November 30, 2005

Condo craze is headed for crash and burn


Here's my take - condos are like day traded stocks in 1999.. houses are like bonds...

People actually LIVE in houses - thus they're more difficult to day-trade. Condo though are like pieces of paper - that can be bought and sold very quickly, and mass produced very quickly too, as you stack 'em on top each other vs. one per parcel of land like a house

So.. what goes up must come down, and condos will be first to fall. It happened 20 years ago in Florida, and it's happening now


Call it "condo-mania" uncontrolled condominium construction and high prices. It hit the Tampa Bay area in the early 1980s. The area is just beginning to recover from that condo glut . . . If you're shopping for a condo, the best deals are to be found in foreclosures or resales by investors.

This history lesson is from a 1987 story in the St. Petersburg Times.

I bring it up as I drive around Orlando, looking at the increasing number of "For Sale" signs in front yards, taking note of those that have had their "Price reduced."

The number of homes on the market is at an eight-year high. We are shifting from a seller's market to a buyer's market. The speed at which this is happening is remarkable, given that interest rates remain low.

34 comments:

Marinite said...

Sales of condos in Marin County, CA for October were down -50.6% from September and were down -39.1% from a year ago this time. Damn! And Marin thinks its special.

http://tinyurl.com/8ybq7

skytrekker said...

Condo sales in Connecticut have just died. It was just a matter of weeks from hot to cold-incredible.

Marinite said...

Well, condos are the most speculative of the speculative RE. I mean, what do you own? Not the building. Not the land. You own the "air space"! So you own nothing. What you have is the right to live in it and sell it.

itbetterwork said...

Realtors in Miami Beach are telling nervous sellers, "don't put your property in the MLS. The smaller the investory looks, the better chance you'll have to sell at the top."

Realtors told this same story to suckers in the 1930's, the last time Florida had a real estate boom.

The scam has not changed; the swindlers are the same, but a bit younger.

I'm hearing that the luxury car financiers are realizing repossession rates at an all time high. This must have something to the 50% drop in transactions reported today.

41cadillac said...

I am looking for a special home in Los Angeles. A grand hall home for musical Sunday afternoons.

Sept. 2004 a "Grand Hall Home" I call it came on the market with a beautiful hall, (built as a private chapel): Price $6,300,000.

Two weeks ago the Price was $5,200,000. The Realtor said a offer of $4,000,000 was turned down.

A 1905 home with only a marble counter upgrade in the kitchen. Oh, yes! the old toilets were replaced of course.

I am watching.
"Crash and Burn"

Wes D said...

I live in the Tampa Bay area. I can attest first hand to what is going on here. Within a 10 mile radius of my home are at least 5 apartment complexes that were sold as condos in the 1980s. In the proceeding bust, they were bought by REITs and converted to apartments. (I'm sure the owners lost big bucks on them too).

In the past year TWO crappy apt complexes within a mile of here have converted to condos. There are at least another 10 conversions in the paper each weekend.

Some people never learn from history....

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