Financing for Florida condos is so tight, that you can pick one up for a song if you’ve got cash laying around. FBR analyst Paul Miller recently took a tour of the South Florida property market, just to get a ground-level view of the carnage. His account is fascinating. Among the problems: If a condo project has a 15% or more delinquency rate, Fannie and Freddie won’t finance any purchases at the building:
This limits the sale of units to only cash buyers and puts further pressure on prices throughout the complex. One condo unit in a condo conversion project in West Palm Beach was just sold for $37,000 in cash, down from a $247,000 purchase price back in February 2007. This particular condo building had over one-third of association fees delinquent. What about the new Administration’s pledge of $50 billion to help distressed homeowners? One realtor stated that roughly 90% of the foreclosed homes in the West Palm Beach area were investor-related properties, and once home prices dropped significantly, investors walked away from their homes. The Mortgage Bankers Association has estimated that 70% of all foreclosures are unavoidable. Therefore, we believe the new Administration’s $50 billion foreclosure prevention programs will have very little impact on stabilizing the housing market, not stopping the wave of foreclosures that are plaguing the Florida housing market.
Don’t take this as advice or anything, but we’re almost tempted to go down and pick up a condo at these prices. Seriously. For all its faults, Florida will always be warm, right? It’s always going to have that going for it.