Archive for the 'Properties in Focus' Category

Key Biscayne Had Highest Price Per Square Foot in 2013

posted on January 31st, 2014 filed under: Properties in Focus, Real Estate Market Data, Real Estate News

Where in Miami will you find the most expensive real estate in terms of price per square foot for single-family homes?  Turns out it’s in the relatively small homes that line the waterfront in Key Biscayne.  Four of the five top home prices per square foot in 2013 were there.  Of those, three were on a single street — Harbor Drive — while a fourth was on North Mashta Drive.  List below . . .

398 Harbor Drive, Key Biscayne (3BR, 3-1/2BA, 2,155 sf, sold $8.5M):  $4,455/sf

4211 Indian Creek Drive (5BR, 4-1/2BA, 2,322 sf, sold $8.5M):  $3,661/sf

830 Harbor Drive (4BR, 3BA, 2,922 sf, sold $6.25M):  $2,567/sf

571 North Mashta Drive (3BR, 3BA, 3,239 sf, sold $6.7M):  $2,316/sf

881 Harbor Drive (3BR, 3BA, 2,903 sf, sold $5.6M):  $1,998/sf

Miami Real Estate Photos -- Key Biscayne -- Rickenbacker Causeway

Based on MLS data.

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5001 Hammock Lake Dr., Sold for $5.335 Million

posted on September 30th, 2013 filed under: Properties in Focus

This magnificent Portuondo Perotti designed luxury home at 5001 Hammock Lake Drive in Coral Gables sold over the summer for $5.335 million.  At 8,376 square feet, that works out to about $637 per square foot.  Lakefront, of course.

5001 Hammock Lake Dr.

5001 Hammock Lake Dr.

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Boom & Bust Poster Child Sells Again (6925 Tordera St., Coral Gables)

posted on June 30th, 2013 filed under: Properties in Focus, Real Estate Market Data

The bank-owned home at 6925 Tordera Street in Coral Gables recently sold for $822,000, or about $233 per square foot.  That’s a low price per square foot for the South Gables neighborhood these days, but the constant presence of work crews suggests substantial repairs were needed.

6925 Tordera St.

6925 Tordera St.

The property’s sales history illustrates the boom and bust:

Sept. 1998:  $650,000

June 2004:  $1,275,000

May 2005:  $1,650,000

March 2006:  $1,850,000

May 2009:  $301,000 (sale to or from financial institution)

April 2013:  $822,000 (sale to or from financial institution)

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For Richer or Poorer

posted on April 12th, 2013 filed under: Properties in Focus, Real Estate Market Data

Broad market data do not always capture the reality of the real estate market.  National data do not necessarily reflect local market conditions.  Even metro data does not necessarily capture deep divisions among micro-markets.

Miami is especially fertile territory for such local divisions to sprout.  According to the U.S. Census, Miami-Dade County is second only to New York County (i.e., Manhattan) in income inequality.  Hot properties and neighborhoods are also a magnet for international wealth.  If location matters in real estate, it really matters in Miami.

So perhaps it should come as no surprise that the past year’s rebound in Miami home prices has been very unevenly distributed.  The most desirable areas have seen prices regain almost all of their losses, while most of Miami remains deep in negative territory.

For the sake of comparison, consider the Cosmopolitan Condo in the trendy SoFi neighborhood of Miami Beach.  SoFi is the part of South Beach that lies south of Fifth Street.  The Cosmopolitan, built in 2004, is not even a high-end property, yet buyers have recently been willing to pay roughly the same amount that buyers paid at the top of the market in 2006.  Only 6 of the 223 units in the building — about 2.7% — are in some stage of foreclosure.

Cosmopolitan -- South Beach -- Sales History -- By Date -- with Moving Average -- 2013-04-12

Compare that with Snapper Village, a community located in the heart of southwest Miami-Dade County.  Prices went parabolic during the boom and collapsed in the bust.  The past year’s bounce has hardly begun to recoup the losses.  At Snapper Village, 64 of 636 units — over 10% — are in some stage of foreclosure.

Snapper Village -- Miami -- Sales History -- By Date -- with Moving Average -- 2013-02-27

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So You Wanna Be a Landlord?

posted on February 28th, 2013 filed under: Financial Responsibility, Properties in Focus, Real Estate Market Data

Investors big and small have suddenly decided that it’s a great idea to buy single-family homes for rental income and future price appreciation, according to a flood of media reports.  A quip about how quickly we forget would be too easy.  And indeed, these investors are far more responsible than the yahoos who bought homes during the bubble.  Those were bad investors, and these are good ones.  Right?

