Archive for May, 2010

Strategic Nonforeclosure: Banks Leave Condo Associations to Suffer

posted on May 13th, 2010 filed under: Financial Responsibility, Real Estate News

When a borrower defaults on a mortgage in a condo building, the borrower often stops paying not only the mortgage but also the condo association maintenance fees.  The usual remedy would be for the condo association to file a lien against the unit, or exercise a right to take title from the defaulting owner.

The mortgage, however, remains, and has priority over the condo association’s interest.  So the association has to wait for the lender to foreclose and sell the property before the association can get paid anything that might be left from a sale after covering the mortgage (doubtful), or at least get a new owner in place who will start paying the unit’s share of common charges.

But in Miami and other hard-hit real estate markets, lenders are purposely not foreclosing on delinquent loans.  Like borrowers who practice strategic foreclosure and walk away from loans despite being able to pay, lenders are practicing strategic non-foreclosure.  By not foreclosing, lenders avoid realizing losses on their balance sheets and avoid all the costs of condo ownership: taxes, insurance and condo association maintenance fees.  As a result, the unit remains empty and the remaining condo residents are left to share all of the building’s maintenance and insurance costs.

Miami Real Estate Photos -- Biscayne Bay & Miami Beach 1

A case in point, according to the Daily Business Review, is 7149 Bay Drive in Miami Beach.  The condo association waited two years for Citibank to foreclose and take responsibility for a unit.  The association finally brought a quiet-title suit to force Citibank’s hand.  The unit is worth about $45,000.  Citi evidently had no desire to pay past and future taxes and maintenance fees, or the attorney’s fees and other costs of foreclosure.  So Citi simply canceled its $166,000 mortgage, giving the association clean title.

One real estate analyst likened it to a “100% short sale.”

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Real Estate Values Decline in Gated Community of Hammock Oaks in Coral Gables

posted on May 12th, 2010 filed under: Properties in Focus

A recent post compiled first-quarter home sales in Coral Gables 33156.  One of those sales suggests that real estate values in the gated community of Hammock Oaks may be down 18% since 2007.

11097 Paradela Street is a 3239-sf home on a 20,475-sf lot, and sold in March for $930,000.

11097 Paradela St., Hammock Oaks

11097 Paradela St., Hammock Oaks

11060 Paradela Street is a 3170-sf home on an 18,678-sf lot, and sold in August 2007 for $1,135,500.

11060 Paradela St., Hammock Oaks

11060 Paradela St., Hammock Oaks

Down 18% since 2007 seems pretty good compared to the nearly 50% decline in greater Miami.  Is that because wealthier communities will decline less in this downturn?  Or are they just lagging behind, still working their way down?  The truth is probably a little of each.

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Friday Fountain Photo

posted on May 7th, 2010 filed under: Fountains

Detail photo of De Soto Fountain in Coral Gables:

Coral Gables Real Estate Photos -- De Soto Fountain 12

The De Soto fountain is located on De Soto Boulevard near the Venetian Pool, Biltmore Hotel and other Coral Gables landmarks.  The neighborhood has a variety of real estate options from cheap rental units to luxury homes.

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Mortgage Rates May Drop Again

posted on May 6th, 2010 filed under: Real Estate Market Data, Real Estate News

What a difference a month makes.

The yield on the 10-year Treasury note spiked higher at the beginning of April, raising the prospect of higher fixed mortgage rates, which are generally correlated with the yield on the 10-year.  Now, with fears of Greek and other sovereign debt problems rocking Europe, the flight to safety in U.S. Treasury securities has driven the 10-year yield right back down.  Fixed mortgage rates should decline significantly as well.

The 4% level is proving to be very strong resistance.

U.S. 10-Year Treasury Yield (1-1-07 to 5-5-10)

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$8,000 Tax Credit Tempts Tax Cheating

posted on May 4th, 2010 filed under: Real Estate News

There have been plenty of scammers who claimed $8,000 homebuyer tax credits they did not deserve.  But when the government extended the credit beyond the original November 30, 2009 expiration, the new deadline was structured in a way that will test even the most button-down taxpayer’s scruples.

The tax credit is available for anyone who signed a contract by April 30 and closes by June 30.

Query:  Would parties signing a contract in these first couple of weeks of May be tempted to date the contract April 30, by any chance?

Maybe somewhere, but I’m sure things like that never happen in Miami.

Miami Real Estate Photos -- Biscayne Bay & Downtown

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Pending Home Sales Rose in March

posted on May 4th, 2010 filed under: Real Estate Market Data

The number of houses going under contract rose in March, according to the Pending Home Sales Index maintained by the National Association of Realtors.

Nationally, the number of pending home sales rose 5.3% compared to February on a seasonally adjusted basis.

In the South, pending sales rose12.7%.  In the Northeast, pending sales fell 3.3%.

The index does not track activity on a local level, but real estate sales activity in Miami and Coral Gables has been on quite a tear.  (Remember, sales and prices are two very different things.)

