MiamiFlorida.com

By now, you all have been bombarded extensively by the news media on the subject of Wall Street’s financial crisis.

Articles from how it all started with the housing bubble bursting and the implications for financial instruments such as Collateralize Debt Obligations (CDO’s) to the governments bailout of Bear Stearns ($25 billion), Fannie Mae ($100 billion), Freddie Mac ($100 billion), to last weeks Lehman Brothers bankruptcy the largest in history and estimated at over $60 billion, and AIG’s intervention ($85 billion), and now the possible collapse of Credit Default Swaps (CDS’s), a market estimated above $50 trillion dollars.

According to Dr. Martin D. Waiss, Ph.D., “America’s $47-trillion bubble of debt has burst, America’s $180-trillion balloon of derivatives has popped and all the president’s men cannot put them back together again.” Truly a scary statement.

So ask yourself, will a $1 trillion financial patch contain this crisis or extend the inevitable economic depression we are facing?

Because it all started with the greed that overtook the housing sector – from loans with no income verification, to more than 100% financing, to excess construction and the speculation that it brought to itself – I argue that the beginning of the end for this financial crisis starts with price stabilization in the housing sector.

Miami Dade County

Except for August 2008, over the last few months Miami-Dade county has experienced a small decline in inventories and a small increase in sales. We all hear about and/or talk to buyers who have been sitting on the sidelines waiting for signs of a bottoming process arguing that prices have finally reach very attractive discount levels.

Finally, I leave you with a logical though. Remember that most banks are public institutions and as such they report earnings on a quarterly basis. Well, the stock prices for a vast majority of these banks have been hammered to low single digits during this financial crisis, and as the government embarks in a bailout program, banks have a unique opportunity to mark down their Real Estate Owned (REO’s) portfolios in order to sell them quicker without getting hurt much more on the stock price. In anticipation of this, not only will fund managers increase their exposure to many of this banks as they see them improving their balance sheets, but also will buyers of real estate view this as an excellent sign to step in and buy properties.

If you have any questions or comments, please send me an e-mail to: michael.schnabel@mac.com or call me at 305.450.0036

Today the Wall Street Journal published an article entitled “Condo Buyers In Florida Seek To Exit Deals” which brings to our attention the many lawsuits developers are facing on behalf of Condo Buyers who – advised by attorneys and no doubt motivated by current market conditions – are making an effort to cancel their contracts and recoup their deposits. Buyers are considering all angles of the purchase and sale contract vis a vis what they were promised in the advertising and promotional material that motivated their purchase.

The article portrays Miami as ground zero for a new trend in lawsuits against Developers. It makes reference to The Opera Tower and the recent August decision by the U.S. District Court in Miami in which according to the WSJ, two dozen lawsuits against the Developer were dismissed. The lawsuits argue that the Developer promised an “Olympic style” swimming pool when in fact the pool ended up being an L shape one. In the end what prevailed was the wording on the contract and not the promotional material.

Does this mean that a Developer can mislead Buyers and not be subject to legal consequences?

If you have any questions or comments, please send me an e-mail to: michael.schnabel@mac.com or call me at 305.450.0036

There is no “one size fits all” respond. My answer will depend on your particular circumstances. Will it be your homestead (primary home), secondary home or simply an investment property that you plan to rent.

No matter what your interests are, I guess at the end we all want to know if a condo purchased today at the Jade Residences will appreciate over the next 3 to 5 years and for how much.

My hunch is it will appreciate over the next 5 to 10 years and for an average annual percentage growth rate in the mid single digits. I’m a believer in demographic growth over time and its impact in the local economy. Want to read more about demographics, look up the economist Harry Dent.

I just updated the following; “Jade Residences Market Analysis Report” 

Noticed that from the 71 condos active for sale, 36 are foreclosures and 35 are regular listings.

From the 71 condos active for sale, the average foreclosure listing has been discounted 42.7% vs a 27.4% discount for the average regular listing (listings not in foreclosure).

You would guess that Buyers are snapping foreclosures first because of the attractive discounts. Well guess again! From the 14 condos that have sold so far in 2008, only 6 have been condos in foreclosure. The remaining 8 have been regular sales. In fact the 3 most recent recorded sales have been regular sales.

As far as the Jade Residences is concerned, so far in 2008 we are seen somewhat of a balance in the number of condo sales between those in foreclosure and those not in foreclosure.

If you have any questions or comments, please send me an e-mail to: michael.schnabel@mac.com or call me at 305.450.0036

The most common question Realtors are asked today is, “Is it time to buy?”

It doesn’t matter if you are looking for a single family home, a townhouse or a condo, a specific location and/or neighborhood, if financing rates are close to historic lows or even if you are a foreigner with a very favorable exchange rate vs the US Dollar.

Clearly there are so many things to consider when you are planning to buy a property, but the one thing that matters the most to Buyers these days is Price, and price only will determine if it’s time to buy.

But what about Price vs Value.

“Price is what you pay. Value is what you get”. This is a famous quote from Warren Buffett – the Chairman of Berkshire Hathaway, the holding company that ultimately owns Esslinger-Wooten-Maxwell, Inc., Realtors®.

From a monetary perspective, Value is define as: “What something is worth to you compared to the price paid or asked for it”.

Keep this Value definition in mind the next time you plan to buy a property.

2008 is becoming the year for opportunities with Excellent Value!