Run-Up In Prices Will ‘Haunt’ Condo Market
The Wall Street Journal reports on efforts to sell the glut of condos. “At a party in Fort Lauderdale last month, guests in clingy cocktail dresses grooved on stage with singer Wyclef Jean. A week later, in Las Vegas, party-goers attended a reception hosted by actress Pamela Anderson. Last Tuesday night, a half dozen invited guests attended an exclusive Manhattan screening with the movie’s star, actress Meryl Streep.”
“The latest dispatches from the Hollywood glamour circuit? No, it’s real-estate developers wooing real-estate brokers and potential buyers of high-end condominiums. The growing glut of expensive condos is pushing high-performing real-estate brokers and deep-pocketed potential buyers by supplying them with coveted party invitations.”
“Developers hope to reduce the backlog of high-priced luxury condominiums before rival developers can flood the slowing sales market with even more new properties.”
“Last year the Icon Las Vegas condo development hosted a party on the planned condominium site that featured white tigers, fire-eaters and chocolate fountains. It wasn’t enough. That project died. Brokers who have been through the vicissitudes of the real-estate cycle say they’ve never been catered to quite like this before, but they are already getting a bit jaded.”
“In Fort Lauderdale, Las Vegas and Manhattan, an estimated 167,600 luxury units are due to hit the market in coming months. In all three markets, party budgets are going wild. Some event planners working for South Florida developers say their clients have tripled their spending as condo sales have begun to slow in recent months.”
“Developers say the parties are a bargain considering the prices of the condos, and they generate far better returns than dropping the prices of units does.”
The Miami Herald. “When many of Florida’s leading developers want to know what to build, ‘they ask Goodkin.’ As real estate prices jumped to new heights and South Florida development boomed, Lew Goodkin has become a cautionary voice, asserting that the market, and particularly the condominium market, is dangerously overheated because of speculators and investors. He’s warned that prices are inflated because too many purported buyers are actually flippers.”
“The veteran analyst is so convinced that he’s now advising clients who are pooling money to form so-called vulture funds. The aim: Buy land and condo units at depressed values to taking advantage of a tanking condo market.”
“Q: You have seen up and down cycles in the South Florida real estate market during your career, what happened in this latest boom cycle?”
“A: What happened is that real estate became an investment vehicle as opposed to shelter. There was speculation in some projects where more than 60, 70, 80 percent of the ‘buyers’ were speculators. Many of my clients were shocked by all the speculation.”
“Q: What will be the result of all this speculation you say has occurred in the condo market?”
“A: For the most part, multifamily is in the process of taking a big hit. It will be more than 10 percent in terms of price declines. The reason is that so much of the condo market sales were not based on real users. And if it’s not affordable to user demand, the demand will be so off that it will have to be reflected in significantly lower prices.”
“You can’t have something like this when there is not true demand, a run-up in prices like this will come back to haunt you.”
“Q: What about those who say the South Florida’s real estate market is different from other parts of the country? The fact South Florida draws buyers from Latin America or Europe.”
“A: I believe we have all of those things. But the punch-line is that is not what created this boom. What, did everyone just discover Florida in the last 15 minutes? South Americans buying in South Florida is something new? Florida has always had this appeal. There will be many people ready taking advantage of lower values when it surfaces, and it will.”
‘In Fort Lauderdale, Las Vegas and Manhattan, an estimated 167,600 luxury units are due to hit the market in coming months.’
Just when the market can least absorb them.
Luxury units, yes! Oh the thought of living in a luxury unit as described by a builder or landlord. The question is: What defines a luxury unit these days (besides the granite counter tops - oh, that was SO yesterday!) ?
Anyone?
I’m renting a luxury unit. About 3,000 sq. ft. with a beautiful view, is spacious and airy, relatively high ceilings, a magnificent kitchen, a huge master bath with a shower alone the size of some walk-in closets and ample parking.
Yeah, and I bet you hear it through your paper-thin walls when the neighbors take a leak, argue, clatter across the floor overhead, or do some head-board banging. No thanks…..
