CIPS, CDPE, CLHMS, GREEN

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1 September 2009 Newsletter Sean Greco Realtor, CIPS, CDPE, CLHMS, GREEN Certified, TRC, REOS Designations and Certifications are explained at the end of the newsletter Buy the Beach Realty, Cell , buybeach.com Hello from South Florida, Below are brief summaries on key issues that have an effect on South Florida Real Estate, followed by the target market specific data. Click here for graphs of the data to help analyze trends in the market place. Please make note of the trends and data points as this will be key in timing the purchase or sale of a property to your benefit. Also, it is more important than ever that you understand the incentives that might end up being the deciding factor for those whom have been thinking about buying for quite some time. THE BIG SPENDERS ARE BACK: Luxury homes are selling again in South Florida a promising sign of new life in the housing market. Confidence seems to be returning, as well as a rising tide of money from outside the country, positive signs for both the high end housing market, and the real estate market in general. Demand fed by foreign money has always been a critical piece of the real estate puzzle in South Florida. When the global economy took a dive last year, real estate prices plummeted, including prices for South Florida s toniest properties, priced at $1 million or more. And then things got worse. As the calendar year turned, fear that the global financial system was heading off a cliff brought South Florida s luxury home market largely dependent on foreign wealth to a standstill. In January, just nine homes priced over $1 million sold in Miami Dade County and seven in Broward County. But now brokers and some analysts are sensing a collective sigh of relief among the very wealthy, as evidenced by the recent uptick in luxury home sales. In June, the last full month of available data, 25 were sold in Broward and 41 in Miami Dade. Real Estate Brokers say it is evident that foreign buyers are returning to South Florida as news spreads globally that many of the region s tropical, waterfront palaces are on sale. Among the bargains: Shaquille O Neal s 2.45 acre estate on Star Island, which sold recently for $16 million, about $2 million less than he paid for it in Brokers and analysts say the renewed activity in high end real estate is at least partly because of a revived interest among lenders in making very large loans, called jumbo loans. Banks see property values as very depressed and borrowers in the super luxury home market as very unlikely default candidates. Spokesmen for Ocean Bank and BBU Bank in Coral Gables acknowledged they are actively seeking the business of luxury home buyers. Luxury prices have held up significantly better in the current slump than the market as a whole, according to Coral Gables based real estate analyst David Dabby. It is also believed that typically the ultra luxury sector takes less of a hit in real estate downturns and is usually the first to recover. Jill Hertzberg, a broker with Coldwell Banker, said unheard of deals on luxury properties are driving interest. Hertzberg cooed over a fully renovated home in Miami Beach with a stunning wide water vista of Miami s skyline that screamed out to anyone wanting a downtown view and a beautiful home. Originally listed for $4.1 million, the property was dropped to $3.2 million and quickly drew multiple offers. It is now under contract and a closing date has been set. These are great properties, Hertzberg said. They aren t second rate properties. They are adjusting down to prices that are incredible, that no one has seen before and people are buying them. Source: The Miami Herald 8/2/09 EVERGLADES ON THE BAY DEVELOPER FILES FOR BANKRUPTCY: The builder of Everglades on the Bay has filed for bankruptcy, the first condo developer in the downtown Miami area to buckle in the housing downturn. Cabi Downtown

2 Developer, builder of the 849 unit condominium on Biscayne Blvd. across from Bayfront Park, filed 8/18/09 in U.S. Bankruptcy Court on Flagler St. in a move that is likely to be followed by other developers as they try to shield themselves from lender foreclosures. A $256 million loan is much greater than the 75 units the developer had sold for a total of $31 million as of June 30 of this year. Marc Kasowitz, an attorney with New York based Kasowitz, Benson, Torres & Friedman, lead attorney in Cabi s bankruptcy, said the company had no choice but to file because its lenders, which include Bank of America, HSBC, Comerica and Nord LB, would not allow the company to sufficiently reduce pricing. In the condo market, lenders have been allowing developers to sell units for less than the amount needed to repay their construction loan, in what is essentially the equivalent of a residential short sale. The strategy has allowed several condo projects to drop prices and boost sales, including Ivy at 90 SW Third St., and 1060 Brickell, which recently sold out after slashing prices to about $215 per square foot. But Jay Steinman, an attorney who leads the commercial real estate and finance department with the Miami office of Carlton Fields, said the tide is turning and lenders are less inclined to