Clouds Over Condos: Are Stormy Times Ahead?

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Clouds Over Condos: Are
Stormy Times Ahead?

By Amir Efrati
From The Wall Street Journal Online

In Boston, a condominium developer is asking new owners to help it promote its unsold units, while another is putting in hardwood floors free. In Sarasota, Fla., sellers of condos are offering buyers incentives such as exclusive golf-club memberships worth as much as $75,000. In Atlanta, the developer of a high-rise is promising shoppers it will pay their first year of condo-association fees.

Perks being offered by sellers? Until recently, buyers in many markets were competing for the chance to snap up new condos downtown. But even as many cities continue to see condo prices appreciate, there are spreading signs that the market may be cooling, just as in the overall market. The worry for investors is that this real-estate slowdown will mirror that of the early 1990s, when condo values in some markets dropped more sharply than those of single-family homes, in part because many had been bought by speculators -- the same kind of speculative buying that has fueled this era's boom.
-- February 13, 2006

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