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It's disheartening to see any kind of price dip but...it happens. I'm the proud and happy owner of two condo's in Austin and am happy with my purchases. But this year, for the first time, they've actually decreased in value. I'm not planning on selling so it's only theorectical money lost at this point.

Until we can get some of the extra inventory of condo's off the market, it's going to be a soft market. I'm seeing between 4-7% loss in value around the city.  Or in other words: It's a GREAT time to buy a condo.

What I believe we're seeing is the backlash of a lot of condo's having come on the market at relatively the same time. Some were the new construction ones downtown, just south of the river and just east of I-35. But I don't think those affected the prices of the majority of condo's as their pricepoint is considerably higher than the resale condo's on the perimiter of downtown. No, I believe the condo-conversions that were slapped onto the market, in an effort to lure all the new downtown condo buyers into something immediately available, cheaper, and newly redone, are more likely to blame. Condo conversions are apartment complexes where each unit is redone (to varrying degrees) and sold off individually. Think; new floors, countertops, appliances, paint and lighting. Many condo's, both new and conversions, have been forced into leasing in an effort for the developer to stop hemmoraging money from all the unsold units.

In turn, when they start to lease out units, like it was an apartment complex, it becomes hugely problematic to sell any of the units. Why? Well, understandably lenders don't want to finance a condo in the midst of a building with lots of rental units. The difference in care that the average renter takes with the property versus a homeowner is significant and that ultimately affects property value. You rarely see a home OWNER park on their own lawn. A person renting a home - much more likely. The same theory goes for condo's. An FHA loan requires that at a minimum, 50% of units in a condo complex be owner-occupied. And on the other hand, most home buyers want to be in a community of other home owners. They're tired of the rental life.

Bottom line is that this is a temporary dip and condo's will continue to be popular with city dwellers. Many of us just don't want to see a lawn to mow or a fence that needs fixin'. That's what they Home Owners Association fees are for.