When the economy crashed, the question in the minds of many in-process buyers was: "Should I close?"
Apartment buyers, especially, feared moving into buildings that would remain mostly empty, with few neighbors and lacking the promised amenities. In real estate slang, those are called "zombie condos." Now one New Jersey firefighter, who bought a vacation place in Fort Myers, Fla., is claiming that's exactly what happened to him. According to a Fox News report on this lonely condo dweller, he's now the only occupant of Oasis Tower I, a 32-story building. And he wants out.
Victor Vangelakos, the story says, is suing the Oasis developer, the Related Group, to get out of his contract. For its part, Related says they've offered him an apartment in the more-populated Tower II (during the boom, the development was planned at five towers with a collected 1,079 units). Also, in news reports, Related vice president Betsy McCoy points out that Vangelakos has already closed on the property.
The courts will ultimately decide this one -- according to a report in the Fort Myers News-Press, the case is in circuit court in Miami -- but it does provide a glimpse of post-crash apartment living.
Now it should be noted this shouldn't be a problem for much longer, since the markets seem to be recovering. In Miami, for example, data commissioned by the Miami Downtown Development Authority from Goodkin Consulting show that there were 1,059 closings in 4Q 2009 -- nearly triple the 355 closings in 4Q 2008.
However, it could still take a while to recover. Jack McCabe, a housing analyst and CEO of McCabe Research and Consulting in Deerfield Beach, Fla., thinks the marketplace could still "be dominated by foreclosure and short sales for the next two years." Fortunately, he also has tips for what to do if you're stuck in a zombie condo -- or, as he puts it, "ghost towers in the sky":
- Consider utilizing "strategic foreclosure." In the condo sector at the height of the boom, McCabe notes, speculative flipper/investors made up 70 to 100 percent of sales in new condo sectors. If you're one of those people -- i.e., you never really intended to live in your unit -- you may be so far underwater that foreclosure is the way to go. While your lender often won't negotiate with you until you're two or three months' delinquent, McCabe advises that you consult an attorney before you stop making your payments.
- Band together. Most developers, McCabe notes, don't turn over control of a condo board until the building is 50 percent or even 70 percent occupied -- which is generally far in the future for a zombie condo. You're more likely to get your voice heard, however, if you work in a group -- whether it's to get promised amenities or just basic services. "If the hot tubs are turned down from 104 degrees to 94 degrees, massage rooms aren't being utiliized, even garbage piling up, those all affect the experience," McCabe says. If this is your situation, react in unison.
- Go to board meetings. As a condo owner, I can tell you that it's more fun to go to the dentist than to attend a board meeting-- but meetings make change happen. "It's just like the political process; not that many people want to participate." McCabe notes. "But residents do need to go to meetings."