Peter Zalewski, a principal with the real estate consulting firm Condo VulturesLLC and the qualifying licensed real estate broker for Condo Vultures Realty LLC, a Florida brokerage that works exclusively for buyers:

As uncertainty spreads throughout the South Florida condo market, Condo Vultures LLC is looking for indicators to help better gauge the market’s downturn and give our clients an advantage.

I’ve zeroed in on the “walkaway rate” — counting the number of buyers of preconstruction condominium units who are likely to walk on their 20 percent deposits. The walkaway rate is crucial to understanding buyer psychology, and ultimately where we are in the market cycle. Condo Vultures is currently tracking about 36 recently completed or soon-to-be delivered buildings in Miami Beach, Sunny Isles Beach, Brickell Avenue, downtown Miami, the Biscayne Boulevard corridor and the Coral Way corridor.

Even though developers don’t want unsold condos back and are going out of their way to give extensions before closing, I envision about 20 percent of the buyers, or should I say speculators, in the soon-to-be delivered ultra-luxury buildings walking away from their sizable deposits. The liquidity crisis hitting Wall Street and overseas markets is going to make it impossible for marginal buyers to get into a place like the Continuum II or Apogee with exotic financing. The only alternative will be obtaining financing from a hard-equity lender, and not too many people want to do that given the high interest rates.

There is buyer interest, especially from overseas private funds, which are bullish on Miami real estate, but they are looking for significant discounts and prepared to hold up to 10 years while anticipating at least three years of negative cash flow until the market improves.

 

Craig Studnicky, president of International Sales Group, a fully integrated sales and marketing organization based in Aventura, serving high-end condo developers:

Nobody is seeing a meltdown in Miami real estate. What you are seeing is a sort of Mexican standoff. Sellers are not dropping their selling prices and buyers are waiting for the prices to drop. In terms of pricing, it’s a standoff. There is not much change in pricing from a year ago; there has been virtually no appreciation from August ’06 to August ’07.

We are seeing fewer buyers than this time last year and virtually no investors in South Florida right now. Above all, we’re seeing end users and I honestly haven’t seen much change of where the buyers are coming from. The primary South American buyer is from Venezuela, which is the same as last year. Secondary is Mexico and Colombia, also the same as last year. In the North American market, it is still the Northeast corridor as second-home purchasers, which is also the same as last year. I don’t see any buoyant condo markets in South Florida. Other areas in the country are reporting good sales, but not South Florida, which can be described as bland.

 

Oscar Rodriguez, assistant vice president, Hayhurst Mortgage Inc., a major Miami-based, full-service mortgage company:

The real estate market has traditionally been a long-term source of investment, a conservative and steady path on the road toward wealth. In the past few years, the real estate market was flooded with dollars by people looking for an alternative to a poorly performing stock market.

During those very unstable years, people played the real estate mogul game with inflated fair market prices and Monopoly money. Many people made money but most did not have the foresight to know when to tighten the reins.

Now that supply has surpassed the demand, notes have come due and reality/normality has regained its hold on the lot of us ... where are we going to get the money to pay for all of these loans? Where do we conjure up the dollars to pay for all of these six-figure income homes with five-figure incomes? The fever has subsided. The mortgage brokers/lenders have lost their magic wands. Back to reality!

However, I do not see a need to panic. I do not see a need for all of the doomsday predictions. The market is regulating itself. We are heading back to the traditional qualification guidelines for borrowers. We are heading back to the traditional lending practices and products. We are on the conservative and steady path toward wealth once again.

 

Robert Green, executive vice president, BankUnited, the largest bank headquartered in Florida and a major real estate lender:

At BankUnited, we have seen things change for borrowers very quickly. As recently as a year ago the credit taps flowed freely, but our management team has experienced past real estate cycles and knew that the excitement in the market was unsustainable.

As the market filled with speculators, we have become increasingly diligent in our standards. BankUnited has always had an extremely conservative approach to extending credit and this has protected us from the large jumps in foreclosures that many lenders have faced. Even so, we have some borrowers whose finances have become stretched by rising costs of insurance and property taxes. We have a team of loan counselors in place to assist these individuals.

Many of the doom and gloom numbers reported in the media are impacted by a high number of flippers and individuals who overextended themselves to purchase more house than they could afford. Access to credit has become more difficult because many lenders have simply closed their doors, causing the market to shrink. Many of the companies in trouble are dependent on infusions of credit on the open market and the ability to sell off loans once they are made.

A well-rounded commercial bank, which retains loans in its servicing portfolio and has deposits generated in its branches, is in a much better position to fund loans.

 

Alicia Cervera Lamadrid, CEO of Related Cervera Realty Services in Miami, which is responsible for the exclusive marketing of many prestigious projects in South Florida:

Ultimately Miami will grow and prevail, especially the future of downtown. It has so many factors in place as a great place to live. Latin buyers are still coming as well as upscale Americans and Europeans, all buying for their own use.

We’re seeing the market more stabilized even though volume is lower and absorption is slower. Timing is an issue, as many end-users wait to buy a unit when the project is finished.

Brands such as the W South Beach have national appeal and they bring their customers with them. For example, July monthly sales at the W South Beach were the best in 12 months. Another luxury property, St. Regis in Bal Harbour, has reached $350 million in presales with over 100 units sold.

We’re seeing unprecedented prices as more luxury brands redefine Miami Beach as a world-class resort. There’s a whole new level of product at entry-level luxury. I think that with the right product in the right location at the right price, we’ll see continued activity in the marketplace.

 

Michael Cannon, executive director of Integra Realty Resources, a South Florida appraisal and real estate consulting firm:

We need to look at the figures closely. In the first half of 2007, Miami-Dade mortgage foreclosure filings increased to 10,519. For comparison: Whole-year foreclosure filings for 2006 were 67.5 percent of the filings in 2002 (14,567 versus 9,826) and 80 percent of the mortgage foreclosure filings in 2003 (11,605 versus 9,826).

As a percentage of total residential sale closings from 2002 to 2006, the foreclosure filings ranged from 11.4 percent in 2005 to 23 percent in 2002, but in the first half 2007 (owing to lower volume of housing sale closings in Miami-Dade), the percentage increased to 46.7.

We have not seen any widespread distress in selling prices yet, which means the housing market is readjusting to an equilibrium that will unfold over the next 12 to 18 months. “The will goes as the money flows” and the jury remains out in a wait and see situation, where “the money that was imprudently LENT may have been foolishly spent.”  

Helen Hill is a freelance writer specializing in real estate and lifestyle topics.

Please send news items on Miami-Dade real estate to hhill@miamisunpost.com.