Climate Change in Miami Slow to Impact Real Estate Buyers. By Geniusofdespair

According to this Bendixen & Amandi poll printed in the Miami Herald, almost 60% of realtors are concerned about the impact of climate change on Miami real estate. Only 36% of their clients have asked realtors about it. That is a substantial percentage considering most people live in a bubble.  I expect prices to dive when the clients percentage reaches 60%. But that is just my prediction.

Something Special About Jodi Macken of Macken Realty. By Geniusofdespair

I was so mad a Jodi and her mom with my first deal, because Macken Realty represented the buyer. But as I suspected, the Mother-Daughter Realty did not know the full story. They requested a meeting with me and my husband.

At their office in a beautiful conference room we were presented with pastries. A bad sign because I am always bribed easily with food.  I was expecting a fight.

The two Macken gals sat down and the first thing Jodi did was hand me a check and offer an apology. You readers who know me, know I am all about redemption and epiphanies. In that regard one of my heroes is Jack Abramoff,  evil lobbyist who is now crusading for reforming politics. Hats off to Jack!

In any event, my first deal had a problem (I asked my realtor a million times to check something and he did not) with the title company and some other problems. Jodi said that now, because of our problem,  she and her mother were personally reviewing all the files to make sure nothing of this sort happened or does happen again. Lillian Macken was visibly upset, her reputation obviously important to her. Jodi said that with the expansion they had left some of this over-sight to managers. We talked some more did an abrazame or two and left with the hefty check and a promise to sell our house quickly as our realtor, with a financial arrangement we were happy with.

Lillian and Jodi Macken came to our house. I do have to say that Lillian got to me. Not only did we trade Bascom Palmer waiting time stories (abysmal wait), she, like my mom was a realtor mom. She sounded just like my mother.  And Jodi's recollection of her childhood with a realtor mom mirrored my childhood.  Growing up with a realtor mom is grueling, how many times can you listen to a real estate story?

As the 3 of us walked to inspect the pool area, a little old lady passed us with a book in her hand. I said to her "You still read books?" She didn't understand. Lillian translated to Spanish. Anyway I did an abrazame (remember my abrazame campaign to promote love between ethnic groups?).  Then Lillian and Jodi also hugged the woman and the woman began to cry with happiness, so in need of touch from another human being. It was one of the most heart wrenching moments of my life and I had two people to share it with. Special. Jodi said it was an incredible moment.

Back to Real Estate, Jodi sent her young, beautiful assistant to show the house when she couldn't. I wasn't convinced she was qualified, But Sabrina was great. I grew to trust her abilities.  As Jodi texted me during the selling period, I learned how funny she was. And she is a pisser.  I really got to like her and her stories about  bringing up her daughters were hilarious.  I begged to have them for a day. I was going to make them watch meaningful movies all day, like in Clockwork Orange.

Finally my house had a buyer in a bad market. When it was time to negotiate I didn't get nice Jodi (where did she go?), I got tough Jodi. Wow, was I surprised at her skill with dealing with me.  I am not an easy person when prickly.  I am sure the buyer got the same Jodi as I was getting. So, the damn house is gone, I made more money because of our financial agreement and I am renting and happy. But I couldn't let  the real estate saga end without thanking my crack realty team of Matriarch Lillian Macken, Jodi Macken (Facebook buddy), and millennium Sabrina Beyda. You go girls!

"Macken Realty Inc." off the hook on my deal, "Owner's Choice Title" has an agent that still sucks In My Opinion by Geniusofdespair

Lillian and Jodi Macken 

I did a report on Macken Real Estate yesterday and this is the update:

April 21st - I met this morning with the two powerhouse women behind Macken Real Estate, both Lillian and Jodi Macken. We had a very nice meeting and I believe them when they told me that they did not know that our deal was not monitored correctly and that they were unaware of what the title company had done. All they were given was a release from us.

They made the title agent in question cry and that made me immensely happy.

I believe that their offer to sell my home in lieu of the problems I had with the title Company is more than fair, since they really don't control the title company.  To tell you the truth, I enjoyed their company and appreciated their candor. They wanted to make things right -- whatever was in their power -- and I appreciate it.

This is a company that stands behind its name and wants to maintain their reputation. We sorted out the whole convoluted story and the outcome is to my satisfaction. Thank you Jodi and thank you Lillian for valuing your reputation and wanting to be a righteous company. I look forward to your selling my house...quickly Jodi!

US Treasury Department to pull the cloak off hidden buyers in Miami real estate transactions! Best news of 2016... by gimleteye

Hard to believe it, but the best news of 2016 comes out the US Department of Treasury: an effort to pull the shield off buyers of luxury real estate who hide behind corporate entities like LLC's.

