The condo death spiral

Zai sent in a link to this Reuters article showing the dismal result of condo speculation in American cities.

MIAMI (Reuters) – Rust pokes through the peeling paint on the railings, pest control has been curtailed and the palm trees are no longer being fertilized at the 1940s-era Miami Modern condominium building in Miami Beach.

The condo association has been forced to cut expenses because the owners of 11 of the 28 apartments in the modest two-story building are delinquent, victims of a mammoth U.S. real estate collapse that has hit Florida especially hard.

With so many cash-strapped owners failing to pay their monthly fees for upkeep, the condo board last year had to raise $40,000 with a special levy to fill a giant hole in the $80,000 annual budget, but only managed to collect $19,000 from the owners who are still able to pay their bills.

Florida’s condominium and homeowners’ associations are facing what experts call a trickle-down disaster from the property crisis. Dozens and perhaps hundreds of condo buildings have budget shortfalls as thousands of owners, under water on their mortgages or in foreclosure, stop paying monthly fees.

“I call it a death spiral,” Miami Beach city commissioner Jerry Libbin said. “It’s a catastrophe in the making.”

Fortunately for them things can’t possibly get worse because Florida is running out of land and has many wealthy foreigners that want to live there.  Some people consider it ‘the best place on earth‘.  I also hear that they have an illegal drug trade that pumps a lot of undeclared income into the economy – that should help keep property values from falling further.

On the same topic the radio series This American Life has an interesting episode titled Scenes from the recession that touches on the same issue happening in Chicago.  There’s a horror story in that episode about a ‘luxury’ condo development with hardwood floors and granite countertops where the owners can no longer get in touch with the developer and have recently discovered that the building was built directly on unpacked dirt.  The entire show runs about an hour and is worth a listen if you have the time.

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watching the market
watching the market
11 years ago

there are TONS of vacancies all over the west end, every street — even west of denman. Lots and lots of studios, 1 br, but also 2 br, and even the odd 3 br — and that is all west of denman, at the start of the summer! I have never seen so many before in tehe 10 years I have lived down here. I would say equal parts renters becoming owners and also, people leaving the city due to job loss?

Spectrum
Spectrum
11 years ago

I've noticed downtown rents are down slightly for a 1 bedroom + 1 bathroom. Even though Craigslist always has inflated rental prices, you should be able to get a nice place downtown for around $1200. I've been actively looking at rents since my lease is up very soon and I want to move.

On the homeless issue; I've noticed alot more homeless people in Burnaby these days, especially around Burnaby Mountain. I've been biking on the trails there, and homeless people are there all the time, I've heard there is some kind of homeless camp on Burnaby Mountain although I've never seen it.

hughz
hughz
11 years ago

Sorry, Boombust. I let slip on some jargon. I didn't really take any offense – I thought it was a light-hearted jab.

But the commentators are right about what I was trying to say, namely I only have one observation, so take it with a grain of salt.

Boombust
Boombust
11 years ago

'what’s with the insult boombust. He is probably a programmer. He is just saying only of a sample of one."

Well, la-di-da.

Not everyone is an ekonomist.

badnewsbear
badnewsbear
11 years ago

Have you guys noticed there are alot of ' community gardens ' popping up in the downtown area? I am pretty sure we'll be seeing more and more of those around downtown since condos used to grow out of them.

oneangryslav
oneangryslav
11 years ago

Here's a site that may be handy…

http://www.liveonrent.com/listing.php?subtype=Apa

oneangryslav
oneangryslav
11 years ago

There's a block in the West End near my place where there has not been a single vacancy since October 1st (the day I moved into my rental accommodation). Today I walked the length of that block for the first time in about a week and every single building on both sides of the block (about 9 or 10 in total) had a vacancy.

I'm searching for a new place and have seen asking rents dropping by the day…

Anonymous
Anonymous
11 years ago

@11 N=common symbol used for sample size.

patriotz
11 years ago

gasbag:

From Vancouver to Miami the cost of owership has been ratcheted up by greedy stakeholders as the cities were able to continually attach higher assesments to each and every property

How many times does it have to be said:

Property tax revenues in BC do not depend on assessments.

