Equity being wiped out during COVID, what's the realistic fallout? Example included

The numbers may not be accurate because from what I understand on condo projects you need to double your money. If total cost to build is $500/SF you need to sell for at least $1000/SF. Realized after I wrote it out. I made up this example and questions below are mine.

Example:

Let's say you are building a condo in NYC. The project costs $100mm to build and 30% is equity. To break even at $100mm, condo prices on a $/SF basis need to be $2,000/SF. 

Let's say in this case their goal is $2,300/SF to make a profit and cover expenses. Breakeven is $2,000/SF. Reality is when the building is completed (let's say completed so there's no additional costs in this scenario, instead of the beginning of the sales process where you may not be done with construction) the market is really $2,000/SF instead of the $2,300/SF, so they were too ambitious with projections. At this time COVID hits and the market pricing drop 30% wiping out the equity in the project.

Questions:

1. In cases of equity getting wiped out is it because numbers/projections are so unrealistic and the market turns making a bad situation worse?

2. I need to think more about this, but how does lowering the breakeven value help this scenario? If breakeven value/covering costs is $1500/SF, does that just leave more cushion (i.e. profit) to eat away at before getting to equity? Seems so, anything else I'm missing?

3. Why is price dropping so much, for condo's in this example is it because NYC real estate isn't as desirable and there will be a massive inventory of similar condo units on the market making this one inherently cheaper and pricing that scenario in at this time? 

4. What realistically happens? Do they try and find financing (rescue capital)? I feel like during COVID they're screwed because they won't have many options. If they do find capital it will be very expensive and it may just prolong a default not far down the line. Also, due to their unrealistic projections they won't be able to turn a profit anyway, if they get additional debt they'll be even worse off so what happens they put them on the market as rentals and work with lenders? 

5. This was not related to HFZ, but I have to ask how is he getting out of his situation? Is he too big to fail/it's better to work with him, an experience operator, and get the most value out of these properties to make lenders whole than shift half completed/dev sites on other developers? Anyone know why his partner left? Seems like they're both imploding and their relationship is over.... crazy to see how one bad downturn can ruin a relationship formed over so many years.