Sammy — no — in a rare concession to governmental anything, I notice that Florida’s most recent building codes seeem much improved over past ones. Here, at least, condos either generally have or must have thick concrete walls between units. In the one I owned once, I never heard the loud television movies my friend and neighbor played; in the condo I now rent, I have never heard any noise of any kind from the lateral neighbors. Noise from overhead is limited to concussion — the sound, for example, of high heels or of rug rats running in hard-sole shoes; this type of noise is irritating. The new buildings are insulated from exterior sound and weather to a degree I’ve not seen before in buildings with windows. I would feel very safe in the one I rent (with shutters drawn) in any force hurricane.
But condos are not for everyone and no condo dweller would claim they are. To each his own.
I agree with new construction condo quality being superior - mostly. There are new condos with floor to ceiling and wall to wall glass windows that are better insulated than condos with just small windows. But these high quality construction condos tend to be in the city (like in DC proper). Condos being built in the suburbs on the other hand are a complete joke.
In NYC it seems as though every new building is “luxury condos”. So the definition of “luxury” seems to be “in construction, just finished, or completed within the last five years or so”. And in-unit laundry - which truly is a luxury in NYC.
Luxury unit? Well it depends on the area. In Los Angeles in the south Bay, very few apartments had a washer and dryer inside the unit. So my definition of a luxury unit is an apartment with a washer and dryer in the unit. My current apartment I share with a relative is 1,000 square feet in Ahwatukee (suburb of Phoenix) and has 2 bathrooms, a full size W/D, a fireplace, a dishwasher, microwave oven, and garbage disposal. I couldn’t care less about granite countertops, but I’m a guy.
what is so luxury about them most are400 to 600 sq ft.
My friend down there in SoFla fully subscribes to this “Latin America/European will alwyas overpay so I don’t need to sell now” nonsense. It has gotten to the point I don’t even want to talk to him. He knows my views on this subject and yet continually brings it up trying to “convince” me I’m wrong, yet he won’t take the ultimate test of putting the POS on the market for what he thinks it’s “worth” and seeing if he’s right or not.
It’s driven a real fissure between us and we have been the best of friends for years.
Moneyed Immigrants
Rich Ancestors
Generous Expatriates
are of the same ilk as the Easter Bunny, Santa Claus, and The Great Pumpkin.
Just let it go and talk about something else. When the market tanks and he whines just say, “I told you so.”
I told you so…& I son’t want to talk about it! When I did want to talk about it (when there was till time) you told me I was a fool!
add just a little to your monthly bills
http://hosted.ap.org/dynamic/stories/F/FL_HURRICANES_INSURANCE_FLOL-?SITE=FLMYR&SECTION=HOME&TEMPLATE=DEFAULT
add just a little to your monthly bills
http://hosted.ap.org/dynamic/stories/F/FL_HURRICANES_INSURANCE_FLOL-?SITE=FLMYR&SECTION=HOME&TEMPLATE=DEFAULT
“They are making it so that only the very wealthy can afford to live here.”
She’s talking about her rental property. She means “the real cost of insurance of hurricane alley is affecting my investment cashflow, taxpayers should subsidize it so I can keep turning a nice profit”.
Here’s the real dynamics.
Hurricane insurance goes up, the carry goes negative.
She sells the place to someone who will actually lives there.
The sales price reflects the increased cost of insurance to the buyer
This is standard investment risk.
Imagine that I bought the stock of a big insurer in Florida in 2003 and hurricanes hit in 2004. My stock went down. Then someone wrote an article about me where I expected the gov’t to subsidize my investment loss. I would be lynched and thrown out of the state. But this is a *RE* investment so it’s ok.
Shawn - well put.
I’ll 2nd that !
It’s driven a real fissure between us and we have been the best of friends for years.
Just say “Time will tell.” Or even what’s wrong with nodding and saying “Sounds like that would be really good for you.”
I learned to shutup at least a year ago. People will do what they want and are determined to go to self-destruction.
My old friends from the place I sold last year in L.A. County won’t even talk about a possible correction . My friends tried to talk me out of selling last year also . They might of been happy with prices increasing , but I wasn’t . I keep thinking about one of my friend’s son who said sadly ,”I will never be able to buy a house “.
How can you be best of friends with such an imbecile? Time to trade up, I’d say.
Yep , …..Don’t have that much contact anymore with the old friends . I’m getting new friends in the new area I moved to .
