Quote:
Originally Posted by Jdawgboy
Actually Im not astonished at all that the market is holding up. Austin continues to be in a good position as far as the economy goes, and demand will be strong for downtown housing for a while longer.
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I'm not astonished either, but I sure see red flags flying. Here in DC, our economy remains one of the strongest in the US. Average salaries here far surpass those of Austin salaries, and, for the most part, DC is recession resistant. But despite all that, the froth over real estate peaked early in 2006 when sellers and developers pushed prices into the totally insane category, and buyers finally said, "no more". Trust me, the Austin market could flip on a dime!
I don't doubt that many of those pricey condos in downtown Austin will sell. But what I would be looking at is how many buyers must resort to creative financing just to get into them. How many buyers can cough up 20% down on a $300,000+ unit without having to take out an 80/20 interest only, negative amortization loan? (Those types of mortgages might be fine if a buyer can be guaranteed 25% appreciation per year, but will that happen in Austin? Doubtful.)
I wager that if most condo purchases are done through creative financing, then you can expect to see the condo frenzy abruptly coming to an end, and the rate of foreclosures rising sharply. I also bet that outsider investing will dry up quickly when investors find that Austin, unlike San Diego, Miami, DC, and Las Vegas, is not a city where they can name whatever price for their condos and get it. Those days are over!
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