Slow market forces 'huge incentive' for Elgin development

It's been billed as a different way to live in downtown Elgin.

But being different may not be a good thing in today's housing market.

Since at least the start of last year, sales have been slow on the first phase of Elgin's Fountain Square condominium development -- a key piece of the city's downtown revitalization efforts.

At the same time, city officials say the market for new homes has remained relatively strong in Elgin.

"In Elgin, the market continues to be quite strong," said Jerry Deering, the city's community development director. "Is it different for the condos? Yeah, I think it is.

"It's easier to get financing for one house than a 70-unit building," Deering said.

Katie Lange, sales manager for Fountain Square, said this week that about 71 or 72 of the building's 93 available condos have sold.

By comparison, the developer had already sold about 65 of those units back in February 2006.

But those numbers can be misleading, said developer Richard Curto, CEO of RSC and Associates.

"We have sold substantially more than that," Curto said. "But what happens in the process, when you're developed a condo project of this quality, over time you end up losing some of the buyers for extenuating circumstances. Especially in this market, you will have resales."

Still, Curto said, the slow housing market has certainly affected Fountain Square.

"We would have preferred to be at 100 percent," he said. "However, we are satisfied that we are at 75 percent."

But Curto said the slow market has had another effect -- delaying a tentative groundbreaking on Fountain Square's second phase until next fall.

"That's depending on the quality of the market," he said. "We had hoped to be breaking ground this spring."

To help attract prospective buyers during the housing downturn, the development's sales team has been running advertisements with the Daily Herald offering six free months of living.

That means no mortgage payments, no taxes and no association fees -- or about a $10,000 savings on the building's lowest cost, a $230,000 unit, Curto said.

"From my perspective, it's a huge incentive," he said. "I've been through the cycles. It's clear to me that the market is pretty much purged out. People will be buying at the bottom here and riding it, especially in Elgin where there is so much upside."

Curto said they did meet a lot of prospective buyers with the recent promotion. And the sales staff extended the deadline on what was supposed to be a three-day deal through the end of the week.

Still, the response could have been better, Curto said.

"Obviously, you'd always rather have more sales," he said.

Lange says she believes those sales will come.

"We don't have a lot of condos in Elgin," she said. "This is just a unique, new toy. The key behind it all is the urban lifestyle. You can park your car, walk to the rec center, the restaurants around here. It's a different lifestyle.

"The other thing you've got going on here is a revitalization," she said. "You've got a lot of people excited about seeing what's happening, even though the market is what it is."