Condo Glut (Miami, Miami Beach, Weston: 2014, renter, insurance)

[tallrick]

Originally Posted by AnnRyan

Yes, there definitely was some money laundering going on. Still I think that most of the foreign investors were simply hedging against their governments.

I've already had a couple of conversations with investors who were losing money every year on the property, but continued to hold on even when they were clearly much better off selling. There's a psychological barrier to selling for less than you paid, even if you lose 20K a year after expenses.

I am going to laugh when the US government seizes their assets in an attempt to cover massive deficits. Foreign investors are greedy and stupid and deserve to lose everything. They run away from troubles instead of working to fix them at home.

[Wild Style]

Originally Posted by tallrick

I am going to laugh when the US government seizes their assets in an attempt to cover massive deficits. Foreign investors are greedy and stupid and deserve to lose everything. They run away from troubles instead of working to fix them at home.

It isn't just foreign investors. There are a LOT of Americans who are getting in on this crap. The neighborhood in Queens I live in is being bought up by people who are buying homes and renting them out. The fabric of our neighborhood will change for sure. Because renters generally are not vested in a community.

[Wild Style]

Originally Posted by AnnRyan

Yes, there definitely was some money laundering going on. Still I think that most of the foreign investors were simply hedging against their governments.

I've already had a couple of conversations with investors who were losing money every year on the property, but continued to hold on even when they were clearly much better off selling. There's a psychological barrier to selling for less than you paid, even if you lose 20K a year after expenses.

Very true, but there will come a point were fiscal reality will trump emotions.

[hurricaneMan1992]

Originally Posted by AnnRyan

Yes, there definitely was some money laundering going on. Still I think that most of the foreign investors were simply hedging against their governments.

I've already had a couple of conversations with investors who were losing money every year on the property, but continued to hold on even when they were clearly much better off selling. There's a psychological barrier to selling for less than you paid, even if you lose 20K a year after expenses.

Of course, every prospective investor/landlord knows to expect losses for the short term and think long. I just wonder to what extent this holds for large companies investing in properties in bulk as a hedge against short term risks in other types of investments. Hopefully they also tend to think long.

[joachim1000]

The question is.... is Miami considered in the same category than London, Paris and New York by Hedge Fund Managers and private investors? In that case, price of top notch properties will skyrocket. Brickell has always been highly speculative, I remember that 40 years ago prices dropped to the bottom to rise again at the wake of Brazilian and Argentinian investments, military coups, etc.

If Miami attracts the attention of Hedge Funds and those fortunes that buy emblematic properties in emblematic cities, the city will end just like prime properties in London and New York. Real Estate transformed into speculative assets.

[tijlover]

All it takes is for some country in Central or South America to elect a socialist, a Hugo Chavez, and the condo's in Miami will sell like hot tamales!

When Chavez was elected in Venezuela, the rich had their bags packed before he was sworn into office, and off to Miami they went! The same happened in Nicaragua, with the Sandinistas, with the Samoza's leading the pack to Miami!

There's lots of Chinese buyers in the U.S., but I can't somehow see them gravitating to Miami, except perhaps for a 2nd home in winter. A good many Chinese are used to a Midwestern type climate, colder winters, hot summers, and they'd be out of place in Miami. But I could be wrong!

[elchevere]

Article today from Bloomberg--"Miami Condo Frenzy Ends With Inventory Piling Up in New Towers"

Miami

[Wild Style]

Originally Posted by elchevere

Article today from Bloomberg--"Miami Condo Frenzy Ends With Inventory Piling Up in New Towers"

Miami

It is happening in NYC too. This building frenzy is going to have some very interesting long term effects.

[hurricaneMan1992]

New construction would almost have to happen slowly in order to keep supply and demand in sync. It takes time to build, it takes time for people to search for properties and close deals, and even for renters, it takes time for current leases to expire. It's not surprising that the "condo glut" is playing out in many cities throughout the US, feeding off of the whole "downtown living" trend. (Seattle comes to mind, for example). Miami is somewhat better positioned since people paid huge deposits to get in the market this cycle, but as the Bloomberg article pointed out, there's no guarantee these guys won't try to go ahead and sell as soon as the buildings open.

[AnnRyan]

Originally Posted by hurricaneMan1992

New construction would almost have to happen slowly in order to keep supply and demand in sync. It takes time to build, it takes time for people to search for properties and close deals, and even for renters, it takes time for current leases to expire. It's not surprising that the "condo glut" is playing out in many cities throughout the US, feeding off of the whole "downtown living" trend. (Seattle comes to mind, for example). Miami is somewhat better positioned since people paid huge deposits to get in the market this cycle, but as the Bloomberg article pointed out, there's no guarantee these guys won't try to go ahead and sell as soon as the buildings open.

Oh, there's always some who try to sell (at higher prices than they bought the properties) almost immediately. The question is whether they'll get the prices they want... and what they'll do when they don't. Some will let the places sit empty... but most will simply put them up for rent.