First Coast condo prices melting down

[hightowerlover]

First Coast condo prices melting down
Condominiums are selling for far less, sometimes less than a third, of what they did a few years ago. Here are eight examples of recent sales.

Palms at Marsh Landing #1624, 1701 The Greens Way
Sept. 2011: $72,000
2005: $220,000

Merrill Pines Condominium #601, 7920 Merrill Road
Sept. 2011: $40,100
2006: $141,100

Lantern Square at Kendall Town #E2202, 1141 Kendall Town Blvd.
Sept. 2011: $49,000
2006: $159,000

Lakecrest #2201, 10150 Belle Rive Blvd.
Sept. 2011: $29,500
2006: $165,000

Deerwood Place II #348, 4480 Deerwood Lake Pkwy.
Sept. 2011: $170,000
2005: $371,500

Cottages at Argyle #501, 8550 Argyle Business Loop
Oct. 2011: $69,000
2006: $186,800

Preserve at San Jose #192, 8849 Old Kings Road S.
Sept. 2011: $30,000
2007: $141,9000

Plaza Condominium at Berkman #402, 400 E. Bay St.
Sept. 2011: $83,000
2005: $248,900


First Coast condo prices melting down

By Roger Bull jacksonville.com Copyright 2011 The Florida Times-Union.

On Old Kings Road, a condo that sold for $141,000 four years ago recently went for $30,000.

On Belle Rive Boulevard off Southside, one that went for $165,000 five years ago just sold for less than $30,000.

Downtown at Berkman Plaza, two condos recently sold for about a third of what they did a few years ago.

It’s a scene repeated all over town. As badly as the prices for single family homes have dropped, condos and townhouses have dropped far faster.

Read more coverage of real estate around the First Coast

According to the Northeast Florida Association of Realtors, the median selling price for single family homes in this area peaked at $210,000 in August 2006. As of Thursday, the median selling price was $135,000, a drop of 35 percent.

Meanwhile, condos and townhouses peaked in July 2006 at $182,500. As of Thursday, the median price was $67,000, a drop of 63 percent.

The market is being hit in virtually every direction: A glut of condos built in the past decade and prices that went too high too quickly, followed by large numbers of foreclosures that have made so many units available at what would have been considered giveaway prices a few years ago.

On top of that, few people can actually buy them.

“They’re just very difficult to sell,” said Shelba Williams with Watson Realty, “because the majority are not FHA approved. Sometimes you can’t even get conventional loans.”

She said the banks look at how many renters are in a complex. If it’s at least 50 percent, they won’t make a loan.

If 15 percent of the units are behind in their association fees, they won’t make the loan.

“You can’t get a loan at all on apartment conversions,” she said. “And up and down Southside Boulevard, a lot were conversions.

“It has to be cash,” she said.

That means a lot of buyers are investors with cash. They, in turn, rent the units out, which makes it that much harder for conventional loans.

“It’s a vicious cycle,” Williams said.

Alan Dimond is a Miami real estate attorney who owns 24 units in Lantern Square at Kendall Town, a condo project that sits across the parking lot from the Regency Walmart.

The three he’s purchased since September have gone for $49,000, $70,000 and $73,000.

Those are 31 percent to 44 percent what they sold for new in 2006 and 2007.

He’s renting them with the hopes that prices will increase.

“It’s a particularly nice project,” Dimond said. “It’s new construction, a nice location. I just think it’s going to pick up.”

Will the prices get back to where they were five or six years ago?

“Not in my lifetime,” he said. “If I’m looking at the horizon of five years, I don’t see it turning around by then. And I don’t see anyone else betting on that.

“But I’d be very surprised if it hasn’t started to turn in 10 years.”

Taylor Middleton is also starting to build his own collection of condos. He’s got four of them, three on River Hills Circle off Atlantic. He bought the last one in September, a waterfront unit on Pottsburg Creek, for $60,000. That’s $90,000 less than it sold for seven years ago.

His parents live in that one, and he rents out the others, including the $17,000 unit just down Atlantic in Creekside. That one was listed at $86,000 seven years ago.

