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 ...
Sounds like a toxic waste dump with granite countertops.
I took a financial bath on my Silicon Valley condo in 1998. Condos aren’t the investment standalone homes are. Still, I enjoyed the lifestyle.
In the case of Coronado Shores, it was location + draconian governmental restrictions on new construction.
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