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January 2009
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Nearly 2.7 million square feet of condos, townhouses and single-family homes in coastal South Florida sold in 2008 at an average discount of -43 percent, or -$323,784 per residence, according to a new report from Condo Vultures® LLC.
There were 1,717 properties east of I-95 in Miami-Dade, Broward, and Palm Beach counties in the Vultures Database™ that traded last year for a combined price of $775 million, down from a historical high of $1.33 billion.
The overall price drop equates to a combined discount of more than $550 million off of the historical high asking price for the properties that were sold, according to the report by the Bal Harbour, Fla.-based consultancy.
"Every month in 2008, an average of 143 residential properties in the Vultures Database™ sold at 57 cents on the dollar," said Peter Zalewski, a principal with Condo Vultures®. "Given the difficulty in obtaining financing, our data and anecdotal evidence suggests that at least two-thirds of the units sold were purchased by all-cash buyers who didn't need financing to complete their transactions. We don't know how many of these buyers obtained financing after closing."
All-cash buyers who have the ability to close quickly have enjoyed success in South Florida negotiating down prices on residential product from distressed sellers, Zalewski said.
For comparison, consider that in 2007, there were 1,272 properties in the Vultures Database™ that sold at an average discount of -29 percent, or $258,818 per residence, according to the data.
"The Vultures Database™ is comprised of residential properties east of I-95 in Miami-Dade, Broward, and Palm Beach counties from Cutler Bay to West Palm Beach that have dropped in price by at least -10 percent or -$100,000.
On Dec. 31, the Vultures Database™ was comprised of 4,301 condo units, townhouses, and single-family houses in South Florida that had dropped in price by an average of -39 percent, or -$259,356 per residence, according to the report.
Condos and townhouses, which account for 69.6 percent of the total Vultures Database™ inventory, are down an average of -38.5 percent, or -$210,121 per residence. Single-family houses, which represent the remaining 30.4 percent of the inventory, are down an average of -40.2 percent, or -$372,265 per home, according to the Vultures Database™ Report for January 2009.
Pricing in Miami Gardens is down an average of -60.3 percent, making the Miami-Dade County community the city and/or neighborhood with the biggest price drop in South Florida, according to the data.
The Hypoluxo area in Palm Beach County ranks second with an average price drop of -48.4 percent. The neighborhood in Broward County with the biggest price drop is the Oakland Park area, where discounts have reached -45.9 percent, according to the data.
As buyers increasing pick off deeply discounted properties on the barrier island, the difference in pricing is becoming wider and wider for sellers located on the South Florida mainland, according to the data.
For instance, Greater Downtown Miami has an average price drop on condos of -41.8 percent while across the causeway in Miami Beach the average discount is -34.3 percent.
"This is a classic example of buyers flocking to quality, which for many means sand and surf," Zalewski said. "Many people consider a quality building on the water, especially the ocean, a great hedge at times of uncertainty."
The 2008 closed sales of residences in the Vultures Database™ appear to support the notion that buyers, especially those purchasing second homes, are willing to spend more to be near the water.
In 2008, there were 278 Miami Beach properties in the Vultures Database™ that sold for an average discount of -37 percent while the South Florida tri-county regional average discount was -43 percent, according to the data.
In Miami, where the bulk of the new product was constructed based on widespread speculation, there were 378 sales of residences in the Vultures Database™ at an average discount of -48 percent, according to the data.
In Fort Lauderdale, there were 208 transactions of properties in the Vultures Database™ that closed at an average discount of -41 percent.
Hallandale Beach ranked fourth in the region in 2008 for the greatest number of closed deals from the Vultures Database™ with 138 properties at an average discount of -45 percent.
Rounding out the top 5 markets for Vultures Database™ discounts was Sunny Isles Beach with 109 transactions that closed at an average drop of -39 percent.
It is worth noting that Hollywood, just north of Sunny Isles Beach, had 105 deals close out of the Vultures Database™ at an average discount of -43 percent.
