New York City Developers Are Relying On A Shrinking Pool Of Buyers

Most of New York City’s largest developers are probably optimistic about the near future now that one of their own is occupying the most powerful office in the world. Bu, this very specific group of taxpayers stands to benefit immensely from several of the provisions that have appeared in the Senate or House plans: Repealing the AMT and estate taxes would allow them (and their heirs) to shave a pile of percentage points off their tax bills. And those are just two examples.

To be sure, the tax plan’s passage isn’t assured – now that Alabama Democrat Doug Jones has defeated Republican Roy Moore. With Jones expected to be seated some time after New Year’s, the time pressure facing Republicans has intensified. Because at the start of the next Congress, their already precarious two-vote majority will shrink to one. Beyond this, Republicans haven’t agreed on a final version of the bill yet, and existing differences between moderates, deficit hawks and conservatives within the party could prove insurmountable.

But regardless of what happens with the tax plan, there’s a much more pressing problem facing developers in the Big Apple: A glut of “luxury” apartments priced in the low-seven or high-six figure range is coinciding with a precipitous drop in sales volume, according to Reuters.

While prices have been steady in recent years, sales volume for condos in Manhattan are still 30% below their pre-crisis peak.

In other words, the market’s dependence on a small, well-heeled pool of buyers – a pool that is shrinking as prices rise to unsustainable levels and wealth in the US becomes increasingly concentrated in the hands of the wealthiest – could be a major vulnerability in the coming years.

In the past five years, however, Manhattan has seen a different kind of development boom. Prices for these units are higher than they ever were before but the number of units built and sold is way off levels achieved a decade ago, Warshawer said.

 

“As prices have risen, less of the market share is comprised of cheaper units,” she said.

 

In 2013, 7,787 units were sold for under $1 million for a total $4.7 billion in sales. This year is projected to end with 5,040 units sold at under $1 million for $3.4 billion in sales.

Indeed, apartments priced in the seven-figures are increasingly going unsold – while affordable housing becomes increasingly harder to

The median sales price of high-end apartments edged higher in 2017, but the closely watched average square-foot price slid a bit for condos as prices leveled off after years of heady growth, the report said.

 

While the average and median sales price for all residential units has jumped since 2007 by 61 percent to $2.2 million and 44 percent to $1.2 million, respectively, transaction volume is off 30 percent from peak activity a decade ago, CityRealty said.

 

CityRealty examined sales registrations from the city’s Department of Finance. Much of Harlem and nearby areas were excluded because its market size.

Units sold at 432 Park Avenue, a 96-story tower marketed by developers as the tallest residential building in the Americas, garnered the most number of sales in a listing of the 25 highest-priced condos, CityRealty said. But elsewhere, the ultra-high-end market is suffering as nearly a third of the apartments in Manhattan’s recently developed “Billionaire’s Row” have gone unsold.

As we highlighted back in August during Starwood Property Trust’s Q2 earnings call, CEO Barry Sternlicht warned of a doomsday waiting at the end of New York"s "Billionaire"s Row", predicting an imminent "debacle." He mentioned the out-of-balance mezzanine loan at JDS Development and Property Markets Group’s 111 West 57th Street project and predicted more distress in the luxury residential market, including at 53 W 53, a supertall condo being developed next to the Museum of Modern Art by Hines, Pontiac Land Group and Goldman Sachs.

“We are beginning to see the cracks of the high-end residential market in Manhattan,” Sternlich warned.

Indeed, and while developers stand to benefit personally from the Republican plan, proposals to eliminate or reduce the mortgage deduction or deductions on state and local taxes could further damage their sales figures by favoring renters over buyers.

Toronto Home Price Bubble Bursts Into Bear Market

Authored by Wolf Richter via WolfStreet.com,

With surprise rate hike, Bank of Canada turns against housing market...

