. All kinds of numbers are being thrown regarding the eventual bottoming of per SF price of Miami Condos to as low as $150/sf. Maybe true with some buildings and locations and lines but not with these. I also would like to know the objective opinion of the readers as to the eventual bottoming price of the above discussed lines per SF. I am trying to find what you think it will settle down to, NOT what you wish it will settle down to. Also remember that only one in 15 or 20 new flats are with unobstructed direct bayviews. So do not generalise or consider that all flats are created equal.
I will track these periodically. Meanwhile could any realtor or anyone with access to records post the final closing sale price of any of these flats in the past couple of months or the last recorded sale please? Final closing price is the only real indicator and not the asking price.
Once again, here is the list of the lines to look up:
1. 1800 Club: Lines 03,05,07,09
2. Marina Blue: Lines 04,05,08,09
3. 50 Biscayne: Lines 04,06,08
hells yeah! AJ bought in Plaza at 410/sf. I looked up the records and the only person with those initials bought at that price. What do those units run for now? 400? 380? I’m buying at 125 just like the ACE. The man knows what he’s talking about.
Direct bay views —-> AJ’s ORGASM
Interested = Mark = Mark (Not Zilbert) = Mark to Market = Ace = Mo…………
This guy is such a dead give away. The juvenile language is the same in all posts no matter what handle this guy is using today. Why don’t you go and wallow among the filth in the other blog that you mentioned. You belong there.
The way you constantly monitor this site and respond, I strongly believe you may have some self serving interest in that blog that you always want to mention. I do not want to believe you own that site as you see too stupid to own anything.
Mark /Oct 23, 2008 at 11:17 am
The site has the words miami then condo and then forum. It’s a dot com….
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Looked at the site.
Nothing there that hasn’t been posted here.
Granted that graph is better.
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AJ
“Interested = Mark = Mark (Not Zilbert) = ….”
Does that include “Muir?”
If so, I’ve got a “Sybil” problem and have to check myself in. 🙂
Truly AJ, a lot of people see $125 /sq feet easily. (with no GD2)
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I am Mark not Zilbert (Isn’t that obvious?). I’m not trying to hide my identity. The site I mention, I found because it has a link at eyeonmiami.com. I have no idea who interested or the ace are. I do like the ace though. Hey AJ, is it true you bought at $410/sf? Thats expensive. Hope you have a direct bay view.
Another interesting find.
The average prices in the above 3 buildings and the sampled lines are approximately 20-22 times the annual rent. It is ofcourse high. The average in the past 20 years was 15 times the annual rent. If we use the the past 20 years average as the comps, and assume that prices will eventually settle from 22 times to 15 times the annual rent, I calculated that the above lines in the buildings I mentioned may bottom out at $325/sf, if a prolonged recession continues until end of 09. If the economy picks up before that (eg. economic recovery resumes in Spring 09 instead of Winter 09), it will not reach that level. JL, Jcrimes, thoughts?
Muir,
You have posted some intelligent and educated posts. I never compared you to to those names. You have posted a lot of bearish posts like those other names I mentioned but you never insulted anyone, called them names, used filthy language to describe others etc. So do not degrade yourself. You are not in the same level as those unless you want to be. I have not mentioned Renter Tom’s name even though he is the biggest housing bear here because he has not personally attacked anyone or called them names or abuses. So you do not get on the list of names just for being a housing bear, you get on the nasty list for being a deranged, delusional, foul mouth.
AJ said: “I also strongly believe that no matter what happens in the housing market or the economy in general, these flats in these buildings and similar product in other buildings will hold their value.”
Come on. AJ, what is your basis to “strongly believe” and “will hold their value”? That is a fantasy post with no basis in reality even if you cherry pick units to watch. The Wall Street Journal just had an article where it shows a table with Miami having a 26.9% price drop since peak, with 44.6% of purchasers in the last 5 years now underwater on what they owe on their purchase, and a 37.7% FURTHER price DROP needed to restore to historical affordability (to return to average ratio of home price to average income for 1985-2000). So, according to the WSJ, a $100,000 bought at the peak is NOW $73,100 (26.9% drop from peak) and will be $45,541 (an additional 37.7% drop from today). That means we are ALMOST midway through the price drops (so far a drop of $26,900 and $27.589 more to drop for a total of 54.46% drop from peak). Do the math, (100)x(1.0-0.269)x(1.0-37.7).
