developers just got the go ahead to build 29, $250K-$450K townhouses on the end of the lake, 200yds on their left is the sewage treatment plant and 200yds on the right is a large salt factory. but it's beachfront property.
Posted on 08/26/2007 8:18:31 AM PDT by Hydroshock
For the nation's real-estate lenders, the other shoe may be about to drop: condominiums.
Already plagued by rising home-loan defaults and foreclosures among overstretched consumers, major markets across the country -- including parts of Florida, California and Washington, D.C. -- are seeing rising foreclosures and bankruptcies of entire condo projects.
The problems are emerging as some buyers who signed contracts to buy new condos two to three years ago, when construction was just starting, seek ways to back out as they encounter trouble getting financing in the suddenly dicey mortgage market. Falling prices are forcing appraisals down, so banks aren't willing to lend the full amounts that people committed to in the sales contract.
"Closings that are scheduled to take place are not taking place," says Marvin Moss, a North Miami Beach real-estate attorney. He is suing several developers to help clients get out of contracts.
The condo market, while tied to the housing market overall, behaves differently under stress. While a single-family home builder generally constructs units as orders come in, a condo developer builds all at once and hopes for the best, adding risk. So while the speculative overhang of newly constructed single-family homes may have peaked in many markets across the country, the full force of the condo glut is starting to hit now.
(Excerpt) Read more at online.wsj.com ...
Is the condominium sector a detectable percentage of the housing industry?
my heart bleeds.
Yes, particularly in older more built up cities and areas of high land cost like say Florida and California.
Vulture alert “a North Miami Beach real-estate attorney. He is suing several developers to help clients get out of contracts.”
No doubt about it, the sharks smell blood...the media hyped foreclosure ‘crisis’ will provide a lawyer welfare program to rival OJ, Hussein, Election fraud, lobbying, insurance scams, etc all wrapped in one nice bundle!
Hopefully we’ll be spared the BS “I made $200,000 last month with other peoples money” commercials.
Both the lender and the borrowers. But we may all be paying for it.
Agreed.
Yep.
This shows the utility of the cooperative apartment as practiced in New York City
Our Board of Directors figured out what was going on, and said that all purchases must be for at least 20% down.
Of course, we’re relatively liberal. The fancy buildings require all cash and a net worth of five times the value of the apartment.
But you won’t see a crash in Manhattan coop values, because we didn’t allow every idiot to buy in.
and I should have taxes extracted from my wallet spent on mitigating that risk because .... ????
The same thing happened to the housing market - especially condos - in the 80s. People started buying condos as “investments” thinking they could turn around and sell at a profit, but they bought at the height of the market, and got stuck when prices started falling.
I wonder if it’s the same people?
I've never fully understood Manhattan co-ops.Are you saying that an individual with,say,a net worth of 1.25 million who's willing to pay cash for a $750K co-op (I know,that's a 300sq ft "fixer-upper") would be automatically turned down by the board?
“I’ve never fully understood Manhattan co-ops.Are you saying that an individual with,say,a net worth of 1.25 million who’s willing to pay cash for a $750K co-op (I know,that’s a 300sq ft “fixer-upper”) would be automatically turned down by the board?
In some buildings, yes. But those sorts of buildings don’t usually have those types of apartments. A Park Ave building with financial requirements that strict would not have anything under $2-3 million, and they’d all be in top condition.
Younger people with only a few million in assets would probably opt for a new condo.
“fast buck artist” hardest hit
developers just got the go ahead to build 29, $250K-$450K townhouses on the end of the lake, 200yds on their left is the sewage treatment plant and 200yds on the right is a large salt factory. but it's beachfront property.
My mom and dad gave us kids a lesson in this. They bought a townhome/condo in 1983 for an investment. They were lucky although they lost value whenthe market fell they had enough equity due to a big down payment and good renters. They sat on it for 12 years and only made money when they sold it to me. It was my first home when I moved out.
I recall looking at condos in Telluride in about 1979 with my old man. He snorted in disbelief that a condo at the base of the chairlift would cost as much as $35-40,000, along the lines of, "Why, you could buy a decent 3-bedroom house for that at home!"
Of course, those condos now sell for well over a million dollars.
Another place I have seen this happen is at Coronado Shores, just south of the Hotel del Coronado in San Diego. These were condo high-rises on the beach, built in the 1970's before there was a Coastal Commission. There will never again be buildings of this sort allowed within a mile of the California coast. Time was when you could buy a 3-bedroom condo at the Shores for 50 or 60 thousand; now they are 3 million for a good one.
Location is everything. If it's a crummy location, it will always be a bad investment.
-ccm
Anybody wanting to see this in action need only drive to Panama City Beach. Several unfinished condos with just the skeleton of the building been sitting there for over a year.
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