Last Days Of The Florida Condo Bust Bargains
In 2005, Victor Vangelakos was one of the first buyers at the Oasis in Fort Myers, Florida. The development of two condo towers with 400 units on the Calahootchie River was built to rival the majestic and expensive high-rises on Miami's Biscayne Bay. The developer envisioned five towers with 1,000 condos, a clubhouse, theater, marina and restaurants that would transform Fort Myers into one of Florida's premier living destinations. Everything about the project was done first class and pre-construction prices ran from about $350,000 to over $1 million, a fair deal in the then booming Florida condo market.
When Mr. Vangelakos bought his unit for $430,000, Oasis was well on its way to selling out. Many units sold to speculators who expected to flip the units for a quick profit once the buildings were complete. But when the project was finished in 2008, the Florida condo market had crashed and almost all of the early buyers walked away from their contracts. By 2009, Mr. Vangelakos was the only person living at Oasis' first tower. He complained about the bird nests in the nearby empty condos and that it was “kind of scary at night.” According to the Lee County Property Appraiser’s office, the value of Mr Vangelakos condo plunged 75 percent by 2010. The developer's idea of building three more towers was soon abandoned.
Victor is still an owner at Oasis, but after five years of huge price cuts, an auction and converting some units to rentals, Oasis is now down to less than 40 unsold units and prices have started to go back up. In fact, the entire Fort Myers housing market is recovering from years of foreclosures and price reductions. According to the Greater Fort Myers Realtors Association, median home prices increased almost 30 percent in 2012 and new home starts have jumped over 40 percent from 2012 to 2013. Fort Myers home inventory is down to about five months, its lowest level in eight years.
TopTenRealEstateDeals.com is a national real estate website that has been tracking Florida condo sales since the market began to collapse in 2006. According to Robert Walsh, the websites project director, Florida prices went up over 100% from 2000 to 2005 in much of the state, only to crash about 50% over the next five years. Walsh said that the peak opportunity for buying a Florida condo bust bargain was early 2011, and that many of the developers who still had empty units started to raise prices in late 2011. He said the leftover bargains are mostly in Central and South Florida where sales at several buildings were shut down during the worst of the downturn. Their website has a list of the remaining Top 10 Florida condo discounts and closeouts at TopTenRealEstateDeals.com. But he warns that the end is near. Walsh predicts that almost all the Florida condo bust bargains will be gone by the end of 2014.
The entire Florida housing market is humming these days. According to the Florida Realtors Association, state wide condominium prices are up almost 22 percent since July, 2012. With many of the 75 million baby boom generation reaching retirement age and internationals looking at the Sunshine State as a safe and affordable investment, future real estate prices will likely be much higher. According to a 2012 analysis by the real estate website Trulia, seven of the top ten United States metropolitan areas that generate online home searches are in Florida, including the top four spots.
Florida is famous for its real estate booms and busts that date back to the 1920s when prices could double and triple in a matter of weeks, only to crash when prices became so high that no one could afford them. Home price predictions are a lot like betting in Las Vegas, but with an improving economy, nice weather, lots of water, low taxes and reasonable prices, Florida's real estate market, now at 2002 price levels, is probably headed back to its peak years of 2004 - '06.
A number of new Miami condo projects have started construction, but prices are expensive ranging from about $300,000 for a studio apartment with no view up to $32 million for a new penthouse at Porsche Design Tower, where an elevator will transport owners' cars up to their living rooms. Other than Miami, there has been very little home construction since the bust. Nothing substantial will be coming to the market for at least a few years when some experts believe prices could be twice as much as today's market. Michael Spiers is the president of Spiers Realty in Pompano Beach and specializes in waterfront residential property. Spiers predicts that in a couple of years, people will again be standing in line for a chance to buy a new Florida oceanfront condo. Just like in 2005.