Condo Crunch in S. Florida Good News for Bargain Hunters

RISMEDIA, May 20, 2008- (MCT)-The glut of condominiums for sale in South Florida is attracting a legion of bargain hunters.

Out-of-state and international buyers are descending on the area in search of deep discounts as prices continue to crater. They want to get in now and wait out the housing slump because they think the region remains a powerful long-term draw.

With the lingering real estate downturn, now in its third year, some condos are selling at 25 to 60 percent less than during the boom times, when investors hoping to “flip” units bid up prices.

At the end of April, almost 41,000 condos were listed for sale in Palm Beach and Broward counties, according to data from Coldwell Banker Residential Real Estate.

Based on the current monthly sales pace, it would take roughly five years to sell all those condos if no new units came onto the market. Experts point to a huge number of still-unfinished condos that will keep a lid on prices for at least a year.

Flush with cash, buyers from Italy, Germany, England, Spain and other countries are scooping up condos here for at least 30 percent less than the cost of properties in their homelands.

Susan Gomez of Colombia visited South Florida last week and had real estate agent Chuck Frank show her condos in Fort Lauderdale and Miami. The owner of a language translation business said she hopes to buy in a month or so.

“The gossip in South America is that properties in the U.S. are selling for low prices and the market is good here,” said Gomez, 50. “They’re saying that people who want to buy should buy now.”

Amit Bagaria, a real estate executive from Bangalore, India, spent two days this month scouting for deals on behalf of wealthy Asian families. He’s eyeing new buildings in Fort Lauderdale and Miami with condos priced from $400,000 to $1.5 million.

“We hear that if you’re interested in four or five units, builders are willing to negotiate,” Bagaria said. “Good deals are not difficult to find in the market right now.”

The rock-bottom prices also are luring buyers from within the United States, particularly the Northeast.

Austin Regolino, a semi-retired real estate executive from the Boston area, took advantage of plummeting prices when he bought recently at the Sea Ranch Club in Boca Raton.

The two-bedroom condo, once priced at $875,000, was down to $749,900 by the time Regolino and real estate agent Dolly Trotto looked at it. Regolino finally paid $660,000, thrilled to have a second home in an area so close to where many of his longtime friends live.

“I looked at 19 different units in a one-week period,” he said. “I couldn’t be happier. This is as close to paradise as you can get.”

Despite the resurgence of buyer interest in condos, it’s not likely to stabilize the stagnant market in the next year because of the large number still under construction, housing analysts say. At the end of the first quarter, there were more than 30,000 unfinished condos in South Florida, 80 percent of them in Miami-Dade County, according to research firm Metrostudy in West Palm Beach.

“There’s so much inventory reaching completion that it’s going to put downward pressure on prices the rest of this year and into next,” said Brad Hunter, South Florida director of Metrostudy.

During the housing boom of 2000 to 2005, speculators bought condos at pre-construction prices and watched the units rise in value before having to close on the deals.

They then flipped them to other buyers, which artificially inflated demand and sent prices soaring. But not enough long-term owners bought condos, leaving investors on the hook with empty units.

Some of the investors have tried to use loopholes in the sales contracts to get out of closing on the deals, while others are falling into foreclosure. And owners living in the condos are tiring of expensive maintenance costs and special assessments.

“I used to show buyers six condos; now I show them 20,” said Elaine Russell, a broker associate with Lang Realty in Boca Raton. “They want the very best deal. If sellers are not motivated, I tell them, ‘Don’t even bother to list it.'”

At The Prado in West Palm Beach, a unit once priced at $484,000 is now on the market for $349,000. Two years ago, a two-bedroom condo at One City Plaza in West Palm Beach would have fetched $400,000 or more. Today, prices are in the $280,000 range.

“That’s just the list price,” said Kendra Radicchi, a West Palm Beach agent with Condo Vultures, a Bal Harbour-based real estate consultant. “What they sell for is typically much lower.”

In Fort Lauderdale, condos at Las Olas Beach Club that were selling for more than $1 million now are going for $750,000 to $800,000.

A townhouse on Northeast Second Avenue that was on the market in 2006 for $599,000 is listed for $214,500, a 64 percent discount. And a condo on North Ocean Boulevard that two years ago was listed at $899,000 is available for $479,900, a 47 percent cut.

“Some sellers are desperate to get out,” Fort Lauderdale real estate agent Jim DeMaria said. “1/8Buyers3/8 are saying, ‘This is my chance, my opportunity.'”

The March median price of existing condos in Palm Beach County was $148,600, off 30 percent from $211,800 last year, according to the Florida Association of Realtors’ latest figures. Broward’s March median also plummeted 30 percent, to $137,000 from $195,500 a year ago.

Condo sales fell compared with last March, but not by much. Sales dipped 8 percent in Broward and 9 percent in Palm Beach County, well below the statewide decline of 23 percent.

Those figures suggest that activity in South Florida is picking up as prices keep dropping, and it could get even busier, analysts say.

“We really haven’t seen the wheeling and dealing that we will see as we go further along in the year,” said Lewis Goodkin, a Miami-based housing consultant. “I can’t see how we’re not going to have further price deterioration.”

Condo prices overall are expected to keep declining because of the oversupply and the unfinished projects, although certain luxury condos are holding their values, real estate agents say.

Units in urban settings with no water views are seeing the biggest price declines, Goodkin said.

Some offers are “almost embarrassingly low,” said Pompano Beach agent Randy Bates, president of the Realtor Association of Greater Fort Lauderdale. Insulted, owners reject the bids, only to field subsequent offers just as low, Bates said.

One of his clients listed a three-bedroom Lauderdale-by-the-Sea condo for $1.4 million. The owner turned down several offers for two years before finally selling it for $1.05 million. Another of Bates’ clients listed a Lauderdale-by-the-Sea condo for $799,000 two years ago, only to sell it recently for $550,000.

“A lot of these units selling at bargain prices have been on the market for a year or two, and their owners are just now realizing that the market is not going to turn around,” Bates said. “They figure they’re better off taking the deal on the table, even though it’s not the best deal.”