In light of my most recent conversations with various constituencies across the industry, I have identified 5 reasons condo developers should consider an accelerated marketing plan today, versus postponing to a future date.
- We are still in a declining market. A number of reports just came out today confirming this. To claim otherwise is to be simply whistling past the graveyard. IHS Global Insight of Lexington announced an expectation that prices will drop through 2009. The IMF downgraded its worldwide and US economic forecasts today for 2009 placing the US at a -2.8% decline for 2009. Home prices will not rise amid a deepening recession.
- There is still time. A proper campaign can still be mounted to liquidate inventory between now and the week of the 4th of July. The Boston real estate market goes on vacation in late July and August. Now is the time to sell while the market is active.
- Lenders are getting impatient. Many banks need to get their money off the street. Workout officers are pulling back from offering extensions. An accelerated marketing plan can be an attractive offer for negotiating with a lender. If you are a developer with a note coming due in the next 12 months act sooner rather than later. Lenders are very likely to cooperate in instances where it’s possible that they would otherwise own the project. Carrying and disposition costs for fractured or broken condo developments are unpleasant and unpredictable. In my travels and in speaking with special assets and workout groups I can tell you they are not expecting it to get better soon and they are getting impatient.
- If you’re going to be short, tis better to be less short sooner than more short later. There is more value in a project today than there is next quarter or next year, that is the nature of a declining market. If you’re forecasting that you’ll be short or close to it today, you’ll be really short next quarter and wicked short next year. Take the pain, pull off the band-aid with one quick swipe, don’t opt for the slow bleed.
- Certainty in this market ephemeral. If things aren’t going as well as you’d hoped wouldn’t it be nice to forecast a conclusion? You might actually be able to sleep at night if there was some reasonably firm date upon which you could be assured that the thing you fear has come pass.