From the summary of Appraisal Research Counselors‘ 1Q 2009 Downtown Benchmark Report.
So what are the reasons for optimism in the market?
- No more pipeline issues — all potential deals are on hold and will not be adding new inventory anytime soon.
- Unsold inventory levels have peaked and will begin to decrease because new units are not being proposed for development.
- Interest rates are at extremely low levels, increasing the affordability aspect.
- The Obama Administration appears very determined to boost demand for housing (i.e., $8,000 tax credit for first-time buyers).
- Since so many people have had their future moves on hold due to the weakness in the market, there will naturally be some pent-up demand which will be evident when the market recovers.
- Only 600 units are projected for completion in 2010; this will be a welcome relief after the 18,000 units which have been delivered over the four-year period extending from 2006 to 2009.
Overall, there are some outstanding buying opportunities in the market which should spur sales. Accompanied by a general improvement in the overall economic climate, the new development market will be poised to regain momentum, albeit at a more deliberate pace.
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