U.S. Real Estate Trends for the Investor and Seller

2011-10-19T14:47:00.001-07:00

Experts foresee rising Miami-Dade housing prices
By Patricia Hoyos
   Residential real estate experts foresee a boost in property values due to international buyers growing increasingly interested in South Florida.
   Still, with a lack of inventory, financing hurdles and more foreclosures on the horizon, the real estate industry is far from its 2005 market peak.
   The state of the residential market was discussed at the fourth annual Residential Real Estate Outlook Luncheon on Friday at the Westin Colonnade in Coral Gables.
   The luncheon and panel discussion were hosted by the Coral Gables Chamber of Commerce in partnership with the Miami Association of Realtors and Miami Today. Michael Lewis, Miami Today's publisher, served as moderator.
   "You can see that our monthly closings and sales are inching up," said Patrick O'Connell, senior vice president of new business development for EWM and a panelist. "All the numbers are going in the right direction now, and that's what we want to see."
   According to a market report by the Miami Association of Realtors, as of August, condominium sales are up 53% from one year ago and single-family home sales are up 49%. Also showing a favorable number is the residential inventory, which is down to 15,405 from last year's 25,679 units on sale. The industry generally considers a six-month supply of residences on the market to be optimal; larger numbers tend to drive down prices.
   In Florida, 31% of sales are to international buyers. In South Florida, 60% of buyers are foreign nationals, said Jack Levine, chairman of the board of the Miami Association of Realtors and a panelist. Nearly one in three international transactions in the US is in Florida, and nearly one in three international transactions in Florida is in the Miami and Fort Lauderdale area.
   "The buyers are coming in here and they want to buy, and the pricing is great," Mr. Levine said "The main problems I see are in the financing side of it."
   However, financing doesn't seem to be a big problem for many international buyers, who tend to pay mostly with cash. Mr. Levine said foreign buyers also tend to buy residences at the higher end of the market.
   Panelists agreed that the number of buyers from Brazil is increasing significantly. On average, Brazilian buyers pay about 85% in cash and only need financing for the remaining 15%, with a median purchase of $215,000, according to the market report.
   Many of these international buyers are purchasing foreclosed properties as investments to rent them to others, Mr. Levine said.
   "The rental market is on fire," he said.
   Around 53% of international buyers are from South American countries, including Venezuela, Brazil, Argentina and Colombia. Residents of Canada, France and Italy also represent a large number of international buyers.
   Lorenzo Perez Jr., chief executive officer of Premier International Properties Inc., emphasized the need for realtors to reach international buyers through social media. With the majority of social media users not being from the US, he said, the web can be an effective way of reaching potential buyers.
   Because of these international buyers, panelists predict that next year property values will rise.
   "We do foresee an increase in values in properties," said Mayelin Carbajales, vice president of Mercantil Commercebank's residential lending sales department. "It all depends on the market. Currently, in Dade and Broward and Palm Beach, we are seeing an increase in value because of the foreign national buyers that are buying there."
   A major problem currently facing the residential real estate market is having limited inventory.
   Mr. Perez said there is a demand for properties, but there hasn't been much inventory placed out there. High numbers of bank-owned real estate properties continues to be a problem that could continue to hurt South Florida's real estate in the upcoming year.
   "From a banking perspective, we are going to see an increase in foreclosures," Ms. Carbajales said. "We are also seeing distressed borrowers."
   According to Mr. O'Connell, the universal message from his contacts in the banking industry is that a lot of bank real estate owned properties are in the pipeline. He said real estate owned inventory in the market is currently down 50% to 60% from the peak.
   In the luxury homes market, he cited a 30% decrease in inventory.
   Mr. Levine said he expects the real estate owned inventory to be "gobbled up as soon as it comes back up in the market." The question remains when these properties will be listed again on the market.
   Also hurting the real estate industry are banks being more hesitant to lend than in the past.
   In coming months, banks are going to require higher down payments and increase credit score requirements, Ms. Carbajales said. Overall, she predicted, standards across the country for borrowers will be raised.
   With the number of foreclosures still high, banks are continuing to be concerned about the risks associated with lending, she added.
   The panelists said they don't expect foreclosures to slow down in 2012. But on the bright side, they anticipate that interest from international buyers will remain strong, increasing the value of properties.
   "We aren't able to predict with crystal balls," Mr. Levine said. "We try to pick up trends, but it's really, really hard, especially because there are so many moving variables."

2011-10-18T18:52:00.000-07:00

Construction set to begin on Miami's first new high-rise condo since bust

October 18, 2011 12:45PM

Construction will begin on a $170 million, 46-story, 374-unit condominium in Miami come next spring, the Miami Herald reported, marking the first new high-rise condo since the housing bust.

Developed by Newgard Development Group at 1300 Brickell Bay Drive, the tower, called Brickell House, is slated to include a rooftop sky deck, a pool on the 46th floor and an automated parking garage. Newgard said it's a good time to begin construction as much of the firm's inventory has been absorbed over the last 18 months.

