The Real Estate Diamonds in the Rough

Miami Beach real estate can no longer claim to appeal strictly to people with six or seven figure salaries. Today the surplus of properties up for sale in the city has eroded prices, revealing plenty of possible investment prospects for those willing to ignore the steadfast doom cries of the real estate soothsayers and find their next lucrative opportunity.

If you’re renting at a condo like Terra Beachside Villas or ICON, it may come as a slight shock to be told that the money you’re plunking down for your lease is potentially going to waste. Instead of it becoming something that will return you a long term profit, you’re periodically losing hundreds.

Recent news reports show overall property values have plummeted to an eight year low, which essentially equates to being able to actually live in that luxury condo by the ocean closer to an imminent reality than the future pipe dream it once seemed. Pre-construction units continue to materialize and their prices also come with an increasingly reasonable price tag. If you decide to simply wait it out and join the legion of â¬Sdoomers⬝, don’t be surprised if you find yourself possibly regretting that decision once the market returns to a healthier state.

Since you’re already living in Miami Beach, it’s safe to assume you’ve got fairly deep pockets. If you’re managing that spare change in order to pay off your â¬Spad⬝ in the next decade or so it’s quite likely the market will be in better shape come that time which means your condo’s value would likely have increased substantially.

If you’re not in it for the money, that’s fine. Then again, a hint of bragging bravado never hurt anyone. You may find yourself filled with giggly delight as your friends and loved ones stare in amazement at how you were capable of conjuring the funds for that bewildering three bedroom sanctuary with all the bells and whistles that often come with the word “luxury” attached to them. Obviously you didn’t pay anywhere near the princely sum they have in mind but that will be your own little secret.

Nobody’s telling you to go out and splurge on the first property that catches your eye but, just like the old adage “misery loves company”, don’t just sit around with your arms folded like so many of these pessimistic real estate enthusiasts and let a potential opportunity pass you by. After all, there’s absolutely no harm in looking.

Recently, I received in the mail a very comprehensive market snapshot from a local brokerage firm with a variety of confusing statistics gathered from the MLS comparing 2006 and 2007 Q2 sales for the more prominent buildings South of Fifth Street in Miami Beach. I’m astounded that in today’s real estate market, sales professionals are still sending out confusing statistical reports in an effort to sign up listings. Below is my common sense interpretation of the data.

I’ve compiled the following from the MLS to clearly communicate what is happening with the luxury condo market South of Fifth Street for the following luxury waterfront buildings:

Murano at Portofino

There are 20 units for sale, which makes it the lowest inventory building in the entire area. The average asking price is $2,475,000 at $1,107/S.F. The median sales asking price is $1,660,000 at just over $1,000/S.F. YTD 2007 a total of 3 units have sold, at an average sales price of $1,523,000 at $1,126/S.F.

Although on paper prices do not seem to have been affected thus far, only THREE units have sold for the entire year! Also of note, there are only two â¬S01⬝ or â¬SA⬝ units (which I consider to be among the best floorplans and views in all of SE Florida and Greater Miami) and they are still hard to come by- with only two units on the active market starting at $4,900,000 or $1,456/ S.F. The last two closed sales that have taken place for the â¬S01⬝ units were in March of 2006 for an average of $3,947,000 at $1,172/S.F.

Murano Grande

There are 53 condominium units for sale in this building, obviously an oversupply of sellers (with at least two units in foreclosure/pre-foreclosure). The average asking price is $1,897,000 at $840/S.F. The median asking price is $1,470,000 at just over $838/S.F. For the second half of 2007 (since June 1) a total of 6 units have sold (vs 13 sales for same period last year), at an average sales price of $1,406,000 at $847/S.F. This represents a closed sales slowdown of 53% during the summer/fall months of 2007 vs summer/fall of 2006.

Icon South Beach

There are 43 condominium units actively for sale, with at least four units in foreclosure/pre-foreclosure. The average asking price is $1,860,000 at $895/S.F. The median asking price is $1,600,000 at just over $876/S.F. For the second half of 2007 (since June 1) a total of 6 units have sold (vs 16 sales for same period last year), at an average sales price of $2,676,000 at $931/S.F. This represents a closed sales slowdown of 63% during the summer/fall months of 2007 vs summer/fall of 2006.

Continuum South Beach (South Tower)

There are 50 condominium units actively on the market for sale. The average asking price is $2,983,000 at $1,263/S.F. The median asking price is $2,372,000 at just over $1,225/S.F. For the second half of 2007 (since June 1) a total of 7 units have sold (vs 10 sales for same period last year), at an average sales price of $1,566,000 at $869/S.F. This represents a closed sales slowdown of 30% during the summer/fall months of 2007 vs summer/fall of 2006.

Portofino Tower

There are 37 condominium units actively on the market for sale. The average asking price is $1,955,000 at $881/S.F. The median asking price is $1,699,000 at just under $800/S.F. For the second half of 2007 (since July 1) a total of 3 units have sold (vs 6 sales for same period last year), at an average sales price of $2,983,000 at $972/S.F. The most significant difference over the past year, are that the number of active condominiums for sale has increased, but the ones selling are the premier waterfront Penthouses and â¬S01⬝ high floor lines with unobstructed views (see below)

Apogee

Closings will be commencing in the next few weeks, the 01 and 04 lines are by far the most desireable. For example, one of the better re-sale units is #901 and can be purchased for $4,790,000 at $1,155/S.F. This may seem like a high price, the 01 line and 04 lines at Apogee have been thus far priced in the $7M and $8M range. I believe that these units are most competitive with Murano at Portofino â¬S01⬝ or â¬SA⬝ units. Note that the last two closed sales that have taken place for the â¬S01⬝ units at Murano for an average of $3,947,000 at $1,172/S.F. See comparisons of units â¬SA⬝ from both buildings below:

Vs.