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September 2010 Newsletter

Sean Greco – Realtor®, CIPS, CDPE, CLHMS, GREEN Certified, TRC, REOS

Designations and Certifications are explained at the end of the newsletter

Buy the Beach Realty, Cell 786-877-9220, buybeach.com

Hello from Exciting South Florida,

Below is hand selected data that I track every month, in the very specific market in which I practice. This data is for Miami Beach (South Beach, Mid Beach and North Beach), Fisher Island, Bal Harbour, Surfside and Bay Harbor Islands. It is broken down by price ranges to be even more relevant to you, and you can click here for graphs of the data points that are extremely helpful to analyze trends in the market place. Please make note of these trends over time as this will be important regarding the purchase or sale of a property to your benefit. Also, it is more important than ever to look carefully at what the data tells you for this local market, every local market is its own and can differ greatly from a nearby market. Please make your own decisions about this market, it is a unique market with domestic and international appeal, and I will tell you it is a lively one. I especially find the percentage of condos and homes to sell in comparison to the percentage of condos and homes to expire, with the steadily decreasing inventory to be some of the more important statistics I tend to look at. Below the data are brief summaries on key issues that also have an effect on South Florida Real Estate and the economy.

The below chart is data from the past 90 days for Condominiums, ending 8/31/10. The data is taken from South East Florida’s Multiple Listing Service (MLS) for the cities and townships of Miami Beach (South Beach, Mid Beach, & North Beach), Surfside, Bal Harbour, Bay Harbor Islands, and Fisher Island.  The paragraph below the data will explain in more detail what is included in this analysis. Please don’t hesitate to pose any questions you may have, or simply give me a call or send me an email to discuss Real Estate in general. This data will help to analyze market conditions from month to month.

As you can see, I have broken the data into price ranges, and then you can see the amount of Active condos for sale, how many Real Buyers Closed on a condo for sale, how many of those listing agreements Expired unsold, then further calculated what percent of the Active condos for sale Expired and Sold. Then I calculated the Average Days on Market (Avg DOM), which is the amount of days it took the condos that sold to obtain a Real Buyer. Then I show the Average Discount, which is the percentage the Listed Price was discounted to the Actual Sale Price for all Closed Sales. The last column is for Closed Sales that were newer construction, which I considered to be anything built after 1995, versus older buildings built before 1995. I track this data for Condominiums and Single Family Homes separately due to their differences. I also track the data for the more luxurious buildings of South Beach, please feel free to email or call for that data.

The next set of data below is the same information for Single Family Homes. The one difference is that the last column is the Average Age of the homes Sold.

Don’t forget to look at the overall data I have been collecting and determine for yourself what trends, etc. you see; please click here to take you to some graphs that should prove to be very insightful: http://www.miamipropertiesandparadise.com/professional11.shtml

MIDTOWN MIAMI: The dream of Midtown Miami as an urban community where people can live, work and play is starting to happen after a long eight years. But getting there has taken a combination of foresight, luck and deep pocketed owners with a long-term commitment. Developer Midtown Equities acknowledged in 2008 that the Miami condo market was overloaded and closing the sales of four condo buildings was going to be impossible. That’s when the developer cancelled plans to build one building and converted another entire building, plus all remaining unsold units, to rental apartments.

A Midtown Equities affiliate in July 2008 purchased 362 unsold units at Midtown in a bulk deal for $153.7 million. To finance the deal, the developer secured a $146.6 million mortgage on July 1, 2008 from HSBC, which was a refinancing of an existing construction loan. Around the same time, Midtown Equities also secured an additional equity investment from undisclosed private Dubai investors. That was only two months before the Wall Street financial markets collapsed.

Owner of Midtown Equities is Joe Cayre, a prominent New York real estate investor whose other holdings include interests in both the former Sears Tower, now called the Willis Tower, and the lease on the former World Trade Center. Cayre, who grew up in Miami Beach, made his early fortunes in the entertainment business with a Spanish record label Caytronics and video company GoodTimes Entertainment. Another bonus is the Midtown Equities, which paid $34.5 million for the 56-acre site, recouped most of their original investment selling half the original parcel to Developers Diversified Realty to build the Shops at Midtown Miami.