Home sales in the Greater Toronto Area, the largest housing market in Canada, plunged 34.8% in August compared to a year ago, to 6,357 homes, with sales of detached homes and semi-detached homes getting eviscerated:

Sales by type:

• Detached houses -41.6%


• Semi-detached houses -37.3%


• Townhouses -27.5%:


• Condos -28.0%.

Even as total sales plunged, the number of active listings of homes for sale soared 65% year-over-year to 16,419, with 11,523 new listings added in August, according to the Toronto Real Estate Board (TREB).

“The relationship between sales [plunging] and listings in the marketplace today [soaring] suggests a balanced market,” the report explained, adding hopefully:

“If current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation. However, if some buyers move from the sidelines back into the marketplace, as TREB consumer research suggests may happen, an acceleration in price growth could result if listings remain at current levels.”

And the average price of all homes, at C$732,292 in August, plunged 20.5% from the crazy peak in April (C$920,761). By this measure, it has now entered a bear market.

The average price in April had shot up 30% year-over-year.

To cool this nutty business, the Ontario government introduced a laundry list of measures on April 20. It included most prominently a 15% transfer tax on nonresident foreign speculators. That appears to have done the trick.

Given the enormous price gains in recent years, the market remains hyper-inflated, and the four-month downturn into a bear market hasn’t even brought prices back to the year-ago level, with the average price for all types of housing up 3%, and the condo price up 21.4% year-over-year.

To cool a similarly nutty housing bubble in Vancouver, the government of British Columbia had passed a year ago similar legislation with a 15% nonresident foreign speculator tax. But worried about an outright implosion of the bubble, it has since been subsidizing with taxpayer money down-payments aimed at first-time buyers and condos, which has inflated the condo bubble and condo speculation to new heights.

Politicians – they’re desperately dependent on extracting property taxes from homeowners – don’t want the world’s most majestic housing bubble to implode. They just want it to remain stable so that taxes can be extracted from willing homeowners that have gotten rich off years of house-price inflation. But for now, the Ontario government is letting the market ride.

The TREB report said that the sharp drop in average prices “points to fewer high-end home sales this year compared to last.” So are speculators with the most money abandoning the market?

Even the Bank of Canada has been warning home buyers – particularly speculators – all year long about big potential losses. Then in July, it raised its target for the overnight rate by 0.25 percentage points. Another rate hike was expected in December, to match the Fed’s presumed rate hike.

But today, in a surprise move, it raised rates again by 0.25 percentage points, to 1% – and there are now expectations that it might raise its target rate a third time later this year. In response, the loonie jumped 1.3% against the US dollar this morning.

These rate hikes “would just further dampen” the housing market, explained Bank of Montreal chief economist Doug Porter, adding that the surprise increase so soon after July’s rate hike “accentuates” the Bank of Canada’s urgency to raise rates.

“So I wouldn’t brush it off – I think that will put a bit more upward pressure on some of the medium and longer-term mortgage rates as well, and of course the variable rates will move almost instantaneously,” he said.

Variable-rate mortgages account for about 30% of all mortgages in Canada. So these rates ticked up after the July hike; they will after this hike; and if there’s another hike later this year, they’ll tick up again. A 0.75 percentage points increase in the interest rate on a C$800,000 mortgage would raise the annual interest costs by C$6,000.

Homeowners with variable-rate mortgages will now have to come up with more money to pay for their homes. And potential homebuyers are looking at steeper costs – something they will likely keep in mind, now that easy price gains may no longer be so easy, and that the Bank of Canada, rather than just warning about it, is actively working to deflate the housing bubble.

And the housing bubble in the US? Read… The US Cities with the Biggest Housing Bubbles

Record Apartment Building-Boom Meets Reality: First CRE Decline Since The Great Recession

By Wolf Richter of WolfStreet

Even the Fed put commercial real estate on its financial-stability worry list.

No, the crane counters were not wrong. In 2017, the ongoing apartment building-boom in the US will set a new record: 346,000 new rental apartments in buildings with 50+ units are expected to hit the market.

