Buyers shying away from condos, too

NEW YORK, Aug. 25 (UPI) -- Major markets across the United States are seeing a rise in foreclosures and bankruptcies of entire condo projects, the Wall Street Journal reported Saturday.

Some buyers who signed contracts to purchase new condos two to three years ago, when construction was just starting, are seeking ways to back out.

Falling prices are also forcing appraisals down, so banks aren't willing to lend the full amount to which people committed in the sales contract, meaning many scheduled closings are not taking place, the Journal said.

The new trend is an added burden for markets already hard-hit by the rise in home-loan defaults.

Because condo developers assume more risk than their single-home-building counterparts, largely because of the size of the projects.

In 2006, the number of new condominium units completed jumped 145 percent to 102,800, from 41,900 in 2003. Last year was the highest level since 1985, when 135,800 units were built.

Experts predict it could take as long as 18 to 24 months for the most-saturated markets to buy up the glut of condo inventory, so long as the economy overall stays strong.