It is said that the rain falls on the just and the unjust. Well the credit crunch is having about the same coverage. Virtually everyone is being affected- and that includes the high flying high rollers in the Las Vegas high rise market:
Potential buyers are struggling to secure mortgages at two major condominum-hotels as credit has tightened, even for the well-to-do.
Only 21 percent of the 1,284 condos at Trump International Hotel & Tower had closed sales by Sept. 29, while the number at Palms Place is just more than half, a report by Deutsche Bank shows.
At Palms Place, 342 of the 599 units, or 57 percent, have closed sales.
Both properties began closings in February, during the beginning of the mortgage meltdown.
Brock Davis, founder of U.S. Express Mortgages, said prospective condo-hotel buyers are now facing lenders who want as much as 50 percent down and require borrowers to have exceptional credit.
The buyer must be willing to take adjustable-rate mortgages to obtain lower rates.
"The rules have changed on qualifying," said Davis, who has been involved in the area’s mortgage industry for 30 years. "The still have to qualify better than normal on income, on credit and showing where your down payment is coming from."
Rates on 30-year fixed-rate mortgages for banks willing to loan on condo-hotel purchases are as high as 8 percent to 9 percent, according to the latest data Davis had seen.
"There’s just not the financing available at the interest rate or small down payments there was two years ago," Davis said. "That’s the problem."
A few potential buyers have had to walk away from their nonrefundable 20 percent deposits, Trump said.
If buyers are walking away from deposits, "sold" isn’t as final as it used to be. Look for fewer solds and more foreclosures on the Strip in the near future.