If I close my eyes and say, ok what would be on the list of important things to restore public trust and confidence, at the top of the list is real campaign finance reform, but not far behind: a law requiring the disclosure of identity of big real estate investors.

Why?

Local and state government is largely conducted by secret handshakes involving real estate transactions. Those secret handshakes institutionalize the secretive role of lobbyists in the formation of rules and regulations governing development of communities; a critical, if not the most critical force is shaping the American landscape.

The US Treasury Department's agenda is not to shine light on this dark side of American political life. Instead, it is focusing on the use of luxury real estate to launder illegal gains. One could further argue that the program is inadequate from the start: collecting data over a defined and small period of time is a joke because anyone smart enough to steal money or make money through criminal activity is not going to be stupid enough to give the Treasury Department insight, when it knows the disclosure program is sun-setted. The New York Times reports:
Concerned about illicit money flowing into luxury real estate, the Treasury Department said Wednesday that it would begin identifying and tracking secret buyers of high-end properties. The initiative will start in two of the nation’s major destinations for global wealth: Manhattan and Miami-Dade County. It will shine a light on the darkest corner of the real estate market: all-cash purchases made by shell companies that often shield purchasers’ identities. “We are concerned about the possibility that dirty money is being put into luxury real estate,” said Ms. Calvery, the director of the Financial Crimes Enforcement Network, the Treasury unit running the initiative. “We think some of the bigger risk is around the least transparent transactions."

That's true, but the Treasury Department ought to make the disclosure requirements retroactive, say, for the past twenty years. In Miami-Dade County, all LLC's should be required to show individual ownership. Why?

For one, it would provide transparency to the rampant conversion of open space and farmland into soul-less patches of sprawl, outside the Urban Development Boundary, linked by greed. Disclosure would show the partnerships and alliances the made destruction of the public good such a profitable enterprise in Miami-Dade.

According to the Times, "The Treasury’s program will affect billions of dollars in real estate transactions. In Manhattan, the initiative requires buyers in sales of more than $3 million to be reported; in Miami-Dade County, it requires reporting on sales of more than $1 million. In Manhattan, 1,045 residential sales cost more than $3 million in the second half of 2015, worth some $6.5 billion in aggregate, according to PropertyShark, a real estate data company. In addition to starting in only two markets, the requirement runs from March through August. If Treasury officials find that many sales involved suspicious money, Ms. Calvery said, they would develop permanent reporting requirements across the country. Real estate professionals, especially in the luxury market, often know little about buyers, and until now, they have not been legally required to. In its investigation, The Times found that nearly half of homes nationwide worth at least $5 million are purchased using shell companies. In Manhattan and Los Angeles, the figure is higher."

One problem with the new regulation: there should be no time limit on the disclosure. Furthermore, if the requirement were made retroactive, we would see exactly how real estate bubbles formed out of the toxic gas of financial corruption.

This new measure by the Obama Treasury Department is going to ignite a firestorm.

According to The Times: "It is the first time the federal government has required real estate companies to disclose names behind all-cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers." It is also the case, this is the first time that ordinary, middle class Americans will see what powerful undercurrents are eroding American values.

You are unlikely to read this point of view in the Miami Herald, but this is the best news of 2016. It is long, long overdue.

Buying or Selling? Real Estate Market at a Glance in Miami-Dade County. By Geniusofdespair

Thanks Miami Herald.

Don't waste your time looking for foreclosure bargains.

The almost 27% for Brickell is alarming...and they are still building?

Rapidly escalating flood insurance, real estate values, and other Miami mysteries … by gimleteye

The other day, my friends said at dinner, the bar at the River Oyster House was filled with Chinese celebrating New Year in Miami. I had noted on the blog a few days earlier a similar phenomenon at the water line. The day before Christmas I was surprised by the number of Asians, Indians, and Malaysians on Miami Beach: recent additions to the flocks of winter visitors from South and Latin America, not to mention Russians, French, Italians and Germans.

If you want to see "how" Miami has turned into a global destination, take in what is happening on Miami Beach. If you want to see what we will "become", join me on another kind of stroll.

Friends assure me that this building boom in downtown Miami is different from before: this one is being built with hard money even as the cement is being poured. In the early 2000's, I had a grip on the economic, financial and political influences at play in Florida's building boom. This time, I'm at a loss.

What we do know is this: US banks recapitalized (on the backs of taxpayers thanks to the Fed), but the prosperity of the financial sector has had relatively little impact on the broader economy and middle class. The building and construction boomlet in downtown Miami seems a different affair. Are loose fiscal policies in China, not to mention plain old corruption in Asia, fueling Miami's boomlet?