This is in contrast to many US states, where they do.

badnewsbear
badnewsbear
11 years ago

Spin baby spin

n'ski
n'ski
11 years ago

Suguar – I have this link bookmarked but I have not used their service (yet) so no idea about the quality of the listings: http://www.amsrentsline.com/

Suguar
Suguar
11 years ago

Anon:

I have been watching the rental market on Craigslist very closely as my lease is up end of May. Rents have gone down since Nov when a 2b+2b was going for ~$2500…now they seem to be available for $1850-$2200…that said, there was a lot more selection in November than there is today. In late Nov, I had short-listed to 55 potential properties in Fairview, Kits, Coal Harbor and Yaletown, and most landlords were willing to negotiate. Today, there isn't nearly the same inventory available…and the landlords I have spoken with weren't in a bargaining mood. if anyone can suggest other than Craigslist for my search, I would really appreciate if you'd post.

other ted
other ted
11 years ago

what's with the insult boombust. He is probably a programmer. He is just saying only of a sample of one.

Boombust
Boombust
11 years ago

What does "N" mean?

Nincompoop?

Wha?

hughz
hughz
11 years ago

"Has anyone noticed declining rents in Vancouver this month?"

I just renegotiated my lease. $100 per month less and a half-month's free rent to boot.

Landlords with half a clue are desperate to shore up quality tenants in my (recent) experience. Of course, N=1 in this case.

Patiently Waiting
Patiently Waiting
11 years ago

The level of homelessness in suburban Vancouver is new. Its growing rapidly. We will soon have massive tent cities like we're seeing in the US and like what we had in the 30s.

Patiently Waiting
Patiently Waiting
11 years ago

This was in Sapperton around the hospital.

Boombust
Boombust
11 years ago

New Westminster has always had problems on "The Brow of the Hill".

(The area from approx. 8th St. to 12th St. and from 4th Ave. down to Columbia)

Nothing new.

Patiently Waiting
Patiently Waiting
11 years ago

I've been hearing anecdotes that indicate the homeless problem in New West is out-of-hand. The hedges next to parking lots are being hacked back to take out camps. Other camps are being removed from beneath commercial buildings (cookstoves, everything). Free parking because lot meters are busted every day.

All this in the shadow of empty spec condos.

This surely must be happening in most other suburbs.

I don't know if its new homeless or homeless being push out of DTES, but its getting crazy out there.

Anon
Anon
11 years ago

Has anyone noticed declining rents in Vancouver this month?

realpaul
realpaul
11 years ago

The newspapers are selling gleefull coloured snot balls, but snot is still snot. The fact is that the sub prime wave is still building and doesn't even start to crest until late 2011. Like it or not it's not over. NEW YORK (Reuters) – More U.S. consumers are falling behind on their mortgages, an indication that the housing market has yet to hit bottom, a top credit bureau executive told Reuters. Dann Adams, president of U.S. Information Systems for Equifax Inc, reported that 7 percent of homeowners with mortgages were at least 30 days late on their loans in February, an increase of more than 50 percent from a year earlier. He also said 39.8 percent of subprime borrowers were at least 30 days behind on their home mortgage loans, up 23.7 percent from last year. "I'm trying to find… Read more »

gasbag
gasbag
11 years ago

The inflation in property taxes, service fees, utilities, starta fee's, maintainance costs and insurance levies has also been spiralling upwards. From Vancouver to Miami the cost of owership has been ratcheted up by greedy stakeholders as the cities were able to continually attach higher assesments to each and every property. These same entities then proceeeded to agressivley spend the money creating bloated civic and corporate budgets which are getting squeezed hard as property prices fall. The condo and property owners are still stuck with bills. You can fire your property manager and forego maintainance but you can't so easily fire city hall. It's going to take strong political action to force the greedy politicians to cut back on the salary pork they have become addicted to. The rising delinquencies within strata corps are just adding insult to injury when coupled… Read more »

tnt
tnt
11 years ago

right … the bearish punids have been right in Vancouver since 2005. LOL.

blueskies
blueskies
11 years ago

the bearish pundits have been right all along….this is unsustainable…..