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Condo Prices Cut, Slump in Sales Shows No Signs of Let Up, Dec 1, 1975
New York Times, Dec 1, 1975
Miami, Nov 30 - The glutted Florida condo market probably the hardest hit segment of the nation's depressed housing industry and a bellwether in Florda's sagging economy, is entering its second winter of discontent with few signs of any significant pickup in sales.
Some prices have been cut by as much as a third to stimulate a pickup in movement. Real estate agents say there are genuine bargains to be had and that loans are again available.
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But many prospective buyers, dubious about the pace of economic recovery continue to hold back. Others, wary of an industry with a get rich quick reputation, are renting apartments.
"The situation isn't getting better, but at least Floridians are used to this kind of overbuilding bust, since it seems to happen every 10 to 20 years", said Keith White, a condo specialist, president of Reinhold Wolff economic research. "The surplus could last for several years or more (REINalliance note: recovery occurred in 1976!)
The surplus has been instrumental in driving unemployment up to 13%, the highest since the Depression. Thousands of construction workers have lost their jobs as hundreds of condo projects have halted midstream or gone into default.
In the Miami area, half a dozen foreclosures are filed every day, double the number a year ago. Some experts say at least 600 projects worth $1.5 billion are in trouble.
The bust has been exacerbated by a sharp decline in Florida's population growth, once the highest in the nation. Before the recession more than 1000 residents were moving into the state every day. Now that figure has been halved.
That sag in population growth has upset state budgets....
Out on the western edge of Miami and Fort Lauderdale, there are blocks and blocks of empty half completed condominiums. Some people are saying that tourists will come because they can't afford to vacation out of the country. Mr. Wiles estimates that over 40,000 condos are for sale all along the Gold Coast, down Southeast Florida from Palm Beach to Miami. (REIN Alliance Note: Today's figures are far lower)
Other large unsold concentrations are in Orlando, and in the Tampa St Petersburg area.
Orlando is also suffering from a glut of motel rooms, built in anticipation of a Disney overflow that did not materialize. Some motels have closed and others auctioned off.
Though an inventory of 50,000 condos obviously constitutes an unacceptable backlog, it is difficult to pinpoint the size of an acceptable backlog. The key factor as always in Florida is the rate of population growth and that factor has been fluctuating.
Most of the units have been on the market more than a year. It is well known that these developments were financed on the theory that if a project did not sell out all units in 12 months, it would lose money.
Florida papers are filled with ads announcing up to $8,000 reductions on units that once were listed for more than $30,000. (REINalliance: these units are today listing on average for $200-300,000 on average, of 600-1000% above 1975 prices).
Keith White predicts more price cutting will take place as more and more lending institutions foreclose on developers.
"It's all a matter of cutting losses and getting out from under this mess as soon as possible. There'll be some real bargains if only people will buy".
The resistance to purchasing condos goes beyond uneasiness about the economy.
The condo market has also been hurt by reports of shoddy get rich quick schemes and stories about sales contracts with small print that commit buyers to seemingly endless payments for swimming pools, tennis courts and other amenities. State lawmakers are just beginning to attack these problems.
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