A lot of money is going to be lost. I mean, a LOT.
In several metropolitan areas, from Miami to Riverside, Calif., where the real estate market is white hot, rapidly rising prices are luring a growing number of ordinary people into buying and selling residences they do not intend to occupy, despite warnings from some economists that prices cannot continue to rise as steeply as they have in the last few years.
[. . .] Like the day traders of the 1990’s dot-com boom, people are investing in a market that seems to just go up.
[. . .] These buyers, some of whom lost money when the stock market crashed five years ago, believe real estate is a safer bet.
[. . .] Even in Manhattan, where average sales prices topped $1 million last year, investors are piling into the market, brokers say.
[. . .] They rent it out for $2,225 a month, about $1,000 less than their mortgage and maintenance costs. The couple hope to make up the shortfall when they sell the condo in a few years. “It seems that real estate always goes up,” in the long term, Ms. Finley said.
[. . .] With more than 60,000 units in some phase of development in the Miami area, “the supply may be greater than the ultimate demand,” said Michael Y. Cannon, managing director of Integra Realty Resources-South Florida, a market analyst. A similar situation in 1986 sent the market spiraling, and it took seven years to recover.
[. . .] For now, investors like the Lidskys are still buying. They intend to buy at least one more unit – their sixth in less than a year – in another condo.
Oh it’s going to be bad. Really, really bad.