Good news for buyers, and hardly a tragedy for the economy
The WSJ has a scare story about the dire conditions in the condo market that really makes the opposite point — how small the problem really is for the economy, and how miniscule is this market in a nation of 75 million homeowners:
The condominium market is about to get worse as many cities brace for a flood of new supply this year…More than 4,000 new units will be completed in both Atlanta and Phoenix by the end of the year. Developers in Miami and Fort Lauderdale, Fla., are readying nearly 10,000 total new units in a market already struggling with canyons of unsold condos. San Diego, another hard-hit region, will add 2,500 units, according to estimates provided by Reis Inc., a New York-based real-estate-research firm. The new building comes on top of unprecedented supply. The U.S. finished 2007 with a supply of condos large enough to absorb 10 months of demand, the highest level since the National Association of Realtors began the tally in 1999…
Lenders of all sizes have $42 billion of condominium debt on their books, according to Foresight Analytics. In just three months — between the third and fourth quarters of last year — the delinquency rate rose to 10% from 5.9%, says the Oakland, Calif., research firm…
The median condo sales price in the Cape Coral-Fort Myers area of Florida fell 26% to $202,300 in the fourth quarter of 2007 from $273,400 a year earlier. Prices dropped nearly 20% in Tucson, Ariz., and 12% in the Atlanta area during that time, according to National Association of Realtors data. Inside the newly minted Quantum on the Bay in Miami, prices for two-bedroom units have fallen from the high $700,000s to around $500,000.
This is all pretty bad news for condo developers, but great news for condo buyers. 10,000 units here, and 4,000 units there will go for much lower prices than planned. But in a country that still sports — even in this time of distress — over 1 million housing starts a year, it doesn’t seem to be terribly significant news at all