Buyers Walking But Developers Say.....

Anyone remember 2005, when buyers camped out overnight for the chance to buy a house or condo? I sure do. In fact, I remember having some heated discussions with friends about the housing market. They were full of the "Kool-Aid", and would forever be priced out of the market unless they bought NOW, .

Now, just a year later, it's the buyers that are running away from purchases, not running towards them. The situtation has become such a problem, developers have resorted to suing these remorseful buyers.

As reported in today's Palm Beach Post, some developer's and their lawyers are playing hardball, suing buyers to force them into closing.

"The developer of two Boca Raton condos has a new tactic for dealing with skittish home buyers with balking on their mind: Sue them to force them to close.

At least eight buyers at the Bocar condo and one buyer at the Eden condo have been hit with "specific performance" lawsuits by entities owned by developer Ceebraid-Signal of West Palm Beach."

"The issue is one paragraph in the purchase contracts. The documents state that if a buyer refuses to close, the developer has a choice of two remedies: Either keep the deposit money - or force a closing." "Buyers who signed sales contracts months or even years ago have seen their unbuilt properties decline in value in the current condo market slump. That's especially true for these two condo projects, which were completed well past the dates first promised. Both properties have been the subject of lawsuits by buyers upset over the buildings' delays and the quality of the workmanship."

"It's not clear how these lawsuits will turn out, but one thing's for sure: All the lawyers say their clients should have consulted with them before they signed the contracts. "I wish they had," Dieterle said. "I would have steered them away."

Buyers are faced with the choice of either potentially paying thousands in attorney fees to fight, or continue with the purchase of a property they say has dropped in so much in value, it's worth less than what first contracted for- for some a few years back. It's not a pretty choice.

Let David Learah, the NAR, and the Real Estate salesman keep telling you that the same nonsense. This is real life. Real people are losing thousands of dollars, buyers are walking away from thousands of dollars rather than go to closing.

I encourage you to read a post I did back in January of 2006 entitled "SIGHT UNSEEN." Looking back, if that wasn't the bell ringing we hit the top, then I don't know what was.

The next two years will be much worse than 2006. We are faces with some serious problems. There are some two TRILLION in ARM resets to hit. The insurance and tax increases will be staggering. The inventory levels are at four years. For the first time in twenty years, there are decreases in public school enrollment, as many are relocating out of state. We are starting to see the subprime market implode. Over 90% of the people cannot afford the median house. At least three major subprime lenders recently shut down- with no warning.

Let's not forget any way you crunch the numbers, owning just doesn't make sense. We need to see prices get back to 3x income, from the current 7-10x income.