More of the iceberg?
The latest in scare reporting on real estate appears in the WSJ today — the condo market’s increasing defaults. But look how trivial the numbers are of condo units that are in question:
In 2006, the number of new condominium units completed jumped 145% to 102,800, from 41,900 in 2003, according to the U.S. Census Bureau. Last year was the highest level since 1985, when 135,800 units were built. So far this year, 48,354 units have been built and another 72,000 are under construction, according to New York research firm Reis Inc.
Downtown San Diego can expect 2,900 new units to arrive on the market in the next year, according to real-estate investment brokerage Marcus & Millichap. Hessam Nadji, a managing director at the Encino, Calif., firm, estimates it will take as long as 18 to 24 months for the most-saturated markets to buy up the glut of condo inventory — if the economy overall stays strong.
Miami is in worse shape: The city added 4,549 condo units in 2006 and 3,276 so far this year. Another 7,985 will be delivered by the end of the year, with another 8,260 slated for 2008 to 2011, according to Reis, for a grand total of 24,070 news units between 2006 and 2011.
Who knew that there were so few condos built in the US? The article refers to the condo situation as “more of the iceberg.” From the numbers, it would appear to be at worst an ice cube.
UPDATE
More small numbers, followed by large reactions, have appeared among China’s banks. WSJ:
Bank of China saw its Hong Kong stock price fall by as much as 8.1% Friday in reaction to the bank’s report that it holds $9.65 billion in subprime asset-backed securities and collateralized debt obligations. That’s 3.8% of its total securities investments.
Once again small numbers have gotten an outsized reaction. They ran for the exits at Bank of China’s $9.65 billion in CMO’s? Wait until someone focuses on a somewhat larger credit problem.