Real Estate: The Tsunami strike (Part 1)
From Greater Fool Blog
“People,” the lawyer said, “wouldn’t be looking for the return of their deposits if the units were worth more than or as much as they purchased them for.”
Remember those words. You’ll hear them again.
This is what happens when (take your pick), (a) the economy starts fading, (b) real estate prices slide or, (c) people realize they were horny idiots. The words will be repeated in most cities, and apply to many buildings and housing developments where buyers understand what looked sexy a year ago is now just butt ugly. Worse, dangerous.
The latest glam project to falter is Vancouver’s uber-condo, the Residences at Hotel Georgia. This 48-story excess sprouting from the carcass of an art deco downtown fixture was all the rage in 2010 when everyone believed in the Power of HAM and thought it was different there. Units sold for nosebleed prices of $1,400 a square foot, with the developer promising closings in December of 2011.
The damn thing’s still not finished, and meanwhile Van real estate is crashing back to earth. So an error on the part of the developer – inadequate notice of the delayed closing date – has given regretful buyers a chance to wiggle out of their deals. At least six of them have taken legal action to recover their deposits (typically around $400,000 on deals averaging $2 million), and walk.
This could spell financial disaster for a landmark project. Already 60 of the 156 units remain unsold, years after sales began. If these six deals fall apart, more will likely follow, leaving a signature building half dark.
I came across a more in depth article on this project, which I will post and Comment on in Part 2.
This is a good example of what is REALLY going on behind the scenes, if one ignores the media hype.
What the GOOD NEWS is is that apparently the Developer has left open a serious loophole that has allowed parties to legally bail out of what all indications show will be a white elephant ….. economic road kill.
( To Be Continued )