Just got back from Miami Beach where I spent the last 4 days looking at condos. This is a market where sellers are in capitulation/resignation mode. My broker was complaining how little money he is making and how much he hates Miami. He longs for his hometown(Boston). he has stopped paying his mortgage on his Brickel condo. He bought on spec in '06 and re-fied a year later, using his condo as an... [more]
Just got back from Miami Beach where I spent the last 4 days looking at condos. This is a market where sellers are in capitulation/resignation mode. My broker was complaining how little money he is making and how much he hates Miami. He longs for his hometown(Boston). he has stopped paying his mortgage on his Brickel condo. He bought on spec in '06 and re-fied a year later, using his condo as an ATM. Several of the condos I saw were still occupied with owners, all of whom had either stopped paying their mortgages or were about to do so. They spoke freely of the financial mess they were in. They want out at any price. Most others were empty and the owners were eager to make a deal. Many of the listings were on the market for 6 months or more. I did not see all the properties I wanted to as their listing brokers never bothered to call my broker back.
Clearly sellers and brokers who represent them have simply given up and are selling at any price. Sounds like a bottom to me. Have offers in on 3 different units. Carrying costs(mortgage, taxes,maintenance) are nearly covered by rents. One unit in particular comes out at break even.
Will we see this in NYC? Not too sure about Manhattan but W'burg, LIC are in far more danger of a similar scenario.
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Response by secondandc
over 16 years ago
Posts: 121
Member since: Mar 2008
URLs to places you saw?
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Response by The_President
over 16 years ago
Posts: 2412
Member since: Jun 2009
I think Miami has a long way to go before it bottoms. I think the only markets that stand a chnce of bottoming in the next few months are those without speculation, like Texas, Seattle, etc.
Mr. Nino’s fund recently purchased 10 units in Brickell on the River, a Miami tower project, paying about $156 a square foot, or €1,150 a square meter. A comparable market price would be $215 to $225 a square foot for similar units, according to Peter Zalewski, managing principal of Condo Vultures.
Pres: I may not be catching the exact bottom here but the price to rents ratio is very favorable
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Response by Jazzman
over 16 years ago
Posts: 781
Member since: Feb 2009
Pres - I couldn't disagree more - Investors are how these markets are going to find a bottom. I just don't see your logic. The US housing market is overbuilt - that is, we have more houses than qualified home owners. So we need overqualified homeowners to buy multiple homes and rent them to people with bad credit.
Last month in Vegas (a market I watch) 45% of the buyers paid all cash. It's safe to say that the majority of buyers are investors and it seems, that for now, Vegas has a floor (you'll probably see prices fall for another month or two there - as well all know units that go into contract today don't his the transfers for a couple/few months). That floor is at a price where investors can make better than 8% cash on cash returns. If rents go down then prices will go down some more, but for now there are multiple buyers for every property and even though there are thousands of units on the market more than 50% of them are in contract or have an offer pending bank approval.
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Response by newbuyer99
over 16 years ago
Posts: 1231
Member since: Jul 2008
cfranch - why do you say "Carrying costs(mortgage, taxes,maintenance) are nearly covered by rents" makes the price to rents "very favorable"?
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Response by 30yrs_RE_20_in_REO
over 16 years ago
Posts: 9900
Member since: Mar 2009
I remember when we were buying Coop units in Queens in the mid-90's (and I'm talking Forrest Hills/Rego Park/Yellowstaone Blvd, not crap). You know what our biggest issue was? We couldn't even find brokers who were in the business of selling Coops, they had given up on that.
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Response by happyrenter
over 16 years ago
Posts: 2790
Member since: Oct 2008
jazzman,
your argument makes no sense. you write that "there are multiple buyers for every property" but that there are "thousands of unis on the market." uhhh. even if 50% of them are in contract, as you say, that is still an obvious fallacy. investors are NOT going to cause any real estate market to bottom for the very reason you state: investors rely on rental rates, which, as you acknowledge can continue to fall. the only thing that will lead to a bottom in any real estate market is increased demand for housing. the normal real estate cycle often has rents and prices moving in opposite directions because of changes in the cost and availability of money. but in this melt-down rents and prices have both moved down in tandem, and they will both recover only when the demand for housing recovers.
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Response by Jazzman
over 16 years ago
Posts: 781
Member since: Feb 2009
HR -I'll restate - there are multiple buyers for nearly every bank owned property.
And why doesn't investor demand count as "demand in housing?'
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Response by cfranch
over 16 years ago
Posts: 270
Member since: Feb 2009
new buyer: the particular unit i want the most would have a carrying cost of just over $1600(mortgage+taxes+maintenance). there is a rental tenant in the unit now and he pays $1550 per month. the other units have a differential of about $200-$300.
URLs to places you saw?
I think Miami has a long way to go before it bottoms. I think the only markets that stand a chnce of bottoming in the next few months are those without speculation, like Texas, Seattle, etc.
http://www.nytimes.com/2009/10/02/greathomesanddestinations/02iht-revulture.html
Mr. Nino’s fund recently purchased 10 units in Brickell on the River, a Miami tower project, paying about $156 a square foot, or €1,150 a square meter. A comparable market price would be $215 to $225 a square foot for similar units, according to Peter Zalewski, managing principal of Condo Vultures.
Here are some I'm not bidding on:
http://sef.mlxchange.com/EmailView.asp?r=792926586&s=SEF&t=SEF
Pres: I may not be catching the exact bottom here but the price to rents ratio is very favorable
Pres - I couldn't disagree more - Investors are how these markets are going to find a bottom. I just don't see your logic. The US housing market is overbuilt - that is, we have more houses than qualified home owners. So we need overqualified homeowners to buy multiple homes and rent them to people with bad credit.
Last month in Vegas (a market I watch) 45% of the buyers paid all cash. It's safe to say that the majority of buyers are investors and it seems, that for now, Vegas has a floor (you'll probably see prices fall for another month or two there - as well all know units that go into contract today don't his the transfers for a couple/few months). That floor is at a price where investors can make better than 8% cash on cash returns. If rents go down then prices will go down some more, but for now there are multiple buyers for every property and even though there are thousands of units on the market more than 50% of them are in contract or have an offer pending bank approval.
cfranch - why do you say "Carrying costs(mortgage, taxes,maintenance) are nearly covered by rents" makes the price to rents "very favorable"?
I remember when we were buying Coop units in Queens in the mid-90's (and I'm talking Forrest Hills/Rego Park/Yellowstaone Blvd, not crap). You know what our biggest issue was? We couldn't even find brokers who were in the business of selling Coops, they had given up on that.
jazzman,
your argument makes no sense. you write that "there are multiple buyers for every property" but that there are "thousands of unis on the market." uhhh. even if 50% of them are in contract, as you say, that is still an obvious fallacy. investors are NOT going to cause any real estate market to bottom for the very reason you state: investors rely on rental rates, which, as you acknowledge can continue to fall. the only thing that will lead to a bottom in any real estate market is increased demand for housing. the normal real estate cycle often has rents and prices moving in opposite directions because of changes in the cost and availability of money. but in this melt-down rents and prices have both moved down in tandem, and they will both recover only when the demand for housing recovers.
HR -I'll restate - there are multiple buyers for nearly every bank owned property.
And why doesn't investor demand count as "demand in housing?'
new buyer: the particular unit i want the most would have a carrying cost of just over $1600(mortgage+taxes+maintenance). there is a rental tenant in the unit now and he pays $1550 per month. the other units have a differential of about $200-$300.