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.
UK House Bubble
Bubble Meter
Mish's Global Economic Analysis
Northern Virginia Housing Bubble Fallout
Ohio Fraudclosure
Breaking News Relevant Articles© Copyright 2012 Housing Doom | Copyright© 2011, AuthentiCraft, Inc.
“Palms Place condos that have closed range in price from $378,000 to $4.5 million, with 28 units closing at more than $1 million…”
OUCH. Walking away from from a 20% deposit?? I expect those are at the lower end, but you’re still talking about $75K.
“Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him, saying, ‘This fellow began to build and was not able to finish.’” – Luke 14:28-30 (NIV)
I’d leave my 75K on the table in a heartbeat if I had contracted to buy at 375K and thought it was now worth 200K-250K (30-45% decrease in value, which, in my opinion, is probably pretty close from the original prices they set on these things 2-3 years ago). People can’t afford these high end condo/hotel (whatever that even is???) units even IF the values WEREN’T dropping. I watched a client walk from a 120K deposit on a mcmansion in Fountain Hills earlier this year. I told him that I though it was a GREAT decision. It was a 10% deposit on a home that’s now worth about 750K. I’m sure it stung a bit, but the guy had a great attitude. He looked at it as saving 300-400K rather than loosing 120K.
AZSaluki-
I agree with you. If you can afford an expensive condo on the Strip- you didn’t get that way by throwing good money after bad.
If the property you put 20% down on is going to drop more than 20% in value, that deposit is gone anyway. You might as well minimize your losses.
Twist and AZSaluki – Excellent points, and I agree 100%. But that still doesn’t lessen the sting, at least not in my world. But then again, I guess the folks who are buying a condo on the Strip aren’t as worried about a hundred grand as I would be. ‘Vacation’ spots for the high rollers, eh?
Igor’s word: Implode
“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.”
Well, no Mr. Davis, the problem is that your prices are too high.
$120K with 20% down is perfectly doable for the national’s average income.