With hundreds of condominiums on the market downtown, developers and resellers are getting aggressive in their sales efforts, including lowering their prices and offering other incentives.
It is estimated 1,800 new units and another 500 resale units are on the market in the area generally within the 92101 ZIP code.
Bosa Development recently extended a year-end promotion for a 23-story high-rise at the corner of J Street and Seventh Avenue. The Canadian developer lowered prices 7 percent and is waiving homeowner association fees for three years for those who purchased through Feb. 28 at The Legend. The average HOA dues at the property is $830, according to a sales associate.
The associate, Ingrid Sikov, said the promotion has doubled foot traffic to 25 to 30 visitors per week, which has helped increase sales.
Last month, four buyers closed escrow. Only 28 units of 178 remain for sale, with prices starting at $499,000.
The high-rise, which started construction in October 2005, was completed two years later.
Bosa President Nat Bosa said the discount paired with paying HOA fees for three years has helped move units from his inventory.
Meanwhile, Intergulf Development Group and Lennar Urban have maintained their list prices at Breeza, a nine-story, 155-unit project at Pacific Highway and Ash Street.
Prices start at $335,000 and increase to $1.9 million for a 1,900-square-foot penthouse and 600-square-foot patio overlooking San Diego Bay.
Mike Chious said Canadian-based Intergulf is being aggressive in its incentives to maintain buyer interest. Chious, a sales executive with Intergulf, said the project is buying down interest rates, reducing HOA fees for a time and offering upgrades. A buy-down in interest rates is a temporary reduction in interest rates on a mortgage usually acquired by paying a larger deposit.
Foot Traffic Increases
On average, 12 to 14 parties visited the sales office at Breeza but just last week 36 visitors walked through the doors. The project was just completed last month.
Meanwhile, Smart Corner, a 19-story, 301-unit mixed-use project located at Broadway and C Street, recently rebranded itself as Sky View Lofts and is rolling out a rent-to-buy program to attract buyers.
The development partners include architects Austin Veum Robbins Partners, Canyon-Johnson Urban Funds, J & T; Consulting, developer Lankford & Associates, and Urban Housing Partners.
Currently 80 units are rented, 55 are sold and six are under contract.
The new rent-to-buy program will be offered to current tenants leasing as well as new renters.
Renters will earn credit towards the purchase price with each monthly rent payment.
Meanwhile, Sherm Harmer, who heads the Downtown Residential Marketing Alliance, anticipates sales will increase this year to help whittle down the supply.
“We are back to 2003 and 2004 price levels,” said Harmer. “We have historically low interest rates.”
But industry experts widely disagree on how long it will take to sell off supply at today’s sales levels. Estimates range from 18 months to five years. A healthy inventory is widely considered six to nine months.
Harmer predicts new sales will double this year as listing prices fall to their lowest level in five years.
Gary London, president of The London Group Realty Advisors, said he was not certain if sales would increase this year but is confident it’s a good time to buy.
Condo Shortage Looming?
“There are not going to be any condominiums built downtown for at least six years,” said London. “So it is inevitable at some point there will be a shortage.”
The resale market has been stable during the past few years. In 2006, 467 resale units were sold downtown, another 470 units were sold in 2007 and an additional 542 units were sold last year.
While the number of resale unit sales has grown, the number of new units sold has plummeted. In 2006, 1,097 new units sold compared to 384 units in 2007 and just 275 last year, according to Harmer.