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South Florida Real Estate
Merry Christmas
Merry Christmas From Tropical Miami
Icon Brickell To Be Turned Over To Lenders
Icon Brickell, the three-tower 1800-unit complex with views of the Miami River and gorgeous grounds is being turned over to the developer’s lenders in a friendly foreclosure. Only two of the three towers have been built.
Existing Home Sales Surge in November
Interest Rates Will Start Increasing in 2010
The Fed’s Mortgage Backed Security (MBS) purchase program ends on March 31, 2010. This purchase program is what has kept mortgage rates so low for the better part of 2009 and once the Fed stops purchasing MBSs the demand will drop. Since the supply of MBSs is still high, this will have a downward affect on bond prices which, in turn, will make home mortgage rates rise.
This will affect the purchasing power of home buyers.
Happy Holidays from Citigroup
Citigroup announced that it will suspend foreclosures for the next 30 days in order to work on long-term alternatives to foreclosure. This will be happy news to an estimated 4,000 borrowers.
Christmas at Merrick Park
Beautiful Christmas Tree at Merrick Park.
Miami’s Commercial Real Estate Market – Third Quarter Update
Whereas Miami’s residential real estate market is seeing relatively steady increases in sales over last year, our commercial market’s third quarter sales plunged 70% compared to 2008. The price per square foot has decreased in the industrial sector the most, down 23%, followed by multifamily 14%, office 12% and retail 9%. It is interesting to note that the price per square foot decrease does not necessarily correlate with the number of distressed properties in each of these sectors, but rather with their actual use. It makes sense that if industries are closing that sector would have high vacancies (therefore lower pricing) and that the multifamily, in competing with the over supply of residential real estate, would also see a decrease in their pricing.
This huge decrease in commercial sales and pricing is not unexpected, as the commercial real estate sector typically lags behind the residential real estate market.
Miami Has A High Number of Distressed Commercial Properties
Miami ranked third in the nation in the number of distressed commercial properties. Miami has $7.6 billion worth of properties that can be considered distressed, according to Real Capital Analytics, a real estate research firm. Las Vegas was the worst off with $17.7 billion and Manhattan was third with $12.3 billion. Since the total nationwide is estimated to be $180 billion of distressed properties there is plenty of pain in other states. It makes sense that the sectors of commercial real estate hardest hit are the retail and hotel sectors, followed by apartment buildings and finally, the industrial sector, which wasn’t as heavily leveraged as the other sectors.
| RCA’s Market Stats for Miami, FL Past 6 months | Reported closed/in contract |
|---|---|
| Volume ($mil.) | $872.2 |
| No. of props sold | 75 |
| Avg. price in mil. | $11.6 |
Short Sales Starting to Pick Due to New Treasury Rules
At the end of November, the United States Treasury Department released new rules attempting to encourage banks to speed up short sales. The rules create a uniform process and documents that all banks must use as well as provide cash incentives to banks willing to participate. The new rules are starting to work…I actually had a previously unapproved short sale close faster and with less problems than a regular sale that went under contract at around the same time.
This is great news for buyers and sellers as it will help us move through the inventory levels that much faster. In order to qualify, a seller must:
- use the home as his/her primary residence
- have taken the loan out prior to January 1, 2009
- must be delinquent on mortgage or likely to default on it
- have a loan that is less than $729,750
- have a monthly mortgage payment that is more than 31% of before-tax income
Buying Real Estate? Bring Plenty of Patience if You Are Financing
I just came from a closing that almost didn’t happen because of the strict lending requirements lenders have. Mind you, the Buyer has been under contract on a regular sale for over a month and was putting 40% down. Last night the bank decided it needed more information on the source of his original $5,000 deposit, given back in early October. When he provided his bank statement showing the $5,000, the latest bank statement also showed a significant deposit, a gift from his sister to help with the down payment. This initiated a request from the lender for a letter from the sister saying it was a gift. He got the letter, but this morning they wanted a copy of the sister’s account where the money came from. She forwarded the statement showing the debit being made to her account. Unfortunately for all parties involved, the sister is married and doesn’t share her husband’s last name, which lead to another request for information. We finally closed a little before 9:00 p.m.
I have no problem with lenders tightening up their lending requirements and wanting to track the money. I do have an issue with them doing so the day before the closing, jeopardizing the transaction, and stressing out all parties, who are usually stressed out enough on the day of a closing.
Moral of the story?
- Create a paper trail of where all the money you are using for the closing is coming from and provide it to your lender or mortgage broker at least several days before the closing.
- If you are getting money from a family member, get a gift letter to go along with it. The letter should be specific as to where the funds are coming from and include a bank statement showing the funds.
- Make sure the name(s )of the accounts match the name(s) in the gift letter.
- If you are running short on time, sign an addendum for a one-two day extension for the closing and make sure all parties to the original contract sign it before the end of the contracted closing date so that you are still in contract.
- Be patient. Lenders are backlogged with new buyers and new regulations.
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