The developer of the new Everglades on the Bay condominium on Biscayne Boulevard in Downtown Miami has filed for bankruptcy protection on a project that has closed only 9 percent of its 849 units. 

“This is the first new condo tower in Greater Downtown Miami to seek bankruptcy protection,” said Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures® LLC. “The action must have become necessary as the number of closings at this Class A project slowed to a trickle in recent months. The primary reason is, the current pricing at Everglades on the Bay is more reflective of the boom years rather than today’s tumultuous market.

“There is every reason to think this project will sell out rapidly to individuals and/or bulk buyers once the pricing is brought in line with current market conditions.”  

The average purchase price on the 75 units that have closed at the Everglades on the Bay project between November 2008 and June 30, 2009, is more than $425 per square foot, according to the Condo Vultures® Official Condo Buyers Guide To Miami™.

By comparison, many of the Greater Downtown Miami condo projects today are priced between $200 and $300 per square foot. Several of these projects are experiencing brisk sales as foreign nationals, investors, and first-time home buyers are increasingly entering the market looking for value.

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Replacement cost of downtown Miami condos is estimated at about $250 per foot, yet developers at two new Greater Downtown Miami condo projects have cut retail prices to as low as $189 per square foot hoping to unload condos to cash buyers. This, according to a new report from Condo Vultures® LLC.

“Heaven for developers is selling units at $300-plus per square foot to individual buyers, and Hell is unloading product at $100 per square foot to bulk buyers,” said Peter Zalewski, a principal with the real estate consultancy Condo Vultures®. “Purgatory - which is where the Downtown Miami market is currently positioned - is developers attempting to move product at around $200 per square foot. These prices are far below what developers and lenders want or can even afford, but it beats dumping the product to bulk buyers at half that price, which in some cases may be unavoidable.”

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Federal regulators have seized Coral Gables-based BankUnited, FSB, the largest bank based in Florida. It has been sold it to a newly formed savings bank - BankUnited.

Bank United, FSB, had $12.8 billion in assets and $8.6 billion in deposits as of May 2.

The bank had been suffering heavy losses, stemming mostly from its portfolio of “monthly option” adjustable rate mortgages. South Florida condominium units were prominent among its growing volume of non-current loans and foreclosures.

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According to a new report  from Condo Vultures the oceanfront Tides on Hollywood Beach condo ranks as the South Florida project with the greatest number of new foreclosure suits. In the first quarter of 2009, lenders moved on a total of 44 units with outstanding loans totalling more than $13 million. The Beach Club is apparently not far behind earning the No. 15 ranking in the tri-county region of Miami-Dade, Broward, and Palm Beach counties.

The only other waterfront project on the top 20 list is the Miami Beach condo conversion the Mirador, which is located on the west side of the barrier island in the trendy neighborhood of South Beach with 22 foreclosure suits.

“Our data shows that 11 of the top 20 condominium and townhouse projects in South Florida with the greatest number of foreclosures are concentrated in Broward County,” said Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate company Condo Vultures. “Palm Beach County ranks second with six projects on the top 20 list, while only three projects are located in Miami-Dade County. Short of another wave of foreclosures tied to exotic financing, we are doubtful that many more waterfront projects will end up on our list going forward.”

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According to the Forlida Association of Realtors (FAR), first-time home buyers are getting back into the Miami condo market, helping push that market back out of the red with a 25% increase in sales comparing March 2008 to March 2009.

“In the past 4 months we have had clients with as little as $35,000 to over $3 million paying cash for Miami properties,” say Katerina Brosda of Brosda and Bentley Realtors in Miami in her Miami Real Estate Blog. “Jade Beach in Sunny isles Beach for example is over 65 percent closed with very few new homeowners having applied for a mortgage to close on their new condo.”

According to FAR “15 of Florida’s metropolitan statistical areas (MSAs) reported increased existing-home sales in March and 13 MSAs also showed gains in condo sales. It marks the ninth consecutive month that a majority of markets have reported increased sales.”

Overall, prices have dropped about 30% over the same time a year ago, causing a rapid increase in buyers from all over the world.

Says Brosda: “In our market, 30 percent of all purchases are first-time home buyers. Housing has become affordable and many household realize that this might be the last time in our generation that we will see home prices that low.”

Miami Condos lead Foreclosure Stats

According to the lastest Miami Condo Vultures report, South Florida foreclosure actions jumped by  33% in the first quarter of 2009 to 23,672 filings.

An average of a staggering 263 Notices of Default were filed each day in South Florida in the first three months of this year.

“The number of foreclosure filings continues to increase for the third year in a row,” said Peter Zalewski, a principal with real estate consultancy Condo Vultures® LLC. “At this pace, South Florida will have some 96,000 foreclosure actions in 2009 compared to 76,000 in 2008 and 33,000 in 2007.”

