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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (59184)	8/5/2006 6:33:35 PM
From: XoFruitCake	Respond to of 306849

"But it won't be massive until the price of the condo that the buyer is going to close is actually under water more than the deposit. It already is with incentives." Not yet, here is my rational. Most of the WCI condo are in the 800K to 1M range for 1000 ft or so. There is very little re-sell activities going on now. So let's say for argument sake that the clearing price is about 700K for a resell unit. When WCI pre-sold the current group of condo closing in the next 6 month back in 04, the selling price is probably about 600-700K range. And the buyer probably put down 20% down payment. So we are looking at 120k to 140K down payment. For this group of buyer to default, the price of similar condo will have to drop to (700K - 120K) roughly 600K before they would default. The smart flipper/2nd house owner will look at the carrying cost and time on the market and decide to default. By the rest of buyer will close and hope for the best (next year market will be better, long term real estate won't loss money etc.). So I think we would start see some default but not much yet. However, for people who buy in 05 with a completion date in the 07, I think we will start seeing high default rate. Their contract price probably is in the 900K to 1M range with 10% deposit and the clearing price for a resell unit is probably in the 500-600K range by 07. And even factor in the deposit of 100K, it is better to default. And even the "dumbo" will reach the same conclusion.