How superlative is this? Deliveries in 2017 will be 21% above the prior record set in 2016, based on data going back to 1997, by Yardi Matrix, via Rent Café. And even 2015 had set a record. Between 1997 and 2006, so pre-Financial-Crisis, annual completions averaged 212,740 units; 2017 will be 63% higher!

These numbers do not include condos, though many condos are purchased by investors and show up on the rental market. And they do not include apartments in buildings with fewer than 50 units. This chart shows just how phenomenal the building boom of large apartment developments has been over the past few years:

The largest metros are experiencing the largest additions to the rental stock. The chart below shows the number of rental apartments to be delivered in those metros in 2017. But caution in over-interpreting the chart – the population sizes of the metros differ enormously.

The New York City metro includes Northern New Jersey, Central New Jersey, and White Plains and is by far the largest metro in the US. So the nearly 27,000 apartments it is adding this year cannot be compared to the 5,400 apartments for San Francisco (near the bottom of the list). The city of San Francisco is small (about 1/10th the size of New York City itself), and is relatively small even when part of the Bay Area is included.

Other metros on this list are vast, such as the Dallas-Fort Worth metro which includes the surrounding cities such as Plano. Driving through the area on I-35 East gives you a feel for just how vast the metro is. However, I walk across San Francisco in less than two hours:

Special note: Chicago is adding 7,800 apartments even though the population has begun to shrink. So this isn’t necessarily going to work out.

This building boom of large apartment buildings is starting to have an impact on rents. In nearly all of the 12 most expensive rental markets, median asking rents have fallen from their peaks, and in several markets by the double digits, including Chicago (-19%!), Honolulu, San Francisco, and New York City.

And it has an impact on the prices of these buildings. Apartments are a big part of commercial real estate. They’re highly leveraged. Government Sponsored Enterprises such as Fanny Mae guarantee commercial mortgages on apartment buildings and package them in Commercial Mortgage-Backed Securities. So taxpayers are on the hook. Banks are on the hook too.

This is big business. And it is now doing something it hasn’t done since the Great Recession. The Commercial Property Price Index (CPPI) by Green Street, which tracks the “prices at which commercial real estate transactions are currently being negotiated and contracted,” plateaued briefly in December through February and then started to decline. By June, it was below where it had been in June 2016 – the first year-over-year decline since the Great Recession:

Some segments in the CPPI were up, notably industrial, which rose 9% year over year, benefiting from the shift to ecommerce, which entails a massive need for warehouses by Amazon [Is Amazon Eating UPS’s Lunch?] and other companies delivering goods to consumers.

But prices of mall properties fell 5%, prices of strip retail fell 4%, and prices of apartment buildings fell 3% year-over-year.

So for renters, there is some relief on the horizon, or already at hand – depending on the market. There’s nothing like an apartment glut to bring down rents. See what the oil glut in the US has done to the price of oil.

Investors in apartment buildings, lenders, and taxpayers (via Fannie Mae et al. that guarantee commercial mortgage-backed securities), however, face a treacherous road. Commercial real estate goes in cycles as the above chart shows. Those cycles are not benign. Plateaus don’t last long. And declines can be just as sharp, or sharper, than the surges, and the surges were breath-taking.

Even the Fed has put commercial real estate on its financial-stability worry list and has been tightening monetary policy in part to tamp down on the multi-year price surge. The Fed is worried about the banks, particularly the smaller banks that are heavily exposed to CRE loans and dropping collateral values.

But the new supply of apartment units hitting the market in 2018 and 2019 will even be larger. In Seattle, for example, there are 67,507 new apartment units in the pipeline.

The Vancouver Housing Bubble Is Back, And It's (Almost) Bigger Than Ever

For a while it seemed that the Vancouver housing bubble, the direct result of a relentless tidal wave of Chinese "hot money", had burst after last August the British Columbia province implemented a 15% property tax to stem the inflow of offshore funds. And indeed, in the immediate months that followed, Vancouver"s housing priced tumbled from record highs.