This week George Soros expressed fears about China's economy, dependent as it is on easy money to fuel -- primarily -- construction and development schemes for which a legitimate market disappeared in the major urban areas years ago. When it comes to gambling, China is the gold standard. Even though Genting hasn't secured Florida as a base for casinos yet, it is a sure bet that someone's house money is at play in downtown Miami today.

So far as I am aware, there is no clearinghouse for data on sources of finance for construction in Miami. There ought to be, not that anyone in position of power or influence would do anything with the data. It didn't happen with flight capital or drug money, or, when R. Allen Stanford did a reverse migration of dollars to Antigua in the early 2000's with the blessing of the state of Florida, Jeb!, and sped by duffel bags full of cash and private jets totaling a mere $5 billion.

In contrast, the ordinary homeowner knows exactly what is happening with flood insurance. Rates are rising faster than tides, because insurers are in business to survive catastrophic storm events, including the catastrophe of sea level rise due to climate change. I doubt any of the new buyers or builders in downtown Miami are paying more than a passing glance at storm clouds on the horizon. It always rains in Miami in December, right? If the sea levels rise, someone will build sea walls. Just like they do in Denmark.

Down in the Florida Keys, on the other hand, the natives are getting restless. FIRM, "Fair Insurance Rates in Monroe County", is agitating against the current effort by the Florida congressional delegation to delay the implementation of Biggert-Waters Act whose impact could deal a swift karate kick to the heart of Keys real estate. Not to mention, Miami.

Florida homeowners "will see their flood insurance bill potentially quadruple in the coming months because of Biggert-Walters." FIRM wants to kick the insurance rate issue down the road for four more years instead of the 15 month compromise now under discussion in the House that is "essentially useless as a relief measure for a vast majority of Floridians."

What will we know in four years, that we don't know now?

Are you wondering why you can't find a good deal on a foreclosure? By Geniusofdespair

Vulcan Dynamic Realty, a Mexican Company, has tremendous activity in one year of existence on the Clerk's site. They said they planned to invest $150 Million in distressed South Florida property. The players are Emilio Braun, Inaki Negrete, Juan and Jose Zaragoza, Antonio Garcia, Mario and Davila Alonso de Oca. They own 136 properties, they are evicting people after buying the properties for non-payment of rent, they seem to purchase low end properties and have several municipal judgements against them for nuisance, water etc. It looks like those things are inherited from the purchase.

This looks like a real estate flipping operation. I was told by a realtor there is also a Brazilian company doing the same. According to the South Florida Business Journal:

"Vulcan plans to acquire the properties in foreclosure or those that are bank owned (also known as real-estate owned or REOs) and rent them for several years at an attractive cap rate before selling them as the housing recovery takes hold."

If you are bidding on a foreclosure you are probably bidding against one of these wholesale companies. Seems like they have already started selling some. They bought 20492 SW 324th Street for $184,800 (4/2012) and sold it for $295,000 (6/2013). The property originally sold in 2006 for $499,350.

Genting's Luxury Condo. By Geniusofdespair

Marquis

Genting, the Malaysian Gambling giant, has a luxury condo in the Marquis at 1100 Biscayne Blvd. They paid $2 million for the place. The unit is 3,800 square feet and it has 4 bedrooms with 4 baths. It is on the 61st Floor of the 67 story building. The taxes are $22,532.

Ziad Ghandour just bought a unit on the same floor. Is that the same guy who is Founder of TI Capital? He only paid $1,390,000 for his digs (3,017 square feet).

NYCA China Partners LLC also owns a bunch of condos in this building on the 26th, 27th, 28th and 29th floors. They are a mystery - Delaware Corporation.  A company called Optibase also owns 18 units in the Marquis.  Looks like a wholesale buy as they are not counting them on the open market. The developer also appears to still own 69 apartments in the Marquis. Another neighbor for Genting is Robert Straubhaar, CEO of River Advice.

