Quote:
Originally posted by Did you just call me Coltrane?
[the real estate market]
Thoughts?
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Short answer: I expect a plateau, too, with some slight decreases in some categories/neighborhoods.
Longer answer: The folks at TSTCBN are alarmist, but for someone with 100% financing and a non-amortizing (or, heaven forfend, a negative-amortizing) loan, even a 3-5% drop, when combined with 4-6% broker's commission and other seller's closing costs, means a $30-60k loss. That's a big problem for most people.
Also, I sure wouldn't want to own (a) in a building which isn't sold out or (b) a condo which is basically indistinguishable from a lot of others (i.e 3br/2ba in a 3 unit building somewhere on the northside) if there were any chance I would need to sell it in the next 3 (maybe 5) years. Competition from developers of these sorts of condos, who can afford to sell for less and still make money, will be a real killer.
Developers dropping prices could cause sale prices to sink. But because the developers still need to at least break even, there is a floor. For any given typical 3 unit condo building, I think that baseline is probably the acquisition cost of the land plus maybe $100/square foot (or a little less) for construction and other costs. Costs will be higher for high rises (and generally for townhouses/ single family) and lower for rehabs. Being in competition with developers for buyers is where the real risk is.