However, it was not meant to be, and less than a year later, the Vancouver housing bubble is back, and it"s (almost) bigger than ever.

Over the past few months, with many suspecting - as we did - that the housing market in Vancouver had finally normalized, attention shifted to what emerged as the next hotbed of rampant housing speculation in Canada, Toronto, where last month average selling prices surged by 33%.

As it now turns out, ignoring Vancouver, and underestimating the persistence of aggressive Chinese buyers turned out to be a mistake, because earlier today the Real Estate Board of Greater Vancouver announced in its latest monthly report that while home sales in the Vancouver housing market had predictably slowed down in April compared with a year ago, prices - which had dipped slightly in recent months- once again surged.

First the (somewhat) good news: the overall turnover in the Vancouver resi market slowed down appreciably, with property sales in the region totaling 3,553 in April 2017, a 25.7% decline compared to April 2016 when 4,781 homes sold and a 0.7% decrease from the 3,579 sales recorded in March 2017. Sales of single-family homes in April 2017 were hit the hardest, reaching 1,211, a decrease of 38.8% from the 1,979 detached sales recorded in April 2016. Meanwhile, sales of apartment, or condominium, properties reached 1,722 in April 2017, a decrease of 18.3 per cent compared to the 2,107 sales in April 2016.

Yet while sellers and buyers were less likely to agree on a closing price than just a few months ago, that does not mean that sellers were more aggressive, or that prices had declined at all. In fact quite the opposite: the benchmark price for all types of residential properties in Metro Vancouver, Canada"s most expensive real estate market, was C$941,100 ($686,583.50) in April. That was up 5 percent over the past three months and 11.4 percent higher compared with a year ago.

The breakdown was even more stark by category:

• For condominiums, the benchmark price was C$554,100 last month, a 16.6% jump over the past 12 months and 3.1% more than March.


• The benchmark price of an attached unit was $701,800, 15.3% more than a year ago, and a 2.4% increase compared to March 2017.


• The benchmark price for detached properties is $1,516,500, an 8.1% increase over the last 12 months and a 1.8 per cent increase compared to March 2017.

And the visual testament to just how strongly the Vancouver housing bubble has returned, and as of April has almost surpassed last year"s all time highs:

In other words, all that the 15% surtax achieved was to drastically slowdown the rate of transactions (or perhaps home flipping). Meanwhile, as sellers held out to find more aggressive buyers, they were in luck as the new wave of buyers has emerged, and undeterred by the 15% premium, they have been slowly but surely lifting all available offers.

"In the condominium and townhome markets, demand has been increasing for months and supply is not keeping pace, said the board"s president, Jill Oudil. "This dynamic is causing prices to increase and making multiple-offer scenarios the norm," she said in a statement.

She added that “Home buyers are looking to get into the market and they’re facing fierce competition”, and it mostly comes out of China. Or perhaps it is simply other Canadians armed with cheap money loans, rushing to fill the void, because as the following charts show, whether it is due to Chinese buyers or not, China has a very big housing problem on its hands, and explains why the recent collapse of alt-mortgage lender Home Capital Group, which accounts for just 1% of all loans in the market, has escalated all the way to the finance minister. The reason is simple: one the first domino falls, nobody knows just how far the resultant avalanche will go.

To put Canada"s housing market, and bubble, in perspective, first here is a chart of total Canadian household debt. Most of this is in the form of mortgages.

Next, despite Canada"s low rates, the debt service ratio of an average Canadian household is nearly 40% higher than when compared to the US.

And finally, the punchline: indexed home prices in Canada compared to the US.

In retrospect, perhaps Canada was lucky that the attempt to deflate the Vancouver housing bubble failed, had it succeeded and spread across the nation, leading to a collapse in collateral values and widespread defaults, the "mean-reversion" outcome may have been far more devastating. Which of course, is not to say that Canada"s problem has been fixed, but at least for the time being, the can has been kicked once again.

