Miami Real Estate – August 2009

Summary - August 2009

For the month of August 2009, the Miami real estate market experienced a slight drop of 13 percent in overall closed sales. While the median price for single family homes remained constant at $173,000, condominiums and townhomes actually realized an increase in the median price from $126,670 in July 2009 to $135,000 in August 2009.

We think that this slight increase in the median price of condominiums is primarly due to the pent up demand for second homes and investment properties in Miami. In today’s market, it is not uncommon to find multiple cash offers on condominums in desirable locations and somewhat “stable” condo projects.  Additionally, according to the MLS data on the sale of bank owned condos in the Miami Beach area priced at under $500,000, more than 80 percent of all closed sales were all cash transactions. Additionally, there were several examples where the purchaser closed at a price up to 25 percent over the asking price.

The majority of properties trading in the lower price ranges continues to be dominated by distressed properties.  While buyers appear to be having more success closing on short sale deals with financing, if you are looking to be competitive and negotiate terms, be prepared to come with an all cash offer.

Featured Sales - 

800 S Pointe Dr #1203, Miami Beach “The Apogee”

Balconies in the Apogee feature complete outdoor kitchens

According to Miami Dade Public Records, attorney Jan Carson Cheezem of Cohen Fox P.A. in Miami, purchased this 3 bedroom 3.5 bathroom luxury condo in The Apogee on South Beach for $3.8 million or $1,378 per square foot. This unit on the 12th floor, which overlooks Miami Beach to the north, downtown Miami to the west and the oceanbeach to the east, was on the market for 248 days with an asking price of $4.1 million.

1200 West Ave #807, Miami Beach “The Mirador”

The Mirador apartment buildings located on West Avenue in South Beach, were built in the 1960’s and then converted to condominiums by the developer and condo converter Crescent Heights in 2005. With lines of prospective buyers camping out on West Avenue the entire week before the developer opened sales to the public, this condo project was the epitomy of condo conversion frenzy during the Miami real estate rush. This 1 bedroom 1.5 bathroom corner unit with 1,019 square feet of living area, was originally sold by the developer in 2005 for $265,900, then flipped four months later for $383,000, and again six months later in May 2006 for $515,000, only to be taken back by the subprime lender, New Century Mortgage, in December 2008. In this most recent sale last month, the purchaser paid $147,000 or $144 per square foot.

The data used to generate this chart/data is gathered from the Multiple Listing Service (“MLS”) and the Miami Dade Clerk of the Courts. The data in the MLS is deemed reliable but not guaranteed. This data is for August 2009 for single family homes, unless otherwise indicated as condominiums/townhomes. The prices are the actual sales prices of all single family or condos/townhomes that closed during the month of August 2009 and are published in the MLS as of the date of this post.

Miami Real Estate – March 2009

Summary - March 2009

For the month of March 2009 vs. February 2009, we experienced an 14% increase in the number of closed sales from a total of 206 to 235 closed sales. The inventory of properties for sale increased marginally by 10% over the previous month.  This is the third month in a row that we have seen an increase in the overall number of closed sales, and we are up an impressive 35% in the past two months alone.

While the average sale price of single family residences in Miami Beach with a price under $1 million continues to decline from $653,282 in January 2009 to $513,800 in March 2009, the average closed sale price of condominiums in Miami Beach (under $500,000) and in the Downtown/Brickell market actually increased. This is the second month in a row that we have seen prices increase in the Downtown market, and are up from $231,767 in January 2009 to $296,252 in March 2009 respectively.

This leads us to a bit of a quandry in regard to the prices of foreclosure and distressed properties. While we all hear that prices continue to drop, and in relative terms and year-over-year this is the case, the banks are playing a game of cat and mouse with their REO properties. Here is the spiel – offer the property to the public at a bargain basement price, allow multiple offers to accumulate, play it off for a few weeks, and many suckers will bid up the price to more than asking.  It’s simple enough, but works time and time again.

