Florida buyers scramble to get out of contracts
A reader sent in this link to an article in the New York Times about condo buyers trying to get out of presale contracts now that the florida market has tanked. Its an interesting example of how quickly sentiment can change from boom to bust: between March 2005 and 2006 speculators drove prices up 25% in West Palm Beach, but now demand has dropped off and many of the condo construction project started during the boom are starting to complete putting more inventory on the market and driving prices down.
As dozens of condominium towers conceived during Florida’s real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits.“Motivated†sellers are flooding online forums like Craigslist with advertisements for condo units still months or years from being finished. And lawyers have been inundated with calls from people hoping to avoid closing on units they bought during the speculative craze of 2004 and 2005.
“I get two or three of these calls a day,†said James Ryan, a lawyer in Boca Raton who said he had 40 clients looking to get out of condo contracts. One, Mr. Ryan said, abandoned a $340,000 deposit rather than close on a $1.6 million unit that lost its appeal as the market faltered.
The numbers suggest that it will only get worse. In Miami-Dade County alone, 8,000 new condo units will be completed this year and nearly 12,000 more in 2008.
The median condo price in Boca Raton dropped about $13,000 in the year leading up to March ‘07. Could it happen here? Only time will tell, but here are a couple of graphs you may be interested in. The first is from the UBC Sauder school of business and shows Vancouver population growth over the last 19 years:
The second graph is from the City of Vancouver and shows Condo completions in the Downtown core for the same period, with future supply forecast for projects in the pipeline:
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May 27th, 2007 at 8:09 pm
This bubble will take a while to pop, due to lack of Mexican illegals working in construction.
May 27th, 2007 at 8:11 pm
May 27th, 2007 at 8:46 pm
seattle is 13% up yoy.
May 27th, 2007 at 9:00 pm
May 27th, 2007 at 9:24 pm
Vancouver prices are double Seattle.
May 27th, 2007 at 9:25 pm
May 28th, 2007 at 5:38 am
and salaries are probably higher in Seattle than Vancouver no?????
This is about Victoria but RE agents smugly say the prices are higher here because it is held together by rich retirees that come for the amazing weather (yeah amazing rain). Anyway, Florida has always been reitrement capital forever … look what is happening there.
May 28th, 2007 at 5:45 am
I thought those were quarterly numbers, not averages.
Where does the Vancouver CMA end? I’m guessing that more people are moving into the area not defined as the CMA, but they are there due to its proximity to the CMA, like Abbotsford, or even Langley. Not enough to make up the difference of course, but helping to skew the stats.
May 28th, 2007 at 6:41 am
“Bank of England is expected to report that mortgage approvals, a leading indicator of demand for properties, fell back last month.
Hometrack said that the proportion of the country still experiencing a boom in property had shrunk.
About 34 per cent of England’s postcode districts enjoyed price rises this month, compared with 44 per cent in April”
Finally, clear evidence that just as asset inflation was a world wide phenonanon the correction is becoming global.
May 28th, 2007 at 8:46 am
I would expect the updated graph in 6 month to show flat population growth, i.e. 2007 same as 2006.
May 28th, 2007 at 10:29 am
2. I reiterate my previous prediction that our RE prices will peak the moment that the Chinese stock market crashes.
Take a look at this article from today’s Bloomberg, on the Chinese Stock Market.
Can you imagine how many funds/institutions/individuals are sitting with their fingers poised over the ’sell’ buttons? The next fall will be a lot bigger than February’s 9%.
May 28th, 2007 at 10:59 am
May 28th, 2007 at 11:12 am
May 28th, 2007 at 11:16 am
It this is true, one would expect other cities to exhibit similar anomalies. But Vancouver is the only one of the eight CMAs to show this.
Given that rents are climbing so quickly I am surprised that pop growth is so anaemic. SFH under utilisation as kids leave home may account for some of this, as could foreign residents or a large amount of discretionary rental supply. That or the Sauder stats are fatally flawed.
