In the “report good news as bad news” file, the Wall Street Journal oozed out a schizophrenic entry headlined, “The Condo Market Hasn’t Been This Bad in Over a Decade.” About 1,000 previous stories assured us that President Trump faced an intractable housing affordability crisis. But the Journal’s story’s sub-headline complained, “Condo prices this fall posted their biggest declines since 2012.” Which the Journal promptly labeled as awful news.
Of the various affordability issues that Democrats have been constantly crying about lately, housing is the one they cite most often. There are two reasons for this. First, the price of housing affects young voters more than any other affordability issue. But it’s also because Democrats are sure that fixing the problem will take longer than President Trump has before next year’s midterm elections.
In other words, usually housing policies, no matter how ambitious or aggressive, would not be expected to show any meaningful local effects before November.
But —defying all expectations— some housing prices are already starting to shift in the right direction, which is why the Journal tried to frame it as bad news.
📉 “Prices for U.S. condominiums,” the Journal reported, “posted their biggest annual decline since 2012.” Condos are the canaries in the housing mine, but the Journal noted that increases in “single-family home prices have also slowed.” This referred to Florida— one of the hottest real estate markets in the country. But it wasn’t just Florida. The story also reported sagging condo prices in Austin and San Antonio due, get this, to “a glut of supply.”
It’s supply-side economics again!
The story rounded up some heart-rending personal anecdotes. For instance, in Flagler Beach, Florida, Sandra Phillips and Dennis Green have struggled since early last year to sell their townhouse. They de-listed it in July, and plan to relist it soon at around $200,000— roughly the same amount they paid in 2020. “Flagler Beach is saturated with places for sale,” Sandra mourned.
In August, Janice and Edward Grimm listed their vacation condo in Murrell’s Inlet, South Carolina. After months without an offer, they have slashed the price to $295,000— less than they originally paid in 2022. “Buyers,” the Journal ruefully noted, “have many condos on the local market to choose from.”
📉 Economists call real estate prices “sticky,” meaning they fall more slowly than changing market conditions demand. Sellers will only reluctantly make major price concessions, and they always hold out until they’re forced to accept losses. Sellers are rational— it can be much cheaper to carry a property for a while, hoping for a better market, than to sell it sooner at a loss.
But eventually, when sellers conclude that the market isn’t going to recover, then prices can start falling all at once, in what economists call a preference cascade. That’s what seems to be starting now, for condominiums.
The Journal’s gloomy article —“condo owners hardest hit”— speculated about a dozen possible causes, but never mentioned the ICE elephant in the room: immigration enforcement. Fewer subsidized illegals means fewer renters, which trickles right up the economic food chain by pressuring sellers. In other words, carrying unwanted properties is more expensive if you can’t rent them.
The Journal’s framing of falling real estate prices as bad news was especially offensive since lower prices are exactly what it has been demanding for the better part of last year. This isn’t rocket science. Obviously, falling real estate prices will hurt sellers while helping buyers. The painful truth is that real estate has been overdue for correction ever since Obama destroyed the market during the 2008 crisis.
This ridiculous media narrative also helps explain why things usually never change— there’s always one constituency or another that doesn’t like it.
But falling real estate prices —while other assets like stocks are increasing— is great news for the so-called “affordability crisis.” It is obviously happening too fast for Democrats’ tastes.
