The shark lenders are all jammed up with loans they poached last year. The guy defaulted and we’re up to $2.0 million in principal and default interest and we took possession—figuring we were plenty protected by over a million in equity left on the asset. Two things are often left out of the RE status summaries on condos including your summary: Plus insane monthly HoA fees. More expenses for a depreciating asset. Why, exactly, Miami, now??? Companies & Markets Can you image the city tax revenue drop? Lots of very dead wood tossed overboard. Florida has more vacation homes than any other state. Better in fact. Like “hope and change” who just purchased a $16 million beach front house. "The U.S. housing market performance is closely mirroring COVID[-19]’s path, which is providing clues into what we can expect for various housing markets in the months to come,” Hale said in a statement. Don't Neglect These 6 Maintenance Tasks—or Else, Debunked! US regulators are among the most aggressive in the world in terms of ensuring banks identify & charge off bad mortgages (which in 2008 so overwhelmed the system, taxpayers got stuck with part of the bill). Wonder how many other markets in the US are in similar condition. The whole concept is just mad. Florida real estate prices dropped an average of 60% during the last recession. I am not sure about waterfront property, but things seem a little more rational over here. Listen to Shirley Bassey”s song: “History Repeating” Weak economy in EU and China along with stronger dollar and Trump limiting deductions to 10k is killing higher cost properties as well I’m sure. China would rather build empty cities with very slow sales transaction rates than let real estate correct downward. I’ve always been told to ignore sunk costs, AB. Eventually someone blinks, people realize where the real marks are on their assets, then they ask themselves why they are paying 10% a year to hold onto something that they’re underwater on and dropping in price. Miami’s housing market fared far worse … I felt exactly the same way until I spent time there on a cruise stop. Brick & Mortar Meltdown So their 50% LTV is $550 or higher…. All real estate is local, and prices will be under the most pressure in areas where the economies depend on leisure and hospitality, according to a new report from UBS. It is pretty much mathematically impossible to have a positive yield from buying and renting out a Miami condo (trust me, I’ve done the math many times). That’s a similar vein. Dubai is absolutely beautiful (though it helps if you enjoy the desert), everything is new, and, unlike NYC, it has a surprising mix of activities & restaurants that are reasonably priced. There are almost no foreclosures to speak of right now, it is a dry market, and people are bidding outrageously high amounts for foreclosures. The cycle continues. It started in Miami in 2006-2007 last time. They’re paid off so I book a nominal profit, but I’m subsidizing my renters to the tune of $200/mo each for the HOA (and a another couple hundred that goes to the property managers). From what I understand, once a builder gets a loan, the project goes to completion. That direction is too cold, they will likely migrate west along the coast. In Miami, There Are Too Many Condos and Not Enough Foreign Buyers An exodus of Latin Americans is exacerbating oversupply at the high-end, but local real estate … With all of that in mind, I got drinks last weekend with a buddy in the hard-money lending market to discuss the state of the market. One of the arguments people always make against communism is you don’t get to own your own stuff … increasingly the US system, whatever you want to call it, has everything on a subscription service so that you really don’t own your own stuff any more either. “I’m afraid to buy a new car because my dashboard video screen might soon display the latest offerings from Geico before it allows me to change the radio station.”. Him: They underwrote the stuff the local hard money boys wouldn’t touch at 15%, but those jokers got paid fed funds plus 3 to take the risk. I have no idea how to even sell it. “… And I’ve seen it before The condos are rented out. The buyer factors in taxes and HOA fees in the bid or offer. No it’s loss of marshland which serves as a buffer. With a stream of busted IPOs, a stock market that has not gone anywhere in over a year, there is no real incentive to buy. 2. The billions it’s putting into flood mitigation is merely kicking the can down the road. Think of these places as the real estate version of the Vanden Plas 1500: an Austin Allegro with pretentious finish and a ridiculous price tag. As with many of BC’s local housing markets, prices have stayed relatively consistent for real estate on Vancouver Island, even despite depressed activity in April. The basic law of Miami condo pricing is that if prices stop going up, they collapse due to the carrying cost. Since condos are not rent-controlled in SF, the owner can raise the rent at the annual lease renewal date to whatever level. Prices shot up even more in the latter half of the month, rising a median 9.1% in the weeks ending July 18 and July 25 compared with the previous year, according to realtor.com data. Those shrunken rates can greatly reduce monthly mortgage payments. After reading the comments, I guess I am not alone in this observation. A “conversion” of an apartment into a condo. There aren’t enough rich Venezuelans and Russians to buy all these units. The lenders that ARE looking for big returns (and risks and headaches) on real estate watch the public records for notices of defaults and then barrage the distressed borrower with offers of 12-16%, interest only private loans… not any borrower’s idea of a good time but still better than 25% default rate plus legal fees. Besides, those guys aren’t buying here anymore. Very few left to buy these puppies, and diminishing. Shenanigans. And ban something!!!!!! Why are prices dropping? The pace of decline has clearly accelerated recently. And to be really cynical, look at the Boeing 737max fiasco. Very interesting article. Miami Real Estate Selling Close to List Price The median number of days between listing and contract dates for Miami single-family home sales was 50 days, a 9.1% decrease from 55 days last year. Dubai is down around 15-20% this year I believe. In rent-controlled apartments, when the tenant moves out, the landlord can put the unit on the market at whatever rent the market will bear. Then spread to the gulf, eventually to the panhandle. But Miami has been making up lost ground. Enough money can rent it. Check out the data on property taxes compiled by Empirecenter.org. The main culprit is that demand Is not keeping up with the increase in hotel supply in Miami. https://www.acqualinaresort.com/realty/residences/. There are two things here in