Considering the present recessionary trend in the US economy and the woes following the credit crunch, the market for condos is surely in for a depressing time till at least mid-2010. With people in the US tightening their money spending girths and the shockwave of the downtrend in the economy hitting everyone irrespective of status albeit to different degrees, the condos market is cooling down fast.
At such a juncture, people are hardly spending time in making new investments into the condominium market. In fact people are worried now about the investments that they made some time in 2005 or before that into condominiums. Today those dollars are not turning out any impressive returns on investment. The reason is not only the condo market but the entire housing and the real estate industry overall is reeling from the subprime crisis and the deep debt situation that many US citizens are facing today.
Even the recent massive doses of the life-rejuvenating injections of dollars by the US federal government into the banking industry is not anticipated to result in an immediate turnaround in the overall financing of the real estate market. Not only are new endeavors in condominiums are stalled completely because of no takers for existing ones, even the big hotel owners are scared stiff of completing the condominium projects they launched with much fanfare.
Overall it seems that this is a time for deep reflection for the entire real estate industry not only that venturing into condos. The rules of the game are in for a massive overhaul. Not only the money lenders, but even US citizens are wary that they should take on loans that they might never be able to repay in the future.
It seems earlier a lacuna in tax assessment rules in respect of condominiums had resulted in their high sale prices. As a result, people had been enthusiastically investing into them in comparison to ownership homes as they could fetch more returns on investment.
Today the cat is out of the bag as people in the administration have realized that tax assessment for condominiums being based on the whole building is erroneous. They have realized that the assessment needs to take into consideration the common spaces and amenities that different condominium owners use, like it does in respect of houses.
The administration in cities has realized the erstwhile assessment norms resulted in less tax earnings for them. Definitely, legislation is expected to be in the pipeline in the near future to correct this anomaly.
Let us hope that this is a useful period to bring forth rules and regulation in respect of condominiums that will eventually result in a boost to investors' confidence in condominiums. For one thing is sure. This recession cannot be anything but temporary in nature. It cannot defeat the spirit of Americans for long. They have earlier got over such hiccups in the past and this time it will be no different.