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Thursday, Feb. 8, 2007 | This letter is written in response to the Jan. 16 article “In Cooling Market, Condos Keep Coming,” by Kelly Bennett. The article states that there are 1,485 brand-new condos “on the market” and “another” 3,414 currently under construction.
This is not an accurate statement of the numbers. The 1,485 units, referenced above, should be included in the units under construction — they are not additional, or stated another way, out of the 3, 414 units under construction, 1,929 are sold. Additionally, these remaining unsold units are not collectively “on the market.” Rather, most developers offer their condos in phase releases, and many of these units will be delivering over a 2007-2009 time span.
At the end of 2006, there were only 22 completed new condominium inventory units available downtown. Additionally, there were approximately 425 resale units listed on the MLS, which is about 25 percent lower than the peak earlier that year.
As 2007 progresses, we do not argue that there will be many projects being completed downtown, and it will be a great window of opportunity for buyers. However, based on the historical sales data, conservatively, most of that inventory coming on line will be absorbed as the year progresses.
The key point that the article misses is that there is relatively very little production delivering in 2008 and 2009, thereby creating another constricted supply/demand imbalance. This claim is backed by the fact that very few projects have recently commenced construction, and in general terms, they take two years to construct.
It should be noted that just because a project is approved, entitled and “pending construction,” does not mean that it will be constructed. Only projects that are economically viable will move forward.
At best we can all hope for a balanced market, but the suggestion that there could be a prolonged glut of supply in downtown is unfounded and it should also be noted that in 2008 and 2009 the availability of homes is anticipated to tighten significantly.
Richard Gustafson is the president of CityMark Development.