Meeting a Flipper

Last night, I was at a mid priced restaurant in the Chicago suburbs when my mom introduced me to a friend of hers. She told him about my interest in the housing bubble, and told me about his condo in the Miami area. This friend owns a successful retail store in Chicago and is also a flipper. He said that he already made one successful flip on a property. Now, he is holding another condo in a suburb of Miami and has owned it for less then a year. Part of the conversation went something like this:

Flipper "So you think that prices will decline? By how much in Miami?"

Me: "Prices will decline in Miami. By probably 20 - 30% inflation adjusted."

Flipper: "When will the start declines?"

Me: "Probably, starting the fall and continuing for a couple of years. You should consider selling now. "

Flipper: "I need to hold it until next year because of the capital gains tax issue."

Me: "Ok. They are building 60,000 condo units in Miami. Thats huge"

Flipper: "What about all the 1000 people a day who are moving to southern Florida?"

Me: "Sure. But will they be able to afford an expensive condo? Are you losing money each month on your property?"

Flipper: "Ya, I am losing a few hundred dollars a month."

Me: "If you hold you will be burned."

Flipper: "Good bye" and walks away.