Monday, April 06, 2009

DEVELOPERS COOKING UP HOUSING DEALS TO PULL MARKET OUT OF NOSE DIVE

As home-loan interest rates inch toward the lowest level in nearly a half-century and prices continue to spiral lower, new home buyers may be seeing some of the best deals on residential real estate in a lifetime, real estate experts say.

While President Obama’s stimulus program is directing the Federal Reserve to push home-loan rates into the mid-4-percent range, the lowest level since the 1950s, Chicago area developers are giving buyers lucrative offers.

Developer Steve V. Frytz of Anchor General is offering six free monthly home-loan payments for mortgage principal and interest—a cash value of $15,000—to qualified buyers at Cornelia Court, a 63-unit townhome development at 3007 W. Cornelia Ave. in Chicago’s West Roscoe Village neighborhood. Prices start at $449,900. Visit www.corneliacourt.com.

At Eastgate Village, a condominium and townhome development at 2536 S. Martin Luther King Jr. Dr. on the South Side, New West Realty recently unveiled a mortgage payment protection plan. If you lose your job within two years of the closing, New West is willing pay up to six months of your mortgage payment—up to $2,500 a month. Prices start at $239,900 on a condo and $355,900 on a townhome. Visit www.EastgateVillageChicago.com.

Clearance pricing is another marketing innovation. C.A. Development is offering to sell eight immediate-occupancy homes, previously priced as high as $1.15 million, at sealed-bid prices starting at $495,000 in April.

The 4-bedroom to 6-bedroom homes have 3.5 to 4.5 baths. The homes, located in the Edgebrook/Forest Glen, Old Irving Park and Portage Park neighborhoods on the Northwest Side, feature luxury finishes throughout. Visit www.cadevelopment.com.

Analysts say the current mortgage-protection deals were sparked by the Hyundai Assurance program offered earlier this year by the South Korean carmaker. “Buy one of our vehicles, the ads explained, and “if in the next year you lose your income, we’ll let you return it.” But, despite the incentives, many home buyers are still worried and are sitting on the fence.

Developer Maurice Sanderman, the guru of zero-percent financing during the last great housing downturn of 1981-1982, believes interest rates are not the problem today.

“Fear and high housing prices are the problems. Prices may be down 30 percent in some areas, but people think they will go lower,” said Sanderman, a creative-finance specialist who unveiled the zero interest mortgage after home-loan rates skyrocketed to 18 percent.

When the new-home market was in deep depression, Sanderman created a mortgage pool and asked home buyers to place down payments of one-third and set up fixed monthly principal payments designed to pay off the loan in five years.

As a result, Sundance Homes sold 350 single-family homes in Naperville, Carol Stream and Woodridge at average prices of about $200,000 in the early 1980s.

“These buyers owned their homes outright in five years, while many of their neighbors may still be making hefty principal and interest payments 27 years later,” Sanderman said.