Condo prices at Gulf may be leveling off
Auctions, distress sales, buyers with cash chipping away at bloated inventory at Gulf, agents say Sunday, August 02, 2009 By KATHY JUMPER Real Estate Editor
Condominium prices may be leveling off as auctions, distress sales and buyers with cash are reducing some of the inventory at the Gulf, according to agents.
The recent auction sale of 31 units at Escapes! To The Shores in Orange Beach, which netted more than $12 million, "makes a statement of what our rock-bottom prices are right now," said Tina Maynard of RealtySouth in Orange Beach.
The two- and three-bedroom units sold for under $200 per square foot, which included the 10-percent buyer's premium. That's less than half what comparable properties brought in the hot market just before 2004's Hurricane Ivan.
Some three-bedrooms at Escapes! sold at $168 per square foot. The units sold for $290,000 to $600,000, not including the buyer's premium, at an auction held by The National Auction Group.
The steep monthly maintenance fees at Escapes! - from $1,000 to $1,500 - prevented some people from buying, Maynard said. She and other agents predicted the fees will go down once a homeowners association is formed.
Today's buyers are typically end-users who do not plan to sell for four or five years, and most are looking for a deal, whether it's a foreclosure property or a motivated seller, agents said.
While there are some sales in the $700,000 and up range, most buyers are looking to spend $400,000 or less.
"They are buying with a lot of cash," said Patrick Daily, owner of REMAX of Orange Beach. Daily said he was surprised the Escapes! developers stopped the auction after 31 units sold when there were so many people in the crowd with cash.
"I think the developers took a beating," Daily said. "They wanted $200 per square foot and didn't get it." Still, he said, the buyers got nice, large units with wonderful amenities.
The auction buyers were typical of today's purchasers - educated, even comparing insurance costs at other buildings prior to the auction, he said.
"Everybody is looking for the best quality construction at the best price," Daily said.
"Cash is king, especially with the financial situation going on," said Robbie Jaeger of Meyer Real Estate in Gulf Shores. Most lenders require at least 25 percent down, he said. "The deals are definitely out there."
"We have to get the inventory off the shelf and as the supply is reduced, it will drive prices back up," said Steve Jones of Kaiser Realty in Gulf Shores. But the prices won't be back to the "unreal" high prices of 2005 and 2006, he said.
More families are coming back into the buying market - these are buyers who couldn't afford a unit when the market was hot and prices were high, according to Maynard. "There are still enough people who made wise decisions and can afford to buy."
/cut/3/cBILL STARLING/ Staff PhotographerCondominiums line the beach at Gulf Shores in June. As inventory is reduced, condo prices appear to be leveling off, local Realtors say.
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