Negative Ad on Carlos Gimenez. By Geniusofdespair

A negative campaign flyer just came, Carlos Gimenez is pictured with pigs eating in the background. It was put out by a PAC - Council for Stronger Neighborhoods - out of Orlando. YES ORLANDO! They got most of their money from the Realtors PAC also in Orlando. Who gave Realtors PAC money? You might complain to your local realtor for annoying you with this mailer. Many locals gave to Realtors PAC (via dues?) run by Gary Schraut. Here are just some of the local Realtors who gave to hurt Carlos Gimenez by bending the truth. Call them, they might be surprised to find out that their money is going to trashy flyers to kill their OWN candidate (link):

GRAHAM LINDA W - Palmetto Bay
ARMSTRONG WENDY T - Palmetto Bay
GOLIK P.A. VLADIMIR F - Palmetto Bay
SCHULTES WILLIAM V - Coral Gables
FLEMING EILEEN - Coral Gables
KOCH PAUL - Coral Gables
BABOUN TANYA R - Coral Gables
CIOC IOANA E - Coral Gables
REEVES VIOLETA - Coral Gables
BLAIR SONIA M - Coral Gables
BENITEZ MARY - Coral Gables
GOMEZ, MARGARET A - Coral Gables
DAVIS ARTURO E - Coral Gables
ESPIN ROBERT A - South Miami
HERMIDA MARTA E - South Miami
BLUNTZER ELENA C - South Miami
MADERO, DIANA - South Miami
SOTOLONGO GLORIA C - South Miami
MAYNARD CARL K - Coconut Grove
LYNCH F. JUSTIN - Coconut Grove
PARRISH JR ANTHONY R - Coconut Grove
SMITH KELLY P - Coconut Grove
MARTINEZ, GENEVIEVE - Brickell
CHASENS, PENNI F - Brickell
WILDER, JO A - Brickell
DESCALZO, CHRISTOPHER - Brickell
SCHIFF POLLY S - Miami
OCHAITA WILLIAM - Miami
SCHULER MIKE - Miami
MC CARTHY PETER J - Key Biscayne
LUZARRAGA MONICA B - Key Biscayne
PATT ANGELA K - Key Biscayne
DUNCAN JAMES S - Key Biscayne
MACHADO EMILIA C - Miami
CIMETTA HENRY - Miami
MONTOYA LUISA-MARIA - Pinecrest
BENSOUSSAN LAURENT - Pinecrest
GOICOECHEA ANA M - Pinecrest
CHEHEBAR ABRAHAM - North Miami Beach
PATINO MARTA L - Aventura
KRAMER RYAN D - Aventura
SPEKTOR JONATHAN L - Miami Beach
CARRERO EVELYN F - Miami Beach
LINDEMANN GEORGE P - Miami Beach
CAMP ELIZABETH C - Miami Beach
DAVIS JILL LYNN L - Miami Beach
MASTER MARC B - Miami Beach
BERGER JACQUELYN S - Miami Beach
BLANCO XAVIER - Miami Beach

Shame on you all for giving to a sleazy PAC, one that finances negative ads. As of 5/19/2011, this Realtors PAC collected $10,298,765.06. See some more names:

A Few Miami Beach Properties are Selling for More than their Market Value. By Geniusofdespair

I looked up 6 properties in Miami Beach that sold for over the property appraiser's market value (some by as much as $100,000 over) and they all had two things in common. 1) The people buying had no other public record in Miami Dade County and 2) All had no record of a mortgage on the property bought, which means they were bought for cash.

From this I can deduce that the people paying OVER market value are first time buyers, probably new to Miami. They have a lot of cash and maybe they are not getting very good deals, since the vast majority of the people buying are paying under market value -- some by almost half. I looked at 51 properties total in Miami Beach for this report.

You realtors out there, what is going on? Where are people getting all this cash, I am talking about properties that sold for $743,000, $690,000, $600,000, $570,000, $460,000 and $425,000. That is a lot of money to have on hand. Where are you realtors digging these people up? There were a few foreign sounding names, perhaps they are here from abroad to take advantage of our falling market but, in reality, they might not be getting the 'deals' they were seeking.

Also see: The need for financial reform, a case study in Miami: Lennar and LNR

My Biggest Financial Mistake was Also My Biggest Financial Success. By Geniusofdespair

The real estate market was still hot when I looked at a condo in October 2005. I closed on the 1,600 square foot condo for $482,000 in December 2005 at the height of the bubble. A few days later I had a bad feeling and put the unit back on the market. While I owned it, I got a hurricane assessment. I had to carry the condo for 6 months and pay back-to-back real estate fees but I unloaded it for $492,000 in June of 2006 - losing about $50,000 even though I sold it for $10,000 more than I paid.

I just checked on the unit today and the market value now is $305,000. If I had taken the Realtor's advice and rented it for a couple of years and sold it this year, I would have lost about $200,000 instead of the $50,000 I lost two years ago. I think I made a lucky move.

