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There's a lot to do over. Today in the greater Miami area, there are 110,000 single-family houses, condos and townhouses for sale. Some 55,000 new foreclosures were filed in the first nine months of this year, and an additional 19,000 properties were taken back by lenders. In many areas in and around the tri-county area of Miami-Dade, Broward and Palm Beach, the value of property has plummeted so much that in some instances, banks are willing to take less than one-third of a property's value just to staunch the flow of money being spent on taxes and condo fees for unoccupied units. For example, Zalewski the grave dancer is looking at purchasing a 1,800-sq.-ft condo with floor-to-ceiling windows overlooking the waterfront in a place just north of Miami. That unit sold to a speculator for $940,000 in 2006. The bank is asking $389,000 but will probably settle for $300,000, he says.
It's a similar story in California, where the median price for houses dropped 41% in a year, according to the California Association of Realtors. In the Los Angeles area, the outlying suburbs of San Bernardino and Riverside have been hit the hardest due to the high number of homes owned by marginal and subprime borrowers. As a consequence, sales of distressed properties are up significantly. Also in the Los Angeles area, housing sales were up 83% in September over the prior year, with distressed properties notably contributing to the surge. "We're seeing a significant increase in sales activity over the last four or five months, but it is the moderate-to-low-end distressed properties, including real estate owned, foreclosures and short sales, that are showing really very significant increases," says Appleton-Young.
Not all areas of the country are suffering equally. In Chicago last month, Donald Trump stood atop his new, 92-story condo-hotel tower just off this city's most prominent boulevard, Michigan Avenue. "There's an economic disaster going on in the country," Trump dryly acknowledged. "A lot of things you think will be built in Chicago and elsewhere will never be built. The banks are shut down. But we got this one built, and we're proud of it." Getting it built and getting it sold are two different things, however. Many of the gleaming building's units remain on the market. Overall, Chicago's market is faring better than many. Roughly 75% of the 4,900 condominium units under construction in Chicago's downtown are already sold. But it's not out of the woods just yet next year, the number of new units coming onto the market is expected to drop to 4,600, but only 60% are sold, according to Appraisal Research Counselors, a consulting firm that tracks downtown Chicago real estate. Developers are considering alternatives like offering rentals, establishing rent-to-own plans and dropping sales prices. Talk of new projects has ceased.
Experts say parts of Chicago's downtown are most likely to recover first. But it is the areas that were just beginning to experience redevelopment, or any development, where recovery is likely to be the most drawn out, if it happens at all.
As always, some areas of the country are simply immune to it all. If you were thinking of getting a seaside bargain in Malibu, think again. Even in a recession, you can't find more beachfront property.
With reporting by Steven Gray / Chicago; Siobhan Morrissey / Miami; and Alison Stateman / Los Angeles