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Miami Beach condo market?

Discussion in 'Florida' started by BoulderFCar, Jan 9, 2008.

  1. BoulderFCar

    BoulderFCar F1 Veteran
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    Dec 16, 2004
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    About a year ago I put up a post inquiring about condo prices in Miami. I had been on a trip and looked at some but the market just seemed too hot. I didn’t feel good about chasing rapidly rising prices. I did not foresee the sub-prime mess but my instincts told me that the number of people buying pre-construction units to “flip” could be a risky cocktail.

    I’ve read that there are expected to be 50K units on the market in Miami Beach but that seems like a very high number. However, my experience has been that real estate always takes longer to bottom and longer to climb out than people estimate.

    With all of that as context, I’d still like to have a place in warm weather. What are the current thoughts from the locals on the Miami Beach condo market? Thanks
     
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  3. RP

    RP F1 World Champ

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    50,000 units in all of Dade, about 35,000+ of those on Brickell and Biscayne.

    I do not think that a beachfront unit will suffer much in value no matter what happens inland. The beach is the beach, and foreign buyers will take advantage of a failing dollar. It might take longer to sell, but being on the beach is still good.

    Recent project in North Miami Beach, specifically Bal Harbour on the beach, closed 95% of its units to the original buyers. A good project, on a great site, will close. Best buys will be on Brickell.

    You might find a few desparate seller on the beach, unlikely the price will vary much more than 5% from today. If you want it, buy it.
     
  4. geno berns

    geno berns F1 Rookie

    Oct 26, 2006
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    Just got this listing today. One Bel Harbor 2/2+den full Ocean front and partial canal view, 19 floor, amazing unit. $1.5M
    South Beach 2/2 on 5th and Maridian 2 blks to Ocean delivery in 6 months. $695K

    Market is getting hot from the Canadians and Europeans looking for hot deals. There are lots of those right now. Great time to buy!

    Gene (847)275-4363
     
  5. Max4HD

    Max4HD Formula Junior

    Jun 20, 2006
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    Beware of the increase in property taxes that you will face annually if you do not "homestead" the property!
     
  6. Simon^2

    Simon^2 F1 World Champ
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    Wife an I bought in 2/2 in SoBe last june. SoBe has prob bottomed out in my opinion... We offered low, until someone accepted. SoBe is likely more stable than rest of Miami Beach, and mainland miami condo market is still in serious trouble (IMHO)....

    Also, see SoFl forclosure thread:

    http://www.ferrarichat.com/forum/showthread.php?t=174679
     
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  8. Cavallino Motors

    Cavallino Motors F1 World Champ
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    Well, re-read my comments to you from a year ago and put them in perspective. I have forseen the market crash, I have forseen the sub-prime mess, I have forseen the rapidly rising foreclosure rate.

    Yet, those bankers that managed to write off $8Billion in losses are getting Million Dollar bonuses and I am getting nothing. WTF is wrong with that?

    Prediction for the coming year:

    sharply falling prices to lows of the 2002 price structure.

    The following year (09) you will still see a dicline with ton of condo units on the market being sold by banks. At which point they will be dumping them, having taken the loss already this year on the product.

    You will probably see another wave of bank statements coming soon in the "equity-line" loss section. Has not hit quite yet. Those banks that did equity lines to 95% LTV will get hit from people walking off their first mortgages and stiffing the equity line bank for the balance. A lot of people used their equitylines to finance the next donwpayment on the next Condo development. As Ron said, 50K units coming. Lots of equity line deposits being lost.

    We will see the days when a condo is worth and sold for what it brings in return in rent. Always has been the real measurement for real estate value.

    Now, real estate lesson is over for today, children pack your bags and go home. Your homework today is: what will the stock market do in the next two years.
     
  9. Cavallino Motors

    Cavallino Motors F1 World Champ
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    I seriously doubt that. SoBe is tied to all of the Miami market. Granted it will not "bottom" as bad as the Downtown area will, it will still see a correction and that is not here yet. Not even close.
     
