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Tuesday, October 09, 2007

Buyers Want Out of Condos

by Calculated Risk on 10/09/2007 12:25:00 AM

From the NY Times: A Bank Bet on Condos, but Buyers Want Out.

“We’re at the riskiest point of the condo lending cycle as these projects are being completed,” Jefferson L. Harralson, a bank analyst at Keefe, Bruyette & Woods, said. “In the coming weeks and months, we’re going to find out what the demand for these condos really is.”
Today, developers owe Corus $4 billion, $3.7 billion of which, or 92 percent, is in condominiums. Of that, about 25 percent of them are in projects in the Miami area and 9 percent are in Las Vegas, according to regulatory filings. More than $2.15 billion of its outstanding loans are due by the end of this year. Nationwide, the number of condos completed this year will be up 45 percent — 232,933 vs. 160,239 — from 2006, according to data tracked by Marcus & Millichap Real Estate Investment Services, a real estate investment brokerage based in Encino, Calif.
Note: Many of these are the kind of condo units that don't show up in the Census Bureau's New Home report. Some quotes from the article:
“I don’t want to take possession of it.”

“I can go a whole week without seeing a neighbor.”
Not only are there many unsold units, but some buyers are trying to break their contracts, or are thinking about walking away from their deposits.