While rental rates at Midtown Miami’s residential units are only covering about 80 percent of the carrying costs, the Cayre family views Midtown Miami as a long-term investment. The advantage of Midtown is that it’s a self-contained community that has only scratched the surface of what it can become. Midtown Equities has developed about one-third of the 5-million-square-feet available. Developers Diversified is still filling in vacancies on the big box retail side of the project. Occupancy has jumped about 8 percent in the last year and the project is now at about 90 percent occupancy, said Marty Richmond, a DDR spokesman. “Many of our recent leases at Midtown reflect the growing popularity of the center as a one-stop destination for entertainment, dining and shopping,” Richmond said in a statement. While the project was originally designed with 10 condo towers, no new residential units are planned “anytime in the near future”. Instead, the Cayre family’s focus is on building another 300,000 square-feet of retail and commercial development, which would be done in two phases. The first half would likely open in two or three years. The new street front retail will be designed so that when market demand returns a condo tower could be added on top. The retail will expand on the existing restaurant row and include the launch of an entertainment block to be anchored by a premium movie theater. Also on the drawing board: a boutique hotel in the South Block with about 170 rooms. “We’re being a lot more picky,” Cayre said. “This won’t be a ‘me too’ place. It’s not going to have the same retailers you see everywhere else. Anything we do that adds to the cool factor and the sheik urban feel has an exponential effect on any development going forward.”

--Source: The Miami Herald 8/16/2010

CLICK HERE TO VIEW WHAT AMAZING DEALS ARE CURRENTLY IN THIS GREAT PROJECT, HOW COOL…

Somehow, amid a bleak real estate meltdown with shopping centers clinging desperately to tenants, Midtown appears to have caught on, fulfilling a long-desired demand for urban retail. For more than a decade no one could find a suitable place to make it happen, leaving the best shopping meccas a long drive away for residents of central Miami. What makes this area different from other redevelopment plans is that Midtown was started from the blank canvas of an abandoned inner-city rail yard. You had the benefit of two developers controlling a 56-acre site – a rare find in urban Miami and about the same size as a suburban strip mall. Plus, they had financial help from the city to get started and the deep pockets to wait out the recession. While Midtown started like many condo ghost towns, the developer got aggressive early with value-priced rentals aimed at drawing new, hip residents to the once blighted area.

The success of Midtown, in Wynwood at the corner of 36^th Street and Miami Avenue, has helped energize the surrounding area. It has boosted the revitalized Design District directly to the north and spurred additional development in the surrounding commercial district. The entire area has become a destination dotted with art galleries, high-end home furnishing stores and some of the area’s best restaurants. As for Midtown itself, a combination of new residents and hot new restaurants like Sugarcane and Mercadito have breathed life into the former no-man’s land. Some liken it to New York City’s Meat Packing District or SoHo in its early days. A key catalyst has been the growing restaurant scene, drawing in new visitors from a wide area stretching from Miami Shores to Coral Gables. Whether it’s someone who comes to play at Midtown or actually lives there, the convenience of everything in one place – condos, offices, shopping and restaurants – is helping drive the area’s popularity.

When Miami’s condo sales started to grind to a halt in 2008, developer Midtown Equities made the decision to rent the buildings designed as luxury condos rather than be forced into a bargain-basement sale. The developer, which controls the residential and boutique retail, also refunded deposits on a third tower and put the rest of the construction plans on hold. That’s not to say Midtown hasn’t seen its share of foreclosures and litigation, from buyers who didn’t want to close or service providers alleging they didn’t get paid. Most of that litigation has been resolved. “Our bet was on the long-term play,” said Jack Cayre of Midtown Equities. “We view it as more of an investment that requires us to put in more funds today before we can sell it at a higher base tomorrow.”