Another interesting change in sentiment this month is indicated in the sale of five single family residences in Miami Beach in the $1 million plus category. For the past few months, we have witnessed lackluster sales with many luxury home buyers sitting on the sidelines. With five closed sales in the luxury category, and an average closed sale price of $2.4 million, the luxury home buyer has re-emerged in Miami Beach.

Featured Sales -  Two Luxury Miami Beach Homes

28 W San Marino Dr, Miami Beach

This Bauhaus inspired house built in the 1930’s, is located on the prestigious San Marino Island in Miami Beach. With six bedrooms and six bathrooms, a total living area of 4,716 square feet, and incredible views of the Miami skyline, the property sold to Venetian Marino Investments Inc, Hubert Jean Marie Weisslinger as president and director, for $3,830,000 or $812 per square foot. This house was placed on the market in December 2008 with an asking price of $4,450,000 and was only on the market for 47 days before going under contract.

5777 Pinetree Drive, Miami Beach

The data used to generate this chart/data is gathered from the Multiple Listing Service (“MLS”) and the Miami Dade Clerk of the Courts. The data in the MLS is deemed reliable but not guaranteed. This data is for March 2009 for single family homes, unless otherwise indicated as condominiums/townhomes. The prices are the actual sales prices of all single family or condos/townhomes that closed during the month of March 2009.

Foreign Interest in Miami Increases

Although there is no official data available, the estimated percentage of second and investment properties owned by foreigners in Miami is as high as thirty percent. We attract investors and second home owners from all over the world, with our primary feeder markets coming from flight capital leaving Latin and Central America. This is one of the reasons that we have a somewhat unique residential market, and what is now helping us turn over so many foreclosed properties.

We even have certain areas where foreign investors look to purchase residential property. In South Florida, for example, Doral and Weston are two preferred areas for Venezuelans. Known locally as Little Buenos Aires, Argentines love the mid-Miami Beach area.  In the past few years, Sunny Isles Beach in North Miami is fast becoming a Russian enclave for vacation and second homes. Meanwhile, European clients prefer the many waterfront areas of Miami Beach, including the South Beach, Venetian Islands, Normand Isle, Treasure Island, Sunset Islands and Harbor Island.

So while our traditional second home American buyers out of Chicago, Washington D.C., Boston and New York have taken a back seat, international buyers have been flocking to our market to buy distressed real estate.  This year, the range of our international clientele has been extremely diverse and from all corners of the globe, including Turkey, Switzerland, Germany, France, Argentina, Bahamas, Bermuda, Canada, Israel, South Africa, Angola, India, Italy, Brazil, Ecuador, Guatemala, Spain and England.

So what has prompted this surge of international buyers in Miami?  The following driving factors are what we most commonly hear from our international clients buying in our market  -

1. Miami remains an alluring international destination. It is the American Riviera, our own little Sardinia, St. Tropez, Cyprus or Capri.
2. Miami is a cultural Mecca, a tropical paradise where the many cultures of the Americas live, work and play.
3. The cities of Miami and Miami Beach have invested hundreds of millions of dollars to develop the arts, history and culture of our area.
4. Miami is an international hub and easily accessible from most continents. We are a major international airport, sea port for cargo and trade, tourist hub, and regional business center for Central and Latin America.
5. A foreign owner enjoys the same fundamental rights to ownership* as that of a U.S. resident or citizen.
6. Although our country is suffering from a major recession, Miami is a safe place to enjoy, relax and revitalize oneself.
7. The Miami lifestyle is very unique and different to other major cities. This is a city that is always alive and it shows in our people, places, colors, festivals, and experiences.
8. While Miami has one of the highest rates of foreclosures in the country, the value that Miami offers today surpasses that of ten or even twenty years ago.

One of the tools still available to most foreign investors today, is the ability to obtain financing for a second home. Fair enough, relative to three or four years ago when most banks offered generous terms to foreign nationals, it is more difficult to obtain mortgage financing today.

