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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (27710)	3/3/2005 2:17:00 PM
From: Ramsey Su	Read Replies (1) of 110194

Russ, downtown SD is untested. I would not waste time trying to make sense of the numbers that you are looking at. There is a big supply and so far have been met by demand. The problem with this type of supply is the total lack of control. It takes forever to have plans approved and once started, you can't stop regardless of change in market conditions. Same occured for downtown redevelopment on the commercial side in the 1980s. We ended up with 1.5 million or so square feet of office space that ultimately took years to absorb. These condo projects have the addition problem of the HOA. If you are to look at the HOA budgets, I would doubt seriously that any are reserving in accordance to DRE guidelines. Furthermore, with defaults at historic lows, there are also no reserve for delinquent dues. It had been my experience that when there is a problem with these projects, they are far more difficult to solve than SFRs.

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