The WSJ may be a bit optimistic since incomes may be falling……..
If you do not know what I am talking about or if you have a very short memory, go back, way back and read the posts of some of the handles I mentioned. They have talked abusively to people invoking, excreta, genetalia and all kinds of filth. Because of them, many ladies have left the blog including but not limited to Lala, Lara, Candela etc.
That guy (or guys) is the real bastard trying to harm this blog.
Whew. I’m not on the “naughty list”…. now I can sleep better in my rented beachfront condo for half price…. LOL 🙂
Tom,
See my post #23. I did say that they will decline in the event of a severe recession. From a high $500 (asking), I said it can go to as low as $325 (my floor). So I am not being unnessessarily being optimistic. That is why I asked others what they will think of the floor for these “Cherry Picked” premium units.
AJ – They will decline in a mild recession and 20%+ decline in a severe recession. Sell your Florida properties and hold onto the NY ones. Take the meager gain or loss and get out of these condos in Miami they will bled you like leaches on a quadriplegic. The WSJ has NY metro area down 8.2% from peak, with 14.% in last 5 years underwater, and 18.2% more of a drop to get to the historic affordability number. Incomes are going to rise to bump this up anytime soon, so the NY properties I’d probably take the gain and get out if you don’t live in them and only maybe keep just 1 NY property out of the 4. Don’t be delusional and don’t be a pig on gains… Just my wisedom from how I see this market going. I watch a bit of the Chicago market and even the prime areas are showing some distress. It will hit everything….
The macro economic factors that drive housing prices, housing purchases, housing construction, housing loans, etc. almost without exception point to lower prices over the next 12 months. There are no numbers or trends out there that would convince me otherwise. If I lived in a place that I like, didn’t buy in the last 5 years, have a low fixed rate mortgage (if at all) and plan to live in the house for at least 3, preferably 5 years, just stay where you are and don’t worry….if you are planning to sell or is an “investment” with negative returns, get out while you can….if you’re planning on buying wait some more and see how this unfolds a bit more…….it is ugly ugly ugly and I am very happy that I didn’t buy yet. Rent, rent, rent…
Click on my name.
AJ,
Thank you for your kind remarks, and yes, I believe personal insults are unwarranted and cross the line.
I cannot help the schadenfreude I feel sometimes, but I have not had that emotion with regards to you.
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AJ, Here’s the thing, after posting I looked over the following (just headlines in most cases)
IHT
BBC news
Asia Times
FT
The Economist
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These are not fringe blogs about Miami condos.
Case Shiller isn’t a nut job.
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In all sincerity, it could get really REALLY ugly, a lot worse than what you hint at.
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Worldwide, nobody believes that things could not spiral out of total control very quickly in a matter of days if not hours. We are not talking about a “US recession” in this case.
Against this backdrop, some of the things you say sound like hubris; if you get really hurt I will not gleefully rejoice, on the other hand, if Jorge Perez goes bankrupt I will buy a bottle of clicquot and laugh myself silly.
I’m sorry for offending your delicate sensibilities. The reason there are few women on this blog is because fewer women are in the upscale Miami condo market. Why change identities anyways…. I am all marks but no one else.
What effect will police layoffs and higher crime have on brickell condos? Miami Beach will fare better because it literally has a moat surrounding it.
The premium view and location units will hold up well even in a bad recession, compared to the remaining units. But this number of premium units is small compared to the total number. A building with 400 units may only have 40 of what i would consider premium units. Wealthy people who own those will not sell at a loss, and will end up keeping them and enjoying the units for years to come. The remaining units in the building will get slaughtered if the economy continues down. Many of these units are held by the not wealthy population who tried to make their retirement fund in a two year flipping deal. It is this type of owner and these units that are now underwater (way underwater) which are creating the problem.