Renting a house is hardly a newfangled way to earn income.  This big new idea is actually an old idea that previously had limited appeal.  What changed?  For one thing, the government rolled out big subsidies for institutional investors.  For another, Federal Reserve policies are starving small investors of a fair yield on their bank deposits, forcing people to hunt for yield in places they never considered before.

Such things tend to end poorly, but in case that observation strikes you as unconvincing and platitudinous, let’s look at a few recent sales to see what they say about how profitable buying and renting single-family homes really is.

The math is not hard.  In the simplest sense, your yield equals rent, minus carrying costs, divided by purchase price.  This is also known as your capitalization rate, or cap rate.

The major carrying costs annually are property taxes, homeowner’s insurance, and maintenance.  In the Miami area, property taxes approach 2% of the purchase price, homeowner’s insurance can be about 1% to 2% of the purchase price depending on the age and structural characteristics of the home, and maintenance should be budgeted at or near 1% as a rule of thumb anywhere.

If you finance, then the interest is a carrying cost but the out-of-pocket purchase price is effectively reduced by the amount you borrow.  We’ll ignore financing, as it’s often a wash.

So what does this simplified analysis say about buying homes for rental income in the Miami and Coral Gables real estate markets these days?  Consider several homes that recently sold and were also recently rented or offered for rent.

The home at 629 Madeira Avenue in Coral Gables recently sold for $370,000, and recently rented for $1,900 a month ($22,800 annually).  Property taxes are about $7,000.  Insurance can’t be known without getting a quote, but the house was built in 1940, so it probably doesn’t qualify for the cheapest rate.  Call it $5,000.  Add another $3,000 for maintenance and you’re at $15,000 in carrying costs.  Subtract that from the $22,800 and you have net income of $7,800 annually.  Divide $7,800 by $370,000 and you get a yield of 2.1%.  Salivating yet?

629 Madeira Avenue

629 Madeira Avenue

Here’s another.  The home at 1248 Milan Avenue in Coral Gables recently sold for $430,000, and recently rented for $2,000 a month ($24,000 annually).  The house is so small (1,335 sq. ft.) that property taxes are about $5,200.  It was built in 1924, so insurance is probably high for the home’s size, but that isn’t saying much.  Call it $4,000.  For such a small home, add a mere $2,800 for maintenance and you’re at $12,000 in carrying costs.  Subtract that from the $24,000 and you have net income of $12,000 annually.  Divide $12,000 by $430,000 and you get a yield of 2.8%.

1248 Milan Avenue

1248 Milan Avenue

One more — this time on the higher end.  The home at 5309 Alhambra Circle in Coral Gables recently sold for $1,261,000, and was recently offered for rent at $6,950 ($83,400 annually).  Property taxes are about $19,000.  It was built in 1926, so insurance probably is expensive.  Call it $11,000.  Add $8,000 for maintenance and you have $38,000 in carrying costs.  Subtract that from the $83,400 and you have net income of $45,400 annually.  Divide $45,400 by $1,261,000 and you get a yield of 3.6%.

5309 Alhambra Circle

5309 Alhambra Circle

The higher-end home seemingly fared better than the others, but still yields just 3.6% — and that’s based on the asking rent.  It didn’t actually rent for that much, so the yield might well have been less than 3.6% if a tenant had been found.

Which raises another consideration: An important factor omitted from these case studies is the vacancy rate.  There’s a big difference between listing a home for rent and renting the home.  Until it’s rented, your income is not just zero, but negative, because you still owe all the carrying costs.  Professional landlords accordingly reduce their anticipated income by the share of time they think a property will be vacant in between tenants.  A safe margin would probably be at least 5% to 10% for single-family homes, and as 5309 Alhambra Circle shows, it can drag on for much longer.  How long would you be able to take that heat before either cashing out or renting your home on the cheap to seven fraternity brothers and a four-legged mascot?

The home at 5309 Alhambra is particularly interesting because the seller bought it in December 2011 for $1,215,000, then listed it in March 2012 for sale or for rent.  The list price for sale was $1,397,000.  The list price for rent was $8,200.  It looks like a failed flip that neither yielded a capital gain (remember the brokers probably took 6%) nor successfully rented even after the asking rent was substantially reduced.

