I am thinking of buying a condo in a very desirable area as an investment. It is a cash-only short sale. In the last year, all or most sales in the complex seem to have been 100% cash, and prices have plummeted compared to a year ago.
The complex is about 50 years old. In the last decade, it has turned over from mostly old people to younger residents and into vacation rentals.
My guess is that it is impossible to get financing in this complex currently, and that explains the price plummet. Neighboring SFRs (houses) have not dropped much in price and remain very easy to finance. Per sqft, the condo is 1/3 the price of SFRs that are less than one block away. The historical ratio is more like 2/3.
I think this is a good long-term investment because rents remain high (positive cash flow) and when the market does finally recover, lenders will be willing to make loans in this complex again, and prices will pop more than for houses. The area is one of the most sought after in all of California.
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