May 28th, 2007 at 11:53 am
I had breakfast this weekend with some friends and one topic of conversation was ‘moving away from vancouver’ We talked about options as well as the friends we know that have already left. The consensus was that Vancouver is nice, but not worth the price.
May 28th, 2007 at 12:01 pm
May 28th, 2007 at 12:28 pm
Yes, that is exactly what I meant. That our population declined in the fourth quarter.
“I suspect the dip at the end of population growth is an artifact, likely due to smoothing of data points. “
Not sure what you mean by this. Why would there be smoothing? If Sauder pulled the correct numbers of Cansim, it looks like we lost population in q4. I will reverse engineer the numbers into absolute when i get a chance, but for the annual growth rate to drop like that when all the other quarters were 2%, surely q4 was negative.
May 28th, 2007 at 1:02 pm
Sauder has the data in a table format if you follow the link to their site.
I pulled the numbers into a rough population figure. Quarterly growth has basically stalled, from 10,000-12,000 per quarter in 2004/2005, to only about 2,000 to 3,000 per quarter, for the last 3 quarters.
Here are my rough numbers:
Quarter GVRD Pop Difference YOY Growth
2005.1 2,181,583 10,395 1.92%
2005.2 2,192,406 10,824 1.98%
2005.3 2,203,719 11,313 2.06%
2005.4 2,215,866 12,147 2.20%
2006.1 2,229,449 13,582 2.19%
2006.2 2,231,574 2,125 1.79%
2006.3 2,233,952 2,378 1.37%
2006.4 2,236,938 2,986 0.95%
May 28th, 2007 at 2:35 pm
We were growing 40,000+/yr, and now it’s “only” 10,000/yr. So although we have to wonder “who is buying all this new construction” that’s still 5,000 condos or 2,500 detached houses/yr worth of new population to house.
May 28th, 2007 at 4:26 pm
The numbers suggest that it will only get worse. “
I tried and tried but I just could not shed at tear.
Would it surprise anyone on this board if I said I hope the Vancouver speculators get their balls crushed twice as badly?
Tick Tock, Tick Tock
May 28th, 2007 at 4:43 pm
May 28th, 2007 at 6:39 pm
Quarter GVRD Pop Difference YOY Growth
2005.1 2,181,583 10,395 1.92%”
Thanks for those. If Q1 2007 followed the recent trend (I assumed 2600), the q1 yoy population growth will be about 0.5%.
Why the slowdown? Can only be related to prices and draw to Alberta.
Normally it is population growth that drives prices, but it looks like it is prices that are curtailing population growth.
Topsy turvy is what it is. This can only happen during a market failure, which is that sellers aren’t being realistic, and also that part of the demand is from speculators and others who leave units empty.
May 28th, 2007 at 6:55 pm
And it was “well known” in Miami that the biggest buyers were people with mysterious Latin American backgrounds.
But - surprise - when TSHTF, we find out that the excess demand was coming from local cowboys. It’s the same old story, it’s the same old game.
Where does the Vancouver CMA end?
It’s the same as the GVRD, i.e. it includes Langley and Maple Ridge but not points east.
May 28th, 2007 at 7:59 pm
May 28th, 2007 at 9:32 pm
Well said!
May 28th, 2007 at 10:39 pm
Normally it is population growth that drives prices, but it looks like it is prices that are curtailing population growth.
Topsy turvy is what it is. This can only happen during a market failure, which is that sellers aren’t being realistic, and also that part of the demand is from speculators and others who leave units empty.
no no no
people who are moving actually buying out from van are,and were home owners here in van so they are trying to buy out and live free off mortgage or loan anywhere else in canada.
let say some one holding a property worth 600.000 and mortgage of 250.000 likewise people are selling their property and find alternative home some where else to get rid off mortgage and money the will earn will go into their pockets.
new buyers are not in that position so they will hold on to their property unless the boom kept going to bring them in a same condition where old buyers stand right now.
till that time pop g will increase they can hand over to new buyers.
thats the custom of buying and selling.
people who love their city cost does not really matter to them.
May 29th, 2007 at 5:16 am