Today’s New York Times cites a new Queens College demographic report showing homeownership increasing by a never before seen rate over the past few years in New York City. The article states:
Propelled by a building boom, co-op and condominium conversions, the lifting of rent regulations and the availability of low-interest and risky subprime mortgages, the rate of homeownership in the city increased more from 2000 to 2005 than during all of the 1990s, according to the analysis, conducted by Queens College demographers for The New York Times.
Put that together with astronomical rents and unrealistic expectations of prospective tenants, and we have an unsustainable situation. We have people who can’t afford to rent competing with people who can’t afford to own. Too many people are living on tomato soup to make their housing payments. In past markets, NYC had a more healthy ratio of renters to owners. When things got bad, landlords did the reasonable thing: burn down their buildings. (Just a joke to all those who remember the South Bronx of the 1970s and 80s.). Its too early to do what blight will mark this era’s dip in value, but as far as I can see the only thing to cushion the fall of Gotham’s values is a weak dollar abroad and plenty of foreigners still happy to take a piece of the Apple, at a discount.
Categories: Housing Market · Manhattan · New York · Real Estate
Bloomberg reported Friday that NY State is investigating Manhattan real estate, specifically price inflation.
Attorney General Andrew Cuomo issued subpoenas to leading NYC appraisal firm Mitchell, Maxwell & Jackson as well as leading NYC mortgage broker Manhattan Mortgage.
From Bloomberg: “Y. David Scharf, an attorney at New York law firm Morrison Cohen LLP, who is representing Mitchell, Maxwell & Jackson, said his client has been told it’s not a target of the investigation.
“The information that is being requested is whether or not pressure has been brought to bear on appraisers to change their appraisals,” Scharf said. The firm is “continuing to gather information” in response to the subpoena, he said.
“We did not change appraisals in any circumstances,” he said.”
If anything this news is not good for the health of the Manhattan housing market and its ability (per the REBNY report in my prior post) to continue to buck the national trend and most quarter after quarter improvements in housing prices. If the report finds anything serious, it could be disastrous to NYC home values, if not – it should scare the industry into very conservative appraisal practices, never before seen in Manhattan.
Values could be at their tipping point.
Categories: Housing Market · Manhattan · Mortgage · New York · Real Estate
