Vacation home rentals cut into hotel market
Recent condo buyers who bought units and hoped to flip them are now looking to house snowbirds and sun-loving tourists. That growing interest in vacation rentals is apparently affecting South Florida’s hotel market. Marcus & Millichap Real Estate Investment Services cited a 5 percent drop in room rentals for Miami-Dade hotels in 2006.
Some vacation condos are available at cheaper rates than comparable lodging at hotels. A new condo building in downtown Miami charged $900 for weekly June rentals, while a week’s stay at the nearby Biscayne Bay Marriott cost $1,243, the Miami Herald reported.
Housing sales in South Florida are down 29 percent from a year ago, and the 22,000-plus condominium units currently under construction in Miami will only make things tougher for sellers.
Mortgage delinquencies spike
The number of homeowners facing foreclosure in Broward and Palm Beach counties has ballooned since January, the Sun-Sentinel reported. In Broward, 1,135 residents were behind on mortgage payments in April, the latest month for which figures were available, compared to just 248 a year earlier. Palm Beach County didn’t fare any better, as the number of consumers with delinquent mortgages rose to 814 from 174.
Experts cite a range of reasons to explain why so many residents might be on the verge of losing their homes, including high property taxes, rising homeowner’s insurance and ballooning monthly payments from variable rate subprime home loans. The surge in foreclosures in the near future is expected to glut the market and continue to depress property values.
Faltering developer may unload condos in bulk
A glut of unsold units is the impetus for a $168 million deal that illustrates how developers are coping with the faltering condo market. Boca Developers may sell 236 units in three different South Florida projects to New York-based Cabot Investment Properties after its pre-sale strategy faltered in a weakened market.
Unlike many condominium developers, which sell all or most units before construction begins, Boca pre-sold only the number of units required by their lenders and kept the rest. The surplus didn’t sell, owing to the housing market’s slowdown, and Boca is now trying to cut debt by selling those units for around $342 per square foot, well below building costs, according to the Miami Herald.
The bulk sale would include condos at Marina Grande in Riviera Beach, Peninsula II in Aventura and Oaks I at Biscayne Landing in North Miami, the paper reported.
Such mass sales in a down market are not unprecedented, and speculators like Cabot are commonly referred to as “vulture fund” buyers. Following the purchase, they plan to rent the units out until the market improves, at which time they will sell them.
Master plan promotes towers in downtown Fort Lauderdale
A new master plan for downtown Fort Lauderdale emphasizing tower development awaits approval from the city council.
New height limitations would be imposed in areas adjacent to residential neighborhoods, while the center of downtown will continue to have no height restriction. Buildings erected near downtown would have a 30-story limit.
The area’s makeover would require developers to pay particular attention to buildings’ aesthetics, the Sun-Sentinel reported. The plan asks developers to build slim towers instead of bulky buildings, and multiple-tower developers are to place towers at least 60 feet apart.
The plan’s passage also is required before the city can allow 3,000 more residential units — condos, apartments or homes — to be built downtown, the paper reported.
Flat prices keep sales sluggish
Sellers in South Florida are struggling to unload properties in a buyer’s market. Home sales plunged in April while prices remained steady, the Miami Herald reported.
Single-family home sales in Miami-Dade County fell 37 percent to their lowest level for April in 10 years. Broward County home sales were down 16 percent in April from a year earlier.
One local broker said the market was still in a “correction phase” and that buyers are waiting for prices to come down before entering the market. But prices remained flat in April, with median prices for single-family homes up 1 percent compared to last year in Broward County, to $363,800, and up 2 percent in Miami-Dade, to $382,300. But sellers may be coming around, as houses in April sold for about 3 percent less than they did in March.