Florida condo meltdown - who's going to live in all these $%&* condos?

[Liberal_in_LA]

(**Comment: they shouldn't have wasted 100K on a wedding***)
***************************************************

http://www.orlandosentinel.com/business/orl-condobust2707aug27,0,2001796.story

Boom of condo crash loudest in Miami
The pain is acute here but unbearable in S. Florida

MIAMI - The champagne-popping days are over for Natalie and David Luongo, who banked enough money flipping a South Florida condo three years ago to stage a $100,000 wedding.

Now the couple are spending restless nights wrestling with the question that looms like a guillotine: Should they walk away from the $117,000 deposit they plunked down on another investment condo in the ritzy Miami-Dade enclave of Bal Harbour?

Or should they close on the one-bedroom unit, which is similar to others now on the market for less than the $585,000 they agreed to pay?

"It's painful and scary," Natalie Luongo, 31, said. "We saw the frenzy, and we bought in. Now we're paying the consequences."

**** More from further down in the article***

No one knows how many units speculators bought. But as early as 2004, McCabe and Lew Goodkin of Miami-based Goodkin Consulting warned that up to 70 percent of the condos rising in Miami were being snapped up by people who didn't plan to hold on to them, much less live in them.

That was evident from the hordes who camped overnight, fought over lottery numbers, even paid homeless men $20 and a pack of cigarettes to hold their places in long lines, all for the chance to put 20 percent deposits on condos that existed only in brochures. The frenzy for some projects was so fevered that some developers raised their prices hourly.

"It was a nightmare. Lines around the corner. People screaming into phones. I would look at them, and think, 'You don't know what you're doing,' " said Mark Zilbert, president of Zilbert Realty Group.

[silverojo]

1. It's people like these who screw up the housing market n/t

[KittyWampus]

24. I don't understand the mindset. Is it similar to people who start bidding wars like madmen on Ebay

in the last few seconds of an auction?

I benefitted from that sort of behavior.

[dbackjon]

25. Yup - and make housing unaffordable for the rest of us.

[rocktivity]

2. Duh--NEVER buy a one-bedroom ANYTHING!

I've rented all my life, and even I know that!

:crazy:
rocknation

[Colorado Progressive]

3. oooohhh!!!! this makes me so irritated!

Dont ya wonder why they build and build and build? In CO we have so many ridiculous new developments, and nothing is selling at all. So many foreclosures, such a glut of houses on the market. Yet still they build, and build. And yet the greedy developers plop up more cardboard pieces of shit, with yards so small if your dog takes a shit BING! the yard is full! And all these pieces of crap new houses make the existing houses worth less because there is more competition. I wish this state would develop some sort of controlled growth plan. Obviously Miami could use the same.

Glad I got that off my chest :-)

[Liberal_in_LA]

4. From someone living in LA's condo world - What's a 'yard'? LOL.

[Cha]

7. Yeah, I was born and raised

in Colorado..a long time ago. I was talking about it today to someone..how Denver was such a quaint city back in the early '60s. I left in '62 to move to Phoenix which is another city that was really cool back then.

I went back in '90 to '92 and it was huge..I can only imagine how many housing tracts there are now, and the traffic..oy!

[Liberal In Texas]

5. History repeats. Didn't anybody learn anything about condo-flipping from the S&L scandals of the

80s? Same damn deal. Overbuild condos in a boom bubble, speculators fueling the bubble. Then the bubble busts. S&Ls went out of business and people are stuck with condos worth about half what they have the note for.

[Warpy]

6. It's housing, here in the central Rio Grande Valley

They've slapped up huge areas of McMansions for the speculator trade. At one point 1/3 of new construction was being bought by speculators. 1/4 of new construction was being snapped up by Californian speculators, alone. They were flying in and chartering vans to go around the various developments to scope out "investments."

Now there is a glut of single family housing in this town as nervous speculators, often with iffy paper, are dumping the barns on the market to salvage anything they can. One guy bought up a whole cul-de-sac and dumped it on the market in one day.

In the meantime, no one bothered to build the type of housing families needed. My very convenient neighborhood of late 40s starter houses is still selling; the rest of the city seems to have stalled.

This is a classic speculative bubble, meaning the desired commodity was produced well beyond the saturation point.

One wonders what will happen to all the properties as they stand vacant for years, waiting for the population to catch up with the overproduction, if it ever does.

