Saturday, April 4, 2009

Future of Real Estate: Look at Miami Condo Death Spiral



Rust pokes through the peeling paint on the railings, pest control has been curtailed and the palm trees are no longer being fertilized at the 1940s-era Miami Modern condominium building in Miami Beach.

The condo association has been forced to cut expenses because the owners of 11 of the 28 apartments in the modest two-story building are delinquent, victims of a mammoth U.S. real estate collapse that has hit Florida especially hard.

With so many cash-strapped owners failing to pay their monthly fees for upkeep, the condo board last year had to raise $40,000 with a special levy to fill a giant hole in the $80,000 annual budget, but only managed to collect $19,000 from the owners who are still able to pay their bills.

Florida's condominium and homeowners' associations are facing what experts call a trickle-down disaster from the property crisis. Dozens and perhaps hundreds of condo buildings have budget shortfalls as thousands of owners, under water on their mortgages or in foreclosure, stop paying monthly fees.

"I call it a death spiral," Miami Beach city commissioner Jerry Libbin said. "It's a catastrophe in the making."
more..
A one-bedroom, 560-square-foot (52-square-meter) unit that topped out near $200,000 might now get $70,000, leaving owners drowning in debt.
Still, said Housen, it could be worse. She pointed to a nearby tower where she said more than 200 of the 244 units have liens or lawsuits pending.
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26 comments:

  1. 560 sq ft for 200,000? Someone paid that?
    So now they only can get 70,000? 130,000 in the red!

    I would have to see the gun that was held to their head that caused them to do that. I personally don't know anyone that stupid. If the threat of bodily harm or murder was involved if they did not sign the loan papers, then I would have to search real hard to have any sympathy.

    ReplyDelete
  2. Vancouver it would cost $500,000 for 560 sq. ft Condo. The biggest bubble in the world is in VANCOUVER Canada

    ReplyDelete
  3. The real market the value of the condo is = Buyer's income minus debt+a down payment. To buy a $ 150K condo your income needs to be at least $74K.
    Maintenance and property tax on a condo costing $150K = approx. $900. IF interest rates,taxes,insurance and maintenance go up. Property values will go down except when the speculators drive the values higher, just like the stock or commodities markets.
    Risk assesment for most folks is ruled by emotions because you can RENT a $150K condo for between $1000 and $1300 p/m. Save the difference and put more money down for when the market goes realy down to where this condo will be available in th future for 100K and the stock market will be 4000.
    No charge for this advice.

    ReplyDelete
  4. SAVE your money , buy silver coinage , be self sufficient , cause no one is going to hold your hand

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  5. I can't believe that the prices are so low in Miami.

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