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PAD-81-62 1 (1981-03-05)

handle is hein.gao/gaobabbqf0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. PROGRAM ANA6Yrs March 5, 1981 B-202311 The Honorable Benjamin S. Rosenthal 111j~I i Chairman, Subcommittee on Commerce, 114631 Consumer and Monetary Affairs Committee on Government Operations House of Representatives Dear Mr. Chairman: Subject: Eluence of Speculation on the Price of Converted Condominium Unit (PAD-81-62) This report addresses your concerns regarding the effects of investor speculation on the price of converted condominiums. As we understand it, you are concerned that rapid turnover in sales of converted condominium units by investors has caused the price of these units to increase more rapidly than general housing prices. In this response, we discuss the complex interactions that determine the prices at which transactions take place in the housing market. Then a means of isolating the influence of investor speculation on the prices of converted condominium units is discussed. However, because of limited available information at this time, the test we propose cannot be performed in time for your immediate needs. THE OVERALL APPROACH The price of a converted condominium cannot be assessed in isolation from the prices of other converted condominiums or the prices and rentals of alternative housing units. In general, prices for housing depend on three broad sets of factors: --the demand for housing of all types; --the supply of housing of all types; and --the debt service burden associated with the purchase of most housing which, in turn, is dependent largely on mortgage interest rates. Any buyer of a converted condominium unit weighs several factors when purchasing the unit. First, given his tastes, he compares the purchase price on that unit with the purchase (971894)

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