Lower Prices = Increased Sales
Go figure:
If you cut prices in half, sales improve.
“Despite a vast oversupply of new condos in downtown Miami, sales have been brisk lately at 1060 Brickell Avenue, a twin-tower development with 570 units in the heart of the upscale Brickell neighborhood. The reason? Prices have been cut in half, to about $200 a square foot . . .
Since 2003, nearly 23,000 new condo units have been added to the downtown skyline, from Brickell Avenue up through the more modest Biscayne Corridor — far more than this city of 400,000 people could absorb. About 9,400 remained unsold at the end of June, according to Peter Zalewski, the owner of Condo Vultures Realty, a local brokerage.”
Surprise!
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Source:
As Prices Plummet, Condo Sales in Miami Perk Up
TERRY PRISTIN
NYT, July 28, 2009
http://www.nytimes.com/2009/07/29/business/29miami.html
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July 28th, 2009 at 11:51 pm
Hey, Mr. Reealltor,
Can I get half price off a pair of condos?
July 29th, 2009 at 2:46 am
I just generated a demand vs inventory graph for Ventura County, the demand is still all concentrated on the low end. The low end is clamoring for inventory. We have a large pool of renters (available buyers not found in many markets), a tax credit and ultra low rates. Combine that with FHA and the market is white hot on the low end. REOs get multiple the second they hit the market.
Problem is all the government interference, the foreclosure moratoriums and haranguing of servicers have supply constrained the market. We just had a great opportunity to replace weak borrowers with stronger borrowers and the supply wasn’t there. Buyers can’t afford more and push price.. but there are plenty of buyers. It is a huge disapointment and its a shame the investor / cash out / refi crowd gets the bailout while the saver / renter crowd gets the shaft. Yet somehow this was the correct action and “saved” the economy.
Here is the graphic:
http://effectivedemand.blogspot.com/2009/07/ventura-county-demand-versus-inventory.html
July 29th, 2009 at 3:53 am
Holy cow! I have a masters in economics, twenty years of trading experience, and thought myself a smart guy, but this is absolute genius. I will be teaching at a top business school this year; can I use this idea in my course or is it copyrighted?
Just to be clear: if you lower the price, you can sell more of something. (It doesn’t make much sense to me based on the past ten years but I will try to create some spreadsheets or something to figure it out).
Thanks
July 29th, 2009 at 5:05 am
Lower prices = lower rental costs = less buying pressure. I’m livin’ it in ‘my own’ (rental) condo.
And who, exactly, is going to do all the buying? Speculators? Or did someone fix the profound U.S. immigration-cap problem when I wasn’t looking? Or did unemployment suddenly turnaround for the better…or…?
Moreover, I thought the news said just the other day that home prices were going up, and that the recession was over? How can prices be falling still? Maybe I’m just experiencing some of that good ol’ real estate market cognitive dissonance…? ;-)
Then again, maybe fat lady has not even hummed a tune yet.
July 29th, 2009 at 7:51 am
Are you inferring that a degree of deflation is a positive for the economy? Does Chairman Mao er….Ben know about you???
July 29th, 2009 at 8:43 am
Expat, you might also enjoy this instructional video:
http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff
July 29th, 2009 at 9:02 pm
“according to Peter Zalewski, the owner of Condo Vultures Realty, a local brokerage”
Condo Vultures? This can’t seriously be their name can it? If it’s not it’s a funny but accurate typo. If it is, it’s a funny but accurate name.