Real Estate Darwinism

LONG BEACH REAL ESTATE

Downtown Long Beach High Rise Condos

Dream Homes in the Sky

Champagne Wishes and Caviar Dreams

At what point did Robin Leechs 'Lifestyles of the Rich and Famous' Television show transition from a consumers dream to a purchase contract?

For the last few years the excitement of purchasing High Rise Downtown Long Beach Condos has been high.  Consumers have plunked down hefty deposits to procure these fabulous newly built condos and have sat, sometimes for a couple of years, on long waiting lists in the hopes that they too may acquire one of these beautiful sky high homes with walls of glass, endless ocean views, travertine, marble and concierge services. 

So many of these potential buyers excitedly shared their dreams of huge profits.  Most planned to sell as soon as possible after the close of escrow.   Some of these Downtown Long Beach High Rise projects are completed, others are still under construction or in the planning stages. 

Over the last several months I have been contacted by many of the soon to be owners to discuss the future sale of their units.  Some were approaching the close of escrow and were preparing to put their condos onto the market immediately after the close of escrow.  Imagine their shock when they found out they were about to pay $10s of thousands more than current market value.  Add to that the cost of sale and oh brother were they in trouble.  Others, less fortunate had already purchased, several had purchased multiple units. 

One gentleman explained that he had ordered custom everything (already installed)  which had added another over $40k to the already staggering price tag.  His unit was about 4 weeks from closing and there was a hefty cancellation penalty.  We computed his loss by backing out to be far less than the loss would be if he proceeded with the purchase and sold at a loss.  He was not a candidate for a short sale, as he has too many other assets and foreclosure was not an option, his credit is pristine.  Rent wouldnt even come close to covering the overhead.  His decision?  Cancel the purchase, write off the loss and move on.  This gentleman was smart enough to consult a Realtor, regarding the future sale, prior to his purchase, which saved him a large loss. 

Another gentleman had already closed on 2 upper floor, south facing ocean view units (most desirable) he was ready to sell.  He was shocked to learn the actual market value was far less than he had paid for them.  Again add to that the cost of sale and the loss became staggering.  He was insistant on listing the units regardless.  I do not list properties that I cannot sell.  He was advised to seek representation elsewhere.  Had he consulted a Realtor prior to the actual purchase, he too would have had the opportunity to consider his options and decide whether or not to move forward with the purchases. 

Today in the Wall Street Journal Online, Alex Frangos wrote a prolific article on the state of the nations condominium  developers 'Condo Troubles Further Squeeze Property Lenders'.  He says for nations real-estate lenders, the other shoe may be about to drop. 

'Already plagued by rising home-loan defaults and foreclosures among overstretched consumers, major markets across the country " including parts of Florida, California and Washington, D.C. " are seeing rising foreclosures and bankruptcies of entire condo projects.'

He is talking about condominium developers defaulting on their loans.  They are not able to sell units for the anticipated high prices of yesterday, when original plans were laid.  He goes on to explain about buyers seeking ways to back out as they encounter difficulty getting financing in the now dicey mortgage market.  This article is a must read if you are one of these buyers. 

This is a long article, worthy of the read. 

If you are considering the purchase of one of the Long Beach High Rise Condominiums being built, it is in your best interest to consult with a knowledgable local Realtor as to actual market value prior to your purchase, especially if it is your intent to turn around and sell it.  Most of these developers are not working with Realtors, you must work with them direct.  It would not be in their best interest to share this information with you.

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