Miami Condo Index – Brickell – July 2007

Lucas – Great Job! It’s great to see an agent that speaks the facts… no hyperbole, no BS. You’re right-on about the bulk of the problem stretching from the Brickell corridor up to Arts District, and South Beach and Coral Gables are holding steady. What we all need to remember is that prices in these areas were artificially inflated, for the most part, so it is expected that prices have to continue to come down. When people ask me about the condo market in Miami, I was always say that you need to consider geography, unit and age of the building. Let’s examine Brickell on The River (North Tower)… a 380-unit building on the Miami River just two blocks west of Brickell. Resales began last year and as of today there are 105 units listed on the MLS. When you have almost one-third of an entire bulding up for sale at the same time… you tell me what that equals. I say 105 out of 380 = TROUBLE. Not to mention, that the South Tower (328 units) has not been completed yet. I have shown units in the North Tower and the hallways are empty.
Similarly, units in older buildings have held strong, but let’s examine what we mean by “older”. I like to refer to “older” as any building completed before or during the boom, more specifically any building completed by 2003. These units, depending on location, are holding steady.

In addition, as far as the stand-off between sellers and buyers, I have rejected, and continue to reject, taking on listings b/c sellers expectations were totally off. What they don’t want to comprehened is that as fast as prices were increasing during the heyday, they are now decreasing at the same speed.

What we can do as agents is continue to speak the facts and everyone will eventually get it.

Lucas – GREAT Blog, I will continue to follow. Best wishes to all here…

I’m looking forward to seeing Latitude on the River when it is complete. The prices that were offered for Latitude on the River in 2004 were reasonable. That neighborhood had a ways to go in 2004 but the neighborhood has made great strides in the past three years. The addition of Mary Brickell Village and the Miami river walk has done a lot for that area. It will be interesting to see who walks and who closes in this building. Someone contacted me last week to help him sell his 2 bedroom at Latitude. I will post details about that unit by tomorrow.

Lucas – Thanks for all of this analysis. It is amazing that the fraud is so obvious and so prevalent. Another point to consider about the instability of the newer buildings is that a buyer buying into one of the newest buildings can’t be sure how long it will take for all of the units to be closed on or foreclosed on. What then happens to that buyer’s maintenance costs? How will the amenities and services that were promised by the developer be delivered if half of the units are not paying their maintenance? I think this makes a great case for the more established, more mature buildings. Not to mention they are a great deal right now.

I definitely think prices need to come in a lot in order for buyers to be enticed to buy. For the most part, buyers are waiting on the sidelines. Buyers have an idea of the seriousness of the oversupply problem that we have in the condo market throughout Miami. They read the newspaper and various websites on the Internet so what I’m reporting is nothing new to them. It is probably surprising for them to hear it from a Realtor though. The statistics that I provide paint an accurate picture of the condo market. Numbers don’t lie.

The bulk of the problems will stretch from Brickell to as far north as the Arts District where most of the development in the last three years has occurred. As you mentioned at lunch the other day, condo prices in Coral Gables have held strong. Condo units in older buildings have also held strong. It is the condo units that are held by investors, not end-users, that are having the most pricing issues.

Right now there’s a standoff between buyers and sellers. The standoff will end once sellers begin to drop their prices. I think this will happen soon.

What do you think Beth? I’d love to hear what you have to say on the current situation.