When Doug Duncan, chief economist of the Mortgage Bankers Association, wants to get a forward peek at housing prices he looks at condos. “A higher share of them are discretionary purchases,” Duncan notes. “They’re second homes and investor properties.” That means owners don’t need to buy them or need to keep them like they do primary residences. Duncan says he started noticing a slowdown in condo price appreciation last summer. The market really turned in October and November. Condo sales fell 1.5% to 850,000 units in February. The median price was $214,300, up 3.5% from February 2005. Single-family home sales, by comparison, were off just 0.2% from their 6 million-unit pace of February 2005. The median home price was $208,500, up a still-strong 11.6% from a year ago. Duncan isn’t forecasting any kind of market collapse, just a “return to normalcy” which he says means price appreciation averaging 6% a year for homes. That appreciation might be less though for units in the Los Angeles building in the picture. A two-bedroom, two-bath condo there is selling for $890,000.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.