Developers continue to report that some buyers don’t want to close on their contracts (i.e. investors) while others lack the financial resources to close on their contracts, given the tighter lending standards and job losses. Contract fallout had escalated since the spring of 2008; it is still too early to determine the fallout levels for the buildings which delivered units in 2009, as many buildings only began closing units late in the 3rd and 4th quarter. Thus, developers tend to close these contracts over a very extended period of time before acknowledging fallout. However, we have seen buildings which were completed over the past year, with contract fallout rates ranging from 25 to 50+%, depending on the building.
– From the executive summary of Appraisal Research Counselors‘ 4th Quarter 2009 Downtown Chicago Residential Benchmark Report.