Wednesday, October 22, 2008

Welcome Aboard the Real Estate Sag Wagon

Everybody knows residential real estate is going through a rough patch.  Mortgage applications are down to their lowest level since December 2000 (I guess people who've just seen their savings go "Poof" and whose jobs may do the same at any moment aren't interested in taking on 30-year obligations.).  Now the other shoe is dropping: commercial real estate.  Retail of course is a train wreck, with store after store going dark, and now Mervyn's announcing it will be liquidated by the end of the year.  Now developers are shocked, shocked to find that office space is overbuilt (Tenants can play musical chairs downtown at will, and 222 and City Creek aren't even built yet.  And Sandy and Cottonwood Heights are going great guns.  Some people are just easily surprised.)  (As an aside, Craig Mecham continues to use the downturn as an excuse for why there is still a hole in Sugarhouse.  Odd thing is, though, he claims he's going forward with the retail space and is just putting the condos on the back burner.  And Frank Gray, SLC'c community development director, is buying it and giving him more time to come into compliance.  Who says there's only one born every minute?).  The real estate market is a mess, it's getting messier, and it isn't suddenly going to pull out of this power dive any time soon.  Every fundamental (supply, demand, financing) is bad, and if you think the MOAB(Mother Of All Bailouts) is a magic wand, you need to sit down with a nice, big cuppa joe and wake up.

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