I began looking for 2B units at $400k a year ago, recently considered purchases at $300k, and now believe that $200k will be what it takes to make me do a deal. The risk/reward issues dictate this. Otherwise, you become a slave to an illiquid asset which drains your cash and eliminates mobility for better job prospects in the future.
I’m with Gables. I will pull the trigger and buy at a price point between 200k-275k at Marina Blue or 900 Biscayne.
What are 2B units?
2B units= 2 Bedroom Units
Can anyone tell me why the developer of Epic chose to put up an ugly neon sign on the parking garage? And when do closings start?
And to help the lovefest here, AJ (and the other optimists, including lala), I respect you…although I disagree with 98.2% of what you say. Kramer on the otherhand (query: where did he go?) is horrible and threatens us all.
I think it’s funny that according to the WSJ article Jorge Perez was educated as an urban planner…talk about doing a lot with your education, sheesh…
gables,
I think your assessment is so far the most accurate regarding the premium units in a building. For those who missed, this is what gables said and it confirms my belief that all flats are not created equal:
“The premium view and location units will hold up well even in a bad recession, compared to the remaining units. But this number of premium units is small compared to the total number. A building with 400 units may only have 40 of what i would consider premium units. Wealthy people who own those will not sell at a loss, and will end up keeping them and enjoying the units for years to come. The remaining units in the building will get slaughtered if the economy continues down. Many of these units are held by the not wealthy population who tried to make their retirement fund in a two year flipping deal.”
Very well said. Let us see what will happen in 6 months to a year from now. As before, I will be periodically track these premium units and see how they fare compared to the rest of the condo inventory. They should hold their own. That is why I keep telling people, there is no better time to buy a premium unit with a view. Wealthy people who bought the 5%-10% premium flats in a building usually do not get affected that much by a downturn. They will ride it out or just enjoy their flats until time is right. I have personally spoken to a few owners of these premium flats and they are fiercely possessive about their premium water view units. They said they will continue to keep them under any circumstance no matter what and they have the wherewithal to do so.
Of course, there are always some unqualified poor souls who booked a premium flat hoping to flip it and got stuck. You might see a deal here or deal there and grab it when it comes along. Remember my floor $325/sf (it is equivalent to the floor price of $125 set by some for non premium- non view units). I think the price of the premium units cannot go below that. So if any of these premium units currently averaging $500/sf should go below $350/sf for any reason due to distress, foreclosure etc, and you are the end user looking for a premium flat with water views, buy without hesitation. You wont regret it. Sorry Tom.
I do not have any arguments with those predicting $150/sf or even $125/sf. If you are in the market to buy those kind of flats in a non waterfront building with city view or partial water view, no contest here.
Angel,
Can you be more specific? 200-275K for 1 BR or 2 BR? At what price per SF will you jump in?
Muir,
Do you know that Jorge Perez, Pedro Martin, Jack McCabe, Peter Zalewski et all read this blog regularly? You are making them very uncomfortable. They are all closet readers of MCI.
I think every RE guy reads this blog because it is the only blog with a point and counter point, both bulls and bears. Makes it kind of Balanced unlike the much maligned blog of that SOBE guy with nothing but positive spin on everything and also unlike some of bubble blogs where it is nothing but negative spin on everything.
Jcrimes,
How much $ per SF presently for the Epic river loft that you are eying? At what price per SF do you think you will be justified to jump in? (I did not get your love fest comment. Anyway I would not ask you to elaborate either)
Lala, You are a city planner too. Did you know that they had a meeting with citizens and city officials last week with regards to the complete makeover of the NE 2nd avenue? They are changing the face of that road completely. It will drive any last remnants of undesirables out of that area completely. There was a big opposition from the local residents to the plan of removing all street parking on 2nd ave and making them wide pedestrian side walks.
Anyway, I am glad the city is still undertaking public works projects such as Biscayne Blvd and 2nd Avenue redevelopment in spite of the downturn. I hope the work starts and finishes before they run out of money!
