McCabe calls the marketing program "smart" because it ensures a purchase price at a time when would-be buyers are concerned about declining prices. However, there's a glitch, he points out--the prices Lehman is asking are significantly higher than comparable unit prices for the area. So someone could buy a unit for $200,000 elsewhere and if prices go down, that buyer wouldn't lose much money; but if the market improved, the opportunity to make a profit would be greater than if they purchased the $300,000 unit. With the more expensive unit, the buyer would either make a slight profit, at best, or break even, at worst.

These are just a few of the myriad creative tactics property owners are using to attract condo buyers. At some properties, the developer is paying the first year or two of maintenance fees and/or homeownership dues. At another, the developer is waiving its fee, and some are even telling prospective purchasers to bring their best offer. "In some of the higher end buildings," says McCabe, "some try to attract buyers by cutting deals with different celebrities to take down units in an effort to build up the property's cache."Despite all of the concessions, he notes, units are still not moving. "Concessions, in my mind, are only good if you're one of a very few that are offering them," he relates. "Then they're a competitive advantage. But if everyone's offering concessions, then it's not a concession; it's just seen as part of business. Then, you have to ultimately move to the last resort--cutting prices. Once you lower prices, it's very difficult to ever raise them again in the future. That's why you see this in every up and down cycle--they try concessionary incentives first. Sometimes they work, especially when you're one of the first to offer them. But then everyone starts offering them, and there's no competitive advantage."

All of this is no doubt going to have significant implications for the market. Due to the sector's blacklisting, says McCabe, it's already difficult to get a retail mortgage loan or a commercial construction loan for a condo in Florida right now. The CEO says condo prices will continue to decline due to foreclosures and high inventory. "Prices will probably drop another 10% to 15% this year, and I think 10% to 15% next year, before all is said and done in many markets in Florida," he says. "We're also going to see a lot of for-sale product move into the rental pool."

In fact, the shadow market has grown by thousands of units in the past few years. "That's definitely affecting the long-term apartment operators in different markets," says McCabe. "Rents skyrocketed in the condo conversion days because so many units were taken out of the apartment pool. In 2006, we saw rental rates go up 13.9% in South Florida--it was incredible. Rents actually went up 20% over the two-year period of the condo boom. But rents have now flattened and we're seeing the return of rental concessions because of increasing vacancies, due to the shadow market competition. Now developers are effective giving away between 8.5% and 17% of their income in rent concessions. We're going to see further erosion of prices in for-sale multifamily, flattening rents and probably the wide-scale return of concessions in the rental segment.