Newgard will depend on prospective buyers to finance construction. Purchasers will need to pay 70 percent of the asking price before construction is completed. It's a model that is typical of Latin American construction, which is appropriate for the development that Newgard plans to market to foreign buers.

"Let's be realistic. The majority of buyers in Miami come from outside of the country," said Newgard Chairman Harvey Hernandez. "Our buyers here, nobody has 70 percent. Nobody can afford that." [Miami Herald]

2011-10-18T18:48:00.001-07:00

South Florida residential inventory

October 18, 2011 03:45PM

Compiled by Condo Vultures Realty using the South Florida Shared Multiple Listing Service. Active listings are properties where no current sale contract exists; pending sales are properties in which a contract for sale has been executed, but not yet closed. Listing brokers control the status of a property listing. -- Adam Fusfeld

2011-09-29T15:27:00.001-07:00

Genting Malaysia to Invest $3 Billion on Resorts World Miami

(Updates with chairman's comment in third paragraph.)

Sept. 15 (Bloomberg) -- Genting Malaysia Bhd., a Southeast Asian casino-operator, plans to invest $3 billion to develop a bayfront resort on land currently housing the Miami Herald Media Co.'s headquarters.

The project, known as Resorts World Miami, will include four hotels, two residential towers and a 3.6 acre rooftop lagoon, on land it agreed to buy from Miami Herald publisher McClatchy Co. in May, the Kuala Lumpur-based company said in an exchange filing today. A casino will be included if Florida's legislature and governor approve, Genting Malaysia said.

“Resorts World Miami will accelerate Florida's evolution as a global destination,” Genting Malaysia Chairman Lim Kok Thay said in the statement.

Genting Malaysia, which has operated Malaysia's only gaming resort on a hilltop since 1968, is already the largest casino- operator in the U.K. and has been seeking opportunities to break into the U.S. market. Its Resorts World Casino New York City development is nearing completion on the Aqueduct Racetrack.

The new Miami resort will cover 30 acres of land overlooking Biscayne Bay, comprising both the Miami Herald site and adjacent Omni Center, for which Genting Malaysia today said it had acquired all outstanding mortgages. The project will also include a convention center, nightclubs and the largest ballroom in the U.S., it said.

Genting Malaysia is 47-percent owned by Kuala Lumpur-based Genting Bhd., which is also the parent company of Genting Singapore Plc, which runs the Resorts World Singapore gaming resort.

--With assistance from Chan Tien Hin in Kuala

2011-09-29T14:55:00.001-07:00

Will Brazilian homebuyers change the way Miami condos conduct business?

September 26, 2011 05:15PMBy Alexander Britell

Apogee Beach

The impact of the continued influx of Brazilian homebuyers is no longer limited to existing residential inventory -- Brazil is now starting to affect Miami developments of the future.

It's all tied to the way residential projects tend to be built within Brazil, where condominium purchasers put down a substantial amount of money when they sign a pre-construction contract, and then pay more as each stage of the building is completed.

"[That process] is something my Brazilian developer [clients] do when they sell an apartment building," said Coldwell Banker Realtor Jeanne Nicastri. "This is something that has been in use in Brazil, and, having all of the Brazilians here, now we have the Brazilian way of doing things."

One project Nicastri pointed to is Related's Apogee Beach, which is already using that method.

"In South America, it's very different," said Craig Studnicky, co-principal of Related ISG, which is marketing Apogee Beach. "They will pay over the course of construction. In fact, we're selling [Apogee] using that exact same formula."

According to Studnicky, Related is requiring a 20 percent down payment upon signing a purchasing contract at the project. When Related begins construction, buyers will pay another 20 percent, along with another 20 percent at two other stages of construction.

"Before closing, the buyer will have 80 percent of the purchase price paid into the property," he said. "And I'm doing fairly well with that business model for Related at Apogee in South America."

Apogee is one of the few projects actually beginning construction after the downturn, and developers have plans for 1,350 new condo units in Florida.

And with 53 percent of Brazilians purchasers in Florida snapping up condos, it's likely that more developers will follow suit.

"I think real estate is a very copycat business," Studnicky said. "I think some competitors, when they see how well Related does at Apogee Beach, might want to copy the business model. But I don't know of any other developers that are ready to launch with this model."

The 49-unit Apogee Beach launched sales in May, and will break ground by the end of the year; the company hopes to have 30 of the units under contract by mid-October, he said.

According Peter Zalewski, founder of Condo Vultures, it's a trend that could catch on.

"Financing is extremely challenging to obtain for new condos in South Florida, and for developers who are confident that the market is there, but can't get the financing, what they're doing is opting to do a Latin American model, and that's making typically standard deposits going away," he said. "If you go to Latin America -- Colombia, or anywhere else, and you try to get a condo, all the way through you're putting down money."

But there are still questions, he said, chiefly the question of what happens if the project falls apart.

"If something happens, if it goes sideways, what's the buyer's recourse if the money's already parked into the construction?"

Miami law firm Bilzin Sumberg partner Martin Schwartz said the risk is essentially the same for any buyer who pays beyond an initial 10 percent.

