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Real estate industry

Luxury Condos Head to Auction Block as Market Struggles

Strategic Insights

— 1 min read

As the real estate market slowly recovers, developers are turning to unconventional methods to sell their luxury properties, including auctions. In Oceanside, California, the developer of the Oceanside Terraces condominium project is auctioning off 29 unsold units, with starting bids ranging from $295,000 to $625,000. This move is a sign of the ongoing weakness in the market's upper end, despite increasing demand for lower-end properties.

Key Takeaways:

  • The Oceanside Terraces condominium project is auctioning off 29 unsold units, with starting bids ranging from $295,000 to $625,000, or $151 to $244 per square foot.
  • The developer is expected to take a substantial loss, as comparable condos have been selling for 30 to 40 percent more.
  • In San Diego County, new condominiums sold for a median $362,000 in April, according to the California Building Industry Association.
  • Luxury estates in Escondido were auctioned off in October after the developer was unable to pay off a construction loan.
  • Foreclosures have increased in upscale neighborhoods, and analysts point to rising numbers of luxury homes for sale.
  • The Case-Shiller index shows the upper third of San Diego County home prices falling at a 17 percent annual rate in the first three months of the year.
  • Auctions of new homes have become more common in recent years, with 2007 and 2008 being bigger years than 2009.
  • Real estate economist Alan Nevin notes that new-home auctions are often difficult to conduct successfully, as starting bids are typically at or above market values.

Statistics:

  • 29 condominium units are being auctioned off in Oceanside, with starting bids ranging from $295,000 to $625,000.
  • $151 to $244 per square foot is the price range for the auctioned-off condominiums.
  • $362,000 is the median price for new condominiums sold in San Diego County in April.
  • 17 percent is the annual decline in the upper third of San Diego County home prices in the first three months of the year, according to the Case-Shiller index.
  • 10 or more other buyers are competing for foreclosed tract homes, according to buyers and their real estate agents.

Sources:

  • "North County Times, Oceanside, CA"
  • Chris Bagley, staff writer, North County Times
  • California Building Industry Association
  • Case-Shiller index
  • Alan Nevin, real estate economist

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