I was driving down the road today, looking at all the for sale signs and new condo construction in Phoenix. And I thought to myself - what happens if there are NO buyers. I mean none.
Game it out - assume not one single buyer is to be found for all of these investor-owned condos and homes (especially here in AZ).
How does that look? How does it play out?
The big boys are starting to think about this. And they're scared. Really scared. Either because they don't know the answer, or because they do.
Here's an article fromn the economist roundtable at the International Builders show. Must have been an interesting meeting...
But danger does lurk, especially in Palm Beach County, which has a large number of investors who bought condominiums for speculative purposes, Freddie Mac economist Frank Nothaft said.
All three economists warned that investors are pulling out of the housing market and that most of them bought condos. The full extent of their involvement in the condo market isn't known yet, they said, because most investors paid cash.
Some experts have said investors hoping to sell at higher prices have bought as many as 50 percent of all new condos in Palm Beach County. In Miami-Dade, as many as 70 percent to 80 percent are investor-owned, experts say.
If thousands of investor-owned condos flood the local market, prices will drop dramatically, the economists said Wednesday.
"The big risk is: How many investor-owned units are there?" Seiders said. "How many hidden units will come back into the market?"
January 13, 2006
Freddie Mac economist address the 800 pound gorillia in the room - the expected flood of investor owned condos
Posted by blogger at 1/13/2006