For the real estate industry's model of growth at any cost: the bill comes due ... by gimleteye

A Miami real estate agent, Luis Alvarez, publishes a letter in The Miami Herald along the lines we have pointed out in this blog: that official statistics on the depth of this recession/Depression understate the damage to property values by failing to include distressed sales. These sales comprise the majority of real estate transactions today. The writer notes that while taxpayers must pay millage rates based on imaginary values, banks will only write mortgages based on independent appraisals-- appraisals that must take into account all transactions in the neighborhood of similar properties including foreclosures.

The political reality is simple enough: if assessed values are pushed down-- because taxpayers insist on equitable treatment of their market value-- millage rates have to rise. It is a conundrum that politicians and their enablers, including the real estate industry, hoped to avoid. Past recessions have come and gone, inflicting damage, but leaving intact the theory that property values will always rise or only decline slightly. This one is different. Way different.

Like all assets based on speculation-- tulips in 16th century Holland for example-- the market value of houses has been knocked off its foundation. Knocked hard. The US government cannot print enough money to maintain the illusion of housing values. Writer Alvarez makes a lamentable point: "Our local and state governments took in windfall tax revenues during the boom years of real estate. What did they do with this extra revenue? They forgot to save for a rainy day. They spent it on pet projects, while the rest of us were doing the responsible thing and cutting spending."

But those pet projects, in aggregate, are what the real estate industry-- that employs Mr. Alvarez-- wanted. The massive expansion of government is in large part keeping up with the costs of growth: growth of ring suburbs and of providing essential services like police, fire and public welfare in farmland and environmentally sensitive lands whose conversion value accrued mainly to bankers, land speculators, and puppeteers of local municipal and county government.

Today, Florida's population is decreasing for the first time in modern history. At the same time, utility executives at companies like Florida Power and Light are making millions in compensation while using rate payer obligations to ram twenty plus billion dollars in new nuclear reactors at sea level in South Dade, all in expectation that this recession/Depression is just a blip; an aberration. You may be required to draw down your credit card line of credit, but you can be sure that large speculators who own enormous mortgages on farmland outside the Urban Development Boundary are, hand-in-hand, with lenders avoiding repricing of the toxic deals they created at the end of the boom. Wage inflation tells another sordid aspect of the same story: that those who can are grabbing and taking whatever they can, now.

It is a bad time to try and figure out what comes next. Predicting the bust in housing values was easy in comparison. With federal printing presses running at full speed and the mainstream media declaring the recession is over, with property appraisers holding up the pre-crash values of properties with a pen and elected officials imagining that deficits can be accumulated without consequence, only one thing is crystal clear: the growth model that Florida's real estate industry held up as the model of wealth and happiness was a fraud. Perhaps-- since politicians and candidates for public office are living in a dream world-- Mr. Alvarez can ask his industry lobbyists to inform us all, how its future policies on growth are different from the ones that contributed so mightily to this fiscal and economic nightmare.

Property Appraiser’s Records Are NOT Accurate in Florida and Miami-Dade is Worse. By Geniusofdespair

Eye on Miami reporter Gimleteye calls it "Contaminated Data" and looks at the larger implications. I just find it wacko that the Florida Department of Revenue will not allow counties in Florida to count distressed sales which means the entire State of Florida’s Property Appraisers are not counting half the properties changing ownership in their assessments under the guise of distressed. Worse it is not uniform, in Miami-Dade ALL foreclosures are distressed but in Broward County it is SOME foreclosures. In Broward County they post the distressed sale price and date in their public records, but they put a “D” next to the price signifying it is a distressed sale. Any property that is deemed distressed is not counted but at least Broward’s records are accurate. Miami-Dade County will not post any information related to the sale, except the buyer, creating inaccurate records. Look at the graphic at left and I will explain why, in Miami Dade there is little accuracy.

County Commissioner Natacha Seijas (yes her name is spelled wrong in official records) bought a house in December 2008. How do I know this? Because I looked at her financial disclosure form. As you can see, in the graphic, I would NOT know this from the Property Appraiser records. I would assume she bought it in 2006 and paid $360,000 instead of the accurate information of 2008 for $225,000. If I looked up the records by the identifying numbers, I would get the old sales information, they are not correct either.

As a reporter (okay I am taking liberties here) who values accuracy, I would be reporting wrong information if I base it on County Records. This ties my hands. I cannot go out into the outskirts of our cities seeking property turnover information. I will not know if the property has turned over. I cannot look for trends, to see if developers have had to dump properties. I cannot track anything with accuracy in Miami Dade County but if I reported in Broward County, I could.

Currently, the Seijas property is assessed at $320,822 but she only paid $225,000 so her assessment won’t change as much as it would in Broward County. Broward counts some foreclosures in their assessments, those put on multiple listings and advertised. Miami Dade doesn’t county any. Each County in the State is able to set their own rules so don’t look for any uniform accurate records. Read Gimleteye's post July 24th for the far reaching implications.

