Image by thinkpanama via FlickrAccording to CondoVultures.com, roughly 6,000 condos, townhouses and single-family homes priced at $50,000 or less are for sale across South Florida.
Some examples are:
- A Coral Springs condominium on Riverside Drive is listed for sale at $50,000.
- On Haverhill Road in West Palm Beach, a house is going for $40,000.
- And on Southwest 36th Street in Hollywood, you can buy a two-bedroom house for $34,900, or roughly the cost of a 2011 Ford Expedition.
Broward County led the tri-county region with 2,400 of these properties. Palm Beach County has 2,100 homes, while Miami-Dade County has 1,500. In 2005, at the peak of the housing boom, a total of 18 sales closed at $50,000 or less in Broward and Palm Beach counties.
Many of the properties on the market today are owned by lenders and “underwater” owners trying to complete short sales, in which they sell for less than the mortgage amount. The collapse in home prices during the past five years has left plenty of bargains for the taking, but many of the properties are shoe-box tiny, need new roofs or have some other major flaw that doesn’t make financial sense for buyers on a budget.
Typically, investors will buy the homes, renovate them and then resell the properties for a profit within a few weeks or months. Rick Henderson, who recently bought a West Palm Beach home for $42,000, said he and other investors negotiate good deals with contractors and spend $10,000 to $20,000 fixing the homes. He states: “It would cost twice as much for a regular homeowner. There truly is no way that a regular homeowner could get the kinds of prices on material and labor unless they’re in the trades.”
While most of these homes have structural problems or other issues, they’re not necessarily in poor, unsafe areas, real estate agents say. The single-family homes are mostly in older, working-class neighborhoods in the central parts of Broward and Palm Beach counties. The condos are more spread out, located in buildings hit hard by foreclosures or facing steep assessments for repairs. Some of the condos could not be sold by developers after they converted the units from rentals during the boom.
According to the Florida Realtors, the median price for an existing home in Broward County in July was $207,500, and in Palm Beach County the median was $226,000. In both counties, the medians are nearly half of what they were in 2005. July’s median condo prices in Broward and Palm Beach counties were below $100,000, having plummeted by at least 60% since the peak. The median means half the properties sold for more, half for less.
During the early part of the past decade, speculators helped fuel the run-up in home prices by purchasing homes and quickly “flipping” them for large profits. When prices plunged, investors left the market. Now they’re back, this time capitalizing on the low prices and helping to clear the supply of foreclosed homes. David Dabby, a housing analyst in Coral Gables states: “It’s ironic. Now these investors are serving a very useful purpose.” If first-time buyers are interested in bidding for homes priced at $50,000 or less, they’re likely to face steep competition from investors
Judy Trudel of Balistreri Realty in Lighthouse Point states that most buyers need mortgages, but banks typically won’t lend money for a house that has structural problems or is missing major appliances. Investors paying cash don’t have that worry. She says: “Investors are sitting out there and swooping in. Cash is king.”
David Dweck, a real estate agent and founder of the Boca Real Estate Investment Club, said investors must do the proper research to ensure the deals make financial sense. He states: “It’s very hard to go wrong when you’re buying this cheap.” As long as they do that, most of his members find the industry lucrative.
Trebatch, 31, a former banker, expects to buy and sell three or four homes this year. She concludes: “It’s a great time to be buying. Banks are trying to get rid of their inventory. Buy low and sell low. Don’t be greedy.”
