by Calculated Risk on 4/22/2006 01:23:00 AM

Kirstin Downey writes in the Washington Post: After Pushing Up Prices, Investors Are Left Holding Too Many Homes

Investors who sought quick profits buying and selling real estate in the Washington region are in full retreat, dampening demand for homes, most notably for condos.

What is becoming apparent ... is how big a part speculators played in the region's real estate boom of the past few years. ... condominiums, ... townhouses and single-family houses, were snapped up by investors using no-money-down financing and non-traditional loans. They helped send prices soaring at unprecedented rates. And now many are trying to sell, or rent at a loss. Some may eventually dump properties at low prices to get rid of them. That could weigh down values for everyone.

Sales of new condos fell 43 percent in the first quarter of the year, compared with the first quarter of 2005, according to one report, and there are almost four times as many existing condos for sale than last year.

"We think the softness of the market is largely due to the pulling out of investors," said Gopal Ahluwalia, staff vice president for research at the National Association of Home Builders. "They have not only pulled back, they are canceling purchases."

Click on photo for larger image.

Photo Credit: Bubble Meter. From the WaPo article:

... the local Internet blog Bubble Meter focused last month on what it called "the bubblicious bench."

See WaPo for a different picture of the bench. An interesting article.