P.S. If you want to find Natacha's records at the Property Appraiser, key in Sejaz but to find her records at the Miami Dade County Clerk's office you had better use Millan, Natacha S. Go figure, same deed.

If the data is wrong, how can improvement in housing markets be right? ... by gimleteye

This week's post on contaminated housing data from Miami-Dade County was picked up by several national blogs like Patrick.net; showing that there are many readers interested in ways that facts of the housing market crash are being concealed.

The Miami-Dade property appraiser selectively excludes foreclosure sale prices from last sale data. His defense: the Florida Department of Revenue allows local jurisdictions leeway in how to account for foreclosures. That was complete news to me, and I thought I had heard everything. Because foreclosures were once so rare, the state apparently allowed local appraisals for the purposes of tax assessment to ignore them. In Florida, the worst economic crisis since the Depression has made the exception--foreclosures--very nearly the rule. In some Homestead suburbs, for instance, a clear majority of sales are through properties in one stage or another of foreclosure.

The impact of failing to uniformly account for foreclosures is contaminating databases and allowing politicians to sidestep reality. Otherwise, there would be even greater pressure for these officials to raise taxes to cover budget shortfalls. Since Florida is entirely reliant on property transaction taxes, this is a very big deal. It is a new principle of public accounting: "shit in/ shit out" (SISO).

In so far as the actual, real and not imagined real estate market is concerned, it may be that the only bottom being formed in Miami is an artificial one: banks are restricting the number of foreclosures they are leaking into the marketplace. They can do this, because their balance sheets are now "solvent" thanks to gerrymandering financial rules and guarantees by federal taxpayers through TARP and "mark to market rules" and God knows what other favorable treatment is given to the new SISO accounting rules.

Here are what some of our readers wrote earlier this week: "If overall values go down, guess what, the millage rate will go up. The county has bills to pay. The point of the matter is that a record is a record and it should be accurate. I don't look to the MLS. I look to the county for the real number." Predictably, the nation's mainstream newspapers are filled with stories of home owners flooding local tax assessor offices with complaints and requests to re-assess property at lower and more realistic market values. (A story The Miami Herald ought to consider picking up.)

Another commenter wrote, "I've got a question for you all. Did anybody here check to see if MLS "SOLD" prices for these foreclosures in Miami Dade were reported at the foreclosed upon "SOLD" price or the last "SOLD" price before the foreclosure? The reason I ask is the obvious: should the MLS be massaging the foreclosure sales (or not even reporting them) then median and average prices reported to Case/Shiller's Miami's Index is way above what it really is." I agree. I've sent an email to Case/Shiller to ask for clarification of its data source. "This smells very fishy to me. Before you say "case closed" I think you'd do Miami Dade watchers a real service to see if the local MLS is reporting accurate sales data too." Agreed.

Are Case/Shiller statistics and other indicators of the housing market performance picking up bad data? Data that is purposefully being skewed to cancel out the effect of foreclosures? Beyond the personal misery and effect on neighborhoods, a wholesale revaluation of property would require--as the first commenter notes-- increased taxes to cover government budget liabilities "... if 80% of the homes were ... short sales, at what point do the foreclosures start to become relavent to appraiser's numbers." Exactly.

The second commenter: "The bottom line is that the numbers are the numbers. The PT office needs to go back a few years and start correcting the numbers. We can analyze where we go from there when we know WTF we are in all this mess. If we don't fix those numbers now, we will lose all integrity in the data base."

Contaminated data bases are popping up everywhere in the effort to paint the economy as "recovering", along the lines of former US Senator and UBS co-chairman Phil Gramm's "mental recession". The blow-up of the housing market has inflicted deep pain on consumers and consumer demand. One cannot help but feel that the thinking behind the understatement of foreclosures is to make the housing markets seem "less bad" than they are in fact. But this also has the effect of compounding consumer anxiety, especially the middle class where the lack of liquidity, mobility, and stability continues to weigh heavily. The Treasury Department Inspector General has issued a report condemning the lack of transparency in the distribution and effectiveness of TARP distribution to banks and financial institutions. Only a few days ago, a raft of news reported "stabilization" of housing sales and the stock market took off like a butterfly. But no information about the role of foreclosures in the faint signs of life. How can anyone have confidence in capital markets under these circumstances?

The stock market continues to hyperventilate on any whiff of positive news. Yet job cuts continue to outpace economic decline (Wall Street Journal, July 23, 2009) The doubt accumulates for thinking investors who no longer laugh themselves to sleep about others who put gold coins under their mattresses. There is another name for investments based on bad data: speculation. Isn't that just where we have come from?