SF, going into the opposite direction: 1. Wolf, thanks for including the dialog. many owners seeking to rent out their units are negative cash flow because the pool of renters will only pay as much has the market will bear. Condos, being a place to live and an investment, have a role to play. Can I ask why you left Greenville? I buy investment properties for passive income but bought in brickell for future retirement home . Could it be that prospective buyers of Miami or South Beach property have seen pictures of the streets of Miami and South Beach flooding when high tides occur, heavy rain days, etc.? The whole conveyer belt is frozen. Of course, as layoffs happen and the dead wood goes, the average productivity goes up, so some of the next set of people to get laid off will have productivity above the old average but … in the new, smaller, more efficient company, they are now the dead wood. In theory, you can convert the whole condo building from the legal ownership structure of a condo to an apartment building, though I don’t know why anyone would do that. The group Florida Realtors says that's because builders have been cautious since the last recession. I will never understand why people do this. Now you can’t even buy an stationary bicycle without a ‘membership’ attached. I did and had alerts on all my banking accounts with the big three credit agenies, SunTrust and Chase. See pricing and listing details of Miami real estate for sale. Prices stopped going up and the whole thing blew apart and now there’s no buyers. Lets examine the list of normal buyers of Luxury Miami condo’s; Rich Venezuelans–oops, Rich Russians–oops, Rich Chinese=oops, Rich Tech Unicorn Bro’s- oops, Rich Saudi’s-oops, and Rich Columbian Drug Lords- finally a keep group of buyers still rolling. You can give it away for free. Months of house supply dropped 38.9% to 2.2 months. The 2019 and 2020 market price predictions for Miami real estate in regard to single family homes remains mixed but leaning towards strong. It makes no sense to build more, but they keep doing it!! I don’t want to do the landscaping or clean the entrance. He set up a real estate company in Mongolia (YAK.V) when it was the fastest growing economy on the planet (2011-12??? Some of the most high-profile buildings have had less than 50% sell-through and the majority of what’s “sold” is immediately dumped onto the market unfinished and unfurnished, below the developer sale price for fear that the developer will drop his price and leave these guys even further underwater. 200 units per building. They dipped below 3% for the first time in the week ending July 16, according to Freddie Mac. No it’s not. They used to be able to recycle their capital by selling the assets, but now they can’t. Right? Informative article Wolfe. Florida I’m interested in doing that too, but I don’t want to put it in a bank “safety” deposit box. It is spot on. I was told my checking account was empty (I can no longer use on line banking) and $50,000 had been transferred from my money market account to checking to ‘recharge’ it on behalf of the hackers. It will also offer two single family homes, as well as two two-story penthouses, all with private leisure pools. Between screen addiction, vaping, and the Surveillance Industrial Complex you have to wonder how long Millenials will be able to keep civilization going. If you want to live in an apartment, rent one. That’s exactly the kind of thing I fear as well. The real story is commercial real estate when that blows you will se REITs in canada locking funds get out while you can …just got back from delhi it’s down 40 percent as is dubaii and these places actually have real economies….the kids about to blow don’t get burned. How recent was this convo? What will help prevent any sudden collapse are the happy-talk, buy-buy, articles like this one, explaining that “Developers continue to see an international clientele, especially those from Latin America, moving to the Magic City.” Even the County foreclosure sales, which have been loaded with fix-and flip reality TV fans bidding 110% of value for the past 5 years, are seeing below market priced deals with no bids. Him: It’s even worse. Rent control in SF applies only to older apartment buildings with two or more housing units that were completed before June 1979. And I’m not sure storing it at home would be wise either. All data is for Q2 2019 compared to Q2 2018: Below is a riveting and funny article by Harris “Kuppy” Kupperman on the difficulties the market is now facing, as seen by an insider from beneath the surface, particularly the financing issues that are now ripping into Miami’s condo business. The next ‘housing bubble’ can’t come fast enough (though Miami isn’t helping much). We should build a fund to pick at their carcass in 2 years. Sales of existing homes will fall 1.8% from 2019, according to the forecast. ), but the Mongolian government mismanaged everything and the growth spurt came apart. The owner pays about 10,000 Baht per year condo fees. Transportation What next for theses developers. Darn, where are all those manicured little lap poodles going to live now? Friend: It’s different now, the whole system is jammed up. South Florida is one of those markets where foreigners are always invoked, either as a panacea for all ills or as a cause of all evils. Florida orange groves are dead and dying because of the citrus greening disease. Excellent article. My favorite sight was the reasonably-sized indoor, very cold, ski run at the luxury mall (the other mall has the world’s largest aquarium, and it’s fascinating). To err is human. (adsbygoogle = window.adsbygoogle || []).push({}); In recent news, hundreds of Condos will be turned into a small crampy apartment’s as a clever way to pay less taxes and earn profit! Raise taxes. In the Miami area, they rose 13 percent. There’s thousands and thousands of these things. Go onto the social media and get the silicone enhanced influencers to launch the high end Miami lots. Never got around to try anything serious with it. I wonder if this will spill over to the Gulf side of FL. She also taught journalism courses at several New York City colleges and obtained a real estate license. Apparently Brits like Dubai for winter breaks because sunshine is guaranteed. Pittsburgh was followed by Los Angeles, where prices rose 24.3% year over year, to $994,154. Insurance companies can walk away in the middle of your mortgage? They’re scared of Trump and they’re broke anyway. This works well in an up market. The median sales price declined 1.7 percent to $295,000 in August, from $300,000 in July. I moved to Birmingham Al after the crash in Fl. I am sure the Chinese government will be delighted to send a delegation of their finest statisticians to the UAE to show them how you can literally run out of buyers but still have a