In the news today, AP reports:
“Multifamily construction plunged 46.1 percent to an annual rate of 90,000 units after a 23 percent fall in March. Permits for multifamily construction dropped 19.9 percent to 121,000 units. Analysts said apartment construction is being hurt by a glut of condominiums on the market and by tightening credit conditions for commercial real estate.”
My Comment
Oh, my. This made my day. Condo flippers and developers are in big trouble.
Overlook the opening of this article, with that plaintive reference to a ” modest rebound in single-family home construction in April” that “raised hopes.”
Hopes should not be raised. That’s pretty clear by now. Not unless you’re being paid to pump houses for some rash developer who ran out of buyers for his pet eye-sore. We can think of a number of things that should be raised – black flags, eyebrows, interest rates…..but not hopes.
I’ve been checking condo prices all over the world and it’s the same news. From Panama to Kuala Lumpur, from Miami to Baltimore. Commercial developers are in trouble.
If that doesn’t warm the cockles of your heart and put a smile on your face, I don’t know what will. These wretched companies drove up housing by 100-300% (and more) in some cities and literally chased people on small or fixed incomes out of places they’d been living for years.
And don’t tell me they added any real value.
In New York. construction in one building was so shoddy, the Buildings Department had to intervene. I personally inspected a condo where, when the owner kicked the wall, her foot went right through. Many of them were aesthetic monstrosities that ruined the skyline, polluted the air, and destroyed the architectural beauty of the places where they metastasized.
Now there’s a glut and the developers are losing their shirts.
Miami’s condo king, Jorge Perez, is sitting on top of a market with the biggest glut in the country. Since 2003, nearly 23000 condos were added to downtown Miami, and 33% of them remain unsold. The financial hurricane hit just when Perez, the “tropical Trump,” had opened his newest project, Icon Brickell, a boutique hotel combined with over 1,640 luxury apartments and squeezed into three towers. Only 18 units have sold so far. Perez (once estimated to have a net worth of $1.3 billion) is in big money trouble. His company, Related Group, lost $1 billion in 2008 and ran up debt of $2 billion, $700 million from Icon Brickell alone.
It just doesn’t get better than that….