The 38 foreclosures in her 244-unit building and the unpaid dues nearly cost the residents running water because the building could not pay its bills. The building abruptly stopped repairing its ceiling lobby and left its wiring and ducts exposed when the board ran out of money.
She avoids answering questions from visitors about ceiling repairs. “We’re not going to tell them we don’t have any money,” she said. “That’s embarrassing.”
Buildings with few units can suffer even if it just one owner falls into trouble. Doris Wilson, who owns a one-bedroom apartment in a building in the Bronzeville neighborhood of Chicago, struggled to get a lender to pay $2,500 in association fees after it foreclosed on one of the seven units in her building.
The bank eventually paid the money, and the association has since been able to paint its wrought-iron fence and clean the sewer system.
Still, Ms. Wilson worries that the expected sale of the foreclosed unit at about $94,000 will hurt neighbors who paid or refinanced their units for three times that price. In the short term, she dislikes asking her neighbors to pay an extra assessment of nearly $220.
She dreads going to monthly condo board meetings, and she avoids some neighbors who are struggling to pay the additional fees. “It’s personal,” she said. “Here they are going through a hard time and you have to ask them to pay.”
Marki Lemons, a Chicago real estate broker, says that investors are hesitant to buy properties with many foreclosures because of the possible problems.
Some buildings with four to eight units have had so many foreclosures that their condo associations have disbanded and windows have been boarded up. In these cases, she does not even want to represent sellers, because buyers cannot get financing and will have to pay all cash.
Sellers will be disappointed by those buyers’ offers. “They’ll probably give 20 cents on the dollar,” she said.
So far, the Manhattan market has been largely spared, in part because of foreign owners who never sought a quick profit. By the end of the year, about 15,000 units will have been added during the five-year condo boom in Manhattan, according to Miller Samuel, a real estate research firm.
Jonathan Miller, the company’s chief executive, said that foreigners, who have bought up to a third of these new condos, typically put in more cash and plan to hold for some time.
“They’re in it for the long-term equity play,” he said. “They’re looking for a 10-year hold.” Those who fear a downturn remember that Manhattan co-op prices suffered so much during the housing downturn of 1989 to 1993 that buildings had a hard time luring buyers.
This financial instability hurt New Yorkers at all economic levels. Some recall neighbors handing over their Fifth Avenue apartments for $1 because they could not afford the maintenance fees. Condo owners across the country are trying to ride out the slowdown.
Since 2004, when Mark Mills bought his two-bedroom apartment for $622,000 in the 210-unit GasLamp City Square condo in downtown San Diego, 10 of his neighbors have succumbed to foreclosure.
The building now has a $115,000 shortfall in its budget because residents failed to pay their condo dues. He resents neighbors who have rented units they cannot sell to 20-somethings, who leave beer bottles in the lobby and hold late-night parties.
He is tired of the constant beeping of a smoke alarm in a vacant unit, indicating a battery needs to be replaced. Still, Mr. Mills is staying because he expects he could get only about $550,000 for his home. “We couldn’t sell it for what we bought it for,” he said. “I’m in it for the long haul.”