Ok, so everyone is talking about this Platinum auction thing like it is some bellwether of things to come. I did not attend.
Reading all the “coverage” on the event was humorous, to say the least. From all accounts, it was the same old feeding-frenzy that has captivated Miami real estate for the last five years. Here is the down and dirty:
- The media running around like moles looking for the next doom-and-gloom story
- Developers looking to “outsmart” the current market by pulling a fast one
- “Vultures” or whatever the new term is for former “condo flippers,” looking to rape the market of a quick $100K —speculators just love the new Maserati
- Bystanders on the sidelines waiting, and hoping, for lots of blood–just for the fun of it; kind of like “rubberneckers” on I-95
Are Bad Real Estate Decisions an Airborne Illness?
I’d have to say that the greed and the need to out-smart or out-maneuver the competition in Miami drives many people to make bad, bad, BAD decisions. In my opinion, many people got caught up in the hype of pre-construction condo speculation, and I foresee just as many people getting caught up in the hype of condo auctions, should they continue to occur.
From looking at the numbers, the people who bought the “absolute” units probably got a fair deal. Platinum is in an inferior location (north of the P.A.C., not waterfront), and all the real estate market fundamentals that didn’t matter much during the frenzy (location, supply and demand; little things) will now become more important than ever.
I said it before and I’ll say it again: during the last few years of boom, the pre-construction condo buyer got “sucked” into paying the price that the developer deemed the property would probably be worth upon completion, not the current market price. I’ve have been told that the buyers of the “absolute” units are end-users. As always, the end-user is the one who sets the market price, not the speculator.
Real estate analyst Lew Goodkin said it best:
…better bargains should come in 2008 when the market is even softer.
It will be interesting to see if any of the units that were bought at auction come back to market, and at what prices.