AJ – You are simply wrong. Even “premium view” units will take a hit. You seem to be saying that the wealthy people that can hold onto their units and not sell, you said they are “fiercely possessive about their premium water view units” as if there aren’t a lot of them when you add up all the buildings BUT then you say “of course, there are always some unqualified poor souls who booked a premium flat hoping to flip it and got stuck” who will presumably sell their unit or get foreclosed upon. Your post made little sense, you basically said that those that do sell will lose (they got stuck) and the those that don’t sell (presumably because they are wealthy) won’t have the value of their unit go down. It makes no sense. They are all going down, the only way to gage prices absent a sale is to take a comparative unit that sold…which you will then said it doesn’t apply because the poor soul had to sell, it was a foreclosure unit, it was under distress, or whatever.
There is no basis for $325/s.f. for being the pricing floor for even good views (or I suppose you will then say premium views, not your average direct water view, and must be the penthouse, etc. etc. etc.) expect for misplaced optimism and desperate hope rooted in denial.
Yes, we all agree premium locations (which include premium views) in stable buildings with well run HOA’s will do better than the other buildings and units. That is always true in real estate. But these will be affected quite a bit too since those “premium” units were premiumly bubble priced more than the others…that is, people had already factored that in during the bubble. The argument could be that the premium units got the worst of feeding frenzy and are the most overpriced… Just a thought.
Remember 4th Q ’08 is gonna be ugly….
Renter Tom,
You always back up your arguments with figures and well-reasoned argument; thus, somewhat perplexed why you posted a link to the Business Week article (“The Worst Condo Markets”) where this drivel passes for analysis:
“Santa Ana is home to major subprime lenders such as New Century Financial. As a result, many such mortgages were written in the market during the housing bubble. Now, there are “lots of subprime mortgages going under,” says Appleton-Young of the California Association of Realtors.”
Completely agree with your reasoning, overall however; just disagree on the actual percentages that the market will suffer as well as duration.
rantings
“I’m shocked, shocked to find that gambling is going on in here!”
AJ
275-300 sq ft and i’m seriously considering it…250 sq ft, it’s a no brainer. will units go to that price? maybe. right now, i’ve been quoted with prices in the high 400sq/ft low 500 sq/ft. i’d like to think that will trend downward with icon and the rest of the buildings saturating the market. remember, loft units appeal to a certain person (not couples, not seniors, and not families). i don’t see myself getting married down here anytime soon (god bless the awfulness of miami girls) nor do i fall in the latter groups. couple that with the fact that a building like epic simply doesn’t work as a rental and i’m wishfully hoping there is some price softness.
way i look at it, for me to make a move to brickell, an equivalent sized unit has to be lower priced than what i can get in mid beach (think vilazul/vilamur) or interior in south beach. moreover, since i’m not big into amenities, the price has to be lower to compensate for the much higher HOA that i would pay at a building at epic compared to the smaller buildings i prefer on the beach.
fairkim – I think I posted the wrong link…there were three articles I was reading. Will try to find the better one since the Business Week article was pretty cursory like you said….. The WSJ article is better and I think the other one was from Forbes. However, the WSJ analysis that we are only HALF way through the price declines from the peak is scary……. I wasn’t prepared to go that far yet I would have thought we were past the midway point as far as drops from the peak in NOMINAL dollars. The more stories I hear of how utterly irresponsible people were living lies on credit and sucking out home equity….it truly was refi madness. Now that the bill is due people are doing things, including unethical and criminal, to get out of their obligations…it is truly sad.
We have the highest number of formerly occupied but now vacant homes ever. So many people bought more than one or the real kicker is to graduate from college with student loan debt then buy a home or condo when you’ll probably move in the next few years anyway…..all those young college grad singles living in their own condos are in for a long road of hurt….their debt burden, higher taxes, stagnant incomes, higher unemployment, etc. won’t be good for them as they try to pay off their debt. Colleges and universities should be ashamed at the debt burden they have placed on students….so much was at schools to provide an “experience” with little added value to their education….that will change in 10 years.