Condo prices falling off a cliff

[n2doc]

Condo prices near a cliff
Apartment developers cheaply taking over failed conversion projects

By Susan Diesenhouse
Tribune staff reporter
Published September 23, 2006

So far the housing slump has been marked by slowing sales. Now there are signs that rapidly falling prices could be on the way. Earlier this month a Chicago developer sold 150 condominiums in a two-hour lottery by discounting prices about 20 percent from what he would have asked last spring, an indication that industry observers say could signal widespread price reductions here and around the country. For the first time in his 37 years as a developer, Nicholas S. Gouletas, chairman of Chicago-based American Invsco Corp., held a lottery to sell his condos, in this case 150 moderately priced residences in a 292-unit vintage high-rise at 182 W. Lake St. in the Loop.

Gouletas figures he still could make a 10 percent profit by cutting future carrying costs. He will avoid the expense of 2 1/2 years of mortgage interest payments, marketing, maintenance, insurance and taxes by not struggling to sell condos against the headwinds of a slowing housing market. "We're responding to a dramatically changed market," said Gouletas, who plans to conduct lotteries to sell about 2,000 more units in nine other projects he is developing in Chicago, Las Vegas, Orlando and Boynton Beach, Fla. "Let's admit it's a buyer's market and what they want is the best price they can get."

For those anxious to assess how far the decelerating housing market will fall, a lottery sale like this could indicate a steeper decline in prices as veterans in an industry replete with optimists head for the exits to salvage profits and avoid big losses. If this becomes a broad trend it would generate a dynamic destined to ripple through the overall economy. "I haven't heard of a lottery elsewhere, but I've been waiting for them," said Mark Zandi, chief economist for Moody's Economy.com, a research firm in West Chester, Pa. It could signal a change in attitude among sellers who so far have been "holding tough on prices," he added.

"The condo market is quickly unraveling and reeling nationwide, with sales down 15 percent and prices down about 3 percent," Zandi said. Since new housing is still being built he expects sales and prices to continue to fall for a year and to remain flat in 2008. "As the overall housing correction intensifies, the broader economy will weaken further," Zandi said.

more: (reg req'd)
http://www.chicagotribune.com/business/chi-0609230059sep23,1,2356696.story?coll=chi-business-hed

[Fountain79]

1. Are these the condo's they are putting in downtown? n/t

[n2doc]

4. cheaper ones and not at the lake, but yes.

I think the part I posted has the address of these particular ones

[Warpy]

2. Condos offer all the drawbacks of apartment living

plus all the drawbacks of home ownership. One has upkeep and a mortgage and close neighbors with music you don't like and monthly fees that go nowhere but up. It's not surprising that condos are the first thing to go.

This guy was smart. Other condos are being converted back into rental apartments. Soon renters may be in the lap of luxury while suburbanites struggle to make payments on constantly deteriorating bungalows.

[katmondoo]

6. In Florida the rentals are being turned into condo's

In Gainesville a one bedroom condo is about $165,000

[Warpy]

10. In Cocoa Beach, the condos are sitting on the market for months

and are now being reduced. Buyers just aren't biting, no matter how nice the ocean view is.

That was the case last spring. My contacts in the area say that has now spread to houses. Nothing is budging, it's all sitting there for sale forever.

[DoYouEverWonder]

3. The greedy developers

created an unsustainable market. Why anyone would spend $250,000 - $1 mil for an average 'condo' is beyond me.

[demnan]

5. People can't even afford condos anymore

no one has a decent job and owning your own home is too damn expensive. Everyone wants out, everyone wants to move somewhere where there are better jobs.

If I had lots of money to invest, I'd buy some of these condos as the prices go down and rent them out. But only the rich can afford to do that. The rest of us must sit by and suffer as our major investment in life takes a free fall in value.

[annabanana]

7. You mean my 20-something sons

might not live with me & the mister forever?



heehee

[Blackhatjack]

8. Here High End Condos Have Wait List, Moderate Condos Go Begging...

... a reflection of the inequality gap in wealth.

The superrich are buying the highest priced luxury digs at a good clip, and the rest of us are struggling.

[n2doc]

9. there was an article recently on high end condos in london

Starting at 2-3 mil. They were selling like hotcakes to foreign buyers, the "jet set", who want a secure place to stay in several different major world cities. I guess all that Iraq reconstruction money is coming back!

[Divine Discontent]

11. snark!!!! n/t

[Loge23]

12. Developers walk away from projects

In Miami and Fort Lauderdale FL developers are reportably abandoning condo projects already started.
Actually leaving construction sites until the market turns around.