Summer Observations from the Center of the World's Largest Condo Marketplace

Observations made while sitting at the center of the condo search traffic universe in the dead of summer:

More and more people are looking for condos to buy and rent every day. Our site traffic has increased dramatically from the first of 2008 and is now increasing at a rapid rate each month. This is not isolated. It is occurring in all the major metros we track.

Developers are being given significant time by their lenders to work out/thru their problems.

As lenders wait for the market to strengthen they are making the most of the time they have to increase their capital reserves. Once these reserves increase enough to offset losses the banks will take, they will mark properties to market and let the market clear.

Prices have fallen dramatically but apparently not far enough…yet. They are being artificially supported by lenders giving significant time to their developer borrowers.

Owners of units seeking to be “short sellers” are highly scrutinized and the slow turn around keeps this market sector artificially small but I expect it to grow rapidly as lenders become ready to mark to market.

While some professionals wait on the sideline – blogging, holding webinars and creating podcasts, others are working hard at their craft:

–        Investors are buying notes at a discount from banks and other high-net worth individuals and foreclosing aggressively.

–        Developers are fighting “lead fatigue” in their sale force by seeking new lead sources – we are working with many firms to redesign augment their internet marketing with condo.com

–        Bankers are fine tuning the underwriting of their portfolios and accumulating capital to facilitate future write downs.

–        Service providers are becoming “workout advisors” to keep their doors open.

–        Some lenders and investors are beginning to close the bid/ask gap and closing transactions

–        Lenders are willing to make unit end loans and project acquisition loans – just not under the historically aggressive loan amounts and terms they were giving prior to early 2007.

SO what does this all mean? It means that we are not much closer to the market clearing than we were at the start of the summer in many markets, but individual lenders and specific projects are being sold into the market. I expect this to increase in pace and that the number of markets moving to apparent equilibrium on bid/ask will also increase this fall.

Here at condo.com we stand ready to asset participants in the market to preserve market and sell/ their projects.