The latest Downtown Benchmark Report summary from Appraisal Research Counselors is hot of the presses and in my hands right now, and for the first time in several quarters, it offers some glimmers of hope. Downtown condo sales in the second quarter of 2009 were far better than those in the first quarter, and may very well have exceeded all of the quarters of 2008. (The uncertainty in the second half of that sentence is due to the Chicago Spire’s late reporting, which mixed some contracts signed in 1Q ’08 with the sales in 2Q ’08.)
Near the end of the report, Appraisal Research offers these bullet points as signs that the downtown market is improving:
- 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 are decreasing because new units are not being proposed for development.
- Only 600 units are projected for completion in 2010 along with only 86 units in 2011; 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.
- Interest rates are still at attractive levels, increasing the affordability aspect.
- Projects which have been able to offer FHA financing with 3.5% down payments are finding a larger pool of potential buyers. In addition, the $8,000 first-time homebuyer tax credit has helped the most modestly priced units in the Downtown market. It has also added a sense of urgency to buy since this credit currently is due to expire at the end of November 2009.
- 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.
- The condominium conversion segment of the market may be the first to benefit from the strengthening in the market, since it can provide new product most quickly.
Check back the rest of this week for more findings from the latest Downtown Benchmark Report.