Before You Buy a Condo in Miami, Read This...
By
Tom Dyson
October 29, 2007
The Brickell Corridor is one of the most infamous roads in the world. You may have read about some of the buildings that line it in the newspaper recently...
According to the Miami Sun Post: "The Club at Brickell, with 54 foreclosures, holds the distinction of having the most foreclosures of any building in Miami-Dade and Broward counties. The Vue at Brickell, a condo conversion just two blocks away from the Club, ranks No. 3 based on 49 foreclosure actions. The Jade at Brickell, a nearby bayfront luxury building that had the highest number of foreclosures at the end of the second quarter, now ranks fourth with 42 actions.
"These three Brickell towers account for 37 percent of the entire number of foreclosure actions filed and 66% of the dollars in default in the top 10 buildings in South Florida."
I looked at condos in the Brickell Corridor last week. I toured four different skyscrapers: The Vue, The Jade, The Club, and The Sail. Here's what I found:
The four buildings I looked at were all within a couple of blocks of each other. They call this the "Brickell Corridor." Brickell is the main road running through downtown Miami. They seem to have put up 90% of downtown Miami's condo towers along Brickell.
I used to think this was baby-boomer territory. Old folks from the Midwest would come here to retire or buy a second home, I thought. Wrong. That's Naples and Orlando. The condos down here are all full of South Americans. In total, I've probably spent two hours sitting in lobbies waiting for realtors on this trip. I watched the people coming and going. They are all Latin. They speak Spanish, they have pets, they seem wealthy.
The bottom line is, the condo boom in downtown Miami is 100% based on Latin money.
By the way, a separate condo boom is taking place on the barrier islands to the east of Miami. This is a totally different market. Downtown Miami is a metropolitan business district. The barrier islands comprise South Beach, Miami Beach, and Sunny Isles Beach. Collins Avenue is the beach road that strings them all together. It is touristy. There's a beach atmosphere, not a business atmosphere. You see sunburned Brits walking without shirts on.
In downtown Miami, 16,000 new condos are scheduled for completion in the next two years. I saw at least 25 buildings under construction and another dozen lots where they will construct buildings soon. I don't know how many condos are going up in the barrier islands. Space is tighter. But at least 20 buildings are under construction right now.
If these were stocks, now would be the time to buy. The future looks so grim. There are no buyers, and you just need to look around to see thousands more condos coming on the market. The monthly association fees are a major drag, and everyone's rushing for the exits all at the same time.
But these are not stocks. They are properties. The owners are holding out, and their prices move much slower. I think there's at least another 15% downside, but it could be as much as 40% at worst. Right now, you could get a bottom-of-the-line condo for about $350,000. That's still way too high, in my opinion.
For me, condo living is an awful way to live. They are like hotels. I hate elevators. I'd never buy one of these things. That's just me. Others like the urban lifestyle.
Problem is, developers built these condos cheaply and quickly. They look tacky. Bits of tile were already broken in one of the elevators, and there are marks on some of the walls. Meanwhile, you have workers walking around trying to complete construction. It's a mess. Even if you like this lifestyle, I think you'd still be disappointed.
Bottom line, if you'd like to own a Miami condo, wait another year. In the meantime, keep reading DailyWealth. I'll keep you posted on any new developments...
Good investing,
Tom
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