However, one of the common misperceptions of our clients is that the difficulty lies in the program either not being available, or that the rates and loan-to-values are unattractive.  This is mostly an incorrect assumption as today interest rates are far more appealing AND foreign investors may still borrow up to 70% loan-to-value, or 70% of appraised value, whichever is less.

The real difficulty lies in getting approved to purchase a condominium in a project that does not meet today’s guidelines. The personal or borrower requirements, however, for proof of employment, six months reserves, sixty (60) day sourcing of the down payment in a local bank account, and letters of credit, are practically the same.

For further information on any of our properties, or Miami real estate, please call our office at    (305) 673-5300    or email us at info@miamiangelproperties.com.

 * Note that time spent in the United States and immigration status will determine tax liability. Foreign investors should consider title options carefully. There are a several legal issues and tax consequences for foreign investors from purchase to sale of the property – the advice of a qualified accountant, finance professional and attorney should be sought.

Miami Beach Foreclosure Fantasy

Getting all caught up in this real estate madness of chasing the next “best” deal to come on the market, certainly has its downsides and pitfalls. This obsession to find the perfect view, size, location, price, and all in a quality and not a distressed building, is at most just a real estate fantasy, a made for “Property Virgin” TV episode.

Here are some of the most common misperceptions that we commonly hear when “foreclosure hunters” visit our Miami Beach market:

• Cash is King; just because you can pay in cash does not mean that you can low ball the seller and offer way below asking. There are MANY cash buyers out there and you have some serious competition. This is particularly the case when bidding on a property in a high demand location or building.
• It’s All about Price; a value added real estate purchase is not ONLY about the purchase price! If the condo you are considering is in a financially stable building, with a high percentage of owner-occupants, a great location, low default rate,  with no major deferred maintenance issues or upcoming assessments, and conventional financing is available to buyers, then you have much less risk of further price deterioration and the safety of medium to long-term property appreciation.
• A Direct Ocean View; if you have always dreamed of waking up in your bed and looking over the ocean in Miami Beach, be prepared to pay significantly more for this direct view! Miami Beach is surrounded by water on three sides and there are multiple islands surrounding us in Biscayne Bay, such as the Sunset Islands, Venetian Islands, Palm Island, Hibiscus Island, Star Island, Belle Isle, Allison Island, and Treasure Island etc.  Therefore, the views vary GREATLY from location-to-location, building-to-building and unit-by-unit. You may just be able to buy that same 800 SF apartment with direct open bay views, as well as views of the ocean, Miami Beach, and the stunning views of downtown Miami at night, located on Treasure Island, which is just five minutes from the beach and ten minutes to South Beach, all for $80,000 – $100,000 less than that direct ocean view!
• It’s Only about Property Appreciation; this attitude will end your excitement and determination in a heartbeat. Real estate is not liquid asset that trades on a public exchange. While speculators enjoyed many years of unrealistic and unsustainable day trading in real estate, this is not realistic thinking or a smart approach to making a few bucks on your investment. Now don’t get me wrong, there are still many ways for a sophisticated real estate investor to make a quick buck in this market. However, as far as the general public goes, if you are buying that much desired second home or investment property in Miami Beach, you have to be thinking in terms of appreciation over five, ten or twenty years. And just as important, the pleasures of owning a second home in Miami Beach brings SO MUCH MORE to your life than just “how much will I make in three years?”
• Something For Nothing; people, stop deluding yourself. This is one of the most desired cities to own real estate in the world, and one of the cheapest! Everyone wants to experience and live in Miami Beach. Our 80,000 residents are truly a global, diverse, multicultural, open bunch of people. Our real estate is limited and we are built-out in most areas. There is a minimal amount of inventory coming online and most buildings are historically protected. Yes, there are a handful of new condo developments under construction on the beach with maybe a total of 600 new units and then that is it. This is not downtown Miami and the supply is limited.
• I Will Qualify For Financing; even if you have excellent credit, no debt and good income, the property you wish to buy may not qualify for several reasons. Nowadays the most common reasons are the lack of or no available condo association reserves, or more than 15% of owners are 30 days behind on paying their maintenance fees. Let’s face it, in the real estate boom days Fannie Mae or Freddie Mac would buy just about any mortgage on the secondary market.  Today, it is a completely different story.