The housing bubble is interesting and all, but jeez, I don’t take it so personally that I’d break up a friendship over it!
You mean a condo is in fact a place to live and not merely a 1500sq/ft stock certificate?
Hmmm… might have to start recalibrating the old reality matrix.
gin ,hookers and a camera sound like proven methods of firming up that sale…..ah to have a code of ethics like a realtor!
don’t forget the coke!
http://www.jossip.com/gossip/celebs/pat_obrien/alcohobrien_coked_up_voicemails_revealed_20050324.php
That is the funniest damn recording ever.
Anytime my wife watches that stupid gossip show he hosts I get a HUGE laugh.
This has been a point of mine on prior posts . For the last 2 years at least , speculators have driven the prices up without any regard for end user demand .The vulture capital will try to come in and make a killing also. It’s wasn’t just the easy money and low interest rates ,it became specultion raising the prices . End users are now priced out of the market and there are to many units /excess supply on top of all that . Its a false market in a number of American real estate markets .
This is not a glut. Repeat until understood.
Nowhere near as many people want condos as live in condos nevermind own condos. Condos were a symptom of a traditional housing form imbalance. This is all just urbanist hype from people pining for a past that never existed. The cities are not going to be “nice” places to live in the downturn. Think about one of the urbanist claims that it’s okay to go back to the cities because crime is down and the bums have moved on. Gee, any predictions as to crime and homelessness coming?
Has anyone actually been inside one of the condos? Can someone explain the difference at all from a regular apartment (minus the HOA of course)? Having only seen them from the outside, I can’t see what makes them special as compared to a rental unit.
Is there really a huge ground swell of desire to live in an apartment for any length of time??
Most of the condos on Brickell and SoBe (that are below 800K) are just like rental apartments. Only difference is that you pay more for owning the condo rather than renting one.
On the other hand, there are some 800K+ condos that are awesome. They have a great view, high ceilings, good quality materials, etc and are definatly VERY nice.
In Vegas high rise condo’s became all the vogue…Real estate experts told US, “Las Vegas had arrived”…..So they planned and built to an “unproven” product. Even though rooms are cheap and comps are SOP….
Yes the condo buyer would pay $14,000 or more a year to have a spot in the desert for 2 weeks while he could have rented a suite at the LUXOR for $1800 for 10 days. But then, when they go back EAST to their miserable lives they couldn’t tell all their wine tasting friends “we have a condo in Vegas..What happens in Vegas stays in Vegas…Nice buy..morons.
One the owners cannot flip their condos, apartments and condos will be identical because they’ll rent them for a year “until demand comes back”.
Skip — there is a difference, actually. What I know about apartments I learned from my kids and seeing them as I drive by. First, and important to condo owners, is garage parking. All good condos give you one garage parking space. Better ones give you two garage spaces; I suspect it is very difficult, if at all possible, to find an apartment that two garage spaces. A really high-end condo will have elevators that open into your own private outer foyer, based on the code you enter. The kitchens and bathrooms are sumptuous and the views are excellent, usually for every unit. I learned something useful about condo buying a long time ago — if you decide to buy a condo to live in, granted that few readers here seem to be so inclined, look for one where there are no units significantly lower in size or price than the one you want. It will be much easier to maintain the quality of the complex that way, and generally you’ll have fewer short-term renters. Personally, I would be leery of buying a condo that has a minimum lease period of less than a year. Mind you, I am renting mine (long-term) — these are just the criteria I’d use if I were buying.
????
condos and any other type of housing with any other imaginable amentities are available as “rentals” too.
True. Didn’t mean to imply otherwise. There are very nice condos available with rental periods as short as 3 months and I think condos are a great solution for people who are waiting for the low end of the market to buy in; personally, I wouldn’t want one if I had kids at home. In South Florida, there probably will be limitless options in rental condos at great rates as desperate flippers try to hang on. Each condo has a minimal rental period, from one week to one year, but the ones with a one-year minimum are relatively few, in my experience. I don’t know enough about rental SFRs to offer anything useful.
