Many Buyers Must Try, Try Again As Condominium Market Shrinks

The Washington Post reports:

A growing number of condominium developers are backing out of projects as the worsening real estate market causes lenders to tighten their standards.

For buyers, a project's cancellation can be an unexpected jolt. They get their deposits back but nothing for their time and aggravation.

In the past 12 months, nearly 20,000 condo units have been removed from the glutted local development pipeline, said Gregory H. Leisch, chief executive of Delta Associates, a real estate research firm in Alexandria. By Delta's count, in the second quarter of this year, developers abandoned plans for 22 local condo projects.

Victoria Hammond signed a contract for a one-bedroom condo in Arlington more than a year ago, but two weeks before she was scheduled to close, the developer, Monument Realty, notified her that the conversion from rentals to condos would not go through.

Hammond, a government consultant, persuaded the people taking over her group house to let her stay. In December, she put money down on another one-bedroom in Arlington. In April, developer Ed Peete Co. canceled the condo plans.

"I had no idea this was possible with my first contract. That was a complete shock," she said. "The second time, I was prepared and skeptical about what was going on."

In a recent survey, residential developers said lenders are making smaller loans and charging them higher interest rates, according to David Ledford, staff vice president for housing finance and policy with the National Association of Home Builders.

A tough time for those promoting the religion of real estate.