So the verdict is in for all of those folks that wanted to know what happened at March 1st’s auction for Solaire condos. Before we begin, here are some of the facts:
- Appx 150 people registered and were in attendance for this event
- Auction lasted about an hour and a half
- 1br units started at 170K and 2br units started at 250K
- 42 units were available for sale(what was advertised)
- 30 units total sold
- No spectacular, once in a lifetime deals emerged(surprise surprise)
I was not able to attend this auction but have done quite a bit of reading up on the subject. Basically, I think this event shows that we’re feeling a false bottom in the downtown Orlando Condo market. The interest of living a metro-urban lifestyle is there but
the pockets of those who desire to are about as deep as a mid-summer afternoon rain shower puddle in Florida.
I would like to go back to one of my original thoughts on the market as a whole, which was the fact that the surrounding economic infrastructure of Orlando doesn’t pose the best fertilizer for a growing residential presence in the downtown district. The median household income is somewhere around 45K in central Florida which puts most people into the 130K-170K range as far as a comfortable 30 yr termed mortgage payment is concerned. For these condos, you have to factor in a hefty $300+ HOA fees a month extra for a 1br! The only people that can really rationalize living in a 1br condo downtown are younger, single/engaged, business professionals with zero(0) kids. If you had more than yourself or your significant other living there, you would totally be pressed for space in a 850 sq/ft pad in the sky. With that being said, how many young professionals do you know that make at least 60K per year, that have no kids, could afford to make an extremely high HOA fee payment on top of their mortgage, and prefer to live in a small downtown condo instead of in a much larger house in Waterford Lakes or Avalon?….I can’t think of a single person.
To me it’s like putting a solar panel in an area where there is little or no sun. It just doesn’t make sense to build these lavish condo’s that no one in the right demographic can attain. Many people would love to live there, but not many could afford to stay. The condo market here in Orlando was doomed from the start when developers imagined making multiplied margins on a fad that worked in much more thriving core economic environments(Las Vegas, Chicago, LA…etc.). I think this is a prime example of why following trends doesn’t always provide the best results in real estate. At least in Vegas you can walk down out of your 125K condo and hit a couple of casinos or even Circus Circus before you call it a night. In Chicago, you could walk out of your 145K condo right onto Michigan Ave and catch the EL-train over to Grant Park or the Broadway theater….What do we have to look forward to in Orlando? Walking out of our overpriced 260K 1br shoebox across the street to eat a 5 dollar slice of pizza and drink a 4 dollar beer at one of the played out bars? Not a very good bargain to me.
Anywho, enough rambling for now. I am very anxious to see when April 1st hits and those that bid at Saturdays auction have to close or they lose their deposits. I wonder what the gross number of units will be that actually close in such a short timeframe(30 days). Will they appraise for the amount bidded for? I wouldn’t be surprised if the figure gets to somewhere around 12-15 out of the 30 units.
The prices are just too high and the developer really needs to realize that the entire plaza will suffer(on the commercial side) if they don’t fill the residential units. Real Estate is a very cyclical market and the buyer has a leg up on the developers right now. Lower the price of these condos and also get the HOA fees to an affordable amount and minimize your losses now. Long term, the commercial side(shops, restaurants, the theater) will help recoup the money lost in 07 and 08. Also in the long run, the developer will come out “OK” but that won’t happen if they continue on the road of denial thinking the condo’s are worth zillions of dollars…they are only worth as much as someone is willing to pay for them.