In Phoenix many apartments have been converted to “condominiums” but only have covered parking. Where I used to live in South Scottsdale, my apartment complex was converted. They did install laughingly tiny stackable Washer dryer in the hall closets. I know they are smaller than the full sized ones I currently have in my Ahwatukee 2 bedroom apt. The south Scotts place also added some decorative touches to the place. Put a price tag of the 1 bedrooms at $170,000. Hate to think how much the 2 bd/2ba ones are selling for. I would never buy such a place. In my opinion, it’s not a condo if there is not an attached 2 car garage.
Here in Warsaw, Poland (and Europe in general) there IS a great desire to have apartment style condos “downtown”. But that is because people actually LIVE and WORK there. The idea of “suburbs” is a non-factor here. Therein lies the difference between European big-city downtowns and similar American downtowns.
In Warsaw the general population actually lives downtown. Small shops (groc, bakery, etc.) are everywhere so you don’t have to walk far to get your daily groceries. Kids go to school downtown. Parents work downtown. Each neighborhood is actually a minature self-reliant city with stores, restaurants, offices, schools, etc.. You don’t have to drive anywhere…you just walk (remember those two things hanging below your belt that you never use very much?). There is viable and convenient mass-transit (subways, trams, bus, etc.) to cover the big distances. And the downtowns are much safer. My wife and I walk at night and both little kids and old people are walking around….when was the last time you saw that in big-city downtown USA?
Urban condos in America will remain a developer pipe dream until downtown USA is safe, easy to get around in, and the far-flung mega-stores retro back to the mom and pop corner store. The last 50 years the USA has moved away from having vibrant downtowns. I don’t see this as an easily fixable problem.
Throwing up a few “luxury” condos is just putting a happy face on a corpse.
correction …It wasn’t just the easy money and low interest rates, it became speculation that raised the prices.
Went for a walk this am. More places going up for sale. One was of interest to me only because it had been up for sale several months back, and then had a reduced sale sign, soon to be followed by a pending sale sign and a couple weeks later a moving van pulled up moving out the owner belongings. The for sale sign disappeared and I figured the property was turned over to some ‘greater fool’. Fast forward about a month to today; house looks vacant, tall weeds growing in the yard and grass turning yellow. We’re talking about a house asking price somewhere in the $800K -$900K range. Another house in the same area has been up for sale several months and stands vacant but now also sports a for rent sign with an outrageous rent. Every week not rented or sold is someone’s negative cash flow….gotta love it….
How much rent does this speculator think they can get on a 900k house?
In my parts, it’s about 2100 bucks.
Actually, that doesn’t sound outrageous at all to me — looks like half to a third of the carrying cost, depending on taxes and insurance.
Whoops — thought East Beach’s rental price was for Wiz’s house.
Thanks ….Were going to get more of a glut of listings next year because many flippers just waned to wait a year to get long term verses short term capital gains rates. I think some of these rentals are short term rentals .
In other words , I don’t think the inventory is going to stop coming and be absorbed .
another thing to remember.
The market has a terrific run for 3 years …Many of these land /property owners have huge profits to work off. It has been less than 1 year.
Patience Grasshoppers!
$900K at 6.62% for 30 years is $5,760 per month. Then add in Taxes, Maintenance, Insurance, Repairs, etc.
So its going to be more than a 50% neg. cash flow as a rental…. Crazy ……
put in your own numbers -
Cash Flow (Rental)
Cost Monthly Annual
Mortgage $5,760 $69,120
Taxes $600 $7,200
HOA Fees $600 $7,200
Insurance $600 $7,200
Repairs/Maintenance $300 $3,600
Utilities $300 $3,600
Other $300 $3,600
TVM Loss on Down Payment $- $-
Total $8,460 $101,520
Rental Income $2,100 $25,200
Cash Flow $(6,360) $(76,320)
http://www.files.bz/files/11251/RealEstateValuationMethods.xls
The rental income $25,200 will be spent on repair/dress-up when renters move out. If it is sold a year from now at 700K, total loss
will be 300K. How long does it take to pay 300K ? 1K per month
for the next 30 years.
Well, 25 years at $1/month if not financed. 30 years at $1.5K/month if financed!
Best quote of the week:
“What, did everyone just discover Florida in the last 15 minutes?”
Gekko….yes…that is the best quote I have seen so far.
