Condo Boom, Condo Bust
posted 2:56 pm Mon October 08, 2007 - Washington
The plunging market for condominiums has some buyers rethinking their purchases, and even willing to give up their down payments and deposits.
Many buyers who were looking to make money during the real estate boom have found their investments turn to losses. Especially people who contracted their condos on spec, before construction began, locking in prices they thought would only go up. But with prices falling, many would-be buyers are backing out, deciding they would rather lose their deposit than risk a bigger loss.
"It was evident to me after running the numbers that I couldn't make any money on it at all," said one would-be investor who didn't want to be identified. "I'd rather lose $27,000 than $100,000."
His realtor said it was a wise move.
"He determined economically it was better for him to walk away from thirty thousand dollars that go through with the deal," said realtor Betty Pair.
The advice is becoming more common. Realtor Dale House says some condo complexes that were sold out, are now rather empty.
"I know in a couple of the new buildings, we would be talking about fifteen units," he said.
That leaves developers stuck with unsold units, high overhead, and little choice but to reduce prices.
"It is a problem for developers who thought they had contracts and it will take longer to fill buildings," said developer Scott Pannick.
Another problem developers face, even more condo construction projects were started before the bust. That's created a glut. But seasoned developers say units will sell, eventually.
"Whether it take six months or sixteen months, again I don't know, but all this product will get used up and prices will go up," said Pannick.
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