Condo owners can be caught up in market downturn
When the real estate market boomed between 1995 and 2005, speculation ran rampant. Property “flippers” were rolling over huge profits, selling their contracts for condos in new buildings before they were even built.
Just like the game of musical chairs, the music stopped and someone was going to get stuck.
All across the country new construction and conversions have been foreclosed by unpaid lenders because of slow sales, and early buyers are getting stuck with units in a building that cannot cover its overhead. Recent stories about owners vacuuming the hallways and shoveling the parking lots is only one small aspect of the possible crisis.
How about the hypothetical building with 90 units? Thirty sold to owner occupants, 30 to investors who have renters and 30 who own empty units. An active imagination can create a number of scenarios, such as bankruptcy, with a capital – ruptcy.