March 23, 2007

Miami condo buyers: "I want out". Developers: "F*ck you!" REALTORS: "I want my commission check!"

The funniest thing about the rush for the condo-investor exits is all those real estate clerks who've already spent the commissions they'll now never collect.

Man, do I have dot-com deja-vu today...

Isn't it fun to watch a ponzi scheme unravel? What were they thinking? What were they thinking...

Nervous condo buyers want out - Jittery over the cooling condo market, some buyers seek to break their deals as developers resist.

In a cool housing market already overflowing with condos, what were once hot properties are now hot potatoes that many don't want in their hands. Buyers seeking to get out of contracts are pouncing on changes in developers' plans, including those related to higher insurance costs. Some are even combing through documents for blown deadlines, which developers blame on hurricane delays.

The tension is rising as closing day approaches for the roughly 25,000 new condos expected this year and next. And the spats between buyers and developers will help decide one of the biggest questions in the troubled housing market -- how many condo sales will actually close. If the spats continue, they would signal a rocky time to come, with unsold units and falling prices.

'This may be the beginning of the `interesting period,' '' said real-estate analyst Michael Cannon. ``We will see it evolve through 2008.''

So far, there have not been widespread defaults or much litigation, and by most accounts, buyers are going to the closing table, however reluctantly. Still, there is evidence of growing unease.

''The scary thing is, people who have flaked on me tell me they have like five other contracts in other buildings under construction,'' Covin said.


Anonymous said...

''The scary thing is, people who have flaked on me tell me they have like five other contracts in other buildings under construction,''

It must just be me - but I can only be in one place at a time. The stupidity of people amazes me.

Anonymous said...

Realtors commission checks were never mentioned in the article.

Anonymous said...

The stupidity amazes me too. I guess this is one of the things that happens when EVERYONE though they could become a millionaire by tomorrow morning.

FlyingMonkeyWarrior said...

Let the law suits begin.
The next bubble, legal fees.

blogger said...

"Realtors commission checks were never mentioned in the article"

I did the author's work for him.

When dot-condos are cancelled, realtors realize they're as screwed as option holders who thought they were millionaires.

Never count (or spend) the money until it's in your bank account.

I haven't seen one article yet on realtors who are in a world of hurt with this massive cancellation rate ruining their dreams of riches.

Ramen noodles, aisle #2

veritas_faust said...

Interesting enough the number of cranes is now far fewer, but the building sites that are more active.

There is obviously BIG pressure to complete the projects that are going forward. I suppose the developers do not want to be left facing breach of contract lawsuits for not opening as promised.

I will keep you all posted about events here in Miami for the next 72 days. Until I pack up and get out of this tropical cesspool.

Anonymous said...

This article at The New York Times is very revealing of things to come:

Anonymous said...

Everybody was kung-fu fighting
Those cats were fast as lightning
In fact it was a little bit frightning
But they fought with expert timing

They were funky China men from funky Chinatown
They were chopping them up and they were chopping them down
It's an ancient Chineese art and everybody knew their part
From a feint into a slip, and kicking from the hip

Everybody was kung-fu fighting
Those cats were fast as lightning
In fact it was a little bit frightning
But they fought with expert timing

There was funky Billy Chin and little Sammy Chung
He said here comes the big boss, lets get it on
We took a bow and made a stand, started swinging with the hand
The sudden motion made me skip now we're into a brand knew trip

Everybody was kung-fu fighting
Those cats were fast as lightning
In fact it was a little bit frightning
But they did it with expert timing

(repeat)..make sure you have expert timing
Kung-fu fighting, had to be fast as lightning

Anonymous said...

Nice to see these greedy speculators get toasted. LOL!!!!

Anonymous said...

This is the best headline you ever thought of.

It sums up the Miami market perfectly. I love it!

Anonymous said...

Miami isnt a tropical cesspool.It is an international hub,with beautiful women,beaches ,culture.
I was there the other day and laughed at all the building and you know there arent enough people to fill the places.With that being said when prices come crahing down Miami would be a nice place to have a gettaway condo.Only if the price is right which would be a fraction of what they are now.

Anonymous said...

Um, like what I meant to say was that like most of the professional real estate investors that I deal with exclusively are able to properly manage 8-12 individual flips ant any given time.

Is, like, all of a sudden mon that the professional real estate investors are like slowing down in like their appetite for real estate.

I like wonder mon if they like are taking some of their robust and trully impressive like profits off of like the table mon?

Anonymous said...


25,000 real estate agents
2,000 real estate offices

In 1925.

Pop was 50K then.

Source - - Only Yesterday

Mr. PoPlicki

Anonymous said...

anon 2:20 - how pleasant to read about little old ladies getting rooked out of homes they paid on for 30 years. I want to puke.

Shakster said...

Damn!You all seen the price of Raisenetts?Oh well,when the show is good it don't matta.

Anonymous said...