While Midtown Equities is losing money in the short run, experts hail the project as an example of successful urban redevelopment, although it’s a long way from finished. “We got a great place,” said Elizabeth Plater-Zyberk, dean of the University Of Miami School Of Architecture and an advocate for mixed-use development. “The bones and the genes that went in are absolutely of the best character. It will grow up well.” The benefits of Midtown also have had a positive impact on surrounding areas like the Design District, Wynwood and Buena Vista. Residents of Midtown say they frequent many of the restaurants, clubs and art galleries in these neighborhoods.

Finding a vacancy at Midtown Miami isn’t as easy as it once was. These days the developer has only a handful of vacant condos available for rent and people are renting units’ sight unseen. That’s a dramatic change from where Midtown Equities started in 2008, giving away a month’s free rent to fill up 557 condos – or 60 percent of the units. The value at Midtown was also a selling point. Residents were attracted by brand-new apartments with luxuries like wood cabinets, granite countertops, fancy gyms and swimming pools. Most of the rental units fall in the $1,250 - $2,900 range, other than some larger three-bedroom units or penthouse apartments. Those same units once sold for between $195,000 and over $1 million. This year, small units have gone for as low as $125,000 (click no link above to see what you can get!).

“I see Midtown as where Lincoln Road was in 1998 when there was nothing going on,” said Steven Cohen, owner of Dog Bar, which opened this month at Midtown after years at the Miami Beach hotspot, “We’ve always been pioneers.” Another resident claims “I park my car on Friday and I don’t use it again until Monday. Everything you need or want is right there. Plus, South Beach or Brickell Avenue is just a hop, skip and a jump away by cab.”

--Source: The Miami Herald 8/15/2010

With the strong fundamentals of an underlying economy poised with continued growth in the International World, opportunities will continue to present themselves. Investors enjoy the safety of the United States, and Florida has a lot of positive aspects with incredibly depressed prices that make this a great place to develop a real estate investing business plan and reap the profits when done correctly. Please contact me should you want to seriously discuss in more detail distressed sales of multiple units. This market presents various unique opportunities that very well may never be seen again in one’s lifetime. Please let me help you take advantage of this situation. I have many strategic relationships with the decision makers regarding distressed projects, and the resources to carry out the objective, right down to the day to day operations.

FOR SOUTH FLORIDA MARKET, A HOPEFUL SIGN: South Florida’s housing sector asserted its independence from national trends in July as a key measure of the real estate market improved year-over-year, with the region’s international buyers and dropping prices propping up the local housing market. In July, pending home sales in Miami-Dade County stood at 10,113, up 40.5 percent from July of 2009, according to figures released by the Miami Realtors. Pending home sales refer to the number of housing contracts that have been signed, and offer an early indicator of sales activity because typical sales have a one-to-two-month lag between a sales contract and a completed deal. South Florida sizes up well when compared to the national pictures, where the pending home sales index hit a record low 75.7 in June, according to the National Association of Realtors.

“We are encouraged by the statistics for pending home sales in the South Florida real estate market even after the expiration of the home-buyer tax credit,” Jack H. Levine, chairman of the board of the Miami Realtors. About 60 percent of South Florida sales have gone to foreign buyers, who are more likely to pay with cash and were never eligible for the tax credit. Additionally, more than half of recent sales in Miami-Dade and Broward counties involve short sales or bank-owned home sales. In the last 12 months, the number of bank-owned condos and single-family homes sold has more than doubled. A short sale occurs when a home is sold for a price that is less than the value of the outstanding mortgage. In what has become a notoriously lengthy process, both the seller and the bank must agree to the price. Banks have recently become more willing to allow sellers to pursue short sales, which now account for one in four South Florida Sales. There were 944 short sales in Miami-Dade and Broward in June, up from only 379 a year earlier, according to analysis by Esslinger-Wooten-Maxwell Realty.

