Folks, no matter what the NAR or Harvard tell you, condo prices are going to drop nationwide.
Why? Because they were swooped up by investors these past few years to daytrade like pets.com. And these investors don't live in 'em, and if they rent 'em out the negative cash flow kills 'em. If they hang on to 'em they lose even more as their value plummets.
In cities like DC, Vegas, Miami, Phoenix and San Diego, I think you'll be looking at 50%+ declines from top to bottom. They'll come down in price to the point where monthly ownership costs equal monthly rental income. It's called The Fundamentals. Something the corrupt Nicholas Retsinas with Harvard doesn't understand, or doesn't want you to know.
The aftermath of condo fever
People camped out for the chance to buy a unit in Radius, a condominium development in Hollywood, Fla. The building's 285 units sold out in just over 10 hours -- half a year before construction was even set to start.
But that was in the summer of 2004, when the red-hot condo market was peaking and money could be made by investing in condos expected to quickly appreciate. Units were often on the market for resale as soon as they were completed. It's a much riskier proposition to flip a condo in some of today's cooling markets.
"You see some of these communities that investors purchased ... there are no lights on at night," said Bill Donges, chief executive officer of Lane Company, developer of Radius, which is scheduled for completion in the spring.
"The market is clearly oversupplied in many places," said David Seiders, chief economist for the National Association of Home Builders. "The key symptom of that has been on the price front. Prices have taken a hit."
Not wonderful news for those who have invested in condominium units with the intent to sell them quickly -- and are still holding them. According to NAR data, 31% of investment purchases made between 2002 and 2005 were condos.
September 28, 2006
From dot-com to dot-condo: Empty condo towers and panicked investors caught with the hot potato
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25 comments:
Who gives a crap about condos, I have never understood why you would want to live in a apartment that you own. I think this whole bubble thing with end up like Y2K, lots of talk and panic and nothing happenned. But hey its fun to talk about in the mean time.
Hey Keith, good thing you sold your Gold last week (after holding for barely a week and no gain), it's only up 5% since then....good job, buddy
In 1976, condos along the MD/VA coast were selling for $75K. A couple of years later banks were unloading them for $12K. The only story sadder than a typical condo purchase is the one about the luxury time share...
"I have never understood why you would want to live in a apartment that you own."
Me either, but the problem is that because of this f*ing housing bubble, in most major cities that is all one can get for their 300K, nowadays.
And, btw, it will happen- people simply do not make enough to support the prices and all of the jobs are getting exported.
Condos, Condos, Condos...get your condos here!
Tabasco Jenkins:
Thanks for pointing that out to Keith. Maybe someday he will learn that gold is NOT an investment. It's a hedge. I am beginning to wonder if Keith really even understand the fundamentals?
Why is this then?
http://tinyurl.com/l88se
+15% in UK!!
Same could happen here. There is no limit.
Anon, Thursday, September 28, 2006 4:48:45 PM.
I prefer to think of Gold as a currency, which is not something one should attempt to swing trade. Accumulating a currency is never a bad thing, though, especially if that currency is increasing in value in relation to the currency you would use to purchase things in your day to day life.
Keith please dont buy any gold, I want it to keep going up.
But the best currency is women. What else can cause you tomake such stupid mistakes. That keep on costing you for the rest of your life.
I think condos make a lot of sense for a small segment of the population.
For example, retirees that don't want to maintain a house but want more security than an apartment offers (security from having to move after your lease is up because the landlord wants to remodel or whatever).
I have see a lot of "b grade" apartment complexes being turned into condos that are now just coming onto the market (kind of late!). They are trying to sell an apartment that used to rent for 600-800 a month for $140k and more. I would consider one as a rental if I could pick it up for around 50k.
Ooh, feel the chill! Only the hard core posters left here.
yEAH ONLY US WITH STEEL BALS ARE LEFT.
condo's are the housing equivalent of wal-mart discount aisle crap rain poncho. it serves a purpose (protection from rain and cold) for a while, gets better press than it deserves for a while, deteriorates and is eventually put out at a garage sale for a fraction of its original cost. the new owner patches up the holes and wear spots with some duct tape and the process begins anew.
Early in 2004, Mark Clemente left his uncle's dry-cleaning plant in Detroit to go east and, hopefully, make his fortune in real estate. Shortly thereafter, he became a broker at E&G Realty, a small firm in Newark, N.J., where he earned a respectable $195,000 in his first year.
But it has been downhill ever since. The housing slump and fierce brokerage competition led to the demise of E&G. Mr. Clemente's income collapsed, and over the past six months he has held a number of part-time jobs, including one making sandwiches at a Queens delicatessen that paid him $100 a week. "I'm going home; my real estate career is over," he said the other day.
195K?!!... more than two times an engineers salary? (And to become an engineer - you need to get a 4 year university degree.)
So where did that money go? If he saved it - he should be able to live at least two years without worrying...
Do these people expect anyone to feel sorry for them?
rest of the article is here:
http://www.nysun.com/pf.php?id=40411
HP sets traffic records every week. click on the traffic button at the bottom of the main page, and look at the charts. you'll be amazed
250,000 views a month now...
You Rock Keith. I am proud to be an HP Alumni Blogger since August 2005.
Does that mean I have steel Ballz?
he he
Condo-shmondo! Condos have had their day in the limelight, and now once again they have become the ‘kiss of death’ for anybody trying to sell one.
People complain about paying taxes on their single-family homes - with a condo you also have to do this, plus pay the monthly HOA fee as well.
But what really caught the Mammoth’s eye on this thread was the photograph of potatoes. Has anybody noticed that the price of potatoes has doubled in the past year?
When people are forced to make a choice between sending in that monthly mortgage payment and putting food on their family’s table, guess which one they’ll pick?
no one wants to live in a condo, but in So Cal a starter home *IS* a condo. Unless you like mobile home parks I guess.
Can the short-term thinking. If oil dropped because of that Jack 2 discovery in the Gulf, that is a real laugh. When that rig comes online ten years from now, it won't compensate for increased consumption and decreased production from everywhere else. Oil dropped and the market rebounded - talk about a blip! What will happen when we invade Iran? The bulk of the ARM resets doesn't happen until next year. Die-hard HPers only? This thing has a long way to unravel. Who knows, maybe a miracle will save us from the worst?
HP sets traffic records every week. click on the traffic button at the bottom of the main page, and look at the charts. you'll be amazed
250,000 views a month now...
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Yea but, 50,000 of them are from borkafatty.
" think you'll be looking at 50%+ declines from top to bottom. They'll come down in price to the point where monthly ownership costs equal monthly rental income."
and why wouldnt rents just double over next couple of years to compensate for housing's inflated values?
anon 7:06:18 PM: 195,000? if he was smart he better have at least put that money in a CD getting 5% The interest would pay much better then the 100/week sandwich job. Maybe he blew it all maybe on condos because 100/week at subway sounds desperate
Hey, don't be to harsh on borka.....he can't help it, this site is the only thing he's got!!
No friends, No Life, No brain!
borkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborkaborka......kinda like toga,toga from animal house!
Hope he's very, very patient.
Hope he is very very young.
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