The Real Deal Miami

Biscayne Park hit hardest in property value bloodletting

By Jennifer LeClaire | December 23, 2008 01:14PM

 
South Florida homeowners are suffering property devaluations together,
but residents of Biscayne Park in north Miami-Dade County bear the
region’s greatest pain.

Data from Zillow.com from the third quarter show South Florida home
values fell 21.5 percent year over year. But the city of Biscayne Park
saw values plummet 32.2 percent.

The village in north Miami-Dade County has a population of about 3,000.
Founded by a real estate developer in 1933, Biscayne Park is commonly
called “the village of homes” because about 80 percent of its housing
is single-family homes.

“The older, urban municipalities — Biscayne Park, El Portal, Miami
Shores — caught fire later in the hyperbolic period of 2005 to 2007
with speculators and investors charging in on their horses to a stable
neighborhood,” said Michael Cannon, managing director of Integra Realty
Resources-South Florida. “These are some of the areas predatory brokers
went to do refinance deals.”

In Cannon’s experience, where there is a submarket with a large number
of foreclosure filings,  predatory lending often played a larger role
than profit-motivated speculation. Predatory lending, he said, creates
phony prices, phony mortgages and phony sales transactions.

Although there are only 14 foreclosures in the Biscayne Park market
today, that’s a high percentage of the 55 homes for sale there,
according to Trulia. Statewide foreclosures were down 9 percent in
November, according to Realty Trac, but the firm predicts a significant
increase in foreclosures across the nation as holiday moratoriums
expire.

At the top of the Biscayne Park market sits a six-bedroom,
five-bathroom $1.225 million single-family home. The average listing
price is much lower at $368,166, Trulia reports, and the median sales
price is $252,500. At the bottom of the market sits a three-bedroom,
two-bath home for $180,000.

Biscayne Park is a bedroom community, but it saw its share of condo
conversions, according to Rosendo Caveiro, a senior director of Cushman
& Wakefield’s multifamily practice in Miami. About 20 percent of
Biscayne Park’s residential real estate is apartments, townhomes and
condos.

“A lot of the condo conversions in Biscayne Park were Class C
properties because they were very old, developed back in the 1960s and
1970s,” Caveiro said. “These buildings got converted at the end of the
cycle, which means people paid the highest price and are seeing the
biggest devaluation.”

The advantage Biscayne Bay may have over areas like Downtown Miami, at
least for the short-term, is the lack of new construction. Biscayne
Park had seen revitalization over the past five years with
beautification projects that attracted new restaurants and retailers.
But new development was scarce, Rosendo said.

“Biscayne Park’s strategy was to refurbish buildings rather than build
new ones,” he explained. “There were no cranes in the sky there. It’s
not an affluent area like other areas on Biscayne Boulevard, so these
blue-collar workers and students were probably hit the hardest. But
this is a very old neighborhood that should stabilize.”