Foreclosures hit Miami’s top-tier nabes
Tony Miami Beach neighborhoods that serve as magnets for the very rich may be exclusive, but they are not immune to the region’s rising foreclosure trend.
The problem cuts across social and economic lines, said Francisco Mago, owner of Xima USA, a search site for homes in foreclosure in 19 Florida counties. Not only are there more distressed homes in those areas than ever before, but many of them are not listed for sale.
He said in the ritzy Venetian Isles development, for example, of 678 houses, nine single-family homes are foreclosed, and 19 are in foreclosure. Seven of 28 upside-down properties there, or those for which the owner owes more than the home is worth, and that are not yet in foreclosure, are up for sale. In Sunset Island, where the average sale price is $5.13 million, five of its 243 homes are showing foreclosure status and three of 12 upside-down properties there are for sale (see chart for more data on distressed properties in six of Miami Beach’s most expensive neighborhoods).
Compared to Miami-Dade County as a whole, Miami Beach is less affected, he noted.
“Its percentage of distressed homes to total properties is 4.13. The rest of the county is at 11.07 percent,” Mago said.
But only one foreclosure happened in the Venetian Isles community in 2007, he said, calling today’s figure a huge increase. Both the luxury and broader markets share high percentages of foreclosure properties, where the homeowner is at least 90 days late with a mortgage payment, and the homes are not listed for sale. Venetian Isles is at 73.7 percent and Miami-Dade County is at 93.9 percent.
“People don’t sell. Why? I don’t know what they are waiting for,” Mago said. “It doesn’t matter the strata or social status — they are taking the same position. Homeowners in trouble in the top strata are doing exactly the same thing as those in the lower strata. Nothing. They are not paying their mortgages.”
Venetian Isles is one area where the wealthy are moving faster. Of the nine foreclosed properties in the luxury neighborhood, four are now for sale, or about 44 percent. In the county, the percentage is 6.54.
“The banks don’t want to flood the market in the middle or low end, because, if they do, the value of the properties in those areas will go down, and the banks will lose money big time,” Mago said. “But on the high-end, the banks are more willing to dump the house on the market. There’s less risk of them losing money because there are less properties in those areas.”
Mago also said inventories in high-end areas are higher as compared to the county as a whole, with Venetian Isles homes lingering on the market for 17.1 months versus 8.5 months for Miami-Dade County homes. “That tells you that it’s harder to get rid of a higher-priced house,” he said.
North Bay Road in Miami Beach, which has a total of 350 properties on the street, has one home that has been foreclosed on and 18 in foreclosure. Six of the 350 were sold this past year. In 2007, there was only one distressed property.
Nelson Gonzalez, senior vice president of brokerage Esslinger Wooten Maxwell’s Miami office, said the number of distressed properties on North Bay Road this year was unusual.
“I don’t do many foreclosures and short sales,” he said. But he also said there will be more high-end homes in trouble next year.
“Just as a point of reference,” he said, “in the last two weeks, I’ve gotten calls from people who wanted to list, but when I presented them with the comparables, they said they couldn’t sell because their mortgages were higher than that price.”
He added: “Lots of property owners are mortgaged to the hilt, and I wouldn’t be surprised to see more distressed properties.”
Gonzalez, who specializes in luxury waterfront homes, does not see investors buying.
“That market has dried up,” he said. “I see a lot of buyers looking for foreclosures and short sales and 99 percent of those buyers are end users. That’s a good sign. Two or three years ago, only 25 percent were end users.”
On another exclusive street, Pine Tree Drive in Miami Beach, of 270 properties, there are four homes that have been foreclosed on, with three already sold. There are 10 in foreclosure, and one has sold this year. In 2007, there was one distressed property.
Carlo Gambino, managing partner and owner of Carson Realty Group, which specializes in Miami Beach properties, said he’s not surprised at the number of distressed homes there.
“I have a home at 6165 Pine Tree that is a short sale right now,” he said. “Pine Tree is not your typical residential area. At the peak, it was prime waterfront that attracted a lot of investors who bought homes that they were going to flip. Some of those investors thought they could get in the game and got caught in the bubble.”
Now, buyers are looking for the deal of a lifetime, he noted. “The only homes that are selling are those in distress,” Gambino said. “The homes that are priced high, those sellers are going to have to wait until the market revamps.”
There are sales, though, on the high end.
“We had two homes sell that were over $10 million. They would have been $14 million a few years ago. So, even though they are priced in the millions, they are good deals and they sold.”
Both end users and investors are buying, he said. Also, he added, “buyers are putting their money into single-family homes that will recoup faster because of a smaller inventory.”