Despite an oversupply of condos in the downtown area, demand for homes remains high. Developers will complete a record 2,234 units in 2010, which means there will be intense competition for renters. Though there is still strong demand for units, it hasn’t kept up with the booming supply, which has forced landlords to lower rents dramatically.
Developers sold only 572 units in 2009, which makes it the worst year for the downtown condo market since 1997. The rents in top-tier downtown developments were $2.08 per square foot in the fourth quarter. This is down from $2.10 in the third quarter and $2.11 in the year-earlier period.
The proliferation of units on the market has caused Appraisal Research Vice-President Ron DeVries to predict that the occupancy rate could fall as low as 90% this year. The Class A occupancy rate has fallen to 91.4% in the fourth quarter, in contrast to 91.9% in the third quarter.
Though the current market is not beneficial for developers, it is for buyers. The sheer number of units coupled with low prices makes this a great time to purchase a downtown condo. Many people are afraid to buy now due to the state of the job market and a fear that there will be further price declines, but it’s good to keep in mind that the construction boom will end in 2011, which experts predict will cause healthy rent increases in 2012.
Take advantage of these low prices before they’re gone!