give developers an out. Rather, he said, lenders are looking to foreclose on projects and sell units in bulk at discounted rates. That way they get paid off faster. Bulk buyers generally hedge funds, institutional investors and private equity firms prefer buying bigger bulks of units and, in bestcase scenarios, whole projects. As lenders allow developers to sell off individual units at lower and lower prices, the prospect of attracting bulk purchases is diminished, he said. Source: The Miami Herald 8/21/09 Please contact me should you want to seriously discuss in more detail opportunities for distressed sales of multiple units. This market presents unique opportunities that very well may never be seen again in one s lifetime. Please give me the opportunity to help you take advantage of this situation. I am very involved in high level discussions with many of the decision makers regarding distressed projects. QUICK HEADLINES: Outstanding U.S. consumer debt fell by $10.3 billion, or 4.9 percent at an annual rate, to $2.5 trillion, the Federal Reserve said. That s a much steeper cut than the $4.7 billion analysts expected, according to Thomson Reuters. Source: The Miami Herald 8/8/09 U.S. News & World Report released its highly read rankings of colleges and universities on 8/20/09. At Number 47: the University of Florida, up two notches from its spot last year. And at number 50: The University of Miami, a new arrival to the top tier. Source: The Miami Herald 8/20/09 The National Association of Home Builders said 8/17/09 its housing market index rose in August to the highest point in more than a year, as home buyers hurried to take advantage of a federal tax credit before it expires. Source: The Miami Herald 8/18/09 Miami s bid to host future World Cup matches got a major boost 8/10/09 as glitterati from its political, athletic and cultural arenas teamed up to form an exploratory committee with the goal of luring the premier sporting event in the world to South Florida. Source: The Miami Herald 8/11/09 DON T FORGET ABOUT THE HOME BUYER TAX CREDITS: There are 2 separate tax credits for qualified home buyers. The most recently passed tax credit for $8,000 that does not need to be repaid, is for those purchasing a principal residence on or after 1/1/09 and before 12/1/09. And on 5/29/09, The Federal Housing Administration released details of a plan in which borrowers who use FHA loans can get advances from lenders that effectively let them receive the credit before they complete their taxes (Source: The Miami Herald 5/30/09). There are income limits and other guidelines, of which the below website will help you understand better. Or you can contact your accountant for more specific details.

3 The other home buyer tax credit is for $7,500 and does have to be repaid over time. It is available for those that purchased a principal residence on or after 4/9/08 and before 1/1/09. Source: The below chart is data from the past 90 days for Condominiums, ending 8/31/09. The data is taken from South East Florida s Multiple Listing Service (MLS) for the cities and townships of Miami Beach (South Beach, Mid Beach, & North Beach), Surfside, Bal Harbour, Bay Harbor Islands, and Fisher Island. The paragraph below the data will explain in more detail what is included in this analysis. Please don t hesitate to pose any questions you may have, or simply give me a call or send me an to discuss Real Estate in general. This data will help to analyze market conditions from month to month. Price Range Active Closed Listings Expired % Listing Expired % Sold Avg DOM Average Discount New vs Resale $0 - $199, % 18.23% 123 5% 5 vs. 164 $200,000 - $249, % 10.71% % 7 vs. 26 $250,000 - $299, % 9.02% 146 8% 6 vs. 27 $300,000 - $349, % 13.25% % 11 vs. 20 $350,000 - $399, % 11.27% % 8 vs. 23 $400,000 - $499, % 6.08% % 9 vs. 11 $500,000 - $599, % 9.93% % 20 vs. 7 $600,000 - $699, % 6.28% 95 9% 10 vs. 3 $700,000 - $799, % 10.16% % 9 vs. 4 $800,000 - $899, % 3.74% % 3 vs. 1 $900,000 - $1,179, % 10.00% % 12 vs. 3 $1,180,000 - $1,399, % 8.91% % 8 vs. 1 $1,400,000 - $1,799, % 12.07% % 13 vs. 1 $1,800,000 - $2,199, % 7.69% % 6 vs. 0 $2,200,000 - $2,699, % 7.69% % 4 vs. 1 $2,700,000 - $3,199, % 7.41% % 4 vs. 0 $3,200,000 - $3,999, % 1.92% % 1 vs. 0 $4,000,000 - $4,999, % 7.32% % 3 vs. 0 $5,000, % 3.08% 247 8% 2 vs. 0 Totals: % 11.17% % 141 vs. 292 As you can see, I have broken the data into price ranges, and then you can see the amount of Active condos for sale, how many Real Buyers Closed on a condo for sale, how many of those listing agreements Expired unsold, then further calculated what percent of the Active condos for sale Expired and Sold. Then I calculated the Average Days on Market (Avg DOM), which is the amount of days it took the condos that sold to obtain a Real Buyer. Then I show the Average Discount, which is the percentage the Listed Price was discounted to the Actual Sale Price for all Closed Sales. The last column is for Closed Sales that were newer construction, which I considered to be anything built after 1995, versus older buildings built before I track this data for Condominiums and Single Family Homes separately due to their differences. I also track the data for the more luxurious buildings of South Beach, please feel free to or call for that data. The next set of data below is the same information for Single Family Homes. The one difference is that the last column is the Average Age of the homes Sold. Price Range Active Closed Listings Expired % Listing Expired % Sold Avg DOM Average Discount Average Age $0 - $399, % 28.95% 51 1% 1943