booming real estate market. They come with a ‘subscription’ in the form of the HOA monthly fee. It explains why RE prices are generally not going up when mortgage rates are trending down even through the spring and summer. If the market is growing you “have” to buy right now at whatever price, otherwise you will be priced out by [insert the nationality fashionable among RE shills at the moment] desperately trying to bring their money out of their own country. Sign up here. "When the pandemic helped tip the U.S. economy into recession, most homeowners and home buyers braced for falling house prices," says realtor.com Chief Economist Danielle Hale. Attach a 4% annual wealth tax to your property and see what it goes for. It was gangbusters in 2005. Friend: The story usually ends with a “fire sale” of the property by the defaulted borrower or by the lender (after foreclosure). On the positive side, new house listings actually in the high and low price points fell strongly. They’re not jobs. I don’t get the appeal of condos either. Europe’s Dilemmas Add in a recession, and you have a perfect storm. China I heartily recommend this book, a nice read, nothing literary but very enjoyable and uncannily predictive. Besides, the guys who qualify for real loans are all selling because they cannot hold onto their own properties. In 1977 John D. Macdonald’s novel “Condominium” was published. I am not sure how the Fed counts them, or if they count them. The unit stays the same, and it stays on the rental market, but now the owner doesn’t have to deal with rent control. These things take a long time to filter to the surface, as they’re now starting to. I would also be interested to see the absolute $/sq ft price data in addition to the %change. Quick. But when it floods…it must be global warming responsible. But renting out a condo is NOT considered a “conversion.”. Can confirm. From memory, Miami real estate is very much Kuppy’s area. A surge of domestic and foreign buyers are purchasing primary homes in Miami's diverse neighborhoods. "That's what happened in the last recession. Humorously, here in FL, about the only maintenance performed on foreclosed homes (copper pipes ripped out, mold on walls) was keeping the pool clean enough & stocked with mosquito-larve-eating fish. Consumers The property tax is $50,000 alone. Same thing with the algae bloom in Florida. Having said all that, I sure wouldn’t want to live there, Iran is about 30 miles across the water…. https://fred.stlouisfed.org/series/FLRVAC. Pretty soon they’ll all be forced into another round of price cuts. End users are seeing that the “fire sale” price may very well be next quarter’s market price, and the units aren’t moving. 200 units per building…. That’s why every third unit is suddenly for sale. I guess Kuppy is mostly back in Miami these days. The question is how to craft a bailout that would be politically feasible…. These sub-markets are small, and sales volume in each market is relatively small, so the data can get volatile. I have a strong feeling more and more Airbnb units are hitting the market through owners using their condos for Airbnbs. The media went nuts along with all the other party leaders and the majority of the councilors. Have not been reading about them in this supposed bubble. The Phase One build-out will include many greatly improved floorplans, all with exquisite finishes, five-star services and unique amenities that distinguish the Acqualina brand. I think we could say that Miami is “distinctive,” but not unique, and it’s certainly a trendsetter. STAT OF THE WEEK $1 million Miami-based Cervera Real Estate announced that Sandra Masis was its top producer last year in general real estate sales, with $1 million in commissions. It will make for great scuba trips in a few years! In the modern real estate market in growing areas, housing is partially a place to live and partially an investment. A 1909 Family Home Is Fully Restored and Grabs Top Dollar, Just Look at How This Cool Cubic Condo in Cambridge, MA, Stacks Up, Have You Served? People are starting to listen on climate change. Median home prices were $403,826 in Miami and $320,050 in Orlando. $4K/Mo in prop taxes plus HOA fees of prolly $2K/Mo BEFORE you contemplate the purchase price? Hey Wolf, I decided to email these guys for info, as below. Unlike in Broward and Miami-Dade, the median price for single-family homes actually went down in Palm Beach County, dropping by 1.4 percent to $340,000. Friend: Before, when a borrower would default, we’d put him into penalty default interest (which is 25% on loans over $500k in Florida). Overall house listings rose 12.1%, much higher than the 2% growth last month. The rent you pay for your apartment includes the owners financing costs plus the property taxes plus the condo fees and special assessments plus some profit to the owner. The bank branch may be from 2017. When you own a treasury bond, you see NAV = 1 as far as the eye can see, but you look at RE you see who will be swimming naked when the water rises, who will be bone dry, and you bail out. Home Buyers Reveal: 'What I Wish I Had Known Before Buying My First Home', Selling Your Home? I’ve been told Australia is even worse, but I find that hard to believe. Kapish? Besides, property is a slow burn process. Back in 2017, I covered Miami’s condo construction boom, how it was turning into a glut, and how the preconstruction condo flippers were starting to run into trouble, down to the granular detail of condo tower by condo tower. Gross domestic product, aka GDP, the value of goods and services produced, dropped the most in the more than 70 years that it has been recorded. Not in my experience. Of course, commodities ran right downhill after the start-up as well. Last time I was there was a few years ago on my way to Yemen and I picked up a brutal dose of food poisoning. Everybody screamed to raise taxes or the whole place would blow! This is a process with the City that changes the legal ownership structure of the building, and is limited and hard to do these days for reasons I point out below. In SF, condo conversions (item #1 above) are limited to 200 a year. If the Corona Virus is held at bay, home prices could stay flat for July, and then begin a slight 1% increase in August and September. I know what my competitors underwrote, trust me, they’re in MUCH worse shape. The media still peddling ‘all is well’ story: https://therealdeal.com/miami/2019/09/26/in-a-sluggish-condo-market-these-miami-developers-find-a-sweet-spot/, …Now you have whole city blocks that are nothing but high end. This is good information but makes me want to puke as my brickell condo which I thought I overpaid for might tame a further bath if/when I sell . The ground floor on those condos is not far from sea level. https://www.local10.com/weather/heavy-rain-causes-street-flooding-in-miami-miami-beach. Tell