  10. BoulderFCar

    BoulderFCar F1 Veteran
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    I think your view is pretty pragmatic and probably spot on. As I said above, for the reasons you mentioned, these cycles are always longer than people think because the financiers don't want to take the big hit. See Japan for some of the biggest examples of this.

    When I was looking at units at the time of my first post I set appointments to look at 7 units. 48 hours later 5 of the 7 were under contract. I folded and I'm glad I did. I'm sure the below 5th stuff is solid but there are still a lot of units on the beach elsewhere.

    Thanks for the comments.
     
  11. Simon^2

    Simon^2 F1 World Champ
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    I disagree for the units under $1M. The really pricey stuff at several million and up... not in my budget, so I can't speak to that. Could I be wrong, absolutely... Just MHO...
     
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  13. sailquik

    sailquik Formula 3

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    Martin- IMHO, you are right in about 90% of what you say. My 2c. is that the lows aren't here yet, but I don't think we will hit 2002 levels (2004-05 is my barometer, and we're close to there). Right know my gut tells me that prices for properties that have actually sold are about 10-15% below asking prices. Asking prices have dropped maybe 5-10% on average, so properties that are selling are selling at 20% below the ridiculous prices that existed at the top of the market. The people that aren't willing to take 20% below the top of the market are simply sitting on their properties and the question is how long will they sit?

    If they sit until 2011-12, they will get their top dollar. If they sell today they have to take a loss (if bought at top) or less of a profit (if bought 3 or 4 years ago).

    Upshot is - buying now you may have to grin and bear it for a year or two, but if you are *using* your purchase it doesn't really matter, market timing seldom works and you stand the chance of decent appreciation in the 5 yr. term.

    If you are speculating over a 1-2 yr window, put your money in the bank or spend it at the NYSE casino.

    Summary: Get rich quick schemes never work and if you are in it for the long haul now is not a bad time to buy. Unless we're talking condos. I wouldn't touch them for 2-3 years.
     
  14. Cavallino Motors

    Cavallino Motors F1 World Champ
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    If history teaches us something the cycles will take a lot longer to recouperate than 2011. The Mid 80s crash took until the late 90s to turn back to reasonable returns and in those days you had a lot of foreign people coming and buying.

    20%...not numbers I predict. I see 50% and maybe more.
     
  15. racergirl

    racergirl Karting

    Feb 24, 2005
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    Hi Boulder, wanna buy mine? 2 bedrooms, unobstructed view of downtown, star island, port of miami. PM me and i'll give you more details and a good price.
     
  16. BT

    BT F1 World Champ
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    My take is that the prices all will move down somewhat, but less so in the very high end of the market. In Palm Beach county, island properties (Palm Beach proper) have risen over the past two years, and did during previous real estate slumps and recessions. People that do not borrow money for real estate purchases really do not care about the funding the way typical $300-500k property buyers do. If you are at a million dollar market today you are on the fence. Some borrow (and usually very heavily) while others pay cash. Condos offer waterfront living which is nice, but putting so many properties on the market at once will make none of them stand out. If there is an excellent project in the group those will still sell fine. Martin is right about the equity line crunch coming up. I find it funny that the news keeps referring to a 'housing crisis' when there is clearly no housing crisis. If there was too much food to sell at the market would we have a 'food crisis' . NO WAY! We have a housing surplus and a credit / income crisis. Fools pay based on payments and not actual price. Consider that you have to pay the property off someday and tell me if it is worth the price tag....
    :)
    BT
     
  17. sailquik

    sailquik Formula 3

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    The problem with your math is that you are looking at the low-low vs the high-high in the market, in other words, if you had bought at the bottom of the mid-80's market and sold at the top of the early 2000's. Fact is, you can never "market time" real estate, stocks, bonds or anything else. By the time you realize you are at bottom (or at top) the moment has passed....So....instead of looking at the 15 years it took for the mid 80's crash to become the late nineties boom, you need to look at buying "close to" bottom and selling at "close to" top. which may well be within 7 years of a top or bottom (or midway through a cycle). At the end of the day, even if you messed up and bought at the top, there is the inevitability that you will make a reasonable double digit return *if you hold long enough*. The same cannot be said for stocks.

