Wednesday, October 03, 2007

Minneapolis Condos Tank

Major Swanson of Swanblog and now currently serving in Iraq sent this to me.

And what do you know, the condo market in Minneapolis is going down the toilet.

What is great is I had several of these deals cross my desk several years ago. And like a good economist I not only looked at the individual projects, but also looked at the condo market and said, "you know, I think there's going to be too many condo's hitting the market and these won't sell."

The problem with that is it makes bankers sad. For bankers don't make their money on the successful sale of condos. They make their money on the commission of deals they fund. So bankers don't have an incentive to fund good projects, they have the incentive to fund ALL projects.

And thus much lecturing and stern language was used whilst the bankers explained to me that I didn't know how this market worked. And how I was just some young punk kid that didn't have experience in condo development. And why, Good Ole Jim was the developer for this deal and Jim was a good guy, and how dare a young whipper snapper like me question somebody with gray hair.

So, I'm going to pull up an old chart I posted probably a year ago.

Imagine, just imagine, if somebody had listened to me or the bevy of other junior, deputy, professional or otherwise economists out there that saw this coming a mile away. We could have been called "The Recession Preventers" which would make for a good kind of 1960's, Man from UNCLE spy series, but the heroes would be economists.


Bear said...

Great Chart!

Captain Capitalism said...

Thanks, charts are my speciality!

Anonymous said...

That really is a great chart. It's incredible to see that there were more condos built in 2004 than from all of 1995-2003 put together. What's going to happen to those new condo neighborhoods? Are they going to become ghettos?

Anonymous said...

Hmm, I just remembered my road trip through Minneapolis in the Summer of 2007. If I remember correctly, there were an awful lot of apartments advertising for tenants along the interstate.

I didn't quite make the connection until just now...