It may not be South Florida, but there are condo problems in Raleigh, NC too, as well as other cities across the country. Sunday 32 condo units were auctioned off at an average price of $210 per square foot in the West condo unit in a downtown entertainment district known as Glenwood South.
When the West condo building was finished in 2008 a total of 80 units had been sold at an average cost of $300 a square foot, about 40% more than buyers paid Sunday. The original sales brought in about $28 million and the auction Sunday another $8 million, so presumably only $9 million remains on the original Wells Fargo (WFC) loan of $45 million on the project. Wells Fargo has not foreclosed on the property and West’s developers are still in possession, according to an article by David Bracken in the Raleigh News & Observer.
With 68 units remaining for sale, the developers will presumably still come out of this venture in one piece. If the remaining 68 units have the same average value of the 32 properties auctioned Sunday, the sales proceeds for the remaining units, at the same valuation as the auction, would bring in about $17 million. The developers have announced that they will be placing the remaining units on the market at prices higher than the auction produced.
Another condo project in downtown Raleigh, Hue, never sold a single unit and was seized through foreclosure by the lender earlier this year. It’s 208 units have been converted to apartments.
The Raleigh experience is not that much different from the very distressed South Florida situation. From a Real Estate Channel article by Michael Gerrity:
According to Condo Vultures, a Florida developer has slashed the asking price on the remaining 100 units in a new, oceanfront condo project by 43 percent to ignite sales in the luxury complex located in Florida’s Treasure Coast. Prices have slipped below $200 per square foot on some unsold developer units at the two-tower Oceanique condominium located on the barrier island just south of Vero Beach. When the project first opened in 2007, the average sales price in the 144-unit project was $336 per square foot, according to the report based on St. Lucie County records.
Real estate in the Raleigh area has fared much better than much of Florida, but, when it comes to condos, the stories are eerily similar.
Other cities with failed (or in trouble) condo projects can be found in many cities including Atlanta, Baltimore, Chicago, Cleveland, San Diego, Las Vegas, Los Angeles, Philadelphia, Washington DC and other cities across the county.