Dear Fuast--you are correct Miami is a cesspool. I love it when people say things like annon:

Miami isnt a tropical cesspool.It is an international hub,with beautiful women,beaches ,culture.
I was there the other day and laughed at all the building and you know there arent enough people to fill the places.With that being said when prices come crahing down Miami would be a nice place to have a gettaway condo.Only if the price is right which would be a fraction of what they are now.

He forget to add that a.) oh the millions of baby boomers will come to retire here cuase its so great and then b.) all the millions of rich latin americans will come. Faust, you nailed it. I lived there for two years and it was so obvious. Ihave never seen a such a crappy place with a hard core of clowns telling me that Miami is an international hub and it has culture. Please, please tell me what exactly this "culture" in Miami is. What is it a hub for? Why would people think that tens of thousands of people would ponyu up 800k for a condo in a Americans least educated and poorest city? Please FUASt tell us why? In fact if we crack this we can get to the underlying psychology of bubbles..... Bcause as amazing as it seems--there are pleanty of places with beaches and lovely women in the U.S. and the world so why do it in Miami a.k. Bronx by the sea.......

Anonymous said...

Its funny that while Miami was a center of condo mania and mortgage fraud so little work was done on it. There was no worthwhile blog comming out of there (see the Cal and phoenix blogs and D.C.) the local paper was a complete REIC rag and did this artile only after the hourse is out of the barn--and a very moderate article at that. Miami is probably a place the exemplifies the heart of the underlying process that enabled the bubble. Greed, stupidity, local corruption. What do you expect of a twon where people still obsess over Castro and Cuba. Yeesh, poorest city in American, least educated city in American and the REIC was able to seel it as an internationl city with culture. Hell the middle class has been booking out of there for years cuase its esentially the hood with a beach--crappy schools and low wages. talk about B.S. and leveraging beaches to the hilt. Well, f em and hopefully a cat 5 hurricane will help celar up the mess soon.

FlyingMonkeyWarrior said...

hopefully a cat 5 hurricane will help clear up the mess soon.
That wasn't very nice. A cat five, @ 260 MPH would sink/blow away all of Florida and kill us all!

But I do have GOOD NEWS FOR YOU. Looks like the Miami Condos will fall into the Ocean, with out the cat 5. The sand beaches there are already VERY narrow.

For the Full Story:

South Florida running out of sand

For decades, South Florida's beaches have received periodic infusions of fresh sand pumped from offshore to maintain their bountiful curves.

Now, the supply of sunken sand off Miami-Dade and Broward is tapped out.

''For practical purposes,'' said Miami-Dade environmental director Carlos Espinosa, ``we are out of sand.''

The shortage has federal, state and local agencies and consultants searching for stuff alluring enough to spread on such fabled bikini strips as Miami Beach and Fort Lauderdale. The hunt ranges from ancient beaches now buried inland to unexplored depths to islands of the Bahamas and Caribbean.

It also has major implications for Florida's beach program, which regularly ''renourishes'' a constantly eroding coast with dredge pumps and pipelines.

Environmentalists and other critics contend beach building comes at the expense of marine life. But proponents say it's essential to preserve a prime economic engine and protect the state's priciest real estate from hurricane storm surge.

''When we run out of sand for our beaches, the beaches are going to go bye-bye and that's a serious thing,'' said Steve Higgins, beach erosion administrator for Broward.

Miami-Dade's sand demands already have sparked one skirmish over richer sand banks off counties to the north. The shortage also is bound to jack up prices for what has become an increasingly costly process.

Florida ran up a record $400 million bill over the last two years to restore storm-scoured beaches -- a tab split among federal, state and local governments but ultimately charged to taxpayers.

It cost $45 million to rebuild 6.8 miles of South Broward beaches last year with sand dredged from offshore. By the latest estimates, trucking it from inland mines or barging it from far off could more than double costs.

Nobody envisions Miami Beach disappearing to the dune line, but the sand shortage has delayed for more than a year plans to fill a number of persistent erosion ''hot spots'' -- from 63rd to 84th streets, as well as at 27th, 44th and 55th streets.

It also could push back Broward's plan to replenish the thinning stretch from northern Fort Lauderdale to Pompano Beach.

Waterfront hotels, condos and homes aren't considered at immediate risk, but the safety margin narrows along with that protective buffer of beachfront.

''The beach is as good as one storm,'' said Espinosa, whose Department of Environmental Resource Management runs Miami-Dade's renourishment program. ``We've been very fortunate. We've had a number of storms, but we didn't really get a direct blow.''


The Florida Department of Environmental Protection classifies more than 40 percent of the state's 825 miles of beachfront as ''critically eroded,'' including much of the East Coast.

But a geological feature hidden under the waves separates South Florida from the rest of the state.

Miami-Dade and Broward sit on the narrowest lip of the continental shelf, a shallow underwater ridge bordering the peninsula. It's only about a mile and half wide until southern Palm Beach County, when it begins to broaden to 10, 20 and more than 50 miles farther north.

The result is slim pickings off South Florida for dredgers, which slurp sand from ''borrow sites'' in 60 to 90 feet of water and don't have gear to go much deeper -- even if there were some undiscovered Sahara beneath the deep blue.