    As for the 50% decline from highs.... I doubt that very much. Say we go back to the 2002 values you mention. When you account for inflation, those 50% values will actually be around 38% less than the 2007 values so a $500,000 house in 2002 (or a $1,000,000 in 2007) will cost $620,000 by your bottom estimate. There is no way a house purchased in 2007 for $1,000,000 will go to $500,000 before this is done, if for no other reason than people will rather keep paying their mortgage and stay in their home rather than default and rent. Even if they do (rent), that will increase the rental market to a point where rentals will increase, therefore driving up home prices by your rental vs. property value formula.

    If you are looking to pass on prime locations that are 30% below appraised value, waiting for them to go to 50%, let me know :)
     
  18. Cavallino Motors

    Cavallino Motors F1 World Champ
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    Charlie:
    not just that it is very plausable that this will happen I am thinking you will be buying for $500K not taking inflation into account at all.

    Why is it so hard to imagine? It has happened in the 80s, in the 70 and in the 50s. Nobody ever looks at the past.

    The problem we are facing today is a lot harder. People are not just walking away from their $1M properties, they are fleeing. Banks take them over and they have already deducted the loss in their statement a few months ago. Instead of keeping them at all cost they will dump them on the market. A house has a better chance than the condo. In a condo the bank becomes the owner and has to pay association fees as soon as the judgement is awarded. The fees are cash draw. So those properties will be dumped at ALL cost. That $1M condo will be bought for $300,000 with cash in your pocket.

    BTW look at the FL West Coast. property prices have fallen on land already past the 50%. October 05 $300,000, sold 5/06 for $200,000, worth today $120,000.

    Not that it matters what happens. It is happening and I'll make a ton of money :)
     
  19. rgali1

    rgali1 Rookie

    Nov 3, 2004
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    Well since I’m one of those flippers figured I’d give my two thoughts…what really hurt me was in the end I started purchasing units that I not only had no intention of closing on but let alone afford. I guess what saved me though was I only bought in the best of projects. There’s a big difference between buying a preconstruction property in an area they are trying to clean up vs. a Trump building on the ocean. I feel that between now and next year is the best time to buy not sell. Those that can hold on to property and ride out the wave will make a killing. Simple concept buy low, sell high and property over time will always go up. If anyone is looking for an incredible deal I have an oceanfront condo in Trump Towers that I must sell. It’s a world class building in Sunny Isles. Some people paid over 50% more then what I paid for it but with my closing date coming up I need out, if seriously interested we can talk.
    Ramy
    Gali@nova.edu
     
  20. Cavallino Motors

    Cavallino Motors F1 World Champ
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    #18 Cavallino Motors, Jan 26, 2008
    Last edited by a moderator: Sep 7, 2017
  21. Cavallino Motors

    Cavallino Motors F1 World Champ
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    You are the perfect example why we are in this crisis. No intention to close, let alone what you could afford. BINGO.
    And your deposit that you are losing from not closing will go to the bank who is underwrting the project. There will be lots of "you" out there and the bank will start a panic. They will start dumping their inventory units (which they are already doing) and will start the downward spiral. A $700,000 apartment will be dumped for $500,000. The next guy will get cold feet and will start selling for $450,000. Since the banks already wrote off the losses last year with their announcements they will offer at $400,000. Now you have people that walk away from their $700,000 apartments that they owe $680,000 to their bank. Foreclosure. That bank is getting clod feet and dumps their property for $380,000 just to get rid of it. After all they are responsibe for property taxes as well as assocation fees.
    Did I mention association fees? Any condo association will get hit bad in this. Especially if they have a lot of flippers in there. They will not get paid their fees until the bank has been awarded the foreclosure. That means there could be 20%+ in units in foreclosure, dragging 8 months before the bank owns the unit. That means significant shortfalls for the budget of those associations. They will raise their fees (which they have to to cover the outragous insurance increases anyhow) and your $400 association fee jumps to $600, which now makes other unit owners think about letting their properties go.

    Not sure if you see where this is going :)

    It is a great time to be in real estate. Making money with cash at hand of the greed of banks and those that should have never "invested" in real estate in the first place.

