Miami has a new vice: bottom-fishing for condo bargains.
Home buyers from around the United States and abroad are descending on Florida to buy condominiums that have suffered sharp price drops amid the housing glut, subprime mortgage crisis and credit crunch. Some are searching for investment properties, confident home prices will rebound. Others are hunting for vacation or retirement homes. Yet pitfalls abound and experts warn prices could dip even further.
In hard-hit Miami-Dade County, condos originally costing as much as $1.4-million now sell in some cases for $840,000, a 40 percent drop. Farther north, a coming auction at Solaire at the Plaza, a new condo tower in downtown Orlando, has set a minimum selling price of $170,000 on 24 one-bedroom units once priced as high as $296,000.
Florida is a microcosm of what's happening across the country. As the price of condos — which tend to be popular among investors, retirees and second-home owners — take a dive in once-hot markets, buyers are emerging to grab properties on the cheap. They're finding plenty to choose from.
Because of Florida's popularity among real estate investors, vacation- and retirement-home buyers, and young families migrating from other states, many areas were flooded with new projects in recent years. Now, Florida condo sales are sharply down, off an average of 27 percent in 2007 from the year before, says Sean Snaith, an economist at Orlando's University of Central Florida.
Of course, buyers shouldn't be seduced by big price drops alone. While buying in perennially popular areas can make sense, chasing deals in other areas may not be so wise. During the heyday, builders ventured well outside of Miami's core into what are effectively frontier markets. Midtown Miami, for instance, a development located north of downtown in an industrial neighborhood with little scenic appeal, is lightly occupied.
Such properties "will take a decade or longer to come back," says Peter Zalewski, who runs Condo Vultures, a real estate investment consulting firm in Bal Harbour.