--Source: The Miami Herald 8/4/10

QUICK HEADLINES:

• SOME ECONOMIC STATISTICS: Sales in Miami-Dade’s condo market spiked 43 percent in July. The latest report on taxable sales showed a 3.1 percent gain in Miami-Dade. In hotels, per-room revenue is up about 6 percent this summer in South Florida according to Smith Travel Research. Consumer confidence inched up in August, from 67.8 to 68.9, according to a poll released by Reuters and the University of Michigan. --Source: The Miami Herald 8/28/10
• An Estimated 20.8 million people visited the state of Florida between April and June, a 3.4 percent increase from the same time period last year. Domestic visitors increased 2.4 percent, but the state saw an 11.9 percent increase in overseas guests and a 10.4 percent increase in Canadian visitors. Brazilian tourists were up 15 percent in the first 6 months of the year. --Source: The Miami Herald 8/24/10
• A new water park with wave pools, slides and a snorkel area is planned just across the street from Sun Life Stadium, the current playground of the Miami Dolphins and Florida Marlins (until their new stadium is completed in time for the 2012 baseball season). The effort will keep summer business after the Florida Marlins leave for their new stadium. The site is 40-acres, and the project is expected to open in the spring of 2012. It would be South Florida’s first new major attraction since Jungle Island opened in 2003 on Watson Island. --Source: The Miami Herald 8/19/10
• The first major component of a huge transportation hub opened 7/13/10, just east of Miami International Airport. A rental car center will be operational, for the first time bringing under one roof all the major and many of the smaller car rental companies that offer vehicles at MIA. The opening of the rental car center will mark completion of the first major phase of the $1.7 billion Miami Intermodal Center travel hub, which by 2015 will connect in one site virtually all county modes of transportation: aircraft, cars, Metrorail, Tri-Rail, Amtrak and perhaps in the future high-speed rail. --Source: The Miami Herald 7/11/10
• A 46-member delegation from the Brazilian port of Santos – the largest in Latin America – visited the Port of Miami, and Miami officials were eager to put their best foot forward as they seek more trade with Brazil. --Source: The Miami Herald 8/13/10

LEGISLATION, PROPERTY TAXES & INSURANCE:  There was some very beneficial legislation during the most recent session, it is vital to understand the positive impacts this will have on the South Florida real estate market. Below are some highlights and a summary of some of the issues most directly affecting real estate:

Help for condo owners - and ways to spur sales. There was a single 103-page bill encompassing many of these reforms: SB 1196 by Sen. Mike Fasano (R-New Port Richey). It includes the Florida Realtor-supported "bulk buyer" language that seeks to reduce inventory levels by encouraging investors to purchase blocks of condo units. This is accomplished in part by protecting bulk buyers from some of the liabilities faced by condo developers. Other provisions in SB 1196 accomplish the following:

• lower the cost of condo ownership by repealing the requirement that owners purchase individual unit owner insurance coverage;

• remove the requirement for mandatory retrofits of sprinkler systems in condos over 75 feet high;

• require lenders to pay more in past-due assessments on foreclosed properties;

• allow associations to deny owners or occupants the use of common areas and recreational amenities when the owner is more than 90 days delinquent in paying financial obligations due to the association; and

• allow associations to divert tenant rents to pay for delinquent assessments owed by unit owners.

As a property owner or potential property owner, I urge you to keep up to date on the various progress, legislation, and proposed legislation in order to help you better understand how these important issues affect you; please see the below link that will take you to the Florida Association of Realtors Legislative Center, which will help to explain the numerous moving parts concerning these issues:  http://www.floridarealtors.org/LegislativeCenter/TopInitiatives/index.cfm

INTEREST RATES & RELATED NEWS: Rates continue to remain unchanged and at historic lows. Mortgage rates are at astonishingly low levels. It is important to note that different types of loans are ‘pegged’ to different rates, so please make sure to stay in touch with your mortgage broker or banker to keep up to date on interest rates, as this can directly affect many Real Estate related decisions. In addition to the lowered rate when securing a mortgage to buy property, another common question you will see with rates near historic lows is whether or not it is a good idea to refinance. This discussion might be a good one to have with a reputable mortgage broker or your banker and see if this would make sense financially. Or feel free to visit my website and the Mortgage Center for more helpful information. This is the website to the Federal Reserve’s Monetary Policy section: http://federalreserve.gov/monetarypolicy/default.htm

