ROBERT STERN/THE VARSITY article “This is a big deal,” says Mark Schulman, chief executive officer of Realestate.com, an online real estate marketplace.
“This has got a lot of potential to be a huge deal.
The value of this property will go up in the long run.”
The condo market is now in the midst of its biggest downturn since the housing crash of 2008.
The condo boom is a bubble and the bust is a bust, and that’s what we’re seeing right now.
“There is a lot going on in the condo market right now, but it’s not the bubble you see in other bubbles,” says Schulmans.
“It’s the real estate bubble.”
In New York, the market for condo rentals and townhomes is surging as buyers rush to secure properties, often in the suburbs, and some condo builders are moving into the market, which is dominated by big box chains like TJ Maxx and Nordstrom.
“I have never seen a more important time in the real-estate industry,” says Tom Jaffro, an analyst at RBC Capital Markets.
The stock market is also surging, up more than 6% in 2017.
And while it is too early to say whether this condo boom will continue, some experts are predicting that it will take at least a few years before prices rise back to where they were before the recession hit.
“If the market is hot enough, the real price of condos will come back up,” says Joe DeSantis, chief economist at BMO Capital Markets in Toronto.
Real estate is not a good investment If you’re looking to buy a condo, it is important to take a long-term view, says De Santis. “
A lot of the other things that have been happening over the last two years have created this big opportunity for condo developers to get their foot in the door of a new market, but there is still a long way to go,” says DeSantsis.
Real estate is not a good investment If you’re looking to buy a condo, it is important to take a long-term view, says De Santis.
“You have to understand the risk and the upside, and not be afraid to be more aggressive with your investment.”
There are plenty of reasons why you might not want to buy an expensive condo.
It could be a risk to your financial well-being, says Mark Williams, president of Williams &Bohn, a financial advisory firm in Chicago.
“The downside of condo is the risk of mortgage debt,” says Williams.
“People are looking for something to live in for a short time and the condo boom, it’s going to be really hard to get that in this market.”
Some people might be better off saving for a down payment on a condo instead of putting all of their money into a downpayment.
But you also don’t want to pay the mortgage, says Williams, because that will put you in a worse position to pay off the loan.
“In many cases, you have a lot less risk when you are in the mortgage business,” says Jaffros.
That is why condo developers are selling off some of their high-end condos, such as luxury condominiums, to build condos that are more affordable.
“That is a way to reduce the risk,” says de Santis, adding that the market should also be aware of a trend to sell more condos than are being built.
“With more people getting into condos, you will see that price going up,” he says.
A condo in a condo tower is a risky investment if you are not familiar with how it works, says RBC’s Williams.
When you buy a new condo, the unit has to be built by a builder who has built many high-rises and has an approved budget for the project.
The buyer also has to pay rent, insurance and other costs, which can add up quickly.
“They don’t have to pay any money off of the mortgage when they buy it,” says Jones.
The market for condos could be the largest bubble of the past 20 years, but the market could end up smaller than it started out, says Scholms.
“Even if you have the biggest bubble of all time, it will not be the biggest, it’ll be a smaller bubble,” he said.
That’s why the market has been trending lower for the past three years.
The housing crash in 2008 and 2009 drove prices to a 20-year high.
“What’s happened since then is the market hasn’t recovered, and the trend is not going away,” says Kiley.
