"The Bad News" On Condos: In Q1 2007, 3,472 condo units that were either in the planning stage or about to come on line in the Washington area were changed to apartments and another 790 were simply canceled, says the WaPo. Sounds like the signs of a healthy market to us because many investors want to own rental units based on the belief that people want to rent in this market.
Need more another sign of health: there were 395 condo contracts in April of 2007 compared with 354 and 434 from the same month in 06 and 07. So April 07 was a good month, not great, not horrific.
We beleive where the bubble is bursting is outside the Beltway, not in DC.
May 16, 2007
What's Wrong With Conversions?!?
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4 comments:
Ooookay then. Entire condo buildings failing to sell, and being bought up on bankruptcy/forclosure auction is a sign of a healthy market, because they eventually become rental units. Uh...yeah.
Next up, the downward spiral in domestic cars is a sign of a healthy market, as eventually someone will buy the car company's assets and use them to sell cars. Just another day of dcbubble logic!
Bonus points for missing that this article specifically says investors aren't buying, which sorta contradicts your entire post.
Van Dorn is not in DC.
Two points:
1. It's all well and good and healthy for people to be building apartments in DC, but it's not so great when condos convert to apartments midway through the development process. The underlying pricing of land for condos and apartments doesn't discriminate based on the ownership structure of the end units. Moreover, the design standards for condos involve significantly higher per-unit construction costs than rental units. As a result, the decision to convert to condos after you buy the land at "condo" prices, and especially once you've already started construction, is almost always a way to cut your losses. This action is also being forced by lenders given fears of oversupply (i.e. if you're not going to be able to sell your condo units at a reasonable rate when they're completed in 9 months, you better switch to apartment before you marble-tile all the bathrooms, etc.) This dovetails with
2. You're right, the absorption numbers aren't terrible, but given the number of condos for sale relative to last year and the year before has increased substantially. Check out the quarterly development reports at www.downtowndc.org for a sense of what's still on its way up.
Yeah, whatever Realtor is running this blog has been hilarious. You see them post headlines that are all variants of "Things are fabulous!", linking the Post or USA Today.
Then you follow the link and the actual article starts off contradicting the post by DCBubble. Too funny.
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