It is generally believed that the April 30 expiration of the $8,000 government benefit for homebuyers is goosing sales.  The index for April, scheduled to be released on June 2, will be the last one reflecting sales spurred by that handout.  The index is then expected to drop sharply because the handout brought future sales forward, as happened late last year with the originally scheduled November 30 expiration of the credit.  Back then, pending sales peaked in October, because deals had to close by November 30.  This time, pending sales should peak in April, because the expiration was structured to require contracts by April 30 and closings by June 30.

Pending Home Sales Index (NAR) -- March 2010 -- Chart, Graph

An index level of 100 equals the level of pending sales in January 2001 when the data series began.

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A Dark Hour for Biltmore Hotel in Coral Gables?

posted on May 2nd, 2010 filed under: Miami and Coral Gables Living, Real Estate News

The Biltmore Hotel’s management has been widely reported to be seeking renegotiation of their lease arrangement with the City of Coral Gables, which owns the hotel building and land.  The managers claim that business is way down because of the economy.

Indeed, something must be going on if the highly rated Palme d’Or restaurant and the classic Biltmore Bar are closed on a Sunday evening in early May.

Coral Gables Real Estate Photos -- Biltmore Hotel (3)

The odd thing is that the hotel made it through the 2001-03 recession, despite the intense fear of travel that crimped tourism after the 9/11 attacks.  Back then, the hotel slashed prices and offered hefty incentives for guests.  The Simple Pleasures package combined low, tax-inclusive room rates and in-hotel spending credits, for an effective rate of something like $100 per night.

The deals now are not quite as good, but from May 1 to September 30, the Simple Pleasures package is priced at about $149 per night, not including tax and after accounting for the in-hotel spending credit.

The role of the Biltmore in sustaining Coral Gables real estate cannot be underestimated.  The hotel not only adds value to homes and properties in the surrounding neighborhood, but introduces a steady stream of potential future residents to the city.  City founder George Merrick knew as much when he sent Biltmore guests on real estate tours.  After all, Coral Gables is not an obviously desirable destination, and has always had to justify why people coming to Miami should situate themselves 8 miles inland from the ocean and world-famous beaches.

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Coral Gables Living: Miracle Theater Kids Fest 2010

posted on May 2nd, 2010 filed under: Miami and Coral Gables Living

It was all about the kiddies this weekend at the Miracle Theater in downtown Coral Gables.  Kids Fest 2010 offered live performances, crafts, a costume room and various other activities, all free of charge.  It was a good time to be a kid in Coral Gables.

Coral Gables Real Estate Photos -- Miracle Theater -- Kids Fest 2010 (3)Coral Gables Real Estate Photos -- Miracle Theater -- Kids Fest 2010 (2)Coral Gables Real Estate Photos -- Miracle Theater -- Kids Fest 2010 (1)

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Q1 Review: Closed Sales in Miami, Pinecrest and Coral Gables Real Estate, Zip Code 33156

posted on May 2nd, 2010 filed under: Properties in Focus, Real Estate Market Data

The table below reports closed sales of select single-family homes in the portion of zip code 33156 east of Ludlam Road (SW 67 Ave.), including neighborhoods in Pinecrest and Coral Gables.  The 33156 zip code extends from Kendall Drive (SW 88 St.) south to Howard Drive (SW 136 St.), and thus includes the waterfront gated communities of Gables Estates, Journey’s End, Hammock Oaks and Gables by the Sea, as well as the gated lakefront community Snapper Creek Lakes, and the soon-to-be-gated lakefront community Hammock Lakes.

Coral Gables Real Estate -- Closed Sales -- Single-Family Homes -- Zip Code 33156 -- 1Q10

Recently closed sales are the principal guide to current property values in a local real estate market.  Data are from tax records, and thus include transactions not appearing on the MLS.

Because The Real Estate Fountain focuses on mid-range to luxury properties, the table focuses on the more desirable homes and locations in the covered area.

9801 W. Suburban Dr., Pinecrest

9801 W. Suburban Dr., Pinecrest

Although this is a first-quarter review, closed sales from December 2009 are included.  The originally scheduled November 30 expiration of the $8,000 homebuyer tax credit makes December 1 a more interesting time to start the real estate sales “quarter.”  The $8,000 credit should not have made much difference to buyers of mid-range to luxury real estate in Pinecrest and Coral Gables, but no market with human participants is fully rational.

11097 Paradela St., Hammock Oaks, Coral Gables

11097 Paradela St., Hammock Oaks, Coral Gables

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Miami Living: Polo Returns to South Beach

posted on May 1st, 2010 filed under: Miami and Coral Gables Living

The Miami Beach World Cup Polo tournament returned for a few days of sun, surf and social scenery out behind the Setai condo on South Beach.  Oh, and there was polo too . . . .

Miami Real Estate Photos -- Miami Beach Polo World Cup 2010, South BeachMiami Real Estate Photos -- Miami Beach Polo World Cup 2010, South Beach 2Miami Real Estate Photos -- Miami Beach Polo World Cup 2010, South Beach 3

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