I think it is important to work with the facts and the reality of the current real estate market. Many of our clients have been very successful in purchasing a property in a fantastic location for an incredible price. This is a result of having a realistic plan and working with the dynamics of this almost historic opportunity in our local real estate market.

Miami’s Boom to Bust

During the condo boom of the last decade, Miami justifiably earned the nickname “Crane City”. I think at one point we had over 60 construction cranes dotting the downtown Miami skyline. Developers aggressively marketed their projects, each trying to create a sexier marketing campaign than the other. Supermodels were the face of the developments touting an unimaginable lifestyle of fun and success.  For most of them it was a similar theme, buy a small one bedroom condo for $350,000 on Brickell Avenue, and experience la Vida Loca, “the Miami lifestyle!”

The only problem with this pitch was not the weather, beautiful infinity pools, beach volleyball courts, indoor movie theatres, or convenient location to downtown and South Beach. The disconnect was that to own a small one bedroom apartment, one had to earn approximately $80,000 per year to afford the mortgage, real estate tax and maintenance fee payments. Now how many of these jobs are actually available in downtown Miami?

So like sheep in our consumer driven economy, a few jumped in, stories of rags to riches spread, and everyone followed suit. Did you hear the story of the buyer who borrowed $10,000 on his credit card as a down payment, purchased a unit sight unseen, and in a matter of months flipped the contract to the next speculator at a huge profit? Developers supported the practice and charged a 1% ”assignment” fee plus real estate commissions to profit on the flipsters. Sales agents licked their chops earning 5% on the purchase price each time the contract was turned over to the next believer. Developers hired whomever they could to finish the job and slap their buildings together.

At the same time, banks were giving away 100% financing to buyers of high rise condominiums with a 580 credit score. They also allowed up to 6% seller concessions, which would more than cover having to bring any cash to the table. Everyone was betting on appreciation and this huge influx of primary owners and renters moving to downtown. Developers laughed and did not think twice about spending thousands of dollars on weekly lunches at Prime 112. 

No one had any skin in the game.

Miami has seen similar booms and busts throughout its history. The terrible hurricane of 1926 that totally decimated Miami Beach, followed by the Great Depression of 1929, completely destroyed our local economy. Many lives were lost, buildings were completely destroyed, and fortunes quickly evaporated. Yesterday, I received an email from E*Trade Financial stating that “At the end of 2008, cash in money markets and bank accounts had reached nearly $9 trillion or 74% of the value of all publicly traded stocks in the U.S.!”  Does this ring a bell?

Today we are back to bidding on properties. It’s a seller’s market of bank owned real estate. There is much hype in the market as vulture investors with cash chase foreclosures and are determined to out-maneuver the next bidder. Listing agents require buyers to sign multiple disclosures to relieve them of any responsibility as they are in “multiple offer” situations. Banks say they are lending to buyers of condominiums, and while they may be underwriting many, they are funding very few. First time homebuyers are working hard to obtain a very attractive $8,000 homebuyer tax credit. The National Association of Realtors is claiming that we are ”near the bottom”. This is all feeding even further into the hype and creating more uncertainty.

So where does this leave you, the first time home buyer or investor?

The value of real estate in Miami today has much more value than what it offered as recently as 20 years ago. This is fact and you can ask anyone that has lived here even for the past 10 years. Yes, the Miami real estate market is much like the Wild West at the moment. However, in many instances we are witnessing an over-correction, and here is where you will find the real opportunities.

