Sorry for the lack of posts recently, but the reality is that I am a real estate agent first, and a blogger second
Anyway, I don’t know how this little nugget (h/t to Chelsea Handler) slipped by me (probably because May 6th was MY birthday). WSJ had an interesting article prophesizing that we are somewhere near the bottom of the real estate crisis, and one sentence, in particular, jumped out at me:
Most people forget that the current housing bust is nearly three years old.
Yet another article “predicting” the crappy future of South Florida real estate comes to us via tomorrow’s New Times. Bob Norman interviewed Jack McCabe, industry analyst, and here are his predictions for 2008:
Home prices will fall by at least another 15 percent.
Individual foreclosures will increase 300 percent from last year, when they already soared.
About half of all new condo buyers will walk away from projects by the time they reach completion.
Bankruptcies by developers and lenders will proliferate to the point that they become common.
Many lenders, appraisers, and brokers will be indicted for mortgage fraud.
A recession will be declared by the third quarter of the year.
Government efforts at bailouts and interest rate cuts will be like putting a “Band-Aid on skin cancer” and only ensure ’70s-style stagflation.
To the writer, all of the above seems “reasonable.” As I’ve mentioned before, we still have a while to go before things get better stabilize. There is no doubt that the market, in general, will worsen before it gets better, BUT, only in some areas. For example, luxury properties in South Beach have NEVER gone down, AND in the condominiums that I specialize in, only a HANDFUL, maybe six in total, have been foreclosures.
Interesting perspective on the South Florida real estate “meltdown” (see video above): Could it be that the pain of the deflating real estate market will primarily be spread out among many broad shoulders? I think that the Related Group, WCI, Bank of America, and Countrywide losing a couple hundred billion dollars will go a long way in creating “soft landing” for the rough times ahead.
Here are a couple of doosies “weaved” flawlessly into this article:
McCabe has made his name on such dire predictions, and I should note that he stands to profit if he’s right.
The Deerfield Beach-based consultant is now working full-time advising hedge funds and other vulture outfits that await some bottom-feeding deals.
McCabe says he’s seen only two such deals so far, both involving townhouses on the west coast of Florida.
It’s easy to get carried away with a doomsday scenario.
Say you want to sell your unit at Related Group’s new 50 Biscayne Condo in downtown Miami, you find a buyer willing to purchase your unit, you agree on terms, and you probably think, “whew, I’m really lucky I sold.” Not so fast: today’s Daily Business Review is reporting
Banks and mortgage lenders compile lists of buildings they find too risky for lending, and they refuse to finance purchases there.
What This Means if Your Miami Condo is “On the List”
It could mean that it will very hard to obtain financing for your condo, whether you are a buyer or a seller, in one of the “non-warrantable” condominiums.
The lists include finished buildings and projects still under development.
Prominent projects on BankUnited’s list include the Related Group’s 50 Biscayne and 500 Brickell; Terra Group’s 600 Biscayne and 900 Biscayne, and Cabi Developers’ Everglades on the Bay.
Is This the Last Nail in the Coffin for Miami Condos?
The impact of today’s news on the Miami condo market:
Developers with unfinished buildings on the list may have high “walk-away” rates
Owners of units in “blacklisted” condos may find it next to impossible to sell
UPDATE: South Florida Business Journalis reporting that Bank United has blacklisted Opera Tower as well.
Even buyers with good credit can’t get a mortgage for a condo that has an uncertain value, said Lewis Goodkin, president of Miami-based Goodkin Research. He said because sales have been so slow and 35 percent to 40 percent of buyers could pull out of contracts in some buildings, no one knows the real value of these condos. And, if lenders don’t know the value, he said, they can’t set a loan-to-value ratio with any certainty.
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