Good News for Buyers 'Frozen With Fear'

Thanks to Don DeBat, a local real-estate columnist, we now have additional information and insight from the latest Downtown Chicago Residential Benchmark Report by Appraisal Research Counselors (ARC). (ARC defines downtown as the area from Cermak to North Avenue, east of I-94.) In the Sun-Times, Don quotes ARC’s Gail Lissner as saying:

“With so much uncertainty in the market, potential buyers [of new condos] are confused, cautious and deferring purchase decisions. Sales traffic is down overall in the downtown market and conversions of traffic to sales also are down.

“Frozen with fear, potential buyers are afraid of making a bad buying decision while at the same time wanting to purchase only when they are certain that prices have hit rock bottom.

“Of the new-construction condo projects that started marketing programs during 2007, only approximately 33 percent of the units were placed under contract by the end of the year. [That compares to 43 percent in 2006 and 60 percent in 2005.] No longer is it a quick, simple process to meet that typical 50-percent pre-sale requirement to break ground within less than one year.”

Good news for buyers: “Developers continue to offer a wide range of mortgage programs, frequently through preferred-lender programs. Some developers are also offering mortgage rate buy-downs. Nearly all developers will offer some sort of perk to get a buyer to sign a contract. With the consensus that price discounts are not good for the market, most developers are looking at more creative ways to offer incentives, with the most popular ones being free upgrades, free parking and free assessments.”

For additional ARC observations, see previous post.

Don DeBat’s weekly real-estate column, The Home Front, can be found at www.dondebat.net.