The Miami Condo Implosion Is Much Worse Than Aggregate Industry Numbers Reveal

Authored by Wolf Richter via Wolf Street,

Condo sales in Miami-Dade County have plunged. Condos on the market have surged. Supply has hit 14 months. Developers are sitting on completed units they can’t sell, and months’ supply in their projects has reached several years.

With this kind of supply-and-demand imbalance – sales down 25% from February 2014, inventory up 90% since early 2013 – you’d expect prices to head south. But the median price of condos in February, according to the Miami Association of Realtors, increased 6.3% year-over-year. This is the mystery we’ll shed some light on (chart by StatFunding):

StatFunding conducted an analysis of sales price per square foot in four condo projects with 2,634 units in Brickell, an area of Miami that is part of the “condo corridor.” These projects – 1050 & 1060 Brickell, Axis Brickell, Plaza Brickell, and Jade Brickell – are representative of the overall condo market. Turns out, per-square-foot prices in those four projects peaked in 2014 and 2015 and have since dropped between 10% and 16%.

So what"s going on?

One of the projects was completed in 2004, the other three in 2008. Hence there is a sales history. They’re “newer” and well-maintained projects in the aspiring-luxury and luxury categories of the market. Each project was built by a different developer (pricing data as of March 2017, based on the Multiple Listing Service (MLS) and the Miami-Dade Recorder).

The three projects completed in 2008 got caught up in the foreclosure crisis when these units were liquidated at prices as low as $200 a square foot. Whoever bought them at this price more than doubled their money by 2014! But that party has now ended.

1050 & 1060 Brickell (2008), “aspiring-luxury” category; two towers, none on the waterfront; 576 units, with studio, 1-bedroom, 2-story 1-bedroom loft, 2-bedroom, and 3-bedroom penthouse units; 55 units (9% of total) for sale on the MLS, or 26 months’ supply (25 units sold in 12 months). Average price per square foot (blue line) has dropped 16% since the peak in 2014.

In this particular project, studios, lofts, and units below the 14th floor were excluded. Here’s why:

The layout of the building is peculiar: The parking pedestal is shared by both towers, and the amenities and the pool deck are on the 12th floor. The units below the 12th floor are squeezed in leftover spaces of the project, and are almost all 1-bedroom 2-story lofts. Given their proximity to parking, they have a street-level feel, and according to Andrew Stearns, CEO of StatFunding, “the pricing on the units is all over the place and not representative of the project as a whole.”

Studios were excluded because the 1050/1060 is the only project of the four with studios, and there is no comparable data from the other projects.

Penthouses were excluded for all four projects since are all unique and sales don’t occur with enough frequency.

Axis Brickell (2008), aspiring-luxury category, two towers, neither on the waterfront; 718 units, with 1-bedroom, 2-bedroom, 3-bedroom, and penthouse units; 89 units (12% of total) listed for sale on the MLS, or 45 months’ supply (24 units sold in 12 months). The average price per square foot (excl. below 10th floor and penthouse units) has dropped 11% since the peak in 2014.

Plaza Brickell (2008), two towers, neither on the waterfront, aspiring-luxury category; 1,000 units, with 1-bedroom, 2-bedroom, 3-bedroom, and penthouse units. 84 units (8% of total) listed for sale, or 26 months’ supply (36 units sold in 12 months). Average price per square foot (excl. below 11th floor and penthouse units) has dropped 10% since the peak in 2014.

Jade Brickell (2004), waterfront luxury category; 340 units, with 1-bedroom, 2-bedroom, 3-bedroom, 4+ bedroom, “townhouse,” and penthouse units. Completed in the middle of the prior condo bubble, the project “became a hotbed of mortgage fraud and subsequent foreclosure activity.”

Currently 37 units (11% of total) are listed for sale, or 22 months’ supply (20 units sold in 12 months). The average price per square foot (excl. below 8th floor and penthouse units) has dropped 16% since the peak in 2015.