After decades as the state's busiest and biggest sand pumper, Miami-Dade is down to one small site the county wants to keep as an emergency reserve, Espinosa said.

Anonymous said...

I use to live in Coral Gables. I am a gun owning Republican, but I did not vote for Bush. The photo you show is of downtown Miami. Downtown Miami is dangerous, its urban, a concrete canyon, not sandy beaches. Your parking garage is gated and it is needed. You would not take a leisure walk around that neighborhood at night. It reminds me of downtown Los Angeles, another urban jungle.

Anonymous said...

When are the infamous Florida Department of Environmental Regulation and the local government politicians and public officials going to recognized reality? A tremendous shortage of beach sand is going to further ERODE property values along the south Florida beaches. Why should inland property owners, State government and the Federal Government continue to pay the increasing costs of replenishing the sand? Soon we will have a Peak Sand crisis in South Florida so that a small number of property owners and tourist attractions can benefit from the replenishment programs.

The answer is to assess the beachfront property owners for the replenishment cost and any segment where the property owners do not participate will receive no more sand. This will also limit the number of miles of SRPs (sand replenishment projects)needed and delay the date when peak sand is reached and the demand for subsidized sand far exceeds the amount of sand availabe within the economic hauling area. Increasing fuel costs and the huge drop in real estate values, higher insurance costs and property taxes in these areas further dictate a need for these changes. SPRs (sand replenishment districts) could be established to collect the replenishment funds and when these districts provide the funds, the contracts can be executed to collect and distribute the sand to areas where the adjacent property are willing to commit to paying the cost of the SRPs.

Another concept would to charge visitors admission to lie on the beach. The ticket prices to lie on the beach and enjoy the scenery would reduce the area of beaches needed and the markets would adjust to reflect the new reality. I would expect that none of this will happen until Congress and the inland landowners refuse to allow the diversion of general revenues for these costs that benefit the few at the cost of the many.

I am surprised that the Miami Herold was willing to publish the article about the shortage of beach sand. Maybe this is a wakeup call. Considering the response to peak oil, the sand will be seriously depleted before the problems of peak sand are addressed.

Anonymous said...

Hmmm w no condo and REIC fueling local spending, war on terror putting a crimp in drug trade, recession decreasing the tourism of boneheads from Jersey and NYc Outer Boroughs (For some reason only latin americans and older or less educated northeastern jews like it down there. Whats up w that?). Miami will be the first and hardest hit of the U.S. cities (well its not really a but close) by the re crash and comming recession. I bet those condos become low income housing like the glitzy condos of yesteryear in N Miami.....

FlyingMonkeyWarrior said...

peak sand

I have seen a lot of posts about peak
oil, but never knew about peak sand.
We are pretty land locked here in Orlando. I think a beach Charge is a
really good idea, We have a lot of tax revenue that the tourists pay. But Those Miami beach Condos are "Private Beaches" (said in a winey tone) aren't they.

John said...

Speaking of greedy speculators, one firm is finally at work for the buyer:

Condo Vultures Seminar Series Announces New Venues

The Condo Vultures Seminar Series has booked two new venues in Aventura and Fort Lauderdale, Florida

Miami, FL April 4, 2007 – Exotic Financing in a Declining Real Estate Market is the theme of this month’s Condo VulturesTM LLC Seminar Series scheduled for the evenings of April 10 in Aventura and April 17 in Fort Lauderdale.

The Condo VulturesTM Seminar Series program officially launched April 3, at the Westin Colonnade Hotel in Coral Gables.

“I want to thank everyone for contributing to a very successful Condo Vultures Seminar Series event in Coral Gables,” said Peter Zalewski, president of Condo Vultures LLC. “It was our first official seminar after successful beta tests in January, and from the size of the most recent turnout, we are strongly considering
expanding the venues into Palm Beach County in the near future.”

Dennis H. Kleinman, a partner and loan consultant with Capital Mortgage in Aventura, will explore exotic financing opportunities for investors buying in today’s plummeting real estate market. Kleinman, a veteran banker who has worked for financial institutions such as Chase, will address several key questions including:
• Unconventional strategies to minimize the carrying costs on investment properties • how to best utilize leverage • when is the right time to buy

The Aventura seminar April 10 will be held in The Royal Palm Room at The Marriott Residence Inn, 19900 West Country Club Drive. The Fort Lauderdale seminar will be held in The Citrus Room at the Sheraton Fort Lauderdale Airport Hotel, 1825 Griffin Road, Dania Beach.
Registration is free for both events and begins promptly at 6:30 PM.

Due to limited seating, an RSVP is required. To reserve your seat, please call 954-984-0698 or email Seminar Series Director John Fakler at

Condo VulturesTM LLC is a real estate consulting and marketing company intent on becoming the vital intelligence source for discount buyers who want to capitalize on the real estate downturn. Our sister company, Condo VulturesTM Realty LLC, is a licensed Florida real estate brokerage.