In today’s Wall Street Journal, reporter Robbie Whelan takes a look at the new Florida condo bill that should ease the legal path for investors looking to absorb excess condo inventory in bulk purchases. Attorney and co-author of the legislation, Mark Grant with Ruden McClosky, who is attributed in the article, believes this bill can help advance market recovery by protecting bulk buyers from carrying financial burdens of developers, encouraging sales at higher prices, and providing condo associations with stronger tools to collect assessments from delinquent owners.
Bulk Sales’ of Condos Clear Supply, at a Cost Florida, for One, Eases Legal Path to Cut Glut of Distressed Properties, but Packaged Purchases Put Pressure on Prices
by Robbie Whelan
The financial clouds hovering over the Monteverde condominium development in Boynton Beach, Fla., were driven away in late spring when an investor bought 118 of the project’s 219 units in a “bulk sale,” a popular method of moving large numbers of condos in one transaction. But Dan Berwitz, a sales representative for a computer company who paid $204,000 for a unit in the Monteverde in 2007, has mixed feelings about the deal. He is pleased that the sale will bring financial stability to his building, but he isn’t happy that the bulk-sale buyer plans to sell the units far below what he paid, in some cases as low as $100,000. “But unfortunately, right now, there’s nothing we can do,” he said.
In Florida, one of the nation’s hardest-hit housing markets, prices of single-family homes and condos have been falling for the past three years due to rising foreclosures, an abundance of supply and tight credit conditions. While there are signs that prices for homes are starting to stabilize in some Florida cities, that may not be the case for condos due in part to bulk sales such as the Monteverde transaction, which could put more downward pressure on prices.
Research firm Real Capital Analytics, which follows condo markets nationwide, tracked 27 bulk deals valued at $850 million, or $250,000 per unit, in 2007. Transaction volume dipped the following year, then rose to 82 deals valued at $839 million in 2009.
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