The Tables Turn: Condo Association Forecloses on Bank

There was a great discussion here recently about the dangers of buying a Condo in a complex with multiple foreclosures, as the banks don't often pay the HOA fees.

It seems that one association has gone as far as to foreclose on the lenders!

According to an article in the Daily Business Review:

"Condo associations that are in a financial bind from mounting foreclosures are now targeting lenders who have taken back units from owners in default but are themselves failing to pay their share of maintenance fees.

As more units end up in the hands of lenders, the banks and mortgage servicing companies are responsible for maintenance payments for those units. But administering the growing pool of real estate has proved challenging for lenders.

The Residences at the Bath Club Condominium Association in Miami Beach is pressing a foreclosure action against Wells Fargo as trustee for an investment pool that owns the mortgage on a unit that isn’t paying its maintenance fees. "

These could result in some serious bargains, assuming that prices don't continue to plummet.

Another Condo Glut Estimate

The Tribune has a piece on the local condo market, "Who’s paying for the condo craze?". Here's an excerpt:

"During the past few years the city has committed hundreds of millions – $300 million in South Waterfront alone – to encouraging various condo developments around town. The idea, of course, was that this money would be paid back from taxes on the condos.

So what’s going to happen now that the condos aren’t selling?

As should come as a comfort to no one, there is a considerable difference of opinion on that score.

Two months ago, The Oregonian ran a news story on the downturn in the condo market saying there are about 1,300 condos on the market. As they saw it, however, that wasn’t going to be a problem because if condos continued to sell at a rate of 800 a year, the backlog would be erased in 18 months or so.

This week, the Portland Business Journal upped the unsold condo figure to 2,500. Even then, the article went on to predict, there could be a “condo shortage” in two or three years.

The current issue of Brainstorm Northwest, a conservative business magazine, places the figure at closer to 7,500 and says that the backlog of unsold condos might well last a decade.

P-town, we’ve got a problem."

Ya think?

Condo Sales Stall Like an Old Plymouth

According to a recent article, "Condo pipeline dries up" in The Portland Business Journal, sales of new condo's in Portland have come to a screeching halt.

"The John Ross condominiums have sweeping views, an elegant shape that inspires architectural envy, and a whole lot of unsold units.

To date, just 177 of its 303 units have attracted buyers.

According to Multnomah County property records, a database that includes sale dates along with information about the property, buyers and prices, just two units have sold in 2008."

Only 2 units have sold in 5 months? At that rate I'll be dead before they sell the rest.

According to the article, there are over 3 years of inventory for condo's at the current sales rate.

"Today, Portland has about 2,500 unsold condominiums, a figure that includes developers' inventories and another 1,000 "phantom units," which refers to condominiums bought by investors who intended to turn a quick profit and who apparently are holding out for the market to return.

Assuming Portland buyers have an appetite for 700 to 1,000 units a year, it will take nearly three years to clear out the current inventory."

I'm still amazed that the construction industry hasn't found better ways to predict when the market is going to slowdown or pickup. It seems like it's always feast of famine. Develop thousands of new units, flood the market, stop construction, then miss the bottom and scramble to build more.

""We probably have about a two-year supply in the downtown area," said Newton, who said barring an economic collapse, Portland continues to attract newcomers and will need to keep adding new housing in the future."

Yes yes, we know so many people are moving here. With a soft economy I'm not sure where these jobs are coming from. I'll post the migration statistics when I find them again.

But if you're in the market for a condo (and I know a few readers are) it should be a great time to negotiate. And will likely only get better until the inventory drops, either from increased sales, or conversions to apartments.

17% off - 1420 NW 20th Ave Unit: 501

Thanks to Stephanie for sending in an email about this condo with the note: "Here's a condo in the downtown area. It looks like it sold for $525,300 in April 2006 (per Portland Maps). It's on the market today for $436,999. What's the story on this?" MLS#8018072

That's a 17% decline in one year. Ouch.

It doesn't appear to be a foreclosure, at least I couldn't find it on RealtyTrac.

Based on Portland Maps the property tax jumped from $1890 in 2006 to $6100 in 2007.

Is this a sign that the condo glut is starting to push down prices? I don't know anything about this building, any readers know more?