that to all the idiots paying so much to rent in places like San Francisco Raleigh is a great alternative with a growing tech industry and MUCH more affordable living. In the meantime, home prices will grow an average of 4.1% over the next three years, above the long-term average of 3.9%, according to the report, based on a survey of 43 economists at 37 leading real estate organizations. I worked for a County government in Florida when the market blew in 2007. However, Idaho, Iowa, Kansas, Montana, Nebraska, North Dakota, Oklahoma, South Dakota, and Wyoming have more cattle than people. This time, who knows. In other news about banking security on the internet. Suddenly, it seems as though a lot of owners are becoming financially distressed—forcing them to hit bids at a time when demand is somewhat lacking. I suspect similar situation applies to the Bay Area. Part of the reason I could not stand South Florida is how so many people seemed real estate obsessed: I bet they were talking about it in their sleep as well. Although it starts by admitting that although 34,000 people moved to the Miami area in a recent year, 58,000 moved (bye-bye) to another state the same year. We could play these same games with the defaulted borrowers, but my investors want the defaulted paper off the books—we don’t want to re-possess the property and have to sell it. A builder that doesn’t build isn’t a builder any more. This annual limit on rent increases is the reason why owners try to jump through the hoops to legally convert rental apartments to condos. Now those guys are jammed up too or at least they’re not coming down here anymore. said it clearly in the piece: this is fake luxury. Buying a condo is a stupid idea 99.9% of the time. Corporations that never had and never will make a profit. Click on the beer and iced-tea mug to find out how: Would you like to be notified via email when WOLF STREET publishes a new article? This site is protected by reCAPTCHA and the, Sorry, we were unable to share this article. Spoiler: absolutely _nothing_ has changed in more than 40 years. Canada No traffic jams. The interest rate cuts produce a dead cat bouncing… now the fun begins. The only way owning is viable, is if prices go up and allow you to extract capital to fund the carrying costs—though debt service then makes the monthly cash flow even worse. Hoping to find buyers for high end. It may not even trade with a 2-handle. Even more exciting, they have what they call “Sunny day flooding” increasingly every year where the water just comes strait up into their basement through the porous limestone ground the whole city is built on. The tower will also feature an exquisite lobby designed by Karl Lagerfeld, the first condominium project in the United States to involve the iconic designer. Home prices grew by 17 percent year-over-year at the end of 2013 in the West Palm ­Beach-Boca Raton-Delray Beach metro area. Read More » We underwrote this one deal two years ago for a $3.4 million purchase of a new construction condo, we leant $1.5 million against it. It just needed lower prices and it eventually cleared. Finally allow me to say that having lived in Florida, and fled as soon as possible, I just don’t understand how somebody could pay that kind of money to live in Miami. We can use it as the REO office. No amount of money can buy happiness. San Jose CA – can’t keep a McDonald’s, a Ross, a Safeway, etc yadda yadda movie theater closed, Cafe Stritch down to operating 4 nights a week and may cut down to 3 (neat jazz club however long it can survive) the place is just getting dead, dead, dead. Metro areas include smaller towns, cities, and suburbs. Real Estate speculators assuming the greater fool theory…. As if I’d ever want to go there in 1 million years. A middle-class guy cannot afford to hold it. It looks like Cookies are disabled in your browser. Federal Reserve Of the 50 largest metropolitan areas, annual prices rose the most in Pittsburgh. The Estates at Acqualina, will be built in two phases beginning with the South Tower – also known as 777 Via Acqualina – and Villa Acqualina, its extraordinary amenity complex. Perhaps the talk of wealth taxes is scaring off the wealthy foreign purchasers. While the current conditions haven’t led to a short-term price drop, the long-term economic trends induced will likely effect prices in the future. After the new tenant signs the lease, rent control kicks back in and limits annual rent increases to a rate linked to CPI. That’s not the key cost of holding these things anyway. While most of the sub-markets show price declines, and in some cases vertigo-inducing price plunges, there are some sub-markets … Good thing they just popped down a new branch in Sunset Harbor. Suddenly, it seems as though a lot of owners are becoming financially distressed—forcing them to hit bids at a time when demand is somewhat lacking. To really screw things up you need a computer with an internet connection. I suppose I will soon get prompts for iPhones streaming service next. We’re building cash. Additionally, as a result of high demand for larger units and more customized features, 777 Via Acqualina will now be reconfigured to feature a total of 150 luxurious residences with square footage ranging from 2,910 to 5,595 square feet, with larger balconies and extra bedrooms. Meanwhile, I’m stuck carrying the thing—which isn’t cheap. “People are starting to listen on climate change”. Friend: Lemme explain it this way. They can take rates to zero, it won’t matter. You really should, otherwise you may not be making the wisest choices about how to spend your housing money. Condos ( and I live in one) are like everything else these days. Some Northeastern housing markets that were devastated in the spring by the pandemic have rebounded—and then some—as their number of positive cases has fallen. Speculative building….. Debtor Nation I have long drawn my conclusions about the folks who buy this stuff and they are better not printed, at least not on this fine website. Well, it’s been for sale for 9 months now. Wait until it’s your turn. What happens then? In Ontario, Canada, our new Premier cut in almost half the Toronto city councilors… Then again, if the market value drops, how often do you see a decrease in your rent? Canadian Real Estate Prices To Drop 28%. Please do another article on the repo market. They also impact adjacent markets in So. They’re just apparatchiks hired so some manager can get a raise because more people ‘work’ for him. It’s more than simple supply and demand—though the glut of new supply is clearly part of it. 4% or higher property tax rates have been around in some parts of NY state since at least 2017. http://www.empirecenter.org/wp-content/uploads/2018/04/Benchmarking_PropertyTax_2017.pdf. Banks look at the data and won’t underwrite new