Really smart people I know keep on yapping about how S. FL is different, 1K people moving her per day, etc will keep up the market. Some of my co-workers who were burned in the stock market have put all their savings (that were not lost in the stock maket) in the housing market. They can affaord to make the payments, but they were counting on the properties to appreciate and then sell at some poing in the future to get money out for retirement.
I know some people who left thier IT jobs to become realtors/mortgate_brokers and they are all coming back to IT. I have been getting emails from these folks looking for jobs. Some of the guys made good money in housing, but as their income went up, so did thier life-style and in the end, all they have left are good memories of having spent large amounts of money on vacations, etc.
There is a brand new building coming up near my house (Lofts at Mayfair in Coconut Grove) and that location is great. BUT, they still have unsold units. Many that are “sold” are not really sold as the buyer have just put a deposit and have not actually purchased the condos. Within 1 mile of that condo building, there are 7 other buildings coming up. The_Grovenor condo building is now completed and the condos there were all supposed to be $1M+, but I seeing ads for 2 BR condos (1400 sq feet - ocean view) for $750K. Please note hat 750K is the asking price…not the selling price. There are some people asking $5800/month rent for a 2 br condo in that same building…what are they smoking….5800/month rent….for a 2 br condo…i guess it never hurts to ask….someone might actually pay up. lol
Here in Miami Beach the negative carry on a 2/2 condo is about 50% judging from other renters. (the *few* people that actually live in my building are renters). My place is direct ocean view, new 2br/2 bath/2 balcony 1250sf condo renting for $2900. Purchased in July for the bargain basement price of $695k, the landlords negative carry is $3300/mo.
That’s a lot of cash to bleed. Maybe they are praying for a hurricane to end their suffering?
Remember, back in 03,04 and half of 05, the mentality was that housing goes up 20-30-40% in a year. So buying an overpriced condo was ok considering that you will be making 50-100K profit in a year. Now that the market has gone south, these people with the large mortgage payments look like fools for being in their current situation.
Thanks for the info. WCI is my favorite HB short for this reason. This has to end badly for Florida condo developers.
My brother-in-law was in IT (ironically, at CTX), quit his job out of the blue to become a real estate agent, sold almost nothing his first year, and is back in IT.
I have said this before…I might cave in and purchase a condo if ole Pamela will be strutting
by on the way to the pool…I dont think Meryl Streep is going to get it though.
Pam has dirty blood AND she’s starting to look like a tranny. She’s gross.
http://www.thebody.com/asp/june02/lazarus.html
she is also heppetitis posite
positive oops
hence “dirty blood”.
(With an old country voice) You boys is queer.
i hate people.
Wilmer Valderrama Hosts Condo Party
http://therealestate.observer.com/2006/05/wilmer-valderrama-hosts-condo-party.html
who are these people? I have never heard of them. Who cares about them? Why should I?
The “foreign guy” from That 70’s Show.
Wilmer Valderrama died in obscurity recently. No wait, that was his career.
I wonder whether these celebrities are just hired temporarily for the condo party, or whether you get to keep them permanently when you buy the condo.
Nice article in the Tampa Tribune about people moving out of Florida because it is becoming too expensive to live.
http://www.tbo.com/news/metro/MGB40TZTQNE.html
It’s true. That is what will happen to me if prices don’t correct to 1999 levels. Hopefully they will. Other posts have addressed the fact that expected mass immigration of boomers was based not just on warm weather, but also on low cost of living. Property taxes have already screwed that. I suspect that in the end, there will be a coastal zone defined, as “x” miles from the ocean, in which insurance rates are very high and that would ease the pain a bit for the mainlanders, but in any event, it is no longer a cheap place to live. Started turning back when the Mouse barged in.
We may end up seeing large numbers of boomers renting.
Boomers renting is a definite possibility. Particularly for any who were unwise enough to spend the built-up equity in the homes they occupied prior to moving. Renting by boomers is not a terrible solution to all this, IMO. It would sop up a lot of unwanted condos, for starters. And all the unwise would be screwed more or less fairly — boomers who thought they could sell un North, for a fortune, and flippers who bought the condos and screwed the price structure.
