Luxury condominiums

If anyone were to ask me which market sector was most over built in the real estate market, I would have to answer, luxury condominiums. During the boom years, it seemed as though every single development was billed as a luxury condominium, almost regardless of the quality. As long as it had the basic requirements – granite countertops, “gourmet kitchen,” and sunken bathtub. Slap a designer refrigerator in there and you were good to go, instant luxury.

Then the financial crisis arrived and all of a sudden you have hundreds of thousands of the things sat waiting for Mr. and Mrs. Perfect Condo Buyer to take out a jumbo loan on. Sadly, the jumbo loans are a thing of the past – depending on your perspective, and one has to wonder just how long it will be before the glut of luxury apartments will ever be shifted. A few developers who were far enough behind in their progress to be able to shift to more affordable housing have done so, shrinking floor plans and changing interior fittings to suit a less creditworthy and more cost-conscious clientele, but that does not change the fact that we are very, very seriously overbuilt in some areas.

Florida is a good example, and I would hazard a guess that there are some areas of Florida that will end up tearing some of them down before the governments have had time to have printed enough money to make them viable developments again. I recently covered a condo development in Florida that had 200 units and one single, solitary occupant. A family of four living in a deserted building, with no pool lights and unable to use the widescreen TV in the empty clubhouse because they could not find the remote. A little funny, but a little sad at the same time, especially as they had sunk their life savings into what is now an almost worthless piece of real estate. They had apparently bought from a distance and it was only when they moved in that they discovered they were alone. An argument with the mortgage provider is preventing them from moving to another building on the complex which does actually have a few tenants. The other three condo towers have since been cancelled pending a recovery.

There is a massive amount of luxury condos for sale around the US, and places like San Diego in California, Las Vegas in Nevada, and Miami Florida are literally bursting at the seams. Other hot spots abound, usually in city centers where developers were hoping to cash in on the luxury condo mania but tearing down and redeveloping with higher buildings. A few of these have come to a grinding halt, and there are part built developments all over the country, well… all over the world actually.