Condo Crazy

The Wall Street Journal has another article about the housing bubble today, after an extensive look at the bubble yesterday. The article was mostly about the huge amount of condo construction going on nationally and what is possibly fueling the demand. Some people try to make the case that condo demand is high because more people now want to live closer to where they work, and so are happy to buy apartments that are close to city centers. However, the article also points out that condo’s are attractive properties for flippers and suggests that once the speculators stop speculating, there is going to be lots of supply on the market.

At the Jersey Shore, it does seem like condos are sprouting up on a regular basis. Long Branch certainly has lots of condo construction, as does Asbury. Also, the bay shore is building town-homes and condos.

Snip…

“Developers started construction on about 802,000 condo units in the past five years, according to the Census Bureau. More are on the way. About 270,000 condos will be started in 2005 and a further 255,000 in 2006, estimates Michael Carliner, an economist with the National Association of Home Builders, a Washington-based trade association. That doesn't include the sizable but hard-to-quantify number of new buildings that start life as rentals and switch before completion, or the existing offices, hotels and rental properties being converted into condo developments.

"In the past, the highest and best uses of land were commercial, but now with condo prices and single-family homes getting such high prices, the demand for land that would have been used for commercial is being shifted to residential," says Anthony Downs, a senior fellow at the Brookings Institution and a real-estate specialist. Median prices for condos may be skewed because many of the newer properties tend to be located in pricey coastal cities or in parts of town where land prices are higher.”