Broward accounts for 43 percent of all of the foreclosures filed in the first quarter of 2009, Miami-Dade is second with 30 percent of the actions, and Palm Beach is third with 26 percent of the filings, according to the report.

On the plus side, the number of single-family houses, condominium units, and townhouses on the market in South Florida decreased by 1.8 % on a week-over-week basis ending April 6, 2009.

Miami-Dade, Broward, and Palm Beach counties have a combined 92,792 resale residential properties on the market compared to 94,526 a week earlier ending March 30. As the number of available properties has consistently fallen every week since November, the number of pending sales has strengthened correspondingly. This suggests that although prices are down, buyers are stepping up to take advantage of the Miami condo market.

“The appetite of all-cash buyers willing to purchase deeply discounted properties is not weakening,” Zalewski said. “If anything, the appetite of buyers is growing stronger.”

Available condo and townhouse inventory has decreased at a pace of 10.6% to 54,469 units on April 6 2009 compared to 60,928 units for resale in November 2008.

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Is the Miami condo real estate market that made Jorge Perez a billionaire is back in the swamp?

Perez, chief executive of the privately held Related Group is South Florida’s most prolific developer, has been a driving force behind a string of high-rises and mixed-use developments from Miami to West Palm Beach.

But as the Miami Herald reports, Perez is trying to ride out a huge inventory buildup and falloff in property values across Florida.

About 45 percent of the nearly 23,000 condo units added to downtown Miami since 2003 remain unsold, said Peter Zalewski, founder of Condo Vultures Realty, a firm which represents investors looking to buy large blocks of condos and rent them out until the market recovers enough to sell then at a profit.

Perez’s latest project, a complex called Icon Brickell, consists of a boutique hotel and more than 1,640 luxury apartments in three gleaming towers on a spit of land where the Miami River meets Biscayne Bay.

It was supposed to be a crowning achievement after 30 years at the helm of Related for the man dubbed “Tropical Trump”. But Icon Brickell opened as the Miami condo market went into meltdown mode.

In an interview with Perez splashed across its front page on March 1, the Miami Herald reported that his condominium empire was teetering, with the Related Group losing more than $1 billion in the last year, adding that it had nearly $2 billion in debt including $700 million from Icon Brickell alone.

Whatever his personal wealth, estimated previously by Forbes magazine at $1.3 billion, Miami is abuzz with talk about whether Peraz can survive an extended downturn in the Miami condo market.

Two of Perez’ other Miami condo projects, including one just across the street from Icon Brickell, were already struggling with poor sales before the newer development opened. 

Only 18 of Icon’s pricey condo units had closed as of March 12, according to Zalewski. The first closing on residential units in the complex, where condos have gone for an average of $760,317 or $566 per square foot, occurred on Dec. 5.

That sales pace could spell disaster for Perez, who faces what some experts say is the biggest supply and demand imbalance in a condo market anywhere in the United States.

“Not only is this market unprofitable, but at the same time it’s losing money,” Zalewski said.

The U.S. credit crunch and curtailed financing for consumers has been affecting most real estate markets, and Miami is no exception. New rules from lending giant Fannie Mae, which buys mortgages from banks, have been anything but helpful when it comes to providing potential condo buyers with financing.

According to a new report from Condo Vultures® LLC, Developers in Greater Downtown Miami sold an average of five units a day in the fourth quarter of 2008, a drop from the 18 units per day in the third quarter.  To date, buyers have closed on 12,607 new units out of the total of 22,737 units in the Downtown Miami market, according to the report.

“A primary reason for the dramatic slowdown in new condo closings in the fourth quarter is the lack of financing available in the market,” said Peter Zalewski, a principal with Condo Vultures®. “Remember, the financial world changed in September and October with the Lehman Brothers bankruptcy, the wild stock market volatility, the creation of the Troubled Assets Relief Program, and the presidential election.”

The sales ratio for the 66 new Greater Downtown Miami condo towers that have been closing for at least six month is 73 percent. The closing ratio, however, for the six towers that began closing in September or later is 2 percent, or 42, of 2,384 total units, according to the report.

An additional 11 towers with 3,084 units are scheduled to begin closing in 2009.

Florida ranked second for 2008 foreclosures, according to a U.S. Foreclosure index report released Jan. 14 from Foreclosures.com.

Florida led the nation in pre-foreclosures filings last year, with 549,414 total, or 86.8 per every 1,000 households. California followed in second place with 453,421, while Arizona ranked third with 120,066.

The state also was second in bank repossessions of homes - known as real estate owned- with 107,833, or 17.1 of every 1,000 households. California led the nation with 260,709 filings, while Texas was third with 70,037 real estate owned properties.

Nationwide, about 1 million homes went into foreclosure in 2008, up nearly 63.5 percent from 2007, the report said. Another 2.1 million pre-foreclosures filings were reported throughout the United States last year, up nearly 62 percent from the previous year, the report said.