Incentives, quick delivery abound in buyer's market When it comes
to new-construction condominiums in Chicago, the idea of “immediate
delivery” is almost mythical. 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. |