When it comes to new-construction condominiums in Chicago, the idea of “immediate delivery” is almost mythical.
But 2003 appears to be a magical year for buyers who yearn to reside in brand-spanking new condos in upscale neighborhoods such as River North, the West Loop and the South Loop.
Savvy condo hunters can now buy a residence, pocket a developer incentive, lock-in today’s low mortgage rates – and actually move in within a few weeks or months, real estate experts say.
A whopping 4,100 new-construction condominiums are expected to offer occupancy in 2003, reports Appraisal Research Counselors, Ltd. That’s twice the roughly 2,000 condo units completed in 2000 and 2001.
“The impact of these potential deliveries will not likely go unnoticed in the marketplace, with greater activity expected in the resale market, along with ripples in the rental market,” noted John Jaeger, vice president of Appraisal Research.
What is extremely significant to prospective condo buyers is that a hefty 28 percent of the 4,100 units being delivered, or 1,148 units, are not yet under contract, Jaeger said. “This will put additional pressure on the developers who will be completing these units this year,” Jaeger predicted.
On the positive side, the total unsold inventory stood at 5,667 units, including 4,402 new construction condo and townhome units, Appraisal Research reported in its Downtown Chicago Residential Benchmark Report.
“This represents a significant decline from the overall number of 6,411 units a year ago, but actually a slight increase in the unsold new-construction condo and townhome category, which was 4,356 units in January of 2002,” said Gail Lissner, vice president of Appraisal Research.
The West Loop, River North and South Loop markets all have similar amounts of unsold condominium inventory under construction, the report noted. There are 642 unsold units in the West Loop, 600 unsold units in River North, and 507 unsold units in the South Loop.
For buyers who need immediate occupancy this spring or summer, there are a number of condominium and townhome developments in Chicago that are ready for move-ins, according to Appraisal Research.
They include: 55 East Erie, a 56-story highrise just west of Michigan Avenue’s Magnificent Mile, in River North; The Residences at River Bend, a 37-story highrise at Canal and Fulton, on the edge of River North; and University Village, a $600 million new townhome and condominium neighborhood on the Near West Side.
Buyer incentives abound in the new-construction condo market, Appraisal Research reported. “However, many developers and marketing agents are reluctant to discuss sales incentives publicly, preferring to utilize them as point-of purchase concessions for interested prospective buyers,” Lissner said.
While “free” upgrades continue to be the most popular sales incentive, some developers now are also offering an array of other goodies to lure customers. Incentives include free or discounted parking spaces, price discounts, lower down payment deposits, no payments (on mortgage, real estate taxes and assessments) for a specified period of time and special home-loan “rate locks” of up to 18 months, real estate experts say.
At 1111 S. Wabash, a 34-story South Loop highrise scheduled for initial occupancy in December of 2003, the Gammonley Group is offering a 5 percent down payment and special financing that allows buyers to lock in today’s low home-loan rates for delivery later this year or early in 2004, said Audra Hall, sales manager for New West Realty, exclusive sales and marketing agent for the development, which is 65-percent sold.
Under one mortgage-rate lock-in deal, offered through Mid America Bank, a buyer at 1111 S. Wabash could purchase a one-bedroom condo with a den, a parking space and 1.5 baths for $265,000, and lock in a 4.25 percent interest rate on a three-year adjustable-rate mortgage, or a 5.875 percent lock-in rate on a 30-year fixed loan.
The lock fee, 1 percent of the loan amount, would be $2,517.50 with a 5 percent down payment. However, the fee does not go into the lender’s pocket. It is escrowed to pay the buyer’s closing costs.
Real estate columnist and media consultant Don DeBat has written about Chicago-area housing and mortgage markets since 1968. He is president of Don DeBat and Associates, www.dondebat.net.