Update: New Condo Construction Closing Rates
![New Construction Closing Rates New Construction Closing Rates](https://i108.photobucket.com/albums/n12/MiamiCondoInvestments/NewConstructionGraphClosings-Decemb.gif)
The chart above will show you the percentage of total units that each development has closed since closings began.
One Bal Harbour is the newest edition to this monthly update. Closings began November 16, 2007. The percentage of closings may seem very low but keep in mind that it can take up to three weeks for closings to be recorded. However, it normally takes about five days for closings to be recorded. I know for a fact that several extensions have been granted at One Bal Harbour. I have a client who is planning to close on his unit this upcoming week. He will then sell it for a sizable loss to a replacement buyer who contacted me a few weeks ago in a simultaneous closing. I can tell you that WCI has delivered a fantastic product. An investment group that I met with today told me, after seeing a large variety of condo developments throughout South Florida, that One Bal Harbour was by far their favorite. I viewed a $5.7M condo there this past week that was simply amazing!
If you compare last month's graph to this month's you will see that there hasn't been much of a change. Latitude on the River went up about 2%, Star Lofts on the Bay has remained unchanged (they're in trouble), Onyx on the Bay has gone up about 3.5%, Ten Museum Park has gone up 7.5%, 2 Midtown has gone up about 4.5% and 50 Biscayne has gone up about 6.5%.
I'm actually quite shocked that more closing haven't occurred since last month's numbers were released. I realize that the market is slow but I would have thought that 1 or 2 other condo developments would have hit the 70% mark. I especially thought that 50 Biscayne would have had an increase of at least 10%. These figures, when compared to last month's, are quite an eye opener.
Developers build valet-only parking to cut costs, period. It allows them to build less spaces (huge cost savings measure), less handicap spaces, smaller space sizes, narrow ramps, less lighting, fewer cameras, less everything! Saves them millions in construction costs.
It ends up costing the associations in the long run, as they have to pay the valet companies forever and ever. Developer doesn’t care because he is long gone.
Lucas – what are you hearing about the availability of financing for those who want to close? Is the credit crisis affecting the closing rates? Or are people just willing to walk away from a bad investment because the math just doesn’t justify closing in any case?
I don’t think there is a serious “credit crunch” when it comes to mortgages. Case in point, I recently re-fied on my Brickell Key condo, which is rented.. I got 6.125%, no major issues. My rent does not cover my taxes, so I have to pay those on my own. I had no issues getting a mortgage.
I personally think people are starting to add up the costs and realize its easier to walk away than payup. I am willing to bet many of these people signed contracts years ago with bad maintenance numbers. They are finally getting the true numbers and realize its going to be painful each month.
When I signed in 2004 (bought from someone who signed in 2002) for my current place, my maintenance was $350. One week prior to closing in 2006, I was given the real numbers, at it was $505. This is probably happening all over.
Lucas, great work on the blog. I saw your quote in the “CondoLiving” magazine.
Lucas – many thanks for your continued diligence. this chart would become even more useful in future months if you changed to a bar chart format to show not only the totals, but the incremental change since the prior month. you already have the data, so it shouldn’t be any additional work, and it would let us see the trend without toggling between charts.
Brian/Bill – i am only pointing out there are differences on a case by case basis. I agree that valet optional would be the best policy, but the picture you are painting is not entirely consistent with what I have found.
Where I bought, it is a vacation/second home building etc. boutique beachfront building. We have the same number of staff at the valet only building as at the valet optional where i rent. Again, at high end buildings, were it not for the insurance/property tax issue, maintenance would not be an issue.
Secondly, people knew that the building was “valet only” when they bought in, so the costs for that particular building are not somehow “higher” when the association takes over.
Thirdly, there are space issues on the beach, so cramming can be necessary to make sure there are enough spaces for families and visitors, and also to achieve certain price points. In these cases, at least from what i have been told, the city required the developers to include “trained valet” for saftey reasons. For downtown, I would agree in general that valet only seems a bit much – especially for that market.
Mark,
Great idea! I’ll try to include that in next month’s update.
