Auctions are the new black in luxury real estate

38 luxury condominiums sold at auction last week

With massive inventory in most markets, many luxury condo developers are turning to auctions to dispose of excess stock. With many banks refusing to offer mortgages on buildings that are less than 50% sold, this is probably the most realistic way of getting the market moving. I have long been of the opinion that the only thing lacking was realistic sellers and the low volumes recently make it extremely difficult to judge market values in luxury real estate.

A recent auction in Los Angeles generated almost $15 million in under 90 minutes, demonstrating that there are motivated buyers around – they just need to feel they are getting value for their money. One example at the recent auction in the Long Beach Hilton of the West Coast Ocean Two condos, is a one-bedroom, 893 square fot condo – originally offered at $ 512,800 -sold for $228,000 – less than 50% of the asking price. No doubt, owners who bought in the area over the last few years are kicking themselves, but at least sellers have a better idea of the market values. Thirty eight units were sold in total, the most expensive going for $718,000.