This chart shows the average sales price per square foot for all four projects’ averages combined:

Among the reasons prices have declined:

• The strengthening dollar makes real estate more expensive for foreign purchasers, a big force in Miami.


• Foreign purchasers could also be chased off by the efforts of the Treasury Department’s Financial Crimes Enforcement Network to target hotspots of money laundering in real estate, and cash sales in February plunged 18% year-over-year… How Much Money Laundering is Going On in the Housing Market? A Lot


• The change in pricing momentum could be making prospective purchasers skittish.


• New supply from the pre-construction condo boom that now too is running into trouble competes with existing condos.


• The surge in resale inventory.

Why do the numbers not add up? But they do add up

Why do these price declines not show up in the median prices published by the Miami Association of Realtors? Stearns explained:

The realtor’s aggregate data is flawed because from 2009-2016 the data was full of sub $150k sales of bombed-out foreclosure borderline worthless properties – and those properties have worked their way through the system and are the weak comps that make the reported year-over-year average or median gains “true” but entirely meaningless.

So the median price is up 6.3% year-over-year, but it’s meaningless because the prior-year data was pushed down by nearly worthless foreclosed old condos working their way through the process. These units are still not totally gone (Miami Realtors Association lists them as under $50,000 on page 8 of its report).

The consequences when Realtor-published data shows median prices are rising though in reality prices of good condos are declining? Stearns:

What is driving real estate agents crazy is that the local and national real estate associations keep on putting rosy reports out there saying “prices up 7% this month, etc.” but then the agent has to explain to their client that the pricing in their condo building is actually down 20% over the last 18 months with a 5-year supply of units listed for sale.

Most people who make the decision to sell cannot wait five years to find a buyer, which means they have to price the unit at the low end of the market to get their unit sold, which explains a lot about why prices are falling in this market with surging inventory.

The rosy reports might be true in the aggregate, but they mask the distress in certain segments of the market, which makes for painful conversations between real estate agents and their clients.

Miami-Dade’s spectacular condo flipping mania is once again in turmoil. Read… Condo Flippers in Miami-Dade Left Twisting in the Wind

Condo Flippers In Miami-Dade Left Twisting In The Wind

By Wolf Richter of Wolf Street

Ballooning Condo Glut ensnares preconstruction speculators.

Miami-Dade’s spectacular condo flipping mania is in turmoil, with sales plunging, inventory-for-sale soaring, and new supply flooding the market. It’s not like Miami hasn’t been through this before.

In February, existing home sales of all types fell 10% year-over-year, to 1,835 homes. These sales “do not include Miami’s multi-billion dollar new construction condo market,” the Miami Association of Realtors clarified in its report on March 23.

And this new construction market that is not included has become distressed.

Sales of single-family homes fell 10% in February, to 881 houses. The report blamed the shortage of properties “in popular price points.” Prices have been rising sharply, and at the price points where people could actually buy a house – below $250,000 – few sellers were playing ball. Hence a stalling market. Sales of high-priced units rose, but they weren’t enough to pull out the totals.

Condo sales fell 10% as well, to 954 units. This time, the report didn’t blame the lack of supply. Instead: “Existing condo sales are competing with a robust new construction market.” At the same time, inventory of existing condos for sale, not including new units, rose 10% to 15,289. At the current sales rate, supply soared 29% to 14 months.

This chart by StatFunding shows the plunge in sales and the surge in condos listed for sale. I circled the last five Februaries on the sales line (red). From February 2014 to February 2017, condo sales have plunged 25%. Andrew Stearns, StatFunding’s founder and CEO, calls the resale inventory – the dark green line that has soared 90% since early 2013 – “scary”:

Even this “scary” inventory understates the total number of condos for sale. It only includes units listed for sale on the Multiple Listing Service (MLS). But developers normally don’t list their new units on the MLS, and thus they’re not included in the above chart.

This is the distressed market that preconstruction condo flippers are facing.