I couldn’t help but notice that the last woman complaining specifically was driving a SUV. While I agree that Florida is getting real expensive, there are many other corners that could be cut if necessary. It is sad though that the one person can’t go out to eat in order to pay for a house.
even Barron says:
Barron’s cover story is about the second home glut: The Big Glut
A couple of quotes:
“If you want to sell, you’ve got to go back to ‘04 prices,” says Chip Harris of Coldwell Banker Previews International…..
03 then 02 prices soon to follow?
There are 3 key things to remember when buying realestate: Inventory, Inventory. Inventory
What about the “Bubble? I think not.” article the other day claiming prices were up 70% over 04′. I guess it’s actually up 0% over ‘04.
From a contractors point of view, Gary J. Tulacz wrote about the top 400 contractors in the 5/22 edition of Engineering News Record. In that article, Peter Daveron, CEO of Turner Construction Co., was interviewed about the condo market. “For Turner Construction Co., the overall market is volatile and exciting”, says Daveron. “You have people coming out of nowhere to build condos to make a buck, but who are untested. Turner is spending more time on due diligence of owners than ever before. That’s why we’ve stayed away from the residential market except for our regular customers”.
“In some areas, the bloom may be off the rose in the multi-unit residential market, as supply exceeds demand. In Las Vegas, we’ve seen residential projects get canceled because the area is becoming overbuilt”, says Mike Bolen, CEO of McCarthy Building Cos.
Bart Eberwein, vice president of marketing for Hoffman Construction was cautious. Many firms are particularly wary of the condo market on the West Coast, where it is very strong. “Out here, ‘mixed-use’ is code for condos with a coffee shop”, says Eberwein. The firm is careful about such work. “We turn down more of these projects than we take. Contractors will take risks no one else would, but we want to know what those risks are”, he says. The performance of a building over a long period of time for a large number of owners is tough to judge, and the litigation risk is too much for many contractors, say industry sources.
For some firms, growth has been explosive. The biggest jump on the Top 400 was by Alvin H Butz, Inc., which nearly tripled in size. Butz managed to book $129 million in work in schools, condo conversions and retail in less than a year in Florida.
For many contractors, the multi-unit residential market is a Siren, singing a sweet song but fraught with peril. “You have to be careful with mixed-use projects” because of liability issues, says Bolen. He notes that in a few states, the risk of litigation makes any condominium-related project perilous. “Our risk counsel makes a pretty rigorous review before we would even touch a condo project”, adds Mindy Frink, communications director of the Beck Group.
Turner and Hoffman are not dummies and they are trying to resist the siren song.
But as the contracting environment tightens they may lower their standards just like the lenders.
Definitely between a rock and a hard place.
Right on the money about “spending more time on due diligence of owners than ever before”. 2 years ago I started telling fellow contractors to get alot of money up front and stay ahead of their customers.
My golden rule that has kept me from getting burnt? If the first thing a customers says is “the money is no problem” it’s going to be a problem.
Does anyone have any inside contacts at Lumber yards and local construction supply houses.
One of the best stories the Ben blogged was an interview with one such owner. He said he was burned badly by extending credit to johnny come lately builders during the last bust.
Now that those same characters are back and buying supplies wtihout asking how much things cost, his policy is cash only.
“If you want to sell, you have to go back to ‘04 prices.”
http://online.barrons.com/public/article/SB114868496819064730-bj6PCEh91cHB9ztnP2LoC2XKx8g_20060626.html?mod=mktw
‘At Positano Place in Naples, this year is much different than last year. Out of 300 condos, 12 are still empty and 60 are now searching for new owners. The company is even offering buyers $15,000.’
O’ver at Laguna Lakes, they turned condo at the beginning of the year. They still have just under 200 units available out of the 450 they own.’
‘For the past few years, investors have been flocking to Collier County and buying what they can. But now the market is softening and experts say those same investors are leaving the Sunshine State for the Lonestar State.’
Many of the Southwest Florida properties are now in a must sell mode, which means they’re probably going to offer great prices on units.
‘This past April, condo sales in Naples dropped 56 percent versus April of 2005.’
‘I think it’s a great time to buy because inventory is high, but if you’re a seller and you don’t have to sell you shouldn’t be in the market right now.’ said Joe Ballarino, owner of AmeriVest Real Estate.’