    I will take that Trump off your hands. Rents for $1500 means its value is $150,000 :) Whenever you are ready.
     
  22. Uomo360F1

    Uomo360F1 Formula Junior

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    + 1, Martin !!

     
  23. rgali1

    rgali1 Rookie

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    Although I agree with you that flippers helped spiral this crisis by creating a fake demand on property however over time supply and demand will equilibrate and prices will always go up. How long will that take? My opinion is 2-4 years. Like any project you look into its location. I do feel that all those projects in midtown Miami, downtown Miami, and west Miami will have a very high walk away and foreclosure rate because they are not waterfront buildings which make them crap buildings in my book. Secondly those units were at a price range that made it more accessible for the normal Joe thus you had quite a bit of investors in those projects. On the other hand you have beachfront property that will always command a premium not only for demand but also supply, our coast line can not expand but you can always build out west. (unless we are talking about Dubai lol). Furthermore in a multimillion dollar building you will have more people closing and holding onto their property for a number of reasons 1) Most of the people that purchased in these types of units have the financial backing to ride out the wave 2) You have less investors involved in these projects due to the entry price.
    When talking about real estate as a whole it is important to realize there will be areas that will not necessarily follow the trend of the average market. There will always be areas that will out perform and others that will fall short of the projected price. Your theory if anything would apply to the latter. And I wont get into all the real estate scams that make up a large percentage of foreclosures that have now hopefully been corrected so when you see that $500,000 condo sold at auction for $300,000 was someone really planning on paying 500k for it?.
    And regarding my particular unit, if I was to walk away from closing which I am trying not to do because of the price I purchased it at (one of the lowest), the developer would actually give me back some of my money. I wouldn’t loose all of it because the default penalty is less then my deposit amount. Ideally I would want to close on it rent it for the time being then sell because the rents in sunny isles beach are very strong and would cover my carrying costs. Also one of the developers in this project, the related group, will be closing on the units himself not giving them to the banks so that he can profit by buying, holding, then selling. So you see not all properties are created equal.
     
  24. Cavallino Motors

    Cavallino Motors F1 World Champ
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    On that default penalty you may want to read that contract again. If you default by not being willing to close you are in fact in breach of contract wich gives the developer the right to enforce the contract if he really wants to at which point you may personally become liable for the balance of what you purchased the unit for to what the developer will sell the unit for by you refusing, adding all the fees and commissions etc to your liability.
    A lot of people misunderstand the deposit as a max exposure, which it really is not.

    That said, you logic sounds great but then realize that by your own account you bought where you cannot afford to live or hold or even close yet you are in there speculating. What gives you the idea that this was not the case with hundreds of other unit owners, especially in Sunny Isles at the Trump. From personal experience, and I am in THAT biz for the past 14 years, I know that Trump has a high yield of "flippers" and "investors". Trust me a lot of those guys will walk away becasue they know walking is easier than closing.

    I guess you are not taking my offer then :)
     
  25. Cavallino Motors

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    Oh yes, Jorge Perez is a very well educated man. In fact he is one of those guys that I take my hat off for. The only developer that cancelled a project two years ago and publically said that this is going down the $hitter. Long before the banks knew it, long before the market knew it, long before the street knew it but most importantly at a time when the "flippers" should have listend.

    Perez will walk away from any project when it means that he may have to take a personal hit just so the bank that is financing his project does not have to. I would and he would. Not a question in my mind that he will look for a "bail out" of any bank by closing on units at developer price when that price is still higher than market. Especially not if he is left with paying association fees.
     
  26. targanero

    targanero Formula 3

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    Florida's counties don't only have some of the highest foreclosure rates in the country, but of those foreclosures they have the highest rate of negative equity. This is only the beginning and things will get much worse for states like FL, CA, MI, NV, etc as the banks have to offload more and more property in the coming months and years. I would definitely wait to buy - especially a condo which are typically the last to appreciate and the first to depreciate. Just two cents from someone who owns ppty in NY and FL.
     
  27. Ronbo

    Ronbo Formula Junior

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    I agree, and about time, too. Vultures r us! :D
     

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