Real Estate News and Updates in Florida and the MLS
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nvestor Jules Reich buys real estate when most people don’t. He has good credit and cash to pay enough up front to seal a deal.
The 71-year-old Boca Raton resident considers himself the perfect candidate to bail out developers sitting on thousands of unsold condos. He is among dozens of investors who see opportunity where others see gloom in the worst housing slump since 1991.
They are buying condo units in bulk at significant discounts from developers of slow-selling projects. The new breed of buyers sees profit either in long-term rentals or resales at prices lower than developers ever offered.
Reich bought 123 units from Miami developer Allen R. Greenwald, who had nearly 150 unsold condos at the Villas at Emerald Dunes in West Palm Beach.
Reich closed the $18.2 million deal in June and has found tenants for 86 units. He said he sold four units and has four more under contract.
He is selling units for $225,000 each, up from the $150,000 he paid for each of them. The developer had been asking $300,000 for a similar condo, he said.
Selling the units at lower prices benefit buyers who had been priced out of the market by years of high appreciation. Buying in bulk also helps developers cut their losses.
“There are opportunities out there now for everybody,” Reich said. “Some people say wait and then buy real estate. I say buy and then wait. It may take six months. It may take a year for the market to go up. But it will go up.”
He negotiated for about six months to get the West Palm Beach units at least 30 percent less than the cost of new construction, he said.
At a time when bankers blanch at pouring money into condo deals, Reich had to put down 30 percent, or $5.52 million in cash, to make the deal happen. Emigrant Realty Finance, a subsidiary of New York-based Emigrant Bank, financed the balance.
Reich said he put the lender at ease with the large down payment and by buying the units at a discount.
Reich is one of the few investors who successfully negotiated a bargain and is willing to talk about it.
A critical gap
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By LINDA RAWLS
Palm Beach Post Staff Writer
Friday, October 12, 2007
Local housing markets are not going to turn around this year or next year - and might not get better even by 2009, a noted economist said Thursday at the sixth annual conference on "Real Estate Development Trends" at the Palm Beach County Convention Center.
"There are people who want to buy a home now and are waiting because of fear," said Bradley Hunter, director of the South Florida division of Metrostudy in West Palm Beach, which conducts housing research.
"I think the way it will play out is that people are still getting married and they're still having babies," Hunter said. "People who need a house will be the first to come back (into the market). The others will come back when they see that, and this will create your next 'up market.' "
However, Hunter dodged repeated attempts to pin down just when this "up market" might show up.
Metrostudy's clients include most of the developers in South Florida.
He did provide lots of other specifics in his speech, however.
"It might be corny," he said, "but the most useful way to look at today's housing market is 'the good, the bad and the ugly.' "
The good: Listings on the MLS have peaked.
There's no recession. People are buying when the price is right. Florida Power & Light's new customers show population growth.
The bad: Buyers are still unenthusiastic. It's hard to get loans, and jumbo loans are expensive. The Fed can't fix these problems.
And the ugly: Foreclosures and currently rented investor units are causing the inventory of unsold homes to surge.
The conference, sponsored by the Urban Land Institute, was well-represented by the leadership of numerous public and private real estate ventures in South Florida.
If a meteor had dropped on the convention center Thursday, real estate development throughout Palm Beach, Martin and St. Lucie counties would have come to a complete halt.
In the meantime, Marcela Camblor - urban design director for the Treasure Coast Regional Planning Council - told the audience of about 300 people "What's Hot in the Treasure Coast" and Gregg Logan, managing director of Robert Charles Lesser & Co., gave a brisk overview of commercial real estate in the three counties.
"It's not possible for the residential sector to leave the commercial sector unscathed," Logan said. "People living on credit cards impacts how much they'll spend at Wal-Mart."
Despite that drag, St. Lucie County is poised for commercial growth, but with challenges that include increased land and construction costs, energy and environmental concerns, and escalating rent costs, property taxes and insurance.
The conference concluded with an optimistic outlook for Treasure Coast communities.
They are working together on the highly sought and much-touted scientific institutes that comprise the new Research Coast, said Harry Orf, vice president of scientific operations for Scripps Florida; Edwin Massey, president of Indian River Community College; and Richard Houghten, president of Torrey Pines Institute for Molecular Studies
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Home buyers out there, but waiting for better deals, expert says
- By Paul Owers | South Florida Sun-Sentinel
- October 12, 2007
Despite the depressed South Florida housing market, there is pent-up demand for homes from young professionals who want to buy but are holding off for fear of future price declines, a local real estate analyst said Thursday.
"There still are people getting married, having babies, getting new jobs," said Brad Hunter, president of the regional division of Metrostudy, a consulting firm. "That naturally generates a need for new housing."
Hunter spoke to about 375 real estate industry leaders during an Urban Land Institute conference at the Palm Beach County Convention Center in West Palm Beach.
Many potential buyers don't want to commit now because sluggish home prices could keep dropping, Hunter said. The uncertainty over property taxes, trouble getting mortgages and an inability to sell their current homes also prevent them from buying.
"Ultimately, there will be an up cycle," Hunter said. "It'll be when people who really need a house say, 'It may not be the exact bottom [of the market], but it's time for me to buy.'"
Hunter, however, was reluctant to predict when a rebound might begin. He doesn't expect improvement any time soon, and some analysts say it could be 2009 before the local market turns around.
On Wednesday, the National Association of Realtors said existing home sales in the United States will be 10.8 percent below last year in a forecast that has grown more pessimistic with each passing month in 2007.
Although the inventory of properties for sale in South Florida has leveled off recently, a surge in home foreclosures next spring will add to the inventory and hurt sellers and builders, Hunter said.
Broward County had 1,503 mortgage defaults last month, more than double the 636 from a year ago, according to Plantation-based Realestat.com. Actual foreclosure sales hit 718 in September, more than double the 327 from last September.
Palm Beach County had 904 defaults last month, up from 468 a year ago. The county's foreclosure sales were down slightly in September from last year.
Nationwide, foreclosure filings nearly doubled last month compared with September 2006, according to RealtyTrac of Irvine, Calif.
Prices of houses, condominiums and townhomes in South Florida will continue to fall, Hunter said. Experts say a return to more affordable properties ultimately will stimulate the market.
The outlook isn't nearly as bleak for commercial real estate, analysts said at Thursday's conference. Institutional investors are scooping up quality properties, although they are paying less for them as lenders tighten credit standards.
"There's repricing going on, but demand is still there," said Bob Sullivan, president of RJS/Jackson Group, a West Palm Beach retail brokerage.
Still, the residential downturn isn't leaving the commercial sector unscathed, said Gregg Logan, managing director of Robert Charles Lesser & Co., an Orlando consulting firm. The loss of construction jobs is affecting demand for retail.
"People are living on their credit cards, and that's going to impact how much they can spend at Wal-Mart," Logan said.
The Associated Press contributed to this story