4 $400,000 - $499, % 29.63% 187 8% 1945 $500,000 - $649, % 26.67% 120 5% 1944 $650,000 - $799, % 21.62% % 1948 $800,000 - $999, % 14.58% % 1949 $1,000,000 - $1,299, % 11.11% % 1936 $1,300,000 - $1,599, % 7.50% % 1966 $1,600,000 - $1,999, % 8.33% % 1979 $2,000,000 - $2,999, % 11.76% % 1956 $3,000,000 - $3,999, % 10.81% % 1948 $4,000,000 - $4,999, % 0.00% n/a n/a n/a $5,000,000 - $5,999, % 0.00% n/a n/a n/a $6,000,000 - $6,999, % 0.00% n/a n/a n/a $7,000,000 - $9,999, % 5.00% % 1984 $10,000, % 3.03% 94 29% 1992 Totals: % 13.13% % 1957 Don t forget to look at the overall data I have been collecting and determine for yourself what trends, etc. you see; please click here to take you to some graphs that should prove to be very insightful: If you are a bargain hunter looking for distressed properties, please contact me so that I may setup an automatic short sale or foreclosure search notification for you. I have found that the best deals usually go the quickest, and to be proactive in your distressed property search is the best way to go about finding a bargain. In the course of continually researching and familiarizing myself with the inventory of the very localized market in which I practice, along with the banking relationships I have cultivated, I have been able to do a lot of the research and legwork recognizing the best potential values in my target markets, or in some instances in other specific buildings or locations where there is excellent value for the product. Please understand that this service I provide adds significant value to the process, and only contact me if you are serious about buying and planning to be loyal. Please don t hesitate to contact me directly for any such information. VISAS DRAWING FOREIGN INVESTORS TO FLORIDA: As wealthy foreign nationals increasingly flock to South Florida to buy distressed real estate, some are seeking an added return on their investment: a green card. Local immigration attorneys say a growing number of Latin American and European clients are applying for investor visas, which in some cases lay down a fast track to residency and eventually citizenship. Others offer a chance to live and work in the country indefinitely. Clients are coming to us primarily because of the economic opportunity they see in the market, said Randall Sidlosca, an immigration lawyer with Fowler, White & Burnett s Miami office. It s mind boggling to see the amount of interest It s rather good news. It could mean the market will turn around faster than in other parts of the state. The purpose of these visas, which have been around for more than two decades, is to offer immigrants the opportunity to come and create jobs, rather than those who come as a result of family relationships and may do little to stimulate the economy, said Jessica Vaughan, director of policy studies at the Center for Immigration Studies, which promotes immigration controls. Developers and entrepreneurs are catching on to the program. They are hoping the attraction of U.S. residency will help generate new sources of badly needed capital at a time when access to credit has all but dried up. They have new reason to hope. In March, the U.S. Department of Homeland Security, Citizenship and Immigration Services included Miami Dade and Monroe counties in a pilot program that gives temporary residency to foreigners who invest at least

5 $500,000 in a new or established business that creates directly or indirectly at least 10 full time jobs. Until the 2 counties were approved for the pilot program, a $1 million investment was typically required to be eligible for the EB 5 investor visa, which required investors to employ 10 workers directly. The lower investment threshold could be a significant incentive for more people to apply, attorneys say. About 10,000 EB 5 investor visas are available annually, of them about 3,000 for the pilot program. Last year, fewer than 1,000 were issued under the relatively obscure EB 5 visa program. A move is under way in Congress to make the pilot program permanent in the aftermath of growing interest brought about by the recession. Investors remain silent or limited partners in the project, with no day to day responsibilities. A temporary green card allows them to live and work anywhere in the country, including a spouse and children under 21 for 2 years. At the end of that period, they can get permanent green cards; and, after 5 years from the initial approval, apply for U.S. citizenship. The visas can be renewed indefinitely and this investor route to residency is one of the fastest available. Because many people prefer to live where they invest, South Florida could have a competitive edge over other regional investment centers. There are more than 65 around the country, up from 23 a year ago, according to USCIS. While no comprehensive statistics exist, recent research from analyst Craig Werley of Focus Real Estate Advisors in Coral Gables, suggest