Quote:
Originally posted by Cletus Miller
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.
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Thanks for the input, Cletus.
Well, I think (hope) my newly purchased place is relatively distinguishable (3 floors, lots of storage space). The city really didn't undergo the huge price increase like the coasts did, so hopefully it will just flatten out. Also, I plan to stay 5-7 years, so who knows where the market will be then?
