Buying a condominium in South Florida for $100,000 seems improbable, even impossible. But it’s not. Plenty now languish on the market, despite selling for a song.
The implosion of the overbuilt condo sector in Palm Beach, Broward and Miami-Dade counties has caused a price retreat to 2003 levels.
Indeed, the recently released September condo sales report from the Florida Association of Realtors showed median prices of $78,300 in Broward and $106,700 in Palm Beach counties, respectively. In Miami-Dade County, where prices fell 37 percent from the previous year, the median stood at $132,900.
As prospects wait and condo prices in South Florida keep falling, prices going below $100,000 — a return to pre-boom levels — could bring more buyers off the sidelines.
“In a way it could be a psychological factor. When you get into a five-digit instead of a six-digit price, most people would think, that’s affordable,’’ said Brad Hunter, chief economist with Metrostudy in West Palm Beach.
Palm Beach County, the northern edge of the tri-county region, has a stronger condo market than its two southern neighbors because there’s less inventory to sell and far fewer lavish high-rise towers built at the height of the housing boom that are now largely vacant.
Douglas Rill, a realtor with Century 21 America’s Choice Realty in West Palm Beach, said the county’s condo market is nine months past its January bottom, citing data from the county’s Multiple Listing Service.
Those figures show an increase in condos under contract in nine out of 11 months since last November, depleting inventory since June and increasing the number of sales since the beginning of 2009.
“You don’t need a Ph.D. in real estate’’ to see the Palm Beach County condo market has begun a recovery, said Rill, a county resident for 47 years. What’s triggered the turnaround? “Price, price and price,” he added.
With monthly sales climbing this year and median prices at less than half of their spring 2006 peaks, conventional wisdom might be that this is an indication South Florida’s condo sector has hit bottom and a market recovery is imminent.
Real estate analysts and experts think the opposite. They expect more foreclosures as well as tighter lending standards. The area’s still sizable inventory will mean deep price discounting for individual sales and bigger price cuts for bulk purchases by investors through at least 2010.
“If you took investors out totally, your condo market would be so skinny you’d really need an IV unit,’’ said Lewis Goodkin, a real estate analyst and president of Goodkin Consulting in Miami.
Hunter said that while prices have sharply declined among the lower end of the region’s condo sector, the pricing correction still is in the early stages for many high-rise condos just being completed along South Florida’s beachfront.
Buyers entering the condo market here are snapping up deals and usually paying cash, Hunter and Goodkin said. Lenders have severely restricted credit on condo mortgages; they require 20 percent or more down on the loans they are making.
Fannie Mae has essentially turned its back on condo loans. Earlier this year, Fannie stopped buying on condos in buildings in which more than 15 percent of owners are late on their monthly association fees or on units in new projects that aren’t at least 70 percent pre-sold.
“Until we really see lenders coming back in a meaningful way into the region’s condo market, most of the sales will be to investors,’’ Goodkin said.