loans. Many of those listings have yet to go back up. The median number of days between the listing date and closing date for single-family homes was 98 days, a 6.7% decrease from 105 days. If the tenant moves out, the owner can figure out what the market will bear — which is the same for rent-controlled apartments. What does that do to bonds? And they're competing with those who had no plans to move until the stay-at-home orders created a burning desire for additional square footage and a big backyard in which to ride out the crisis. Now you need to pay mortgage on top of it.. Small world. It depends on the market, obviously. https://www.dropbox.com/sh/8qnnqwg5zho8njq/AAARFIuQmqcZPIj_UpBqPNIba/Brand%20Video?dl=0&preview=The+Estates+At+Acqualina+Brand+Video.m4v, https://my.matterport.com/show/?m=aN8UAcUPy9t&brand=0, Casa D’ Oro- Single Family home renderings, https://www.dropbox.com/sh/8qnnqwg5zho8njq/AAA7y72VWXX2PElefiFbyv-Ha/Floor%20Plans/Estates%20Single%20Family%20Homes/Casa%20D'%20Oro?dl=0, North Tower (fully furnished by Fendi Casa), https://www.dropbox.com/sh/y5pghsioi1qhkq3/AAD2aOcBPSqN0t15JFqSiU00a?dl=0, https://www.dropbox.com/sh/yivyqsn92vqczwe/AAByqwvmZvhAwo61mS4d8b4za?dl=0, https://www.dropbox.com/sh/8qnnqwg5zho8njq/AAA1D0f41aT8zfF0zzD3LQcaa/Floor%20Plans/Estates%20Residences/Vecchio?dl=0, https://www.dropbox.com/sh/8qnnqwg5zho8njq/AAAXV7TTM8lLpml9S7hy1zLIa/Floor%20Plans/Estates%20Residences/Uffizi?dl=0, DONATELLO FLOORPLAN AND RENDERINGS Then there’s the “single-asset” commercial mortgage-backed security (CMBS) backed only by the mortgage of this tower. After Katrina, things changed rapidly. And if the market value drops you don’t take a personal hit. Googling OZK bank did not turn up any offices being That would explain very strange as I am seeing on social media sites and we have surprisingly affordable apartments in Dubai can be. I’ll probably smack the bid wherever it is and take the hit—before someone else does. Bank of the Ozarks is into this development for a $600m loan, with a GDV based on over $1100/ sq ft. I’m afraid to buy a new car because my dashboard video screen might soon display the latest offerings from Geico before it allows me to change the radio station. Call Mr Darwin. Miami has a highly cyclical property market where the magnitudes of the booms and busts dwarf anywhere else in the country. The Florida cities have been hard-hit by the coronavirus, which may help to explain the declines. The total inventory of homes on the market is about a third less—roughly 440,000 properties short—than what existed last summer. Trying to clean up the previous parties massive debts and bad policy commitments. Fl’s 21.5M human population outnumbers the 1.1M cattle (who, contrary to popular belief, are allowed to neither vote or count votes). I have noticed that too. I’ll be fine, but they’re toast. This was done some years ago to halt a wave of conversions of rent-controlled apartments into condos, which are not rent-controlled. Last cycle, it was a few hundred units of high-end that went bad. (They have since ticked up to 3.01% in the week ending July 23.) True and when I was building homes I heard the stories of my colleagues making zillions by borrowing more and doing bigger projects as I built one at a time Then as the markets imploded I heard the stories of how they were all crying, bankrupting and divorcing I just kept driving my old pickup to work every day and tried my best to ignore the noise. Miami Beach is sinking, and the sea level is rising. By Harris Kupperman, founder of Praetorian Capital, Adventures in Capitalism. Buying a condo which comes with insane condo fees always makes it a bad deal. https://www.treehugger.com/climate-change/very-late-book-review-john-d-macdonalds-condominium.html. This is totally inaccurate. Your question is nuts, in a best-case scenario. Several of the comments posted also helped understanding. This takes time, and if in the mean time the dollar gets stronger, and the foreign buyers dwindle, things can get messy. But it is showing up in the condo data for the sub-markets. Median prices in the Steel City and surrounding area were 25% higher in July than the previous year, hitting a median $249,950. We don’t need a wall at the Mexican border as much as we need one at the Broward County border on I-75. 8 Myths About Renting You Should Stop Believing Immediately, 6 Ways Home Buyers Mess Up Getting a Mortgage, 6 Reasons You Should Never Buy or Sell a Home Without an Agent, Difference Between Agent, Broker & REALTOR, Real Estate Agents Reveal the Toughest Home Buyers They’ve Ever Met, The 5 Maintenance Skills All Homeowners Should Know, Click for complete coronavirus coverage from realtor.com, Forget About Recessionary Real Estate Bargains: Home Prices Are Still Rising, The Housing Market Heats Up as More Americans Return to Work, Why a Pandemic, Recession, and Protests Aren't Keeping the Housing Market From Roaring Back, What To Expect in 2021's Housing Market: This Is How Much Home Prices Will Rise, What the Flip? Sixty grands per years are not peanuts and come on top of the buying price. Is Miami an extreme outlier? Keep up the good work folks. However, you are correct that foreclosed homes sat empty for years (in some cases) waiting for buyers. Last time they let millions of properties sit empty on the banks books for years, while allowing them to pretend the loans were still good. The condo gets sold at auction. Home prices fell in only two of the nation's 50 largest metros: Miami, where they dipped 1.5% compared with last year, and Orlando, FL, where they ticked down 0.9%. And they get to decide who gets cut, and it won’t be their pals. But this time is different said the REIC shills. Price activity within the Fraser Valley real estate market has taken a different turn, with upward growth in average prices of single-family detached home (+2.7%), townhomes (+1.8%) and apartments (+1.0%) compared to price levels for May 2019. Wait 6 or 9 more months. The chart below, courtesy of Zillow, shows how the median home price in Miami has changed over the past ten years or so. Let’s say $35,000 in taxes and $25,000 in HOA fees per year? After we made the cuts, everything was working just fine. It’s always dead wood or trimming the fat when it’s somebody else losing their job. The Florida vacancy rate was much higher in 2009 after people had moved out of their rental units into new homes to try to strike it rich in the real estate market. This time, the glut is fake “super-luxury.” 