Slump in US Housing Market Continues As Condo ‘Flips’ Fall Flat

The slump in the US real estate market continues. This report comes from the New York Times:

“In Miami-Dade County alone, 8,000 new condo units will be completed this year and nearly 12,000 more in 2008.

“But demand has dropped markedly, and people who thought they could ‘flip’ condos – buying, then selling for a steep profit before construction is done – are parting with that fantasy. After years of stunning price increases – 25% in the West Palm Beach-Boca Raton area, for example, from March 2005 to March 2006 – condo prices have started dropping.

“As a result, many buyers want out – not an easy prospect unless they are willing to forfeit the 10% or 20% they put down, from US$15,000 for an inexpensive studio unit to hundreds of thousands of dollars for a waterfront penthouse.”

And on the other coast of America, the LA Daily News tells us, “Statewide, sales of existing homes fell by 27.8% compared with a year ago, while the median price of a single-family home rose 6.2% to US$597,640, the California Association of Realtors said Friday.”

The reason for the modest price bump was an interesting one. Lower priced houses are not selling as well – presumably since subprime lenders were hit – so their prices are not part of the mix, skewering the average upward.

But we are sure that out in California there are realtors who have a flattering narrative ready at hand for homebuyers who still don’t want to think. Take our advice, dear reader. If you think that this is a good time to buy…think again.

Bill Bonner
Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.
Bill Bonner

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