Southern California Real Estate Bubble Crash Blog

No reasonable person can say that they didn’t see this one coming. Although it has been reported on several other sites and blogs, I wanted to pay my respects to our nearly departed friend, Condoflip.com.

Condoflip was a great idea for specuvestors (pump & dump) to trade (boiler-room style?) condos through a slick front-end over the internet without so much as having to do your homework, run various investment scenarios, or even visit the condo.

This was real-estate’s moment to try to shoot themselves in the foot.

You see, the value of adding this “alternate market” is that the existing one is terribly inefficient and filled with graft, subterfuge, and unnecessary intercessions. Condoflip was to end all that (and provide a nice chunk of funneled business to the founder, Zilbert Realty). It was going to be the NASDAQ of condo buying.

I am certain that they have since realized that disintermediation of their own business would mean that they would no longer be getting fat commission checks on fewer transactions, but thinner commission checks on far more transactions. Doesn’t work if there aren’t any transactions coming through.

What’s going on.

The web page sports a brand new anti-bubble saying:

Bubbles Are For Bathtubs

Uh, does that strike anyone as something like a playground taunt? Do any astute property investors really believe that? It reminds me of a Romanian Proverb:

• Prostul nu e prost destul dacă nu e şi fudul!
  • Translation: “A fool must be conceited to be foolish enough!”

Volume is way down from last year. Prices have stabilized and are going to be falling due to out-of-control inventory, and on top of that, transactions are stagnating and failing. In short, the traditional market is collapsing as we speak. Condoflip’s website says:

We’ve decided to postpone the introduction of our new search engine until June 1, 2006. We’re doing this for a few reasons:

1. The Miami real estate market is currently sitting in an unusual “holding pattern”,and we found that while there are a growing number of units for sale, the buyers seem to be waiting to see what will happen

2. As things are with technology, it’s never a good idea to launch a high-transaction tool unless it is absolutely perfect. And, we’re fussy about quality. So, we’ve introduced some new features to our developers, and they need the extra time to make things just right

3. We’re in no rush to get the flipping of units going. We have predicted all along that 2007 will be the year of the Condo Flip, so we’re going to use this first half
   of 2006 to get our rhythm going

Any thoughts?

1. What’s so unusual about the holding pattern? It hasn’t happened since the last housing bust.

2. Developers? Who are they kidding? This type of tool is a few weeks’ worth of work for any single web developer that is worth his salt. They are either blowing smoke, or complete fools with their resources. (you decide which one)

3. You’re in no rush to get to flipping because noone else is. You need buyers to flip, not just sellers.

I rarely try to predict, but I would venture a guess that 1 year from now, condoflip.com will officially be out of business.

Zilbert Realty will be having bigger problems to deal with than how many condos they can help flip; and more likely they will be funneling business to their core brokerage rather than off chasing some internet scheme; volume will kill the deal.