“‘I think it’s a great time to buy because inventory is high, but if you’re a seller and you don’t have to sell you shouldn’t be in the market right now.’ said Joe Ballarino, owner of AmeriVest Real Estate.”
Sure — let the other guys get out now. Then you can sell yours for an even bigger loss, later.
Actually, it’s “let me get out first”, with “me” being Joe Ballarino himself.
‘I think it’s a great time to buy because inventory is high, but if you’re a seller and you don’t have to sell you shouldn’t be in the market right now.’ said Joe Ballarino, owner of AmeriVest Real Estate.’
Perhaps he’s thinking:
Please, please don’t sell now. Our commissions are dropping as it is! And the market is already flooded with overpriced properties to unload! Please, please don’t sell!
It shouldn’t, but it amazes me that people are foolish enough to spend piles of money on condos. I remember back in the 90’s (after the condo bubble of the 80’s) when “condo” was a dirty word — units that were more than five years old were already deteriorating and condo owners had lots of trouble with leaks and other manifestations of shoddy construction. The only difference was that back then condos were still relatively cheap compared to single family homes; hence their popularity. Today condos are anything but cheap - in some areas they’re actually more expensive.
When I drive through Loudoun County and see all of the slapped-together condos with the thin vinyl siding already starting to warp, I just shake my head in disgust — and they’re everywhere! A few years from now, the idea of paying upwards of $500K for a suburban condo will seem as ludicrous as paying hundreds of dollars per share for stock in an online pet food retailer.
couldnt agree more, I live in Fairfax. An interesting statistic the DC area inventory crossed 53K. With 50K more condos in the pipe line over the next two years this place is gonna experience a glut of housing units like no other time in history.
“Developers say the parties are a bargain considering the prices of the condos, and they generate far better returns than dropping the prices of units does.”
Yeah, heaven forbid you should drop the prices of this glorified apartments. Just think about the hangover you get when you get hammered at the party, and buy one of these worthless places for a cool million. That’s a hangover that just won’t end.
Ben, thanks for the other story. I sure am glad all these seasoned “investers” are leaving the Sunshine State to lose what’s left of their imaginery fortunes in the Lonestar State. These articles are just friggin’ hilarious.
here’s an update on orange county’s only completed high rise condo project, the marquis park place in irvine, which closed out over the last few months. there are approx. 230 units in the 2 buildings. 80 of these are listed for sale in the MLS. 35 are available for rent in the MLS.
there’s a unit for rent on the 13th floor (18 story tower). was available for rent at $4,200 per month. now available, after more than 3 months on the market, at $2,400 per month. owner probably paid more than $800,000 just a few months ago.
out of the $2,400 per month rent (if it rents at that amount), owner has to pay $1,100 monthly association fee, property taxes of at least around $700 per month, interest on the loan, etc.
if you’re looking for a positive cash flow, this one may not pencil out.
Sounds like it’s even a stretch at $4,200 if interest rates keep going up.
I just read this to my wife and she had a really good observation:
“Nobody wants to live on the 13th floor.”
Just another nail in their coffin.
I thought there were no 13th floors in high rises due to superstition. Enter any elevator in a building with more than 12 floors, and the 13th floor button doesn’t exist.
Many people don’t.
I do. I am not Tridecaphobic. Give me 13 anyday.
David
http://bubblemeter.blogspot.com
I’ll take a place on the 13th floor for a SIGNIFICANT discount.
$1100 a month condo dues? Holy freakin’ shiyat! My mortgage plus tax impounds are only $835 a month and I have NO home owner’s dues. (Older 1960s subdivision. Hate those money sucking HOA’s! I’ll probably never buy anything that was built after 1990.)
So, as the pool of GFs shrinks, they mine yet for more GFs by getting people drunk. Amazing. What happens when only underage people are left who didn’t buy? What gimmick will they use? Benadryl, cough syrup?
Good-looking blonde teachers.
(With apologies to any real teachers on the blog — the dark humor was too tempting.)
For the most part, multifamily is in the process of taking a big hit. It will be more than 10 percent in terms of price declines.”
Wow,, thanks Captain Obvious. We’re already there.
Yawn… call me when thery are down another 20%.