(Fortune Magazine) – FAST-FLIPPING INVESTORS aren't the only ones who love condos. For many empty nesters, nothing beats selling the big old house in the suburbs and hightailing it to a luxury development where sun and golf are plentiful and maintenance is minimal. And what better time to go shopping than during a real estate slowdown? It was condos, after all, that rose the fastest—and fell the hardest. There should be deals aplenty, right? As it turns out, it's not that simple. Some markets have already recovered, while others have yet to hit rock bottom—and not every place was as overbuilt as, say, Miami. To get the real picture, we zeroed in on five once-scorching cities and talked to brokers, analysts, buyers, and sellers. Read on for our results, a guide to finding the best retirement real estate bargains today. And get ready to sell the lawn mower.

MIAMI

VULTURES CIRCLING

In housing markets across the country, the reassuring refrain goes a little something like this: At least it's not as bad as Miami.

Nowhere has the real estate slowdown hit as hard as it has here. At the height of the boom, speculators gorged on condos, lining up for lotteries and flipping paper units. Then, in 2005, the market turned, and the buyers vanished.

Now the vultures are circling, almost literally. Peter Zalewski's year-old firm, Condo Vultures, tracks units that stall on the market for more than 100 days and shed at least 10% or $100,000 in price. His database now lists more than 1,400 condos.

Zalewski recently let FORTUNE tag along as he sized up a vacant two-bedroom penthouse in a 35-story tower overlooking Biscayne Bay. With $10,000 in monthly costs, the seller—an investor who failed to flip—has already cut his price from $1.2 million to $849,000. Besides the hefty discount, the unit has one of Zalewski's favorite features: an unfinished concrete floor. "It tells you the seller is desperate," he says.

Desperation hangs in the air here—and analysts say today's market is only a prelude to a bigger glut. Nearly 8,000 units are on the way this year, with another 12,000 coming in 2008, says Jack McCabe of McCabe Research & Consulting in Deerfield Beach, Fla.

Bob Zimmel, a 55-year-old health-care exec in Bethlehem, Pa., and a Condo Vultures client, is one buyer who is willing to wait. "I think the market's still going to settle out in the next 18 months," he says. If you can't wait that long, consider leasing in the meantime. The owners of a similar empty penthouse in the Biscayne Bay tower are looking to rent—so badly that they've dropped their monthly price from $4,500 to $2,800.

NAPLES

CALM ON THE COAST

It's just a two-hour drive from Miami, but Naples is another world, as famous for its sun-drenched beaches as it is for the high-society snowbirds who fill them. The tony resort town attracts everyone from retired NFL coaches—Mike Ditka has a home here—to former auto execs.

During the real estate boom, Naples regularly landed at the top of housing analysts' overpriced-markets lists. But last year a chill fell over this pristine town and its expansive golf courses. Pending condo sales dropped 43% from the first quarter to the fourth, and median prices fell 17% as buyers chose to wait out the frenzy. Other scare factors: Florida's soaring insurance costs and a real estate downturn in the Midwest, where many Naples retirees come from. "It even hurt the high end," says Richard Baker, president of luxury-condo developer Lutgert. His latest building on Naples' Park Shore Beach, the Aria, still had unsold units after it opened last October. "People were just not buying," he says.

But some experts say the market is starting to stabilize. While there's still excess inventory—a 36-month supply of new condos, plus another 42 months' worth of existing units for sale—construction has halted, and the glut is mostly in the lower end of the market. (Yes, Naples has a low end.)

That means now might be the time for the skittish to come off the sidelines. And buyers may be doing just that: Baker says three $2 million condos sold in the Aria last month. "The savvy second-home buyer is seeing that this is a good time," says Naples Area Board of Realtors president Spencer Haynes. "There's choice now, and they might be able to negotiate a better deal." For this ritzy enclave, that kind of opportunity doesn't come around often.

PHOENIX

RAISING ARIZONA

When most people think of retiring to Arizona, they picture a quiet life in a development on a golf course. But in the past five years Arizona's sprawling metropolises—Phoenix, Scottsdale, and Tempe—have begun to go vertical, adding luxury high-rises to markets in which condos have typically meant low-rise starter homes or senior-citizen-friendly "active communities."

In Phoenix at least five high-rises are planned, touting proximity to downtown and swanky amenities like concierge service. The big question is whether the Manhattanization of this market, where condos make up just 8% of the housing stock, will take off. The real estate rush that triggered this spurt has waned, stalling Arizona's single-family home market, which has seen sales slide 47% from 2005.

It's still early for the condo market, though, and analysts say its late start prevented overbuilding. Already some projects have been put on hold. The early buildings, on the other hand, have already given buyers opportunities to pick up units from overleveraged speculators.

