So, where did everybody go?

 If you read the headlines, you think that people just packed up and went elsewhere. Does that mean that people have just given up and are moving back with family or to a trailer park? Not necessarily.

 

If you read the story, you see that the number of vacant homes is largely all the new construction projects that are sitting empty, unfinished and unsold.  The large tract luxury homes and condo high-rises look like empty towns after the tornado hit. All those “I am buying three and am going to flip two and retire in one” was pure fool’s gold.  Leave it up to basic makeup of stupidity and greed that have forced many Americans to walk away from new construction projects and lose hefty deposits.

 

Statistics show that most of these homes are in California and Florida. This is where the gold rush was in real estate a few years ago.  You know, that get rich flipping thing that everybody was chatting about over Cosmos! Guess what: it did not happen. The time from signing contracts to closing was too far out and did not anticipate the problems in the mortgage industry.  Many people that could have qualified for a loan three years after the signed the contract are now stuck without a mortgage commitment letter. So, they walk.

 

Developers are offering incentives and reduced prices, but people are simply shell shocked and afraid to move forward. It will take some time to shake this off.  In the mean time, the new chat is cheaper rentals.  However, the journalists and realtors are forgetting that developers have to cover increasing interest costs, taxes and insurance with the rental income.

 

This will force many a developer to walk away from themselves.  A good friend of mine in NYC real estate always told me that when you see two large developers in an area go belly up, it is soon after that more will follow.  This will cause more pain in local communities.

 

No, the worst is not over.  As we keep paying more for gas and food, we have less for housing expenses. Perhaps, trailer parks will begin to increase their maintenance costs in anticipation of the rush for hook ups!

 

And still, I am very concerned about the increase in the cost of rice.

 

– Dale Siegel

 