All told, there were 29 cities and/or neighborhoods in South Florida that experienced a transaction where the property was being monitored in the Vultures Database™.
The list of South Florida cities ranges from ultra-wealthy Fisher Island, where a property was purchased at a -53 percent discount, to Boca Raton, where 13 properties were sold at an average discount of -49 percent, according to the data.
Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .
Copyright © 2009, Condo Vultures® LLC
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Residential real estate resales in South Florida dropped by -4 percent in 2008 to 34,915 transactions compared to 36,366 in 2007, according to a new report from Condo Vultures® LLC using data from the Florida Association of Realtors.
The Greater Miami metropolitan area experienced a -19 percent drop in transaction as 8,959 residential properties closed in 2008 compared to 11,061 in 2007, according to the report by the Bal Harbour, Fla.-based consultancy.
The overall regional drop in sales would have much deeper if not for slight increases percentage wise in Greater Fort Lauderdale and the West Palm Beach to Boca Raton metropolitan areas.
Fort Lauderdale experienced a 2 percent increase in resales in 2008 with 12,928 transactions closed compared to 12,660 in 2007.
In the West Palm Beach to Boca Raton metropolitan area, the closed sales increased by 3 percent to 13,028 in 2008 compared to 12,645 in 2007, according to the data.
Statewide, resales were down -6 percent in Florida with 162,012 transactions occurring in 2008 compared to 171,720 in 2007, according to the data.
Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .
Copyright © 2009, Condo Vultures® LLC
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For the first time in recent memory, the number of single-family houses, condominiums, and townhouses on the resale market in South Florida could drop below 100,000 residences, according to a new report from Condo Vultures® LLC.
Simultaneously, the number of pending sales has broken the important psychological benchmark of 10,000 residences – 10,007 to be exact - under contract and scheduled to close in the upcoming weeks, according to the report that was created using the Florida Association of Realtors Multiple Listing Service.
“It is too early to call a bottom to the South Florida housing market but it is evident from the data and the intelligence we are getting from the street is that residential product is starting to trade,” said Peter Zalewski, a principal in by the Bal Harbour, Fla.-based consultancy Condo Vultures® LLC.
In Miami-Dade, Broward, and Palm Beach counties, there are 100,131 properties for sale as of January 26. Miami-Dade has 37 percent of the available inventory, Broward 34 percent, and Palm Beach the remaining 29 percent.
By comparison two months ago on Nov. 28, 2008, there were 107,527 properties on the resale market in South Florida. Today’s current inventory represents about a -7 percent decrease in available resale product since late November, according to the report.
Condominiums and townhouses represent the majority of the resale product available in South Florida.
There are currently 57,312 condos and townhouses on the market with Miami-Dade accounting for 39 percent of the inventory, Broward 34 percent, and Palm Beach about 26 percent, according to the report.
The number of pending sales for condominiums and townhouses stands at 4,838 in the tri-county South Florida region. In Miami-Dade, there are 2,307 pending contracts, while in Broward the total is 1,727. Palm Beach has 804 deals in the works.
South Florida amount of available single-family house inventory is also beginning to decrease.
There are currently 42,819 houses on the resale market in South Florida with 14,888 in Miami-Dade, 14,322 in Broward, and 13,609 in Palm Beach.
Two months ago, there were 46,599 single-family houses for sale in South Florida with 16,554 in Miami-Dade, 15,831 in Broward, and 14,214 in Palm Beach.
The number of pending sales involving single-family houses currently totals 5,169, up from 4,868 two months ago, according to the report.
Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .
Copyright © 2009, Condo Vultures® LLC
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Fearing widespread mortgage default on $1.1 trillion of investor-owned properties, JP Morgan Chase has launched a new loan modification program aimed at keeping landlords paying their debt service.
JP Morgan Chase’s loan modification program – dubbed The Way Forward – piggybacks off the financial institution’s efforts implemented late last year geared toward homeowners who are primary users.