Preconstruction condo flippers make a highly leveraged bet. They buy the condo from the developer during the construction phase. The initial deposit is small. Additional payments are required as construction progresses. But in a booming market, lenders are eager to lend. Then, often around the time the building is completed, flippers try to unload the condo at a profit. This bet has been hot in the condo construction boom around the country. But in Miami, the bet is now collapsing.

During good times, developers sell all their units either to end-users or to flippers within a few months of completion. But now, developers are getting stuck with unsold units, which, as Stearns points out, marked the “inflection points of previous condo cycles.”

The 12 large developments completed between late 2015 and late 2016 have added 2,743 condos to the market. Developers still own 433 of them (15.8%).

In addition, preconstruction flippers are also trying to unload their units. In those 12 developments alone, 451 condos, or 16.4% of the total, have been listed for sale on the MLS.

Here is the granular detail as of March 22 per StatFunding (sources: MLS, Miami-Dade Recorder; completion date in parenthesis):

• Echo Aventura, 190 units (8/2015). Developer sits on 13 units (7%) and took out a bridge loan secured by those units. 36 units have appeared on the MLS.


• Crimson, 90 units (12/2015). Developer is stuck with 30 units (34%!) and has sold only 1 unit since December 2016. 12 units listed for sale on MLS.


• Peloro Miami Beach, 114 units (3/2016). Developer has sold all but 2 units. This includes 3 units sold via bulk sale this year. But 38 units – 33% of the total! – are listed on the MLS for resale.


• CityCenter Reach, 390 units (4/2016). Developer is stuck with 46 units (12%). Meanwhile, 47 units have appeared on the MLS for resale.


• Le Parc Brickell, 128 units (6/2016). The developer has listed the 9 units that haven’t sold yet on the MLS, in addition to 23 units listed on the MLS by condo flippers, for a total of 32 units – 25% of the total!


• Centro, 352 units (7/2016). Developer sits on 34 units and has not sold any in 2017. Meanwhile, 56 units (16% of total) are listed on MLS.


• Bond, 328 units (8/2016). Developer still has 23 units, including 12 that an affiliate of the developer purchased in bulk in March. And 72 units (22%) have been listed for sale on MLS.


• Grove Grand Bay, 98 units (8/2016). Developer owns 7 units; 31 units (32%!) have been listed on MLS.


• CityCenter Rise, 390 units (9/2016). Developer still sits on 212 units (54%). According to Stearns, “developer closings have slowed to a trickle, and it appears the initial sell-through is nearly complete.” Already, 24 units are listed on MLS.


• SLS Brickell, 450 units (11/2016). Developer is down to 8 units, four months after completion. “This is what a successful sell-through looks like,” Stearns says. Condo flippers have listed 55 units for sale.


• Casa Brickell, 81 units (11/2016). Developer sits on 22 units (27%); 8 units (10%) have already appeared on MLS.


• Porsche Design, 132 units (12/2016). Developer still has 27 units (20%). “Initial sell-through closings are slowing,” and only 4 developer units sold in March, Stearns says. But 40 units (30% of total) have been listed for resale on MLS.

This sort of data begs the question: How many people actually live in units they own in these buildings?

For developers, the equation is getting dicey. Stearns:

Stuck with unsold units, some developers have not repaid their construction loans, others have taken out bridge loans to carry unsold units. The developer is responsible for taxes, maintenance fees, and insurance for unsold units, and unsold units are probably negative carry for the developer.

Developers may resort to mark-down liquidation or bulk sales of unsold condos as the cycle progresses….

Part of the problem? The market teems with foreign buyers. But the Treasury Department’s Financial Crimes Enforcement Network has figured out that there is a large amount of money laundering in housing. It has started making noises. And cash deals are plunging in  Miami-Dade. In February they were down 17.5% year-over-year to 580 condo deals, or 61% of all condos sold. Other money-laundering hotspots too are being targeted, and answers are starting to emerge.