The Daily Soak - April 20

Condo-hotel Purchasers' Angst Rising, Lawsuits Increasing

Two separate class action suits are brewing in Palm Beach County from purchasers of condo-hotel units at the 20-story Resort at Singer Island. According to the Palm Beach Post, these are "owners who claim they were duped into buying units that have become financial drains." While this article raises plenty of questions regarding buyer responsibility, the one irrefutable takeaway is the demise of "condotels," chronicled recently in the Wall Street Journal article, Rooms With a Bubble View. Condo-hotels were all the rage when the Florida housing market and speculation were on fire. Viewed from a slightly longer lens, the Journal says "the condo hotel may go down as the Pets.com of the real-estate bubble." For those still anxious to snatch up a Resort at Singer Island condo-hotel unit, this cavernous, 773-square foot 1/1 is priced at $600,000 or just $776/SF.


British Viewpoint: Miami's Credit Crunch & Mortgage Crisis

The BBC digs beneath the surface of Miami's seemingly stable landscape of high-rises nearing completion and examines the current stagnation and negative spillover effects into the retail and manufacturing sectors. Despite the recent fallout in Miami real estate, the BBC notes that companies like Condo Vultures are well positioned to capitalize on the desperation that many sellers feel in this market. Condo Vultures owner Peter Zalewski describes his firm's m.o. as follows: "We find the most vulnerable of the sellers and we go in there and try and steal the property from them legally and ethically." Looking at the broader macroeconomic situation, respected Miami economist Tony Villamil shared this sobering summary, "I think we will be working this out for the rest of 2008 and the first half of 2009."


Rethinking Rondos: Rental-to-Condo Conversions Fall Flat in Tampa

The conversion of multi-family rental apartment complexes to whole-ownership condos, or "rondos," was all the rage in 2005. Nowhere in the U.S. was the frenzy stronger than in Florida where Tampa Bay, Miami and Orlando led the nation in rondos. The Tampa Bay area alone has witnessed 29,000 rondos in just the last four years. (For a historical perspective, check out this pro-rondo piece from a blogger named "Mr. Real Estate") So far 3,500 units in Tampa Bay have reverted back to apartments thanks in part to state legislation that makes it easier to terminate condominiums and the fact that units are being repurchased at a "fair market value" which is typically thousands of dollars less than what buyers paid two or three years ago. With rondos clearly out of favor, the emergence of condo to rental conversions demands the coining of a catch phrase, so HB.com is proposing: Condental. We need to run it by Mr. Real Estate first, but we think it has juice.