High Estates

There is a mortgage crisis in New York, not only in low cost houses, but also in homes that are valued $500,000 or more.

Real estate agents say that lending activities in the area has fallen dramatically even during this peak season, when buyers and sellers should be busy. Mortgage bankers say that the change is due to tighter financing. Since the borrowers are starting to find it hard to get lenders who will fund big amounts of financing, they do not bother to buy at all. And even when they do, they usually end up in banks charging as much as 9% in interest.

MANHATTAN HOUSING – I expect a slower than normal wall street bonus season in the months of JAN – APRIL, in terms of buyer demand. As for bonuses, yes I think they will be given out (with some departments seeing drastic cuts in bonuses) but its HOW THEY ARE SPENT that I’m a bit concerned about. I expect inventory to build as we near summertime, as a result of a slower than normal bonus season, and wall street to deteriorate as we get more clues about whether we are in a recession or not. As wall street falls, so will confidence and demand on the buy side for Manhattan real estate products. At the same time, we will see more types of sellers contribute to inventory builds toward the end of 2008; speculators, foreign buyers flipping, second home’s selling, and struggling buyers who bought a bit more than they can chew or whose job security has changed to the negative. I expect job losses to grow during the first two quarters of the year as a result of the credit crisis and hit to the financial sector, leading to what I described above.

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