The Worst Real Estate Story Yet

A close friend of mine recently told me the following real estate experience:

“Back in 2004 our company was looking for a place along the Miami coast for our staff to stay during business trips to the south Florida area. We were spending a considerable amount of money on hotels for our staff and we simply thought a condo or apartment would be a cost effective alternative.

“After looking at about 10 properties, we chose a condo in a trendy area just north of Miami within proximity to the airport, restaurants, and companies we do business with. At the time, 2004, there were five units for sale in the building.

“This particular building was relatively new at the time, having completed construction in 2003. From what we could tell, the apartments in the building were mostly used as second homes for either vacationers or businesspeople like us. It was built by the well-known South Florida builder Related Group of Companies. This builder is a partner with Trump on other condo buildings along the Miami coast.

“Anyway to make a long story short, to our dismay, we recently did an MLS search and found 37 units are for sale in our building. The punch line: There are only 215 condo units in this building! That means 17% of the building, or one out of six units, is for sale!

“For a 215 unit condo building to jump from five units for sale in 2004 to 37 units for sale in late 2006, there’s definitely something wrong. (Not with the building, which is first class, but with the owners.) Could people in the building simply be bailing because they are concerned about the real estate market getting worse? Or could people be selling because of their personal economic situations? Honestly, we don’t know. All we do know is that prices in the building are gradually coming down as 37 units compete against each other for a sale. And the number of days units stay for sale has skyrocketed. These units once sold in days, now we see the listings staying on the MLS for months!”