Going, going, not gone! More developers are resorting to auctions as the Chicagoland housing market slows down, according to Rick Levin of Rick Levin & Associates. Levin has 88 auctions of new-construction properties with one or more units scheduled for February, up from a mere 15 in February 2006.
“I am getting triple the amount of calls and they’re coming from all over – all kinds of price points and all geographic areas of Chicagoland,” Levin told Yo. “It’s homes, townhomes, condos and especially vacant land.”
Levin says developers are loathe to stump up for the carrying costs of a development that has a few remaining units and are eager to cash out so they can finance their next project.
“As a developer, if you own $10 million in real estate and it’s vacant for a year that costs you $1 million in mortgages, taxes and assessments,” he says. “If the market goes down 5 to 10 percent, you might not only pay $1 million to carry the project – the product might be worth $1 million less, so you lose $2 million.” We’ll bring you more news on the auction market in coming posts.