SALISBURY — South Beach Landing, a 32-unit permitted condo complex intended to signal the rebirth of Salisbury Beach Center, sold at public auction yesterday for only $1 million, another casualty of the plummeting real estate market and depressed economy.
The Newburyport Five Cents Savings Bank, which foreclosed on the property for nonpayment on a $5,125,000 loan, was the purchaser. The property includes an already constructed five-story, 16-unit structure at 233 Beach Road, as well as the vacant parcel beside it, permitted for another 16-unit building.
Only four of the 16 built units are finished, and all who viewed the units, originally priced at $400,000 to $500,000, yesterday muttered how beautiful they were. But the condo market, even at popular Salisbury Beach, has tanked. Over the past year, only one buyer, Joe Dooley, put down a deposit on a unit priced by then in the mid-$200,000 range.
Needing sales to pay its debts, South Beach Landing's owners were unable to pay $54,000 in taxes and its loan.
"The value of real estate had appreciated considerably over past years, and now it's undergoing a correction," said Newburyport Five Executive Vice President and Treasurer Janice Morse after the auction. "Someday, this is still going to be a beautiful place for people to live. The market will recover."
The complex was a project of South Beach Landing, LLC, composed of three principals: longtime successful builder/developer John Longo, his son Brett, and their partner Barry Burrows. It's the second foreclosure auction in a month for John Longo, who lost four other properties to foreclosure by the Newburyport Five two weeks ago.
Aside from the bank, only three of the 50 attendees of yesterday's auction were bidders. Nearly everyone else was there to watch the funeral of what in 2006 had been a hope for Salisbury Beach's imminent renaissance.
It was Morse's nearly invisible nod that brought the only bid. None of the other bidders so much as twitched a counter to her $1 million offer.
Yarmouth auctioneer Justin Manning, whose foreclosure business has grown 25 percent over recent months, wasn't surprised. The current "stagnation" in the real estate market reflects problems with the economy as a whole, he said.
"No one wants to sink money into a project while the real estate market isn't moving," Manning said.
Uncertainty about the duration of the poor economy was a hot topic of conversation among those who'd gone to watch the painful financial bloodletting yesterday.
Jack Goldman is the owner of Beach Road's 13-acre Kartland Amusement Park, approved in mid-2007 for a 210-unit condo development yet to be built because of the poor market. Goldman understood the tragic circumstances.
"I feel bad for these people," Goldman said of Burrows and the Longos. "This is very sad. Mr. Longo builds beautiful buildings, but anybody can get caught when the market crashes."
The history of South Beach Landing isn't long. Tim Mulcahy purchased the former site of the Gateway Motel from Frank Gorman for $1.54 million late April 2005, then sold it to South Beach Landing, LLC on Aug. 31, 2006, for $2.6 million after getting it approved.
But, the Longos and Burrows aren't the only ones in Salisbury caught in the burst national real estate bubble. Yesterday was the second bank foreclosure auction of prime beach land in a year.
In September 2007, Peter Carbone's dream 24-unit, luxury Broadway complex crashed around him when The Provident Bank foreclosed on his $1.4 million loan. Hoping to sell condos in the $500,000 to $1 million range, Carbone couldn't build his complex because he couldn't pre-sell enough units to get the financing. And, he couldn't repay the bank until he built and sold the units.
Both projects were the first and last two developments approved after Salisbury rezoned its deteriorated beach center in May 2005 — during the market's high point — in hopes of bringing back the center's glory.
