Football condo market proves a poor bet

One of the more amazing real estate construction booms that’s taken place in Columbia over the past half decade is that which surrounds Williams Brice Stadium, home of the University of South Carolina football team.

It’s nothing short of remarkable the number of condos that have gone up in recent years around the stadium, particularly given that many of the units were sold to individuals who only planned to occupy them on game days. That’s a pretty pricey investment for something that gets just six or seven days of use annually.

Apparently, Columbia isn’t the only Southeastern football city that went on a football-related condo-building spree. For example, Auburn underwent a similar construction boom. At first, as in Columbia, condos went like hotcakes. But that’s no longer the case.

Doug French details here what happened with the Tiger Football Suites project, a 73-unit complex that’s just a short walk from Jordan-Hare Stadium.

The project was completed in 2007, just as the real estate market started to slow. Now, two years later, the real estate bubble has completely popped, so the 49 remaining unsold units at the football suites were put up for auction last week in what was dubbed the “WAR AUCTION!” in the auctioneer’s brochure, according to French. “It’s the Ultimate War Eagle Condo Auction and it’s Available for One Day Only!”

Despite pre-sale hype, it wasn’t a pretty scene:

With an attempt to muster all the luck possible, the sellers scheduled the auction to start at 11:07am and about 80 folks here there when the auctioneer started the proceedings with a prayer. He asked the Lord “to be especially with the seller…oh, and the buyers as well.”

But lucky numbers are no match for this market, and the requested divine intervention was not to be. Twelve of the 49 units were to be sold absolute, regardless of price. These 12 were auctioned first – presumably to build momentum and get the crowd revved up to bid more on the reserved-price units.

But there was no momentum to be had. The first unit up for bid was the two bedroom deluxe unit measuring 1,200 square feet. The auctioneer called for initial bids of $300,000 after all, the original asking price was $389,885. Despite aggressive urging by the auctioneer floor staff, there were no bids until someone up front shouted “$70,000!” The auctioneers collectively scoffed, and quickly moved on when $100,000 was offered. The 2bd deluxe finally went for $260,000 or 33 percent less than the original asking price.

It was all downhill from there. The next 2bd deluxe went for $245,000. Four of the 861sf, 2bd lockout units were sold absolute for between $125,000 and $135,000, less than half the original $279,885 asking price. Four of the spacious 894sf, 1bd deluxe units were sold for $105,000, a more than 60 percent haircut from the original $279,075 price. Finally, after a train appropriately rumbled by at 11:45, a 768sf one bedroom unit went for $70,000 and $63,000 was fetched for a 581sf studio suite, roughly a third the original prices of $210,075 and $188,825, respectively.

When only $200,000 was the highest bid on the 2bd deluxe unit that was being auctioned with a reserve, and with most of the crowd gone, the auction was stopped. The absolute bid prices received were just too low and there was no sense going on was the word. But anyone who wanted to make a “reasonable offer” was invited to stick around and negotiate a price on the unit they wanted.

Anyone who thinks what’s transpired in Auburn isn’t also going on in Columbia is deluding themselves. At The Gates at Williams Brice, for example, developers have slashed prices on the remaining units from $230,000 to $158,000 to speed sales.

And Adesso, the high-end condo complex at the corner of Main and Blossom streets, has been struggling for more than two years to sell units. And while Adesso may be some distance from Williams Brice, it’s also considerably nicer than many of the units being sold close to the stadium.

If there was ever a real estate segment headed for a serious price crash, it’s the football-condo market. With the current economic downturn, individuals’ economic priorities have changed. Developers who thought that there was an endless supply of people willing to shell out big bucks for a place to hang out half a dozen times a year are finding out that that’s not the case.

And those that bought condos expecting to be able to turn around and sell them in a couple years for a big profit may find themselves with a long-term investment, possibly a very long-term investment.