Here’s a little vignette that ties together the ’90s bust with the coming bust.
Along with a friend of mine I recently toured a large downtown condo project with one of the developers. It will be completed and ready for move-in by the end of this month. It’s a top-of-the-line, Class A development. They spared no expense on the details. Well, four percent of the units are pre-sold; you read that right, 4%. The other units have no deposit, no nothing – they’re for sale.
The builder, who shall remain nameless, is an acquaintance of my friend and told him that he was not optimistic about the current state of affairs (downtown inventory, tightening credit standards, etc.). This building’s all-in costs, including land and the whole shabang, were $370/sq.ft. That’s a big number.
Well, to tie this in the with the ’90s bust, this developer went BK back in the mid-90s only to resurface a few years later with more projects. In his defense, I know of one project he did that was completed in 2004 that did extremely well.
But, it’s hard to get builders to stop building when they’re mostly playing with the house’s (bank’s) and other investors’ money.
