Detroit condo project could set bar for downtown

National City Corp. expects to close on the Book Cadillac's first mortgage prior to the October opening of the historic 33-story luxury hotel.

Successful sales would create a new mark for comparable downtown condo developments left in limbo by the worsening national mortgage crunch, enabling lenders to make loans based on the new value.

But relying on buyers to quickly gobble up the Book Cadillac's 64 condos at between $290,000 and $1.4 million still is risky in a time of financial uncertainty and Detroit's own bleak economy.

The city's double-digit unemployment rate is tops in the country, while "for sale" signs sprout like pesky dandelions on lawns of some of its most affluent suburbs.

"We were very upbeat that Detroit was doing quite well until this economic slowdown," Book Cadillac developer John J. Ferchill told The Associated Press. "Getting anything financed today, from a homeowner's standpoint, is impossible. I think development downtown will stay slow until the economy settles down."

But lenders still are pushing downtown living to those who can afford it. One of its programs knocks 1.5 percent from a mortgage's interest rate in specific developments, such as the Book Cadillac.

"It helps us qualify more buyers and make units more affordable for more people," said Roz Gietzen, National City Mortgage Co. assistant vice president.

With little to set prices on, developers have had to do a lot of explaining to appraisers about the value of upscale residential developments downtown, said David DiRita, a principal with The Roxbury Group, developer of the nearby Griswold project.

Low-end condo-loft units in or near downtown sell for $150 per square foot. Higher-end condo units are averaging about $230 per square foot, but there had been no real standard for luxury condos.