"Under Chapter 718, which is the condominium statute in Florida, assuming you have appropriate language in the contract, the developers are entitled to everything over the first 10 percent in construction, and then that money can go into bricks and mortar," he said.

He said that if a project were to fail under those circumstances, it would be the same kind of situation being faced by myriad developers -- where there may not be enough value in the project to compensate the construction lender on the project.

"I understand that with these Brazilian deals, basically the buyers are putting up close to 100 percent of the purchase price -- it's a great deal for a developer," he said. "It's cheap money, but all the money that goes in after the first 10 percent is at risk if the project doesn't succeed."

Accordingly, some developers of new projects are not going the Brazilian way. For example, there's Martin Margulies, developer of Bellini Williams Island, a 24-story residential tower in Aventura.

"Marty's always been about one deal at a time," said Shannon Selby, COO at Martin Marguiles and developer of the Bellini Williams Island project. "In that vein, it doesn't make sense in this day and age to start with a 20 percent, 20 percent, 60 percent [payment structure]. I think in this day and age you have to have transparency and honesty, and in fact, we're not using any deposit money [for construction]."

Selby said it was included in the purchase contract that a buyer would pay 10 percent upon signing the contract, with an additional 10 percent upon the closing of the loan and 10 percent when the project "hit the roof."

It's not clear just how much the trend will catch on, but with the continued influx of Brazilian and Latin American buyers for South Florida condos, and a wave of new developments on the way, the money will have to come from somewhere.

2011-09-16T17:54:00.001-07:00

U.S. foreclosures up in August

September 15, 2011 01:30PM

Foreclosure filings in August increased 7 percent in August, but were still down nearly 33 percent from August 2010, according to national data released by Realtytrac today. There were foreclosure filings on 228,098 U.S. properties in August, or about one in 570 housing units.

In Florida, there were 23,569 foreclosures, or one in every 376 units.

First-time default notices were at a nine-month high and had their biggest month-over-month increase -- 33 percent -- since August 2007, but were still down 18 percent from August 2010 and 44 percent from the monthly peak of 142,064 default notices in April 2009.

Default notices increased more than 40 percent on a month-over-month basis in several states, including New Jersey (42 percent), Indiana (46 percent) and California (55 percent), but were still down from a year ago in all of those states.

"The big increase in new foreclosure actions may be a signal that lenders are starting to push through some of the foreclosures delayed by robo-signing and other documentation problems," said James Saccacio, CEO of RealtyTrac. "It also foreshadows more bank repossessions in the coming months as these new foreclosures make their way through the process."

Foreclosure auctions decreased 43 percent year-over-year, and dropped 1 percent from a month prior.

Foreclosure auctions hit a 37-month low in August and were 47 percent below the monthly peak of 158,105 scheduled auctions in March 2010.

Repossessions saw a 32 percent decrease from August 2010 and a 4 percent decrease from the previous month. The real estate owned by bank total in August marked a six-month low and was 37 percent below the monthly peak of 102,134 bank repossessions in September 2010. -- Miranda Neubauer

2011-09-16T14:30:00.001-07:00

Foreclosure stats for the week

September 16, 2011 03:45PM

Source: Condo Vultures

As of today, the number of foreclosures in South Florida year-to-date is 22,142, down from 46,522 at the same time last year, based on the most recent data available from Broward, Miami-Dade and Palm Beach counties. In the week ending today there were 763 foreclosures in South Florida. The graph above shows foreclosure activity in South Florida's three counties. -- Adam Fusfeld

2011-09-16T14:29:00.001-07:00

Florida real estate picks up jobs while construction loses them

September 16, 2011 01:30PM

For the 11th consecutive month, the State of Florida posted job gains, according to a report released today by the Agency for Workforce Innovation. Though the month-over-month gains in August were modest -- just 0.1 percent -- in 2011 the state has gained 71,600 jobs bringing the unemployment rate down to 10.7 percent from 11.6 percent in the prior year August. Nationally, the unemployment rate is 9.1 percent in August.

Those industries most closely connected with real estate were a mixed bag, according to the report. The construction industry performed fourth worst of all industries shedding 1,900 jobs, or 0.6 percent of its workforce in the month of August. Florida has lost more construction jobs -- 17,600, or 5.1 percent of its total employment number -- than jobs in any other industry, save government, in the past 12 months.

On the other hand, the real estate, rental and leasing industry added 2,700 jobs in August, or 1.8 percent of its workforce. That marks the highest percentage point gain of any industry in the state. In the last 12 months its gained 6,200 jobs, (or an additional 4.1 percent from last year's level). -- Adam Fusfeld

Real Estate News Update

2010-07-30T19:16:00.000-07:00

Bellini Condo major reduction:

http://feeds.feedburner.com/trdnews_miami?format=xml

2010-06-15T19:22:00.001-07:00

Where is the money going? Check this out:

http://realestate.yahoo.com/promo/where-americas-money-is-moving

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2010-06-10T10:54:00.001-07:00

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