Middleton couldn’t get a bank loan for any of these. He said it’s because he’s an artist with no steady stream of income.

He’s also 21 years old and doesn’t graduate from Jacksonville University until May.

“Now’s the time to buy,” he said. “And there’s no reason for me to try to sell; the rents cover the mortages. I need to find more to buy.”

Matt Coleman of Remax Atlantic has studied the sales data over the past several years and said while prices are still dropping, the rate has slowed.

“We’re not hemorrhaging at the levels that we were,” he said.

But the biggest problem in the condo market, he said, is the number of distressed properties, both foreclosures and short sales.

“A property owner who isn’t in trouble has to compete with that same buying pool,” he said.

And those owners often can’t drop prices low enough to compete.

“So it’s the homes that are not distressed that are sitting empty the longest,” he said.

He said that in 2005 and 2006, investment groups were buying large numbers of condos sight-unseen straight from the developer. When the market fell apart, they just dumped.

And there’s more out there.

“The elephant in the room is the shadow inventory,” Coleman said. “Lenders are holding on to so many that they’ve foreclosed on but haven’t released.

“If they dumped them all on the market at once, you’d have a complete real estate collapse.”

roger.bull@jacksonville.com, (904) 359-4296



Read more at Jacksonville.com: http://jacksonville.com/business/real-estate/2011-11-12/story/first-coast-condo-prices-melting-down#ixzz1dhs7Yjio

[thelakelander]

I'm still trying to figure out how a mobility fee moratorium to encourage more building is supposed to alleviate this problem.

[Bativac]

I think a lot of people guessed this back during the "condo craze." I know my family was adamant that most of the newer condos in town were not going to hold their value (especially Kendall Town - not that living in a Wal Mart parking lot isn't luxurious.......).

I know a couple people with condos who are desperately trying to get them rented, without much luck.

I guess the upside is, renters have a lot more power than they used to....

[tufsu1]

I'm still trying to figure out how a mobility fee moratorium to encourage more building is supposed to alleviate this problem.

stop asking questions...nothing to see here...move along now

[KenFSU]

I think settling into a reasonable equlibrium may be a more appropriate way to look at it. In a city where the supply seemingly far outweighs the demand, it would seem that the prices still have a ways to drop as well. The continued building is only going to drive existing prices down (obviously). Unless you can find a real steal, Jacksonville is a hell of a city to rent in right now.

[Captain Zissou]

I think settling into a reasonable equlibrium may be a more appropriate way to look at it. In a city where the supply seemingly far outweighs the demand, it would seem that the prices still have a ways to drop as well. The continued building is only going to drive existing prices down (obviously). Unless you can find a real steal, Jacksonville is a hell of a city to rent in right now.

Construction costs aren't decreasing at nearly the rate that condo prices are.  it makes no sense to build more.  Unless you bring a truly innovative product to a desirable part of town that meets an unmet need of the current market, it's not worth even trying to build.  A project like that hasn't happened in a while.

Hopefully some of the worst developments of the condo boom will die off and allow for those renters to relocate to better planned and better located developments in town.

[David]

So it's virtually impossible to get a loan on most of these condos right? If i'm paying 800 in rent, and I can snag a condo for 60-100k on a 30 year loan, i'd strongly consider that because it seems you get way more space for your money buying vs renting. But they dont give out loans easily soooo unless I have 60-100k to shell out, I take it i'm not snagging one of these ridiculously cheap condos.

[Timkin]

So it's virtually impossible to get a loan on most of these condos right? If i'm paying 800 in rent, and I can snag a condo for 60-100k on a 30 year loan, i'd strongly consider that because it seems you get way more space for your money buying vs renting. But they dont give out loans easily soooo unless I have 60-100k to shell out, I take it i'm not snagging one of these ridiculously cheap condos.