Last fall Ray Slomski, a Phoenix attorney, bought a $1.7 million apartment in a new luxury mid-rise—for exactly what an investor paid in 2005. Slomski leases the unit now, but it's an option if he and his wife decide on apartment life when their kids go to college. "If we were going to downsize, this is the place we'd want to live," says Slomski. Among the building's perks: valet parking and an entertainment terrace for parties.

Selling the urban lifestyle in Phoenix may be a challenge. But bullish brokers say these new condos offer exactly what retirees flocking from cities like Chicago have long sought here—not just another home in the suburbs.

LAS VEGAS

UPPING THE ANTE

Like any good Vegas adventure, the real estate boom in the desert had a cast of colorful characters, more bluster than action, and, for some, a rough morning after.

Starting in 2003, legions of developers swooped into Sin City, heralding plans for more than 100 luxury-condo projects totaling some 70,000 units. But as the cold reality of land and construction costs set in, most packed up and left town. "It was typical Vegas—a lot of hype," says local real estate consultant John Restrepo, who estimates that only 10% of the projects actually got off the ground.

So while the lower end of the Las Vegas condo market swoons—the total number of units for sale is up 63% since last year—the market for luxury condos is strong. And it's likely to stay that way. The majority of the towers are in the so-called resort corridor, the Strip and its environs, popular with foreign buyers benefiting from a weak dollar. "To those buyers, a million-dollar condo is very reasonable," says Bruce Hiatt, co-owner of Luxury Realty Group. Foreign buyers have already snapped up 30% of the units in a new Mandarin Oriental residence scheduled for fall 2009. The rest of the building, part of a $7 billion MGM Mirage project, is almost sold out: 90% of its 227 units, which start at $1.5 million, sold within two weeks of release.

Where does that leave potential buyers? Analysts say prices aren't likely to drop from here. But in a few years there will be more inventory as well as ample opportunity in resales, when the earliest investors who locked in the best prices start to sell. "In two or three years your choices are going to be phenomenal," says Sean Brown, CEO of the Vegas-based National Association of Residential Real Estate Investment Advisors. Sometimes in Vegas it pays to hold.

SAN DIEGO

BETWEEN INNINGS

As they try for a division title three-peat this year, the San Diego Padres are playing in front of a much bigger crowd. Five new condo towers have sprung up since last season around Petco Park in the city's still-gritty East Village neighborhood. But on a recent evening one right-field newcomer, the 223-unit Park Terrace, is mostly dark. Like other buildings that went up after the market peaked here in 2005, it's caught in a real estate downturn. Forty percent of its units are still unsold, with concessions like waiving closing costs and home—owners' association fees the only way to lure buyers.

More than 5,800 condos were added to San Diego's burgeoning downtown in the past five years, and prices here have doubled since 1999. But the speculators who stoked that frenzy have by all accounts left—and pricing has remained stubbornly flat. "I thought San Diego would fall in price further and faster than it has," says Gary London, president of the London Group Realty Advisors.

Yet there are encouraging signs for bargain hunters. Plenty of inventory is on the way: An estimated 4,380 units will be completed through 2008, with another 1,700 scheduled for 2009. As a swell of new condos near their move-in dates, London predicts that the influx will force double-digit percentage price drops, not just around the ballpark but throughout the city's downtown. He's careful to note that he sees big potential for the area's livability—just not for its short-term condo markets. "My five-year forecast is pretty positive," he says. "But it could get dicey over the next two years."

The Padres, on the other hand, may have a pretty good shot this season.

MIAMI'S VICE

NEARLY 8,000 units will be completed this year, with another 12,000 coming in 2008.

EXISTING-CONDO sales are down 30% from a year ago.

ONE FIRM that tracks units that have sat on the market for 100 days or more has a database of 1,400 condos.

WELL HEELED—AND WELL PRICED

NAPLES HAS nearly 4,000 new condos on the way, a 36-month supply based on current market conditions.

MEDIAN CONDO price fell 17% last year to $315,000; pending sales plummeted 43%.

A CALMER market and price adjustments are slowly bringing buyers back into this highly desirable—and pricey—haven.

A PLACE IN THE SUN

SINGLE-FAMILY homes have long dominated here, but 4,200 high-rise units are on the way.

GROWTH SLOWED last year; sales of single-family homes are down 47% from 2005.

SOME CONDO projects were put on hold after the rest of the market stalled, reducing inventory—but savvy buyers can still find deals.

HIGH STAKES

THE LUXURY-CONDO boom here was mostly hype. Just 10% of 70,000 planned units are actually being built.

DEMAND is still high: 90% of Mandarin Oriental's new units, priced at $1.5 million and up, sold within two weeks.

CHOICES WILL be better in two to three years, when more towers are finished and investor resales start to kick in.

WAIT TILL NEXT YEAR

DEVELOPERS added more than 5,800 condos in the past five years.

THE AVERAGE PRICE of a condo jumped from $337,000 to $710,000 since 1999.

ANOTHER 6,000 units are coming. Look for prices to soften closer to move-in date.