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.
The Daily Reckoning Australia