For further information or to discuss the opportunities in Miami real estate, please send us an email at info@miamiangelproperties.com.

Miami’s Venetian Islands

Stretched across Biscayne Bay between South Beach and downtown Miami sits a chain of six reclaimed islands known as the Venetian Islands. These six inhabited islands, from west to east, includes the romantically named isles of Biscayne, San Marco, San Marino, Di Lido, Rivo Alto and Belle Isle. Some are part of the city of Miami, others part of Miami Beach.  Originally designed and developed in the early 1920’s to mimic Venice with numerous bridges and street lamps, the secluded Venetians are home to some of the most eclectic, unique and stimulating waterfront homes in Miami.

When the Collins Bridge was opened in 1913, it was the longest wooden bridge in the world and a solitary drive across the bay. After twelve years of service it was on its last legs. The Collins Bridge was then sold to the Venetian Islands Company, which proceeded to build the beautiful Venetian Causeway and fill in the bottom of the bay. With the building of the Venetian Causeway, Carl Fisher brought a small fleet of Venetian gondolas, complete with Italian gondoliers. The gondolas were used for close to fifteen years in Biscayne Bay to ferry locals, tourists and potential buyers around the islands. It did not take much for potential buyers to recognize the ease of access and location of the islands along with the tropical urban lifestyle afforded to one as a resident.

Traveling west on the Venetian Causeway from South Beach towards downtown Miami one first arrives on Belle Isle, which consists of several medium to large sized condominium buildings, together with a variety of multi-unit residential properties, and the completely renovated and re-designed The Standard Hotel. Belle Isle sits literally a short five minute walk to South Beach’s Lincoln Road Mall and also features a totally redesigned 3.3 acres “dog-friendly” Belle Isle Park.

The seven condominium buildings located on the Island Avenue, range from the classic Belle Towers Condominium to the modern Grand Venetian tower. During the real estate boom many of these properties were out of reach for the average buyer. However, in today’s market there are more than 80 properties available at attractive entry prices as low as $200 per square foot. A wide variety of apartments are to be found in these seven buildings, ranging from large one bedroom units to fully modern residences with large wraparound glass balconies. It is easy to recognize the allure of Belle Isle to second home owners and Miamians alike.  Revel in some of the most breathtaking views of downtown Miami, cruise ships and several surrounding islands, experience the tropical colors and serenity of a sunset over Biscayne Bay, or simply enjoy a weekend brunch and day at The Standard Spa to absorb it all.

Continuing further west on the Venetian Causeway one crosses over the islands of Rivo Alto, Di Lido, San Marino, and San Marco. This cluster of islands only allows for single family residences, of which approximately one third are waterfront properties. Waterfront lot sizes range from the standard 10,500 square feet up to 15,750 square feet for the larger properties on either the northern or southern points of the islands. Each island varies in size and number of homes, with the most exclusive waterfront properties considered to be situated on the island of San Marco. Currently, there are 58 single family homes ranging from $899,000 to $14,900,000 available on the market. It has been quite a number of years since we have seen waterfront homes available on these islands for less than two million dollars, however, this may just be the year to take advantage of the slow and distressed real estate market to snap one up.

So who lives in these homes? You would be surprised to learn that only approximately twenty percent of all residences are occupied as second homes, with the remainder being full time local residents. This is one of the many attractive features of living on the Venetians, you have a real sense of community and a safe neighborhood. Sure, there have been a number of real estate investors speculating on the increase in popularity of these unique homes, including the likes of Eddie Irvine, Larry Groll, and DCA Trust. However, included in the mix of homeowners on the Venetian Islands are just a handful of celebrities such as Paulina Rubio or music producer Estefano.