Matt,
I’ve been hearing that foreigners are having a tough time obtaining finance. I’ve heard that up to 30% of the condos in some of these developments were sold to South Americans. Fortunately, many of them are cash buyer so the financing problems doesn’t affect them. However, I think at least a third of them probably rely on financing to help them close on their unit(s). This means to me that about 10% of the overall contract holders are having problems to close because of financing issues. I’m sure there are other domestic buyers that are having problems obtaining financing but I don’t think that it is as problematic as you might think. I’ve been saying for months that even the best condo development will have at least a 15% default rate and I think much of it has to do with foreigners having problems obtaining finance.
Antonio,
I have to agree with everything that you said. I don’t think the credit problem is as widespread as the papers would make you think. I have heard that some banks have blacklisted certain buildings in Brickell such as Vue at Brickell, Jade and The Club at Brickell Bay but I don’t take a listings in these buildings and very rarely take buyers to these buildings. If someone wants to see something in one of these buildings it is because it is a foreclosure and I always tell them the risk of buying in one of these buildings.
What was my quote in “CondoLiving” magazine? I think I gave it about a month ago so I don’t even remember what I said.
Valet parking a status symbol? Dream on, it is a way for developers to make more money. They usually retain ownership of the garage and lease it back to owners. Many times they will resell it to another investment group in order to make even more money. They are also able to put more cars into it when it is valet. I see it in my own building and the fees keep going up, up, up. So do the damage claims, which they now refuse to pay.
Along those same lines, does anyone know of all the buildings that are valet-only? To my knowledge, Bentley Bay and Continuum are valet-only, but there certainly must be others.
I believe ten museum park is valet only. I have a place in sunny isles at sayan which is valet only. It is becoming the trend – a status symbol. I think alot of the newer upper echelon buildings (jade ocean e.g.) will be valet only.
With groceries, usually you have a cart at the door and you can bring them up while they park the car, or you can leave them and they will park the car and then bring them to you.
Valet only really is a concern when you are leaving not arriving. When arriving, you just leave the car there since they should have a key, and they’ll take care of it. But when you are leaving, if it is crowded, sometimes the valet guys aren’t around and you have to wait while they get other cars. Supposedly, we will have an “electronic valet”, which is a display in our units where we can just push a button and the valets downstairs know which cars to bring around. Theoretically, it should be waiting for you when you get downstairs. It hasn’t been installed yet – so we’ll see.
Bill of course people make money on it – they do on a lot of status symbols. But people are willing to pay for it – people like being served – this is particularly true for foreigners. You really couldn’t have a high end building right now without valet.
[…] Tell The Contract Cancellation Story Miami realtor extraordinaire Lucas Luchuga has posted the latest closing rates for several key projects in Miami: Latitude on the River, Star Lofts on the Bay, Onyx on the Bay, […]
bill – sorry but your short “one size fits all” is just wrong
Very interesting post. Keep these up. Thank you.
Matt,
You are just wrong.
LUCAS,what do you mean that STAR LOFT is in problems??. What about ONYX ON THE BAY??.
Guillermo, They are all having problems. I only mentioned Star Lofts because it has failed to close even one condo since last month.
hi lucas,
great job on your blog, i do check in every now and then.
many may think that the two are not closely correlated but if this stock market drops and you start seeing some pain there, you will see prices drop much faster in the condo market (…and not just in miami). many who have bough since 2002 are still upside down on their costs, meaning even if they put down 30% and rent their place out, they still can’t cover their monthly costs. at some point, it will make sense to buy, put down 20% and have positive cash flow from the rent. until this happens, i think there’s pain on the downside.
again, great job on the blog … i enjoy your detailed info … thanks!
Great info again…might be helpful to see how many closed versus the total units in the building, and the date closing began.
For instance, 50 Biscayne has closed many more units than 10 Museum Park, despite 10 Museum park having a 3 month head start, because 50 Biscayne is a much bigger building.
A little off-topic.
I have read in several posts here that there are buildings that only have valet parking. In this case what do a tenant do if coming for example from the supermarket? Do they have to unload all the groceries before the valet takes the car?
The valet parking staff take your griceries up for you, at the cost of tips
Having a valet only garage isn’t great. I live in a 1 parking space per unit building and the valet not only park guests, but other owners, and we even have a hotel parking in our garage.
So many cars have been damaged, accidents, and we even found a valet with no drivers license. It isn’t such a great idea.
I don’t remember the quote, it was about “where to buy in this condo market”, which I thought would be a good article, but it basically stated about how to buy a foreclosure. It mentioned you as a blogger giving advice..
