In a booming downtown market with an unheard of amount of rental properties in the pipeline developers now have to think twice - have we reached the tipping point?
Sure the sales market is still rebounding, but it's close to leveling out. With historically low inventory buyers are either stuck in bidding wars or waiting it out in a rental for that perfect place. Sure there will always be renters but with current interest rates and tax credits what better time to buy then now.
Today developers are challenged with evaluating the risk/return of each structure. Is it wiser to develop a condo building that might not sell as quickly as anticipated, or opening up a rental high rise to find there are no renters in sight?
I think what we need is more inventory for our would-be buyers. Inventory at various price points to appeal to a wide range of consumers. The only new construction since the crash has been luxury single family homes or smaller boutique sized developments. Lets get some projects in the works that would appeal to first time buyers and urban professionals wanting to be close to work and downtown.
Worst-case outcome for developers? Build as rentals, wait a couple years until the market is overly saturated with them, then flip their projects from rental to condo. Based on current trends it seems this is what most are betting on.