Also see: July 26 - Property Appraiser’s Records Are NOT Accurate in Florida

Miami Dade Foreclosure update for the data obsessed. By Geniusofdespair

In the first 4 months of this year we have had 25,577 foreclosures in Miami Dade County. That is almost as many as we had the entire year in 2007 (26,391) and more than 3 times as many as we had the entire year in 2005 (7,829). During the same 4 months in 2008 we had 16,248 foreclosures, and ended 2008 with 56,656 total. If we keep up with the current trend, we will close 2009 with more than 75,000 foreclosures. If you add all the foreclosures between 2002 and 2007 (6 years) the total is 79,812. We could possibly reach that mark in one year!

Deutsche Bank Dumping Foreclosed Homes In Miami. By Geniusofdespair

Deutsche Bank has sold a slew of foreclosed homes in the North section Miami-Dade County for bargain basement prices. Maybe what is happening is that this bank is finally recognizing derivative losses to its balance sheet, and writing off the underlying mortgages.

1. 425 NE 114 Street which sold for $325,000 in 4/2006, sold recently for $100,000. The assessed value in ‘08 was $295,053. EQUITY LOSS: $225,000
2. 345 NW 118 Street which sold for $499,500 in 9/2006, sold recently for $174,000. The assessed value in ‘08 was $225,250. EQUITY LOSS: $325,500
3. 661 NE 52 Terrace which sold for $759,000 in 5/2005, sold recently for $350,000. The assessed value in ‘08 was $510,373. EQUITY LOSS: $409,000
4. 224 NW 64 Street which sold for $339,000 in 5/2006, sold recently for $135,000. The assessed value in ‘08 was $337,252. EQUITY LOSS: $204,000
5. 11940 NW 16th Avenue which sold for $230,000 in 7/2006, sold recently for $64,900. The assessed value in ‘08 was $137,144. EQUITY LOSS: $165,100
6. 11930 N. Bayshore Drive (I could only find a comp. in the same line, 2 floors below that sold for $190,000 in 4/2007) sold recently for $56,000. The assessed value in ‘08 was $178,130. EQUITY LOSS (estimate): $134,000
7. 780 NE 69 St. which sold for $460,000 in 12/2005, sold recently for $155,000. The assessed value in ‘08 was $244,000. EQUITY LOSS: $305,000

How long will it take for consumers, who are badly shaken by job losses around the country, to come back into the South Florida real estate markets? At the height of the boom, as much as 70 percent of new housing construction was being purchased by flippers and speculators. I strongly doubt that this segment of the market is coming back, at all, in our lifetimes. So: two conclusions. Not only do we have a supply of housing inventory that far, far exceeds demand (Parkland, Krome Gold, anyone?), we also have sharply falling government revenues.


If banks are unloading mortgages at a fraction of a dollar, how long will it be before tax assessments are geared downward? If we look at only these 7 properties and compare the combined assessed value of $1,927,202 to the combined actual value (the selling price) of $1,034,900. That is about a 46% drop in taxable equity from 2008 assessments.

Multiply this effect by millions of homeowners and you can see that the "green shoots" in the economy probably mean that once the housing markets find a bottom, we will be bouncing there for years while taxes go up and inflation increases. It is not a pretty picture, but before blaming Obama; remember how we got here and who profited from this misery.

The Future of The Housing Bust: Two Views in the Miami Herald. By Geniusofdespair

Take a look at the excellent article in the business section Real estate experts face off on Real Estate Meltdown. The pensive looking guy is Jack McCabe who seems to see the future less bright on the real estate front. The happy guy, Michael Cannon, writes a Herald column about real estate and he is more optimistic. You can see the difference pretty clearly in their predictions (which are at the end here).

Most important, these guys are both bowling champions. What are the odds of that? Anyway...

I found something McCabe said rather interesting, especially in light of Jorge Perez wanting to buy the Miami Herald (this would NOT be in the paper if he were a major investor in the Miami Herald):

McCabe: Last year (Cannon) said project failures are isolated. That’s not true. There are project failures all over the place. Perez buying his own condos (at 50 Biscayne) is a project failure. When he buys them at $250 a square foot, after he sold them at $400 a square foot, he has cut out the legs of all previous buyers. Everybody who previously bought and closed has been wiped out.

That is pretty alarming for the other buyers in the building, glad I am not one of them and I am sure Perez is hopping mad at reading this.