I’m not enamored with the idea of “valet parking” only either. It should only be available as an option if one chooses to use it. There are many times when you don’t want to have to stand around and wait (perhaps 10 to 20 minutes for a valet to appear). One could have very easily parked his own car during that time.
On top of that, the valet will have his hand out so
that you can “tip” him for his poor service!!
I don’t see how having a valet can cost the associations any more in the long run because they always had valet and expected to have it forever. People knew when they bought in that it would be part of the maintenance cost of the building. In every high-end building, it is an expected amenity that buyers’ demand, at least from what I have seen.
The costs people are concerned about are the ridiculously high insurance costs that double your HOA and the property taxes – if these were under control, nobody in a high-end building would even think about their monthly maintenance.
I rent in a building with valet and have spoken to people about it. People have complained about the timing, and no one is happy about that, but no one has complained about any damaged cars nor have they complained about the cost of the valet as a portion of their maintenance. I can’t imagine people paying millions for a condo but allowing the valet to crash their vehicles with impunity. The condo owners, ultimately, have to bear the responsibility of ensuring a high level of service and must hold the providers accountable.
what insurrance cost are condow owners liable to ? the have to pay more than maintenance and taxes?
renters should have their own home owner insurrance ..what else needs to be covered by owners?
Matt,
There is a big difference in operational cost between a valet service that is for guests and the occassional owner versus the costs for a valet service that must serve the entire building and every car that enters. The former might have 1 or 2 attendents max, while the latter must have plenty of staff 24/7.
In a vacational/2nd home building its not as intense. But the buildings in downtown are mostly owner-occupied and need a full staff 24/7.
The properties which will command the highest price will have assigned parking spaces and a valet parking availability for those spaces. Many of the recent “valet parking only” garages do not deed owners a specific space, only a right to park a vehicle, and because of limited access these garage require a much higher staffing level and they cram more cars into the garage. The operating costs for valet only garages is considerably higher due to required staffing.
I have heard that some banks have blacklisted certain buildings in Brickell such as Vue at Brickell, Jade and The Club at Brickell Bay but I don’t take a listings in these buildings and very rarely take buyers to these buildings.
why??
Raffi,
Those buildings have been blacklisted by many banks because of the level of mortgage fraud that has occurred there. I usually don’t waste my time with those buildings because the prices are inflated as a result. The condo associations in these buildings are also having problems maintaining the building in many cases because of the high number of foreclosures and short-sales in these buildings. They are not receiving the full amount of maintenance fees that they budgeted for as a result. Why would I want to stick someone into a building that I feel may be in danger of a special assessment in future months?
The major problem that I would envision at “valet only” buildings are in developments not used strictly as vacation homes. If it’s 8:00 and 50-100 people (or more in really large buildings) are headed out to work, the valets can’t possibly handle the flow efficiently. Furthermore, when I’m headed out to work in the morning, I don’t want to have to wait around–I want to leave my apartment, jump into the elevator, get into my car and go. Time is money for working professionals, so even 5 minutes spent waiting on my car would be extremely frustrating.
Anyone know what have been the special assesments in the Jade? They have the most foreclosures, but I just dont understand listings at the jade, the Foreclosures are priced as much as 50% off from the comparables, yet the comparable listings remain inflated, it just doesnt make sense, I guess the owneres are thinking if they keep thier listings at 1.5 Million for a 2 bedroom when someone offers them 1.1M and they say yes it will look like a better deal? No idea anyone care to comment on this?
I also believe we need more foreclosure sales to see the market drop since all CMA’s realtors do are based on Comparable Sales….
Lucas Quick question, is this percentage of the whole building that has closed, or percentage that have closed on the time period they have to close. For example if there were 100 units that have a scheduled closing date in october, does 73% mean 73 closed in october or does this mean that 73% of all the units in latitude on the River have closed
“The chart above will show you the percentage of total units that each development has closed since closings began.”
I guess this means that 73% of all units in Latitude have closed, where 100% sold precontruction???
Yep…it shows you the overall percentage of units that have closed since closings began in each development.
Lucas…
Great info. Thanks a bunch for the update. I was wondering how much of One Bal Harbor would close.
Do you happen to know the pre-construction pricing on One Bal Harbor? Any estimate of what resales will be as a percent of pre-construction pricing?
Great, great blog and info.
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