This past year has been rough on developers, and 2009 doesn't look much more promising. In the South Bay and East Bay, we've seen them holding auctions. With hefty loan payments to cover and time running out, several builders are resorting to this method, previously used only for distressed properties, to sell off excess inventory.
Prices on downtown high rises have dropped quite a bit, but their builders aren't resorting to auctions yet. They are offering generous packages to potential buyers...buying down interest rates and even crediting the first few months' payments in escrow. Although the demand for an urban lifestyle is down, some builders are certain that it will revive, and are renting the units for the short term.
With no more lines of potential buyers signing up for unbuilt models, builders are finishing their units, and find that selling them in "turn-key" condition (often with upgrades included) is the solution to a slow market.
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