3,500 ft units with private exterior jacuzzies don’t ever clear. In my experience, trends in Miami real estate also tend to lead national trends by a few quarters. I want to look into Tampa or Jacksonville. And it doesn't look like they'll be coming down anytime soon. Me: So, what are you doing to clear these bad assets? The number of real estate contracts signed for Manhattan apartments plunged 84% in May compared with last year. And property taxes are based on how much the property is valued, not on the real value of the shoddy workmanship and poor materials sold for their weight in gold. Folks this is not going to work. Wolf – This would have been mid-2000s, involving those tons of sh!tty apartments in Sunnyvale along Mathilda Avenue. Finally newspaper editors and economists from Japan, Sweden and Australia can explain to the embattled Amir how merely slashing interest rates and buying securities can solve any problem, included (but not limited to) baldness, traffic congestion and even the common cold. In the Miami Beach area further south, property prices have been falling for some time now. Love water, heat, and sunsets… Energy Cheap and easy money always finds a place to die. It remind me of all the people buying (leasing was still in its infancy) Bentley’s around 2005 and trying to sell them after six months because insurance and maintenance alone were eating them alive. Yikes. There used to be more jobs in the orange groves and juice factories. It seems that the condo developers should have spent more time paying attention to geopolitical and financial events and less time watching football the property Bros. I stopped by SunTrust today to see the status of my accounts. Am I crazy for wondering whether they’re building high end fully expecting them to get wiped out by the next hurricane? The record for house price increases among the 20 metros in the Case-Shiller House Price Index is held by Miami, where prices skyrocketed 193% in the six years through December 2006, before collapsing. Very happy with that turn of events. As early as 2005, McCabe was sounding alarms of a … Credit Bubble As a Brit, these numbers are absolutely staggering. During the 90’s we vacationed often in Miami, 3 or 4 days was always more than enough. Consistently low mortgage rates, expanded work-from-home and remote schooling fueled already strong demand for Miami real estate. Lemme know when I can get a great deal on something nice. At least I won’t have to keep making condo payments and 2% property tax payments. Roughly a year ago, I noticed that Miami property prices started to decline after a two or three-year period of leveling off. Hey they could always just build a wall Seawall that is Doesn’t POTUS own property down there He’s an expert on wall building. Me: Won’t the 50-bps the fed cut help clear the log-jam? Just little bits of history repeating..”, “Even the County foreclosure sales, which have been loaded with fix-and flip reality TV fans bidding 110% of value for the past 5 years, are seeing below market priced deals with no bids.”. Office occupancy plunged by the most in Dallas. But it can be. You don’t get trimmed if your not dead wood. Our policy makers will react to this somehow, they don’t like affordable housing either. A high end buyer buying a unit in a 200 unit building. Inflation & Devaluation "We have this market imbalance tipped pretty solidly in favor of sellers at this point," says Hale. The median price was up 5.2 percent, year-over-year, however. For the best experience, please enable cookies when using our site. Miami was cool in the 70s and 80s when it was a little run down, too commercial now. I love MiAmi but im too practical to get gouged daily on almost every purchase and activity . This has not yet made its way into the overall house price indices for the vast Miami metro, such as the Case-Shiller Index for Miami, in part because it only tracks single-family houses and not condos. Freddie Mac’s experts expect home prices to drop, too, falling 0.1% in the third and fourth quarters of this year, and then again in Q1 next year. Commercial Property FACTOID: draining pools in high-water-table areas means pools might literally pop out of the ground & float…VERY EXPENSIVE TO REPAIR. Every month they break ground on hundreds of additional units when the existing ones won’t sell. Each estate in the sky will be delivered furniture ready, and equipped with the finest appliances, imported stone countertops, smart-home technology and soaring ceilings. It was still strong in that area up until late 2008 early 2009, then the bottom fell out there too. Remember, our basis is $1.5 million. 7 SoCal Properties Recently Sold by the HGTV Star. The benchmark price of a single-family home in May increased slightly from April 2020 to $528,800, a … I guess I will always be looking at the condos 3 blocks from the beach. Sounds a lot like Vancouver over built no buyers and more units coming I feel we should see a major crash in Vancouver real estate it’s down 20 percent already we could use another 40 or 60 percent ratcheting before it settles . It’s going to be just like 2009. Now add a law where you cannot buy properties with dirty or laundered money through an anonymous shell corporation, and things get very ugly. We’re happy when someone takes our problems away. HoA is over $1/sqft/month, so tens of thousands a year plus property taxes. And they’re expected to continue dropping for the foreseeable future. Villa Acqualina, 60,000 square feet of remarkable amenities space, will also be completed in Phase I, and will house a world-class Spa and Salt Room, a private Nightclub, Wine Lounge and a celebrity chef restaurant, as well as Circus Maximus, offering residents a world of games and activities including a Wall Street Traders’ Club Room, a private skating rink and bowling alley, all in a private gated community on the ocean. No one has a clue what to do with it, yet these assholes keep building more product. See our Privacy Policy, Miami Real Estate Is About To Collapse… This is About Condos, and it Would Be Funny if it Weren’t so Serious, Copyright © 2011 - 2020 Wolf Street Corp. All Rights Reserved. I spent roughly half my work like in private industry, and the other half in public (if I include the Army). One of the tour guides explained there’s actually a higher percentage of Arabs in Manhattan than in Dubai. I converted to not only cash but goldand silver as well a year ago Sleep well at night now. These offers often come with periods of prepaid interest that temporarily take some pressure off the borrower… but also help sharpen the axe for when it finally falls (larger, artificially inflated final loan amount). This has led to a return to bidding wars and offers over asking price, which is helping to drive up home prices. I have a feeling many will turn to hotels or Airbnb units, which would be really bad for the hotel sector. Wolf, your table of various neighborhood stats is very interesting and helpful. But beneath the surface, it has gotten a lot worse. Read…The Most Splendid Housing Bubbles in America, Sep. Update. Even a few months ago, there were still idiots from out of town, or kids with daddy’s offshore money