The Herald said in the article that there are 76,829 homes on the market in Miami Dade County. McCabe said there is a 17,176 supply of single family homes in multiple listing which, he says, is a 33 month supply (condos are at a 42 month supply).

Here are McCabe's and Cannon's predictions for the future (but do read the entire article in the Miami Herald):

McCabe Predictions:

The coming year will be as bad as 2008. Expect price declines of 10 to 15 percent through 2009. Prices are already at 2004 levels and will likely see a retreat to at least 2002 levels. The foreclosures and inventory will continue to drive price declines. Sales have not hit bottom yet. Yes, there will be sporadic periods of increased sales, but it will amount to false bottoms. For 2009, sales will be slightly above 2008, but that's only because of lower prices, and there are still years and years of inventory to absorb.

Cannon Predictions:

Sales will continues to increase due to lower prices. But stabilization in prices will vary neighborhood by neighborhood and, in some areas, building by building. Prices have reached sustainable levels in established areas close to employment and urban centers, like Coral Gables and parts of Miami Beach. But prices in outlying markets such as Homestead or Lantana will likely drop more. Pockets hit hard by predatory lending will decline further too.

Sergio Pino is Still Turning a Profit in a Bad Market. By Geniusofdespair

According the Herald:
Vacant Land Sells for $6M in West Kendall
Location: 15300 SW 88th St.
Seller: Alexandra Property Holdings, represented by Sergio Pino, managing member.
Buyer: Garden Village Shopping Center, represented by Martin Pico, manager.

Price: $6 million or $29.04 per square foot based on 206,642 square feet of building area. A prior sale reported was in March 2006 for $2.6 million.

So In two years the property appreciated by $3.4 million(it is approximately 4.7 acres so it sold for over a million per acre). Well, it actually might be more! Pino's people still retain about an acre, that little square (41,650 sq. ft.) cut-out (see above) which appears to have been a part of the 2006 sale. So I would suppose, if I am correct, you can add at least another million to the profit.

Can you get a mortgage with a 480 Credit Score and What is with "Nehemiah"? By geniusofdespair

I was curious to see what I could get with a 480 credit score. I saw in Lennar’s ad that they were requiring a 600 score on a new home. More interesting, the ad said you can put “0” down but it requires the buyer to qualify to obtain down payment from a "non-profit down payment assistance program." I decided that was worth a call to Lennar, to get the skinny on the program.

It is called the "Nehemiah Assistance Program" You can read about it on GetDownpayment.com. They also have a Christian Ministry component. Boy, the website was pretty odd. You had to take an online course to qualify for no down payment. Nehemiah tells developers on their website:

“As a builder, your success depends on getting more qualified people to visit your homes. Putting together the most attractive home package available will drive more people to your communities. The Nehemiah Program® understands this. When you partner with Nehemiah, you can advertise your homes as having downpayment assistance available. Nehemiah will partner with you to create just the right marketing campaign for your homes.”

That is a non profit? This Nehemiah Program is a story in itself, however, I am writing about credit scores.

I decided to call around to see what was up. I claimed my credit score was pretty bad: 480. I called "------" (btw, beware of phone shopping, this guy had some kind of ID reader on his phone...the guy read me back my name and address). They said their minimum score was 580. When I said mine was 480, they weren’t that disappointed. (I have since heard from this guy so I am leaving out the name of his company -- remember to watch out for that ID reader).

I then called "Chase" which also required 580. When I said my score was 480 the guy said “We have programs that don’t require credit scores, assets or salary disclosure.” They are called Hard Money or Hard Equity loans. They lend money based on equity: you need 35 to 40 percent down for these loans. They can only lend you up to 65% of the value of the property. "Choice One Mortgage" had the same story — 580 required -- for my 480 credit score, 35% down and they would give me an 11 or 12 percent adjustable mortgage.

Still seems risky for the lenders/banks. With value still dropping in South Florida, they still could still lose. Apparently a credit score of 480 doesn’t scare mortgage lenders.

P.S. The Nehemiah Mission:

"Nehemiah transforms lives by increasing homeownership and asset development opportunities for diverse populations, while maintaining our commitment to successful, responsible homeownership.

Nehemiah transforms communities by expanding our faith-based, charitable and community development initiatives into underserved neighborhoods across America."

Also see today’s post: Bank Failures

Miami Herald the "Johnny Come Lately" of Journalism. By Geniusofdespair

The Vice Mayor of Miami Lakes, Nancy Simon, is accused of practicing real estate without a license. We reported about it, January 31st, February 3rd and February 8th. The Herald put out it's story today: February 12th. The Herald went into excruciating detail with all her excuses: Blood clots in the leg...lost checks, etc. Don't care Herald!