Thursday September 27, 2007

What's so great about a housing crash?

platinum condominium Platinum Condominium has had some trouble selling units, so they decided to try selling 20 units off at a live auction. The results? Well, as Lucas put it at Miami Condo Investments, “the auction was a disappointing failure and Miami condo developers should soon be seeing brown stains appear in their underpants.”

Only 9 units were auctioned, and most came in hundreds of thousands less then what identical units have recently closed for. Luis has more analysis (plus videos of the event), and leaves open the question of whether this is the bottom. Well, folks, it’s not. Reports on the sub-prime mortgage meltdown have that fiasco continuing for about another year, so it’ll be feeding coal to this fire well into next year.

I still say this is great for Miami. The housing crash is nation-wide, and steps are being taken to fix the situation, but because it’s worst in Miami, those steps will do little more then soften the landing a tad. Consider the internet bubble of the 1990’s: one of the results was that insane amounts of fiber optic cable were laid down, much more then it made financial sense to do. The result is cheap broadband for everyone (and a hosing for greedy companies). The result here? Well, a hosing for greedy developers, but cheap condos for everybody! (With fancy lofts and primo stainless-steel appliances, natch.) Workforce housing? Give me a few more months, and I’ll have all the workforce housing you need on tap for ya.

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  1. MiamianLawStudent    Thu Sep 27, 01:00 PM #  

    Amen!

    See also, Michael Lewis’s similar post in MiamiTodayNews.

    Like a piƱata, bursting condo bubble will spill forth goodies



  2. Gabriel J. Lopez-Bernal    Thu Sep 27, 02:20 PM #  

    Precisely!



  3. Ilene    Thu Sep 27, 02:43 PM #  

    Actually you forgot to mention the fact the developers of the Platinum Condominium decided not to sell the remaining 11 units that were auctioned due to the fact that the bid prices were well below there pre-construction prices. The 11 units will now be rentals.



  4. dreaming    Thu Sep 27, 02:59 PM #  

    evidently, you missed it, but the developers decided to reject the bids on most of the auctioned units because they were deemed too low. that, and the threat of lawsuits by buyers who just paid double for the similar units in the bldg that were sold on the open market.

    but i think yr right about some major price cuts on the condos coming along.



  5. alesh    Thu Sep 27, 04:12 PM #  

    hmm… they can do that, eh?



  6. Dave    Fri Sep 28, 01:44 PM #  

    The developers of this project must be morons! There are 24,000 units currently for sale in the Brickell-Downtown area and ANOTHER 24,000 being built right now. Did they really believe that an auction was going to boost prices? You are absolutely correct about the market. Prices got way beyond the capacity of the public to buy. A classic case of another tulip bulb craze. The first leg of the benefit for consumers will be that the rental market will become extremely cheap as planned condos become rental units. The second phase will be as you say a wonderful opportunity to buy a reasonably priced condo.



  7. Ed    Sat Sep 29, 03:01 PM #  

    This is only a preview of what’s coming. In six months these developers will be wishing they had taken the “too low” offers.



  8. T.Fernandez    Fri Oct 12, 11:43 AM #  

    There are a whole host of dynamics that must be considered before converting units to rentals. I know to investors it may be a quick fix, but to the renters that will occupy these units beware.

    Here’s a link to an article that highlights the issues surrounding condo converting to rentals.

    http://rentrollandreason.blogspot.com/2007/10/
    investor-foreclosures-will-likely-boost.html