who’d come down here with a new hard money-fund and make stupid decisions. This means that no one is buying the distressed loans off our books without demanding a discount on principal. Chart: Miami home … More subtle things than subscription too, like how “mysteriously” people’s iPhone slow down after a system update following a release of a new model – its why Apple already got sued by France which has anti-planned-obsolescence laws. So this dialog (convo) above is from 2017. https://www.miamiherald.com/news/business/real-estate-news/article235149742.html. But that's not what we're seeing in today's market. Him: Are you f*cking kidding me? Not an unknown process at all; in the SF Bay Area lots of small crampy apartments got turned into condos. Will they have to move back to New York? In 2018, a total of 191 units were converted from apartments into condos, according to the SF Planning Department’s 2018 report. Plummeting New York real estate values are causing people to flee New York in droves! Check the Miami dade clerk of the courts website and see how many foreclosures are out there, and look and see how many were administered daily back during the crash and after. I got an add for “bank repossessed property Costa Del Sol”. Buyers who were sidelined by the virus in the spring are now jockeying with those who had planned to buy in the summer. When then rent goes up, you move. The property taxes plus HOA Fee plus Mella Roos Fee alone may cost you $2000/month . My god man…flooding. It seems that homo highendicus dumbus is also going extinct. I’m charging these guys 10% because they cannot get traditional loans. :-), I didn’t say those were my only two homes…. Florida has a high rental vacancy rate (8.2%). We had a housing shortage already, and the pandemic has created conditions that have only worsened it.". No flood of foreign buyers this time, particularly from Europe. Add to that the $4500-$5000 a month mortgage and all of a sudden it doesn’t really make sense to buy if prices are not going up any more. Tommorrow I convert to cash. Suddenly, no one wants our defaulted borrowers. Buyers paid a median $27,000 more for a home in July than they did last year because the supply of available properties for sale plummeted at the same time that demand for them had skyrocketed. She previously wrote for a Financial Times publication, the New York Daily News, and the Associated Press. Maybe stop in Texas if they get that far. This was done to halt a wave of conversions some years ago, of rent-controlled apartments in older buildings into condos, which are not rent-controlled. Here is a sampling from the Q2 report on Miami’s condo markets by Brown Harris Stevens. Trade Thoughts? In 2018, a total of 191 units were converted from apartments into condos, according to the SF Planning Department’s 2018 report. But new businesses with planned wages have been getting scarcer since 2007. Housing Bubble 2 That has to do with the immense dead zone in the GOM result of oil spills and stuff coming down Miss, excess fertilizer dumped on GMO crops in Midwest. Wolf here: Signs have been piling up that the Miami condo market, where luxury towers are still sprouting like mushrooms, is getting into serious trouble. He runs a real estate economic consulting firm based in Deerfield Beach that bears his name. Grow government. The property prices can halve and that means the property tax halves, but you’re still paying condo fees and remember, when your neighbors stop paying, you’re on the hook for their payments. For my flat in England I pay £75 per year ground rent, £1,200 per year maintenance, and £1,100 per year council tax – a total of about $250 per month. This is turn could be causing the disappearance of demand from the hotel sector. But just because it’s fake luxury it doesn’t mean HOA fees are any lower. Here’s a guess: a 5% drop in home prices in May, 7% in June if everything holds economically. View 10318 homes for sale in Miami, FL at a median listing price of $390,000. Hydro was just about to buy Avista a US outfit but this was subject to Hydro being private. I’m a hotel consultant and while the hotel business has been great in Miami, this year (like many other top markets in the US), Revpar (revenue per available room) is turning south. Housing prices aren't expected to drop significantly during the COVID-19 pandemic. And Petunia makes a good point…. This means that we need to now take possession of our defaults. If you buy a condo for $1.2 M in a relatively nice area with good schools, your property tax is about $1200 a month, $500 HOA fees, plus insurance and maintenance, your carrying costs easily reach $2500-$3000 a month before even the mortgage payments. Not good. Yes I’ve seen it before Condo prices rose 7.6 percent to … In SF, condo conversions are limited to 200 a year. If you think the market is going to go up, and if all you can afford is a condo (or have preference for living in one for some reason), then it can be a good investment. Zillow economist Skylar Olsen says Zillow is forecasting a price drop of 2 to 3 percent through the end of 2020, depending on the city, compared to where prices were in February. Full disclosure. Meanwhile, many sellers nervous about contracting COVID-19 from buyers touring their homes put off plans to list their residences or pulled them off the market. Same thing in newer neighborhoods in San Diego. These areas outside of the densely packed cities where buyers can get more square footage and outdoor space for their money and have an easier time maintaining social distance have become more popular as the pandemic has dragged on. View listing photos, review sales history, and use our detailed real estate filters to find the perfect place. The original Florida land boom was followed by 1929 crash and depression….. Other 1920s Florida Real Estate Bubble Resources: Wikipedia: Florida Land Boom of the 1920s, Market Crashes: The Florida Real Estate Craze, The Forgotten Real Estate Boom of the 1920s, ‘It’s over’: Miami Beach tries to outrace climate change’s rising seas, https://news.yahoo.com/its-over-miami-beach-tries-to-outrace-climate-change-and-the-rising-seas-160000886.html. Contact her at clare.trapasso@realtor.com. Where do you store your gold and silver? It’s just as easy/hard to rent out a condo (item #2 above) as it is to rent out an apartment. In fact, in some cases it is assumed that the borrower will not repay the loan and through penalty interest, you rapidly chew through their equity and get to own a high-quality property at a great initial entry price. My business is to underwrite safe loans and to clip a coupon, not to own real estate. Most of the condo buildings up and down the entire east coast of south FL are full of renters. Friend: Holy sh*t Kuppy, it’s about to blow!! we live in birmingham – we live in highland park and birmingham