at least 12 percent of the new condos in the greater downtown Miami area are now owned by foreigners. For foreign investors interested in the region the stars could not have aligned at a more opportune time to apply for residency, said Alfredo Vizcarrondo, president of AV Group, a Doral based real estate services firm. Political and economic uncertainty in many countries is pushing the well heeled to look for secure places to stash their money abroad. Meantime, South Florida properties foreclosures, short sales and other distressed situations are going for fire sale prices. Source: The Miami Herald 8/11/09 I have a close affiliation with an Immigration attorney with much expertise in this field should you need more details about the program, please send me an . PROPERTY TAXES & INSURANCE: As a property owner or potential property owner, I urge you to keep up to date on the various progress, legislation, and proposed legislation in order to help you better understand how these important issues affect you; please see the below link that will take you to the Florida Association of Realtors Legislative Center, which will help to explain the numerous moving parts concerning these issues: INTEREST RATES & RELATED NEWS: It is important to note that different types of loans are pegged to different rates, so please make sure to stay in touch with your mortgage broker or banker to keep up to date on interest rates, as this can directly affect many Real Estate related decisions. In addition to the lowered rate when securing a mortgage to buy property, another common question you will see throughout the upcoming year with lowered rates is whether or not it is a good idea to refinance. This discussion might be a good one to have with a reputable mortgage broker or your banker and see if this would make sense financially. Or feel free to visit my website and the Mortgage Center for more helpful information. This is the website to the Federal Reserve s Monetary Policy section: Exchange rates play a vital role in Real Estate related decisions for foreign buyers or sellers, a good source to track currency exchange rates is:

6 I hope this finds you well and looking forward to comparing this month s data with last month s data to spot trends and decide for yourself the status of the local Real Estate market, of which I work within 24/7. You are receiving this because we have been in touch about Real Estate here in the South Florida area, most likely property at the Beach. As you read the newsletter from month to month it will contain data that will help you to analyze market conditions. In addition, it is an unobtrusive way to stay in touch with you regarding my Real Estate Consulting Services. That is all for this month s newsletter and I welcome suggestions, feedback, and of course I am here if you or anyone you know is thinking of buying or selling property here in South Florida. If you wish to further discuss any of the above issues in more detail, or any other Real Estate related topics, please don t hesitate to call or . I would like to leave you with the following quote by Winston Churchill: The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty. DESIGNATIONS AND CERTIFICATIONS: These Designations and Certifications were specifically chosen by me to give my effort, time, and money, as well as meeting the required experience because I feel that this shows my dedication to continually learning and evolving as a Real Estate Consultant. Plus, the market that I practice in is a natural one to achieve such designations to separate myself from the other professionals within my field. Keep in mind these not only prove education but also transactional experience in order to obtain the designations and certifications. Realtor Membership in the largest professional association known as the National Association of Realtors or N.A.R. C.I.P.S. Certified International Property Specialist, member of CIPS network; Designation shows education and transactional experience in the International Arena of Real Estate. C.D.P.E. Certified Distressed Property Expert, member of Distressed Property Institute; Designation shows education and experience in the continually evolving and complicated short sale and foreclosure markets. C.L.H.M.S. Certified Luxury Home Marketing Specialist, member of Million Dollar Guild; Designation shows education and transactional experience in the top tier level within my market, Million Dollar Guild is the highest level of membership with proven experience in numerous $1M+ transactions. GREEN Certified also known as GCREP GL, Green Certified Real Estate Professional Green Leadership; Certification shows education and leadership within the Green Real Estate Industry. T.R.C. Transnational Referral Certification; Certification shows education in researching Real Estate throughout the world and allows me to refer and to be referred from 28 International Real Estate Organizations in the Global marketplace. R.E.O.S. Real Estate Owned Specialist, shows extensive experience and knowledge in the distressed property class known as REO, also known as foreclosures or bank owned properties. If you wish to be removed from this mailing list, please REPLY to this placing REMOVE in the subject line.