July 31, 2006

Developers Across the Country Nix or Delay Condo Projects As Sales Slow and Costs Rise

Remember the "condo dead pool" idea? It's not just the projects in Vegas now, this condo cancellation craze is going to spread world-wide.

Too bad, they had such pretty pictures and websites, and threw such great pre-construction parties, to go along with the $800,000 price tags

In a city cluttered with condominium construction, Old City 205 aspired to shine as an ultramodern residence for the well-heeled with its zinc and glass facade, loft-style homes and windows that span floor to ceiling.

Too bad no one will get to move in now: The $40 million project in Philadelphia's Old City neighborhood won't break ground after the housing market softened and increasingly picky buyers balked at its price tags from $400,000 for a studio to over $2 million for a three-bedroom penthouse.

Brown Hill Development, the company behind the project, noticed slower traffic and decided it didn't want to be left with unsold units, said partner Greg Hill.

From coast to coast, developers are nixing or delaying condominium projects as home sales decelerate, construction costs soar and lenders start to balk at financing units that might not sell. What's making it worse is the glut of high-priced condos and too few people who can afford them.

In Las Vegas, projects nixed include high-profile developments such as Aqua Blue, a $600 million, 825-unit luxury condominium-hotel resort that counted Michael Jordan as an investor; the $3 billion, 4,400-unit Las Ramblas resort, backed by George Clooney; and Ivana Las Vegas, a $700 million, 945-unit tower named after Donald Trump's ex-wife.

Related Las Vegas, one of the two developers for Las Ramblas, had cited rising construction costs and slowing sales for the cancellation.

In South Florida, canceled condo developments include 1390 Brickell Bay and ICE in Miami, Fort Lauderdale's The Waves Las Olas, and Promenade in Palm Beach County. WCI Communities Inc., a luxury home builder based in Bonita Springs, Fla., said in June that new orders for its high-rise condominiums fell by 84 percent in the second quarter. The company will now go forward with only three to five condo projects in 2006, down from as many as 15 to 17, mostly in Florida.

With housing looking increasingly anemic, it's not surprising that developers are bailing out.
Domb said he's gotten about half a dozen phone calls over the past four weeks from developers asking if he would like to buy their properties.


David said...

According to some the housing industry is already in a recession state.

The decline in the housing market over the coming quarters will will be lead to a genereal economc recession.

Anonymous said...

I have to wonder: what on EARTH is going to happen to those 62,000 condos coming onto the market in Miami over the next few years??????

Anonymous said...

BTW, The group that bought and owned Las Rambles in Vegas, sold it and made MILLIONS! They only held it for about a year.

Anonymous said...

I was in San Diego over the weekend. I have to believe that they will be joining the ranks. There is no way they will be able to sell all of those units. Do these developers do any market research?

Jip said...

>>I have to wonder: what on EARTH is going to happen to those 62,000 condos coming onto the market in Miami over the next few years??????<<

Ditto with Long Beach, CA. I saw at least three projects in progress this weekend. Prices starting at $300K

Anonymous said...

There are many overpriced vacant condos and apartments here in Pasadena with more being built as we speak. California is in deep deep crap; our electricity is now on a tierd use price scale. If you use your AC you can easily pay double the normal KWH rate. Add gasoline into this and you guessed it. Even without a sub-prime, exotic, HELOC, or variable loan, on a fixed income YOU ARE SCREWED! I have seen some electric bills go to $800 in the last heat wave.

Anonymous said...

Developers/Builders continue to build until the banks etc. stop them.

The long permitting process leaves them little choice imo.

infidel said...

America, land of the free and home of the foolish? I think we should open our doors to anyone from overseas who will buy all those condos and give them automatic citizenship! Our immigration policy is a joke anyway and if all we do is allow poor immigrants into this country (no bash here we NEED them and they ard hard working and honest people who really understand that they can make a better life for their children here than where they came from) they can't buy those homes.

Instead of "Give me your tired, your poor" Change it to "Give me your rich, your educated"! As for all those who can't afford million dollar condos we have millions of ghettos in cities large and small so let anyone who'd migrate to those cities and towns and invest, build businesses, rebuild the decaying infastructure and buildings and commit to living there at least five years a visa and a chance at citizenship! Sort of like the 1800s all over again!

Problem of all those unsold homes and more solved.

Anonymous said...

Real estate schizophrenia in Seattle:

This past Saturday, The Seattle Times published a "Special Section" on new condos and newly built homes available for sale. The SIZE of this insert was unprecedented. Then on Sunday, the Sunday edition had a front-page article in the Real Estate section on how much condos had appreciated in various sections of Seattle and its suburbs.

Hmm....a little collusion here? I have a feeling the bottom is dropping out of the Seattle "boom" but nobody wants to talk about it. The buyers are perhaps disappearing??

Anonymous said...

If we bring over educated, talented foreigners, they'll just buy at the market rate right now and keep this thing going. All it means is more bubble and less housing for working and middle class individuals in the US.

Anonymous said...

Actually, the world is full of rich foreigners who've been waiting to jump into our market. They've held off because they didn't think property was as overpriced as much as it should be.

WTF - Do citizens of the wealthiest nations of the world actually believe third world citizens are desperate to bail them out by stupidly buying overpriced real estate?????? If they had that kind of purchasing power it wouldn't be third world.

Anonymous said...

Repartments and arson

Remember the key phrase: "Limited Liability Corporation"

bostongrrl said...

A few weeks ago I was in Seattle. There was so much construction, it looked like Shanghai.

Ballard, just north of the city, had at least three condos going up within a few blocks of each other. Not to mention the 50 or so townhomes being built in the area.

Anyone on the ground in Seattle? How is the market there?

Joe said...

I work in downtown Bellevue. Similar situation there also. My office has an unobstructed view of the lake, but there are 2 condo projects coming up that will obstruct it. I'm hoping the bubble pops here soon so those projects get cancelled, that view is all got in this crazy office to keeps me sane ...

Anonymous said...

Whoe condo complex in Philly for sale at $70 million on Craigslist-hey when the MLS doesn't work try everything.