Still wanna be a landlord?

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Luxury Flips Hit Market in Miami and Coral Gables

posted on August 18th, 2012 filed under: Properties in Focus, Real Estate News

The luxury real estate market in Miami and Coral Gables sprang to life about a year ago.  An extreme oversupply of homes for sale quickly shrank to nearly normal inventory levels.

Perhaps another sign of strength is that some recent buyers of luxury properties in Miami and Coral Gables are attempting to flip the houses — i.e., sell them quickly for a large profit.

15 Star Island Drive is on the fabulous Star Island in the middle of Biscayne Bay.  There are just 34 properties on Star Island, and 15 Star Island Drive is adjacent to the home of Philip and Patricia Frost at 21 Star Island Drive, which is arguably the grandest estate in all of South Florida, with nearly 32,000 square feet of living space on over 6 acres of waterfront land.  15 Star Island is a mere 8,621 square feet on a 40,000 square foot waterfront lot.

The previous owner of 15 Star Island was Claudio Osorio, an embattled entrepreneur who declared bankruptcy in 2011.  The property made news when a bankruptcy judge thwarted a would-be buyer’s attempt to enforce a contract to purchase the property for $10 million.  The judge held an auction instead, and the property brought $12.72 million at auction in November 2011.

The buyer has now re-listed the property for $16.9 million.

15 Star Island Drive

15 Star Island Drive

6611 Leonardo Street in Coral Gables is not as ritzy, but still in the luxury-home segment of the real estate market.  It was listed for sale at $2.7 million in January 2009 and eventually sold for $1,215,899 in a short sale in March of this year.  The buyer re-listed the property in June for $1.995 million, and has since reduced the price to $1.799 million.

6611 Leonardo Street

6611 Leonardo Street

As auctioneers like to say, it’s worth what you pay for it.

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Recent Sales of Project Homes in Ponce-Davis and Coral Gables

posted on June 27th, 2012 filed under: Properties in Focus, Real Estate Market Data

Two recent sales of homes — one in Miami’s desirable Ponce-Davis neighborhood and the other in Coral Gables — give an indication of what buyers are apparently willing to pay in those areas for potential luxury homes in need of substantial work.

In Ponce-Davis, the house under construction at 4975 SW 78 St. sold for $2.5 million.  It was mostly finished but still needed at least a few hundred thousand dollars of work.  At 8,450 sf, the sale price works out to about $296/sf.  With the additional work, figure the property will eventually cost about $350/sf.

4975 SW 78 St.

4975 SW 78 St.

The house at 3510 Granada Boulevard was effectively a private sale, having been entered on the MLS after it was, for practical purposes, already sold.  The price was $1.2 million, which works out to about $282/sf for the 4,251-sf home.  The property is located on the Biltmore Hotel golf course.  No doubt the project is a total gut job, which should easily put the total cost at $350/sf to $400/sf, and perhaps more depending on materials and finishes.

3510 Granada Blvd.

3510 Granada Blvd.

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Luxury Land in Coral Gables Brings 27% Gain in One Year

posted on April 20th, 2012 filed under: Properties in Focus

Who says the days of buying and flipping are over?  The 49,658-sf (1.14-acre) lot at 4940 Hammock Lake Drive in Coral Gables sold for $1.1 million in March 2011, and just sold again for $1.4 million in March 2012.  That’s $300k or 27% in a single year — a tidy gain.

4940 Hammock Lake Drive

4940 Hammock Lake Drive

The lot is located in the desirable and soon-to-be-gated Hammock Lakes neighborhood, but is not waterfront.

Don’t expect this kind of deal to be commonplace, however.  Land in Miami and Coral Gables may have stabilized, but it isn’t rising at a 27% annual pace.  The cheap sale last year reportedly happened after one of the owners unexpectedly died, and plans for building a new house and new life together were shattered.  The human element often figures prominently in residential real estate transactions.

Just goes to illustrate that the real estate market is highly inefficient and illiquid, creating occasional opportunities for attentive and well-informed market participants.

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Opportunity and Risk in the New York Suburbs

posted on April 9th, 2012 filed under: Properties in Focus, Real Estate Market Data, Real Estate News

It’s too soon for prices to start rising in the New York suburbs, and significant risk remains for further declines.  Beware salesmen (and saleswomen) bearing happy-talk.

