When Doug Duncan, chief economist of the Mortgage Bankers Association, wants to get a forward peek at housing prices he looks at condos. “A higher share of them are discretionary purchases,” Duncan notes. “They’re second homes and investor properties.” That means owners don’t need to buy them or need to keep them like they do primary residences. Duncan says he started noticing a slowdown in condo price appreciation last summer. The market really turned in October and November. Condo sales fell 1.5% to 850,000 units in February. The median price was $214,300, up 3.5% from February 2005. Single-family home sales, by comparison, were off just 0.2% from their 6 million-unit pace of February 2005. The median home price was $208,500, up a still-strong 11.6% from a year ago. Duncan isn’t forecasting any kind of market collapse, just a “return to normalcy” which he says means price appreciation averaging 6% a year for homes. That appreciation might be less though for units in the Los Angeles building in the picture. A two-bedroom, two-bath condo there is selling for $890,000.

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