With the condo glut growing as new towers are finished, and buyers walk away from presale contracts, developers increasingly are resorting to auctions to unload units at steep discounts.
Unlike ubiquitous foreclosed-home auctions, these events seek to establish market prices for untainted, often upscale properties. In an aggressive test of the strategy, 39 luxury coastal condominiums in Long Beach, Calif., went under the hammer in late August at about half their previous asking prices.
“We believe people are sitting on the sidelines looking for an excuse to buy. We gave them that excuse,” said David Parsky, director of Citi Property Investors, a Citigroup Inc. unit that is the controlling owner of the West Ocean Two building in Long Beach.