You might notice that we always ask developers in our video interviews some variation of the following question: “What do you say to the buyer who looks at the current market and decides to sit on the fence?”
Naturally, most of their answers include the recommendation to “buy now.” (These people are selling a product, after all.) But it’s always good to hear their rationale behind these answers.
Yesterday, Joe Zekas sat down with Motor Row Lofts developer Paul Zucker for an interview about his career and his approach to home building. We haven’t uploaded Joe’s video’s to YouTube yet, but here’s a small excerpt from the interview, in which Zucker explains why today is a good day to buy.
I don’t think there’s anybody who’s saying that a recovery is any more than 18 months away. Most people are projecting that it’ll be at the end of this year and into the beginning of 2009. So if you’re talking about really being in a house that you buy today three to five years from now, chances are it’ll be worth more then than it is today, for a variety of reasons.’
One, the economy will be better.
Two, the real-estate market will have stabilized.
Three, a lot of the projects that would normally be coming into the pipeline at a time like now are not, because the credit crunch has limited access to capital. Fewer projects will get off the ground, so supply will tighten as we move through this current inventory reduction phase, and prices will go up significantly in three or four or five years.
So it is a good rationale, as much as it may be emotionally driven, to jump in now, do your best to negotiate as good of a value as you can today. Remember that prices aren’t down dramatically in Chicago, so you have some leverage, but not the same as you might if you were looking for a condo in Miami right now, where there are 200 units for every buyer in the marketplace. Once you do that, pick a home that’s going to give you some advantage at resale, which usually is a product that is somehow unique to the marketplace.
Stay tuned for Joe’s videos with Paul Zucker. In the meantime, you can watch my visit to Motor Row Lofts.