[Liberal_in_LA]

11. Vacant forclosures have become a problem in Los Angeles (article attached)

Blight moves in after foreclosures

http://www.latimes.com/business/la-fi-vacant28aug28,0,1813154.story?coll=la-home-center

[Warpy]

13. At least here, swimming pools aren't a problem

Most folks don't have them because the water level drops two inches a day in summer. They're just too expensive to keep filled out here in the desert.

There's only one abandoned property near me, but this area is just scary enough to discourage squatters. The worst thing about that place is the crop of weeds in the yard.

It's going to get worse, though. I have a feeling it'll hit those higher priced places first, as the people who rode the wave and traded up every couple of years are going to find themselves stuck with monstrosities they have no way to pay for and no way to sell for enough to get them out of hock.

[Doremus]

15. Jim Kuntsler says McMansion developments are destined to be tomorrow's slums.

As energy prices rise and fewer people can afford to heat/cool their shoddy palaces miles away from anything, these places will become unsellable.

I just watched The End of Suburbia. I highly recommend it. :thumbsup:

[Gormy Cuss]

17. Some of the city mansions of the Gilded Age survived as apartment buildings.

Not always slums, but what was built for one wealthy family became housing for a half dozen or more households. Current zoning may not allow that for many McMansion developments but once a municipality faces the loss of considerable tax revenue it's easier to change that zoning designation.

The gas-guzzling SUV class will become the crapbox cars of the lower-income too because the resale price will make them affordable to buy if recent history is a guide. The big gas-guzzling Lincolns, Olds, and Caddies of the '60s became cheap cars after the 1973 oil crisis.

[Warpy]

18. Unfortunately, the McMansions aren't built that way

A typical McMansion has only 3 bedrooms, but has a media room, game room, formal living room, formal dining room, sun room, ad nauseum. They will be easier to convert to retail space than to multifamily living space. Converting to living space, chopping them up into 2 or 3 flats, will involve moving interior walls and extensive work on the layout, something that will be difficult to do in a rough economy.

McMansions are the stretch Hummers of the building industry, signs of conspicuous consumption that have little practical use.

[Gormy Cuss]

22. Meh, most have 3 or 4 bathrooms, which means there's plenty of plumbing.

That helps when trying to divide up the space cheaply. There will be the need to partition the space anew (perhaps both vertically and horizontally) but that can and historically was done on the cheap. I saw many examples of it in Boston and New England with the older architecture. Chopped up spaces with windows in odd places, crown molding that ends abruptly, new floors to break up great halls into two levels, et cetera.

The exceptions I see among the McMansions are the ones that are so shoddily constructed that their shelf life is already expiring, and the ones that are on large lots far away from neighbors. Those McMansions would be more suited to tear down and replacement with higher density housing rather than conversion.

I agree that some McMs can be converted more easily to retail but the market has an abundance of retail spaces as it is and there may be less demand for additional conversions if the local economy is tanking.

[HeeBGBz]

8. That's about all they are rebuilding here on the MGC

High rise condos out of the Katrina ruins. You'd think someone would build a few restaurants or what not to employ some people. I don't know who the hell they think can afford to live in those places. It won't be your average local.

[azurnoir]

9. I think thats the idea n/t

[pansypoo53219]

10. if only they could ship

all this excess building down to new orleans.

[krispos42]

12. Katrina and Iraqi refugees

But I'm sure they're be a series of tragic fiery accidents before THAT happens.

[JPZenger]

14. Builders and Buyers Playing a Game of Chicken

It is possible that condo builders and buyers are playing a game of chicken - to see who gives in first. If the builder decides not to build, he has to return all of the deposits from persons who intended to buy units. The builders might be pretending to move forward, but actually be striking deals with buyers who are willing to forego most or all of their deposits, to avoid losing more money.

[Tommy_Carcetti]

16. Driving into downtown Miami this morning....

I was absolutely amazed at the amount of high rise condominiums still under construction. I had to ask myself who in this market is going to buy all those units? What a waste.

[Mutineer]

21. Foreign investors? People whose jobs haven't been impacted

by the economic downturn? That's who they build those kinds of condos for.

[Liberal_in_LA]

26. those high rises were planned and financed years ago (during the boom).

[leftofthedial]

19. giant flying roaches

[Kingshakabobo]

20. LOL.....it took me a second......

Maybe Giant Bees too..

[leftofthedial]

23. THE END

?

[Bluebear]

27. Here's who . . . Katrina refugees, Iraq vets with PTSD who can't work anymore...

...I can think of a lot of people who could live in them once the developer goes bankrupt. Maybe make them into some kind of Habitat for Humanity project :)