INTEREST RATE SCENARIO, AS OF THE WRITING OF THIS A 30 YEAR FIXED RATE WAS 4.33% ACCORDING TO BANKRATE.COM:

I would like to illustrate an example of how important an interest rate can be in one’s decision to purchase when financing. Suppose you were to have purchased and to be conservative secured a higher rate than what they are currently averaging, you locked in at 4.75 percent, as opposed to waiting for another 6 months because you felt prices were going to be 5 percent lower, but in that time interest rates rose 1 percentage point. You wanted a 30 year fixed rate mortgage:

This example is meant to show you that there are important factors that go into trying to ‘time the bottom’ and in turn, consequences. No one can predict the future and I want to stress that this is merely an example to show the potential amount of savings one could realize due to the nature of the interest rate affecting the bottom line payment for what could be a mortgage you have for 30 years. Plus, it illustrates the opportunity costs of sacrificing a lower rate for the uncertainty of an additional drop in prices. One must consider how long they feel they will be in this property, personal financial situation and credit score, opportunity to refinance if rates go lower but sacrificing that opportunity should rates never go that low again, and other items such as these. I did not tabulate any sort of totals in an attempt to have you analyze the numbers based on your personal situation to decide for yourself what your best decision would be. Please click here to take you to the mortgage calculator I used for this example. Again, this chart is strictly meant as an example of some various considerations that you should think about if you are contemplating a real estate purchase.

Exchange rates play a vital role in Real Estate related decisions for foreign buyers or sellers, a good source to track currency exchange rates is:

http://www.xe.com/ucc/

I hope this email finds you well and looking forward to comparing this month’s data with last month’s data to spot trends and decide for yourself the status of the local Real Estate market, of which I work within 24/7. You are receiving this because we have been in touch about Real Estate here in the South Florida area, most likely property at the Beach. As you read the newsletter from month to month it will contain data that will help you to analyze market conditions. In addition, it is an unobtrusive way to stay in touch with you regarding my Real Estate Consulting Services.

That is all for this month’s newsletter and I welcome suggestions, feedback, and of course I am here if you or anyone you know is thinking of buying or selling property here in South Florida. If you wish to further discuss any of the above issues in more detail, or any other Real Estate related topics, please don’t hesitate to call or email. I would like to leave you with the 4 following quotes:

“Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing.” – Abraham Lincoln

“People seem not to see that their opinion of the world is also a confession of character.” – Ralph Waldo Emerson

“Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.” - John Kenneth Galbraith

“Growth is a painful process.” - Wilma Mankiller

DESIGNATIONS AND CERTIFICATIONS:

These Designations and Certifications were specifically chosen by me to give my effort, time, and money, as well as meeting the required experience because I feel that this shows my dedication to continually learning and evolving as a Real Estate Consultant. Plus, the market that I practice in is a natural one to achieve such designations to separate myself from the other professionals within my field. Keep in mind these not only prove education but also transactional experience in order to obtain the designations and certifications.

Realtor® - Membership in the largest professional association known as the National Association of Realtors or N.A.R.

C.I.P.S. – Certified International Property Specialist, member of CIPS network; Designation shows education and transactional experience in the International Arena of Real Estate.

C.D.P.E. – Certified Distressed Property Expert, member of Distressed Property Institute; Designation shows education and experience in the continually evolving and complicated short sale and foreclosure markets.

C.L.H.M.S. – Certified Luxury Home Marketing Specialist, member of Million Dollar Guild; Designation shows education and transactional experience in the top tier level within my market, Million Dollar Guild is the highest level of membership with proven experience in numerous $1M+ transactions.

GREEN Certified – also known as GCREP-GL, Green Certified Real Estate Professional – Green Leadership; Certification shows education and leadership within the Green Real Estate Industry.

T.R.C. – Transnational Referral Certification; Certification shows education in researching Real Estate throughout the world and allows me to refer and to be referred from 28 International Real Estate Organizations in the Global marketplace.

R.E.O.S. – Real Estate Owned Specialist, shows extensive experience and knowledge in the distressed property class known as REO, also known as foreclosures or bank owned properties.