Miami is a unique city unlike few others in the world. It is the American Riviera that should be experienced from both the water as well as from the beach or comforts of your home. Living on the Venetian Islands offers everything to you. It is a melting pot that attracts successful locals, Latin Americans and Europeans alike. You can live large like Michael Stern, a commercial real estate developer, that incorporated his own indoor basketball court in his Mediterranean villa on Di Lido Island, or, you could simply enjoy the stunning sunsets from your one-bedroom apartment at Nine Island Avenue Condominium.

To view a map of the Venetian Islands see below. If you would like further information on any properties available for sale in this area, please do not hesitate to email us at info@miamiangelproperties.com or call 305.673.5300.

The New Miami Icon

This month the much talked about high-rise residential development known as the Icon Brickell, located at 495 Brickell Avenue in downtown Miami, will start closing on units and open it’s doors to new residents. A couple of weekends ago, I visited the site to get a feel of this enormous condo project at the mouth of the Miami River.

The first thing that jumps out at me are the several gigantic heads, something reminiscent of the Maoi of Easter Island, staring at me as I enter the premises. Multiple shapes, colors, sizes, textures and even a few with lights in their eye sockets. The site is impressive from which the three Icon towers rise in the Miami skyline. I am drawn to the waterfront area and the historical Tequesta Indian settlement, or better know as the Miami Circle. Here it sits directly in front of the “north” tower, almost invisible and certainly not representative of a 2,000 year old archaelogical site. 

So this is Icon Brickell. Three modern glass towers as high as 57 stories tall, all containing 1,800 units and 148 hotel rooms. Spas, fitness centers, movie theater, club rooms, cabanas, pools and multiple sun decks. It’s now 2pm and the middle tower is lost somewhere in the shade of the north and south towers. I imagine that natural light is going to be a premium and so is getting the buyers in contract to close.

According to the Daily Business Review, buyers of 120 condos no longer want to be part of this architectural Miami Icon. They are suing to recover $13.7 million in down payments on condos with purchase prices totaling $68.4 million. The suit claims that the developer failed to complete the project on schedule in 2007.

I cannot help but wonder the fate of this Icon. How many buyers will close and how many will follow that dreaded path to foreclosure? Hopefully these Easter Island heads will not become the living faces of sacred Icon Brickell owners.

Miami Real Estate Market Summary – September 2008

Summary – September 2008

For the month of September vs. August 2008, we did not see any significant changes in the Miami real estate market, other than to report that the number of either foreclosure or short sales by lenders continues to increase, particulary in the Brickell/Downtown Condos and Greater Miami market. For example, 32 of the 59 closed sales in Downtown/Brickell Condos, or 54%, were either foreclosure or short sales. Additionally, I think that it is pretty clear that the properties that are selling are in the less than $500,000 range, and this is further evident by a sizeable decrease in the number of pending sales in September vs. August for the $500,000 and over categories.

September’s Featured Sale

This month’s Featured Sale, is a one bedroom condominium on the 33rd floor of The Club at Brickell Bay, with a living area of 818 square feet (81 sq. metres), located in downtown Miami. The condo was purchased from the developer in August 2005 for $315,000. The owner, Cristina Rodriguez, then sold the property a few months later, in February 2006, to Francisco Grande for a whopping $600,000. Yes, that’s correct. Then in August 2007, The Bank of New York foreclosed on the owner and took title to the property. Practically one year later, on September 23, 2008, this bank owned condo sold to an all cash buyer for $125,900 or $153.91 per square foot.

For additional information on Miami real estate, short sales or bank owned properties, please contact us at info@miamiangelproperties.com or call 305.673.5300.

The data used to generate this chart is gathered from the Multiple Listing Service (“MLS”). The data in the MLS is deemed reliable but not guaranteed. This data is for September 2008 for single family homes, unless otherwise indicated as condominiums.

Homes that are pending sales have had offers made on them, and those offers have been accepted by the seller, however the sale has not yet closed. The prices are the actual sales prices of all single family or condos that closed during the month of August. Please note that the areas that have the most foreclosures and distressed sellers, also have the largest disparity between asking and sale prices.