Selling Condos? "The DJ's Got To Be Really Good"
It would seem the Miami condo craze may be reaching it's zenith with stories like this NYTimes piece. "You could salsa with dancers in fringed hot pants at Aqua, hear a drag queen D.J. at Cynergi or watch stunt men ricochet off a trampoline at Soleil. Nightclubs? No. Carnival acts? Not quite. These were launch parties for condominium projects, one of the stranger forms of nightlife in a city obsessed with real estate."
"Deep-pocketed developers, forced to be ever more creative in the pursuit of buyers for condos still years from being built, pay for these lavish affairs. Builders need early deposits to get construction loans, so they work hard to entice the buyers they covet, image-conscious people, many from Latin America and Europe, with money to burn on a second home, a speculative investment or a status symbol."
"The bait includes small initial down payments, slick marketing, and parties. Usually held just before a project begins selling units, the events are meant to create buzz among brokers, who make up the bulk of invitees."
"Jon Graney, who owns two condos in South Beach and is looking to buy more, said launch parties were beginning to rival clubs. He added, however, that he would probably not buy at Vitri because the building was too low. 'If I spend six hundred grand, I want to go high.'"
10 Comments:
This TOTALLY reminds me of the lavish, opulent parties I went to in 1999-2000, where massive amounts of sushi, caviar, and liquor were thrown around. The parties were usually for online agencies that ended up laying off 75% of their staff, Web-related events and conferences that stopped occurring, and dot-com startups that under by 2001.
If history isn't repeating itself, I'll be sorely disappointed. And I don't rent, I own!
Or the expensive 'road-shows' for IPO's. The writer seems to be saying as much.
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The money pumps were turned on in the early '80s and have never really been shut off. So we go from one bubble to the next. Anytime there is a stumble, the pumps go into overdrive:
---'87 crash
---early '90s recession
---Asian currency crisis of 1997
---Mexican Peso Crisis
---LTCM hedge fund collapse of 1998
---Y2K faux crisis of 1999
---Nasdaq implosion of 2000
---9/11/2001
---corporate scandals and deflation scare of 2002
With all this liquidity washing across the globe, it winds up inflating assets worldwide. Little wonder then that most Americans think it is their birthright to have ever-inflating homes, stocks, etc. All the while, the poor Federal Reserve Note (what we call the dollar) has lost 97% of its buying power since it was first instituted in 1913.
Smoke and mirrors. Yet bubbles and booms play tricks with the mind. They foster speculation and the "money for nothing" mindset.
So the 90s stock bubble has morphed effortlessly into today's housing mania. How long can this go on? Well, it's been 20 years and counting.
Can it continue forever? No. The history of the world is replete with examples of nations that trashed its own currency and encouraged speculative behavior. It always ends in disaster. But nations (empires) that had special advantages like having the world's default currency (Rome, for example) can keep the game going far longer than lesser examples like Argentina most recently.
It's sad to see things come to this, knowing how it ends, but not knowing when.
(2. If you're in California, upgrading to a slightly bigger home would easily triple your property tax and double your mortgage payment. Many growing families are stuck in small homes for good.)
THis is a good point. A lot of bulls here think that prices are skyrocketing because of supply and demand. But one of the main reasons (other than EZ credit) is because the supply is limited due to the facts you state above.
Unless you are willing to sell and rent, or sell and move to a cheaper state, most Californians can't "afford" to sell because their housing costs will rise substantially. The boom actually limits supply. So you see all these buyers in a frenzy bidding on the few available homes for sale. It's like a feedback loop. The buyers don't realize it is their own behavior driving up prices.
And the higher they go, the more frenzied buyers get---they feel the market will run away from them. What they don't realize is that they are chasing their own tail.
Crimson -- good point.
Wanna party like it's 1999- I am on the next plane to Miami! NYC was an orgy of insanity til 3/10/00 (Nasdaq 5040?)
I long for the days of the boom, and want to ride this one for the last few months- the flameout should be spectacular. Getting out a copy of "The Great Gatsby" for summer reading.
Any suggestions on good books about how people made a mint off of the RTC bailout? Michael Price comes to mind.
Seems bubbles are a Bush Family curse- 41 had the S&L's, and now 43 (W) will be blamed for the RE bubble.
JL, good point- The Bushes have an interesting record. As always, your comments are insightful.
That said, I hope that we all agree to leave any partisan politics out of this site. Too much at stake.
Nothing partisan about those comments.
All facts.
It wouldn't even be partisan if you bought up that Neil was never prosecuted (his dad was VP) for his role in the S&L crisis.
It's not partisan if it is a fact.
Absolutely, we are seeing shades of the crazy things of the 1999 period with dot-coms as the IPO and prospective IPO's became even more bizarre
Many people remember the meteoric rise and fall of PETS.COM and their famous sock puppet mascot. After its total collapse, one of the venture capitalists - was quoted as saying "we really didn't understand how heavy dog food was and how expensive it would be to ship to each customer's home."
URBAN COOL NETWORK however was the zenith in craziness reached in 1999. It went into the pre-IPO phase using its urbancool.com. site, and was supposed to be the ultimate business directed at "hip urban city dwellers" including among other things a financial subsidiary to be called "Mo Money" which allegedly would offer "HIP" advice to this special (underserved market) via among other things kiosks in urban malls and locales such as Harlem sidewalks
If the IPO had been successful it would have been given an initially market cap (or net worth) of 75 million minium based upon just the offering price.
In fact the business was worth 0, and the entire plan was idiotic, and it collapsed in the larger dotcom IPO crash by late 1999 w/o even hitting the IPO market
CRAZINESS accepted as normal in 1999, just like many things happening in 2005 in real estate today
("we really didn't understand how heavy dog food was and how expensive it would be to ship to each customer's home.")
The VC probably figured that, if only the Internet pipe was wide enough, they could send the dog food direct to your home computer. That's just about how savvy the thinking was in the late '90s.
I sat in on quite a few dotcom "pitch" meetings down on Sand Hill Road. It was everything you could do to keep from laughing out loud. I didn't know if everyone was lying or whether some of them were dumb enough to believe the business plans.
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