"Over the past two years, Chase has helped 330,000 families avoid foreclosure," according to a company statement. "And now, by addressing investor-owned loans, we will help even more Americans keep the homes they've worked so hard to buy."
As part of the initiative, investors can utilize JP Morgan Chase’s new regional centers around the country housing a team of 2,500 loan counselors who have a number of mortgage modification programs to offer qualified borrowers.
"Don't underestimate the significance of JP Morgan Chase's decision to offer loan modifications to borrowers of investor-owned properties," said Peter Zalewski, a principal with the Bal Harbour, Fla.-based consultancy Condo Vultures® LLC. "Many industry watchers had thought that lenders would work with homeowners on loan modifications but never investors."
"The fact that JP Morgan Chase is willing to do so could signal that the bank’s future projections as per the default rates on mortgages are more dismal than many had thought."
Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .
Copyright © 2009, Condo Vultures® LLC
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Fannie Mae, the public-private mortgage giant bailed out by the U.S. government in 2008, is going into the short-term rental business.
Fannie Mae has unveiled a new National REO Rental Policy that now permits renters – regardless of credit score or payment history – to lease homes that have been repossessed by the mortgage giant.
“Overwhelmed with thousands of bank-owned properties in places such as South Florida, Las Vegas, and San Diego, Fannie Mae is obviously desperate to stabilize its portfolio of repossessed residences and reduce the monthly expenses,” said Peter Zalewski, a principal with the Bal Harbour, Fla.-based consultancy Condo Vultures® LLC. “Lenders, governments, and neighborhoods are quickly realizing how important it is to have someone living in a foreclosed home even if it means providing extremely generous terms for the renter.”
All of the leases on the Real Estate Owned (REO) properties will be on a month-to-month basis with the rental rates priced at a fair market value for the area. No security deposit will be required, according to Fannie Mae.
Fannie Mae’s rental program is open to tenants who were already living in a home prior to the residence being repossessed.
In return, all of tenants will be expected to cooperate with the listing agents who will be showing the properties to potential buyers. When a property is sold, the terms of the tenant’s lease must be honored by the new owner.
Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .
Copyright © 2009, Condo Vultures® LLC
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A South Florida private equity fund has paid $277 per square foot for 101 units in the Related Group’s Harbour House oceanfront condominium conversion in wealthy enclave of Bal Harbour, Fla.
A Florida entity called HH Condominium Investments LLC, with Thomas F. Daly as president and former Miami Beach City Manager Christina M. Cuervo as the registered agent, paid $27 million for an average of $268,000 per unit in the 16-story, Y-shaped tower, according to the South Florida Business Journal.
A year earlier in 2007, a Florida entity called HH Condo Holdings LLC, with Christina M. Cuervo as the registered agent and a member, purchased seven units in the Harbour House for $4.1 million, or $588,000 per residence, according to records from Miami-Dade County and the state of Florida.
The seller was TRG-Harbour House Ltd with Jorge M. Perez of The Related Group as president, according to the government records.
The Harbour House transaction is the third bulk deal to close since December, with the other two multiple unit sales occurring in Downtown Miami and Downtown West Palm Beach.
“Given that three bulk deals have occurred in the last month, we would venture to say the long anticipated bulk buying phase of the real estate cycle is finally upon us,” said Peter Zalewski, a principal with the Bal Harbour, Fla.-based consultancy Condo Vultures® LLC. “The most interesting aspect of all of these deals thus far is that the private equity groups, not the hedge funds and pension funds, are the buyers of the product at deep discounts. We could envision a scenario sometime in the future where the private equity groups will be selling to the hedge funds. ”
HH Condominium Investments purchased 97,573 square feet, or 22 percent, of the 434,781 square feet of residential saleable space in the 451-unit tower, according to Miami-Dade County records.
To complete the deal, HH Condominium Investment obtained a $7.3 million mortgage on the units from the seller, according to Miami-Dade County records.
TRG-Harbour House originally purchased the 1960s Harbour House apartment complex for $125 million in December 2004 using a $101 million loan from Germany's Landesbank Hessen Thuringen Girozentrale, according to Miami-Dade County records.