is booming- don’t know if it will last but its great right now- we moved here from greenville sc – we like it. Predicted to be under water (literally) before the mortgage ends. At a 45-50% LTGDV $OZK is into this for up to $750/ sq ft. Condos start at $4.2m? Each master suite will boast his and her bathroom suites with imported onyx countertops and walls and marble floors, a steam mist shower, a free-standing tub, an ocean-view shower and elaborate his and her dressing rooms. Middle class has been made extinct and the duffers are building high end. Was told you can’t fire the CEO of Ontario Hydro due to some high penalty clause… Many rentals in large expensive cities are $1K per mo neg cash flow, and owners tolerate that because they are expecting big cap gains. The advantage to an apartment is you can leave for greener pastures, typically within a year, or sooner if you break the lease. This time it really is gonna blow…. I own a 2 bedroom flat in England and rent a condo in Thailand. Most properties on South Beach (where I live) are off by 20 to 35% from peak prices, but that is nothing compared to the carnage across the bridge in areas like Brickell and Edgewater. They underwrote all sorts of nonsense that I wouldn’t ever touch. The tenant then decides to endure or move out. The branch I got to looks like it’s 100 years old. The only cure for asset bubbles is a mercy killing by collapse. Using this model, and using the OECD index numbers, we should see prices drop … I get prompts on my iPhone to sign in to the Apple store and ‘news alerts’ I didn’t request. Most of New Orleans is built BELOW sea level. Miami Luxury Home Sales Spike 55 Percent Annually in Q3. The developer or owner goes bankrupt. Jobs Me: Why isn’t any of this showing up in the data yet? I can accept that as a necessary evil. You can buy nice houses in South Miami/ Coral Gables/ Pinecrest for less than $300 with no HoA fees. My fund has basically stopped lending on condos and is well below 50% LTV on everything else. In some parts of the country, new home construction was delayed or paused in the spring in the beginning of the pandemic. A 10 year lease for an apartment is rare. It’s a vicious cycle that every condo development goes through eventually. The Fed counts vacation homes as vacant rentals, even though they are not rentals, as they are not used as primary residences. I used to read about condo conversions. Copyright © 2011 - 2020 Wolf Street Corp. All Rights Reserved. They’re mostly Cuban or PR who can’t buy a house there, or NY/NJ/New England who bought there and then ruined it the way they ruined the Northeast. I follow the foreclosures and tax deeds religiously. His ass was grass with just the required severance package by law. Data from some of Wolf’s earlier articles have been foreshadowing this in Miami. Miami FL, San Jose CA, Seattle WA, Las Vegas NV all looking weak. What areas are most devoid of NE’ers? Him: Last time, a lot of the stuff that defaulted was upper middle-class product. They can cut a few points off rates and it wouldn’t matter. These sub-markets are small, and sales volume in each market is relatively small, so the data can get volatile. It sounds like you’ve never visited any “rent vs. buy” sites or ever made a spreadsheet to calculate your expected future wealth in a buy vs. rent scenario. Looks like another blood bath is underway in Miami’s condo market. 2017, as far bank branches is concerned, is new. SC & AL are always on my list of places to look into moving. If you later decide that moving to Florida was a mistake and you want to sell and move out of Florida, you may find yourself in a strong buyer’s market when Florida real estate prices are low. Let me assure you, in both, management always takes care of it’s own. Nonetheless, home prices have hit record highs as buyers are battling it out across the nation over a limited selection of reasonably priced abodes. We’re on our 3rd broker now. Who would have thought that this summer, with the number of COVID-19 cases surging and new rounds of restrictions and shutdowns, would yield one of the most competitive housing markets in recent memory? Me: Welcome to the Miami property cycle. This adds up fast when a property is worth hundreds of thousands or even millions. Get quick and easy access to your home value, neighborhood activity and financial possibilites. Enjoy reading WOLF STREET and want to support it? I rank Dubai as one of the worst cities in the world unless you enjoy 50 degree Celsius heat and shopping malls. We had to cut staff by 20% over two years. A much stronger group than any union ever was, for damn sure. In a city 5 feet above sea level. Greek, Italian and Spanish authorities can provide their expertise in keeping real estate prices sky high in face of declining sales and shrinking populations. The firing of the CEO established that Hydro was govt controlled and this killed the deal requiring Hydro to pay a 100 million plus break fee. At the right price someome will buy, but at $1500/ sq ft?!? More cows than people in some areas. Remember, the price for a whole building is set on the last trade. If the market is going down is it’s all the fault of those dastardly [insert the nationality that used to be fashionable among RE shills until a few weeks earlier] dumping their properties on the market at fire sale prices. In July, the median home price shot up 8.5% year over year, to hit a new all-time high of $349,000, according to the most recent realtor.com® data. The basic law of Miami condo pricing is that if prices stop going up, they collapse due to the carrying cost. Are there any other local markets in the US this out of kilter? Often these have a bigger impact on buy decisions than price and usually take a little work to dig up.. I appreciate it immensely. When they go into foreclosure, the HOAs buy them and rent them out to keep the prices from collapsing. People are massively striking out on their own. Coral Gables and Coconut Grove will likely have stable-to-up prices, while in Miami Beach we see some signs of weakness although prices are still on a slow and steady climb there. They've built fewer homes, and right now, Florida has a statewide shortage. It is pure speculation, combined with the greater fool theory. Our specialty is underwriting—not foreclosure. Rather, your typical condo has a carrying cost of 4-7% of fair value before financing costs (property tax/condo fees/insurance/maintenance/special assessments/etc). We live on the Gulf side too — and what’s keeping our prices growing (slowly and steadily this time, we hope) is all the refugees from Miami-Dade and Broward Counties. Central Banks Then the rest of the country. Rent, don’t buy. A March 2020 report by Clever, an online real estate service, indicates that only 5.3% of homes in Miami-Dade are worth less than their mortgage …