31% of condo reservations in DC are being cancelled. My only question is, how stupid are the other 69%?
I'd love to see these stats updated by city. Phoenix and Miami have to be crazy. Walk away from $10,000 or sign and lose $100,000? Tough choice
Sold -- or Not: When Home Buyers Walk
Some Will Give Up Thousands to Get Out of This Market
As the housing market cools, builders are reporting that more people are walking away from contracts and from tens of thousands of dollars in deposits.
Wall Street analysts say the Washington market is among those seeing the highest percentages of buyers abandoning ship -- more than double last year's rate, according to one research firm, and perhaps as high as one in three new-home buyers in some places. And nationally, some big builders are beginning to report cancellation rates upward of 25 percent.
The survey shows the cancellation rate locally highest in Fairfax County, at 30.9 percent, compared with 0.8 percent a year ago. Half of condominium buyers there canceled, compared with no cancellations a year ago. When the statistics are looked at by a single county or type of housing for one month, however, the number of transactions is small.
People who are buying for investments rather than residences are the most likely to bail out, experts said. They reason that it would be better to lose a deposit than to go ahead with an investment that could lose value, particularly if builders are cutting prices in the same or nearby projects.
June 27, 2006
Rampant cancellations - when you're in a hole, quit digging
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I live in Phoenix, and have seen too many condos either in planning stages or under construction. Add to that the conversions of crappy apartment complexes, and you have the makings for a condo meltdown. Who in their right mind would pay 300K for a 2BD/2BA, stick built, stucco apartment with the charm of a strip-mall...? Still, lots of existing condos at Tapestry & Orpheum & Optima for sale. Can the auctions be far behind?
It's a new paradigm, and everybody who doesn't buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.
Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter home in 15 years. They will live in tent cities, and Hondas.
This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent.
Check it: My friend bought a Lennar home in Matin's Crossing in Stuart FL for 393k. He walked on the deal becuase the same house was trading for 350 in the resale market. He lost 40k in deposit, and that was 2 months ago. Just this week, Lennar called the broker who got him in (our other friend who was not a real "broker", just an investor) and said that he could use that 40k towards one of their new great deals in same community. They are puking out of cancelled contract homes and giving them away, AND letting people who walked previously pick up the same house for less with their deposit. Martin's Crossing, Lennar: Caroline, salesperson 772-781-3704 for some "good deals". I gotta blame Lennar on thsi one. They sold to 85% investors up there, and knew it.
Another gem from PB County Florida: Kenco Communities in Palm Beach Gardens has a nice community named Mirabella. The builder just sold a model home (Rosello model, 2900sqft ranch), all decked out for $890k. That's a stout price, bbut thing is, it was 260k off their asking price. This builder has always said they would not negotiate.
My coworker just got notice that his large apartment complex is being converted to condos. A German investor has bought the complex and is giving tenants two months notice.
This investor is getting in way too late in the game unless he got a good enough price to undercut the competition. I should watch how this late development goes.
If someone is buying into an area that looks and feels like an apartment complex, you might as well just rent an apartment.
My guess is that people who follow thru plan to live in those condos and the cancellations are coming from flippers
My favorite quote from the WaPo article:
Remove condos from the picture, he said, and inventories drop to a more-normal 7.2-month supply.
I live on Capitol Hill. There are 171 houses (not condos) for sale in my zip code, which was unheard of this time last year.
There are several hundred condos listed on craigslist on "Capitol Hill," too.
And that's just one zip code (20003). 20002 has hundreds more listings. And all of the ads sound desperate.
Here's what I find truly fascinating about the DC Housing situation: no one has addressed what will happen if either the House or the Senate turns over this November.
The Bush admin doubled the living allowance for its staffers in 2001, which allowed them to invest in real estate instead of rent. Things could really get sticky if there's a sudden glut come Fall.
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