In September 2005, TRG-Harbour House obtained an additional $48 million loan to undertake a complete renovation of the tower, which included replacing all of the windows and sliding glass doors. An additional $24 million in financing was also provided to TRG-Harbour House in 2006, according to Miami-Dade County records.
Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .
Copyright © 2009, Condo Vultures® LLC
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A Pennsylvania businessman has paid $165 per square foot – at least $15 per foot below the construction replacement cost - for 26 units in the new but struggling Edge condominium in West Palm Beach, according to the Palm Beach Post.
The highest closing price in the tower was $475 per square foot in 2007, meaning the buyer, Ed Dunlap, chairman of the Canonsburg, Pa.-based roofing company CentiMark, purchased the units at a 65 percent discount off the market peak.
Dunlap was the high bidder on six units at a Nov. 15 auction at a price that was 20 percent higher than the purchase amount he ultimately paid.
In the seven weeks since the November auction, Dunlap negotiated to buy from the developer, Wood Partners, an additional 20 units at a total price of $5 million for all 26 units, according to the story.
The Edge purchase represents the third bulk purchase of new condos in South Florida to close.
“Buyers are beginning to demonstrate that the going rate for a bulk condo deal in South Florida is between $165 and $250 per square foot,” said Peter Zalewski, a principal with the Bal Harbour, Fla.-based consultancy Condo Vultures® LLC. “Buying in this price range begins to make sense from a cash-to-carry perspective.”
Peter Zalewski can be reached at 305-865-5629 or by email at peter@condovultures.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .
Copyright © 2009, Condo Vultures® LLC
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An all-cash, bulk buyer that paid $36 million for nearly 150 units in a new Downtown Miami condominium tower last summer has just secured a $21 million mortgage on the remaining high-rise residences that haven’t been resold, according to the Wall Street Journal.
An opportunity fund established by Miami developer Jorge Perez’s Related Group and Philadelphia private equity group Lubert-Adler Partners LP purchased 146 units in 50 Biscayne condominium tower in July for $246 per square foot, or $36.4 million.
Shortly after closing, the Related/Lubert-Adler opportunity fund resold 10 units in the bayfront high-rise to individuals for $3.6 million, or $367 per square foot.
The retail sales cleared the way for Prudential Insurance Co. of America to provide $20.9 million in financing on the remaining 136 units at a price of $151 per square foot.
“Both the borrower and the lender look to win on this deal,” said Peter Zalewski, a principal with the Bal Harbour, Fla.-based consultancy Condo Vultures® LLC. “The borrower has been able to somehow obtain financing on unsold condos in a market where there is virtually no liquidity at this time. The lender has been able to finance an attractive new tower where the replacement costs far exceed the loan amount.”
Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .
Copyright © 2009, Condo Vultures® LLC
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The lender of the Whitney condominium in West Palm Beach has taken back the remaining unsold units in the recently constructed nine-story residential tower, according to the South Florida Business Journal.
New York-based iStar Financial has taken back 140 unsold units from the Miami developer Evernia Properties, which still owes $43.9 million of a $52.5 million construction loan taken out in 2004. The remaining debt works out to about $314,000 per unit repossessed, according to the story.
Fremont Investment and Loan was the original lender on the Whitney, but subsequently sold the condo construction loan as part of a portfolio sale to iStar.
A foreclosure action was filed by iStar before the developer decided in December 2008 to hand over the remaining units by agreeing to a deed in lieu of foreclosure, according to the story
Located at 410 Evernia Street, the Whitney condominium had strong presales during the condo boom of 2004-05 but was only able to close 70 units, or about one-third of the total inventory, when the tower was completed in 2007, according to the story.
The lender is now actively looking to unload the remaining units to a single buyer in a bulk sale, according to the story.
Peter Zalewski is a principal with the consulting company Condo Vultures® LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™ .
Copyright © 2009, Condo Vultures® LLC
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