According to the National Association of Home Builders, the New York metro remains the least affordable in the nation, with a median home price of $409,000 and a median income of $67,400, a ratio of 6 to 1.  That’s down from 8 to 1 at the peak of the real estate mania, but still far above the 3 to 1 that prevailed in New York before the boom began.  Sure, record-low interest rates ease the pain, but if rates rise faster than incomes, the downward pressure on prices will intensify.  That’s what pricked the bubble a few short years ago.  Have we already forgotten?

A similar observation works at the micro-market level.  Consider the exemplary New York City suburban yuppie enclave of Cedar Knolls, a neighborhood in the city of Yonkers that shares a zip code and much of its daily life with the adjacent village of Bronxville.

Bronxville is no median suburb.  Wikipedia puts the median family income at $200,000.  The average kid taking the SAT at Bronxville High School scores at about the 90th percentile nationwide.

Being in Yonkers, Cedar Knolls doesn’t get Bronxville schools.  But most of the houses are classics from the 1920s, and carry much lower price tags and property taxes than their Bronxville counterparts.  The combination of beauty and relative affordability makes Cedar Knolls a popular choice among young professionals who work in New York City, but haven’t gained master-of-universe status.

You won’t find income data for Cedar Knolls, but a proxy will do.  Let’s compare Cedar Knolls home prices to a widely published compensation benchmark for young professionals in New York: the salary of first-year associates at big New York City law firms.

  • In 1998, before the real estate boom, first-year lawyers made about $90,000, and a typical Cedar Knolls home could be had for about $450,000 — a ratio of about 5 to 1.
  • When Cedar Knolls home prices topped out in 2004, first-year lawyers made about $190,000 (salaries spiked when dot-coms were luring lawyers away from firms), and a typical Cedar Knolls home cost about $1.25 million, a ratio of about 6.5 to 1.
  • In 2011, first-year lawyers were back to about $170,000 (bonuses were crimped by the financial crisis).

If you don’t want to pay a bubbly price for a house in Cedar Knolls, you might want to stay close to the pre-boom ratio of 5 to 1, which works out to $850,000.  But sales prices during the past year suggest that you’d have a hard time paying so “little”:

  • 132 Pondfield Road West sold for $1,083,500 (6.4 times the salary of a first-year lawyer)
132 Pondfield Road West

132 Pondfield Road West

  • 11 Beechmont Avenue sold for $1.2 million (over 7 times the salary of a first-year lawyer)
11 Beechmont Avenue

11 Beechmont Avenue

But there are some decent opportunities out there:

  • 170 Pondfield Road West is now listed for $945,000 (about 5.5 times the salary of a first-year lawyer, and considerably less than the current owner paid about eight years ago).
170 Pondfield Road West

170 Pondfield Road West

  • 13 Cedar Lane is now listed for $1.195 million (about 7 times the salary of a first-year lawyer, but for one of the larger homes in Cedar Knolls, a 6 BR, 4-1/2 BA, 3,860 sf house — almost twice the size of 11 Beechmont).
13 Cedar Lane

13 Cedar Lane

All four of the above properties are basically within a one-block radius.

After a real estate boom, overvaluation is worked off by a combination of falling prices and rising incomes.  While that plays out, the market will present attractive opportunities to savvy buyers.  REF Real Estate likes savvy buyers.

REF Real Estate is a licensed real estate broker in Florida and New York.

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Prices Bottom at Cosmopolitan Condo in South Beach

posted on March 19th, 2012 filed under: Properties in Focus, Real Estate Market Data

Here’s another sign of a bottom in Miami Real Estate: the price per square foot of condos sold at the Cosmopolitan Condo in South Beach.

The chart below shows the sales history going back to the building’s construction in 2004.  Blue represents individual unit sales, black is the 20-sale moving average.  Prices have broken above the moving average, reversing the downtrend.

Cosmopolitan -- South Beach -- Sales History -- By Date -- with Moving Average

The Cosmopolitan is located at 110 Washington Street in the very desirable SoFi (south of Fifth Street) neighborhood of South Beach, which is one of the most desirable locations in Miami Beach.  The Cosmo is a middle-market building, with units in nearby luxury condos like Continuum and Apogee selling for much higher prices per square foot, and units in the dwindling stock of old buildings in SoFi selling for less.

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