Few bulk buyers So far, only a handful of bulk sales have occurred -- and most that have closed are in South Florida, where the condo construction boom got under way a little earlier than in other parts of the U.S.
But they're imminent, says McCabe, anywhere there's been a lot of new condo development combined with a high foreclosure rate.
He predicts we'll see them in Southeast and Central Florida; Sun Belt cities such as Las Vegas, Phoenix and Tucson, Ariz.; and many parts of California, including San Diego, Orange County, Inland Empire, Sacramento, Bakersfield and Stockton.
"In the next couple of years we could see it in markets like Chicago and Manhattan," McCabe says, "where there's been a lot of redevelopment or tremendous job cuts."
Zalewski says vulture funds are also starting to look at single-family home subdivisions in the Rust Belt states of the Midwest, as well as eastern California.
"The reason we haven't seen that many of these deals done as yet," McCabe says, "is that lenders have still been unrealistic in their view of the value of these projects. When these buyers look at an opportunity, they also look at the risk. For example, if there are a lot of unpaid association dues, they could be specially assessed for them. Or, especially in older condo-conversion projects, there may not be sufficient reserves if the plumbing or roofing fails."
Another factor, he says, is that lenders usually have sale-price requirements that prohibit a developer from selling under a certain value, so that bulk sales are more likely to occur after the lender has taken a project back and is willing to sell at lower rates.
Brian Gordon, principal of Applied Analysis in Las Vegas, says he is fielding calls from investment groups looking for opportunities, but so far "there's a disconnect between asking prices and offer price. As lenders take control of some of these properties, we'll see what happens."
Las Vegas, he says, has virtually no rental pool for luxury apartments, so bulk buyers would be competing with much lower-priced suburban products such as garden-style apartments or even single-family homes.
"That makes the price point even more difficult," he says. "But certainly those lenders who are in a position to cut their losses may make deals."
Lenore Wilkas, a Realtor with Prudential Fine Homes International in Burlingame, Calif., says that although first-time buyers in the San Francisco Bay area are snapping up units as prices come down, she's starting to see some solicitations for bulk buyers.