In a sense, yes you could.. but rental prices are down as well.  I live in a 2,627 square foot home with a 3 car garage on a little over an acre of property. I rent it @ $680.00 /monthly.  The home at one time rented @ $1,200.00 month.  I do not pay for property taxes, upkeep, repairs, condo fees , neighborhood dues, live in a deed-restricted area, etc.  I do take care of the grass and of course keep the home in great shape as though I owned it. For the deal I feel I get, that is the least I can do .

I guess it depends on what makes one comfortable.  I know of no place I could get  a deal like I have now.  As long as it is available, I am staying where I am .

That said,  some of the condo prices as shown above are at give-away prices.   Wait 6 months.  They will be even less.

[peestandingup]

I think settling into a reasonable equlibrium may be a more appropriate way to look at it. In a city where the supply seemingly far outweighs the demand, it would seem that the prices still have a ways to drop as well. The continued building is only going to drive existing prices down (obviously). Unless you can find a real steal, Jacksonville is a hell of a city to rent in right now.

Construction costs aren't decreasing at nearly the rate that condo prices are.  it makes no sense to build more.  Unless you bring a truly innovative product to a desirable part of town that meets an unmet need of the current market, it's not worth even trying to build.  A project like that hasn't happened in a while.

Hopefully some of the worst developments of the condo boom will die off and allow for those renters to relocate to better planned and better located developments in town.

I agree. A lot of these places aren't worth living in & have no real value. Its just like the cookie cutter suburbs I live in that's full of homes put together with scotch tape & bubble gum. Its all fake manufactured crap & leftovers of a boom age that went way overboard. None of its connected, walkable, planned well, you need a car just to walk out your front door, huge lawns that serve no purpose but taking up space & being a mowing headache, etc. It's basically cow pastors someone bought out in the middle of nowhere & wanted to get rich off of, all the while the city core has buildings you can see through. How does that make sense??

I really think as time goes on, the boomers start getting up in age & we get deeper into this, you're going to see these areas start to fall just like the city cores did back in the day. Younger generations absolutely do not want this type of lifestyle. The housing crisis will only accelerate it.

[simms3]

Rental prices are coming down, too?  Damn Jacksonville is getting sooooo cheap.

The opposite is happening most other cities where rental prices have escalated and are continuing to do so (there was a dip right as the recession hit, but this year due to high demand and lack of new supply most cities are back to where they were with rental prices or even higher).

I know there is a glut of every real estate product in Jacksonville, but many other cities faced even more extreme gluts and have since recovered.  Sounds like nobody is moving to Jacksonville anymore

[JeffreyS]

I think settling into a reasonable equlibrium may be a more appropriate way to look at it. In a city where the supply seemingly far outweighs the demand, it would seem that the prices still have a ways to drop as well. The continued building is only going to drive existing prices down (obviously). Unless you can find a real steal, Jacksonville is a hell of a city to rent in right now.

Construction costs aren't decreasing at nearly the rate that condo prices are.  it makes no sense to build more.  Unless you bring a truly innovative product to a desirable part of town that meets an unmet need of the current market, it's not worth even trying to build.  A project like that hasn't happened in a while.

Hopefully some of the worst developments of the condo boom will die off and allow for those renters to relocate to better planned and better located developments in town.

No the City Council told me we should encourage more construction and waive any impact fees(see Mobility Fee Moratorium) and it would be 90s sprawlville joy.

[Tacachale]

Decline in both property value and rental prices is happening too in SW Florida, where my father-in-law lives, and in Tampa. And SW Florida is growing even faster than Jacksonville is, though Tampa-St. Pete has been slower. I think we all know what's at play here.

[acme54321]

Younger generations absolutely do not want this type of lifestyle.

You would think that's true.  However I know several people who have proven otherwise.  I scratch my head.

[Non-RedNeck Westsider]

Construction costs aren't decreasing at nearly the rate that condo prices are. 

Construction costs can't really decrease any further.   We've been at rock bottom and are finally starting to see an increase back to normal levels.

[avs]

Not all condos are decreasing in value.  The Lofts at 1951 Market have seen an incease in price per square foot in recent sales.  The Lofts are also FHA approved, which means homebuyers can purchase with 3.5% down.