Market Update: Bad News For Subprime-Stunned Nabes
A Crain’s article features some pretty grim sales data from Brooklyn-based appraisal firm HMS Associates. It goes a little something like this: Bed-Stuy, East New York, Brownsville and Ocean Hill are looking kinda screwed right about now. Sales volume in the four neighborhoods, which were hit hard by subprime lending, is down 64 percent over…
A Crain’s article features some pretty grim sales data from Brooklyn-based appraisal firm HMS Associates. It goes a little something like this: Bed-Stuy, East New York, Brownsville and Ocean Hill are looking kinda screwed right about now. Sales volume in the four neighborhoods, which were hit hard by subprime lending, is down 64 percent over the past six months, and prices are nudging down. Financing is simply not available, says HMS Executive VP Sam Heskel. Sales are down all over, but in subprime neighborhoods, you see it more.
Brooklyn Starts to Feel the Real Estate Pinch [Crain’s]
Photo by Reid Harris Cooper.
OK, I’ve been a real estate investor in Brooklyn for over 30 years, and this is the cold hard truth. Prices in Brooklyn are coming down, and they will be dropping considerably. The banks and lenders have done a total about face, and their credit policies have now eliminated huge numbers of potential borrowers by seriously tightening loan standards. Couple this with a huge rise in foreclosures, and the impact of the credit crisis on Wall Street, and the results are inevitable. We will be seeing price declines of 25% to 35% before this is all over. If you have any interest in buying Brooklyn real estate, just wait it out a year or two and you will save yourself a bundle.
Hey Brooklynlove, I will post this whole story here. This is a bombshell and I hope everyone reads this story. This outright manipulation of our financial system. This is ENRON to the thousand power.
New Century Bankruptcy Examiner Says KPMG Aided Fraud (Update3)
http://www.bloomberg.com/apps/news?pid=20601103&sid=aXebBOZ3eBjQ&refer=news
New Century “engaged in a number of significant improper and imprudent practices related to its loan originations, operations, accounting and financial reporting processes,” Missal wrote in the report. He said “KPMG contributed to certain of these accounting and financial reporting deficiencies by enabling them to persist” and in some cases “precipitating” a departure from “applicable accounting standards.”
“This is really the embryo of the credit crisis,” Missal said today in a phone interview. “The theme of the report is how easily the loans were originated, how exceptions were made, how they used bad appraisals. There were no appropriate internal controls and KPMG failed to look at these things skeptically.”
This is a Oh My GOD moment! I think the gates of hell just opened up just a little bit. Everything is fine, I don’t think so!
The What
Someday this war is gonna end…
People bought houses in marginal neighborhoods hoping they would go up in value. Now values are falling at a alarming rate. I know people look at sales price but, sales volume has fallen off a cliff. As soon the credit markets adjust themselves without Government intervention, the value of all assets class will fall. When Wall Street starts laying off people then, you know the greater economy is in bad shape. The sad thing is the writing is on the wall but, people will just ignore it. By then it will be too late.
The What
Someday this war is gonna end…
Responding to those who think Wall Streeters don’t buy in Bed-Stuy… I live there and I know a few financial types who bought here. A train is great for going to Wall Street.
Warsaw was flattened too by the Germans in WWII, then rebuilt.
That article said nothing. So little real information. It said foreclosures on “homes” in those 4 neighborhoods. That means coops and condos too, don’t forget.
Unqualified buyers were not buying million dollar brownstones. They’re buying coops under $500K that they still couldn’t afford. I don’t feel like this applies much to the people who own houses, here. Also the way the stats are measured for existing home sales nationwide is very narrow, pretty ridiculous and hardly applies to NYC real estate either.
No doubt sales will lag and people won’t get the prices they ideally greedily want. I’m glad those overpriced houses are selling for less. It means buyers can negotiate more, now. It’s a good thing. It opens up the community to more types of people. Like more people in media and arts. Who wants to live with a bunch of bankers?
“It’s not an ancient world heritage city like London, Paris, Tokyo, Warsaw, etc.”
(record player screech) – Tokyo an ancient world heritage city? Dude, have you ever been to Tokyo? Sure, the name has been around for a long time, but we firebombed most of the city 60 years ago and it now has a culture of planned obsolescence in its architecture. I have seen you post similar ramblings before with that list of cities. Going forward, why don’t you leave Tokyo out of those, m-kay? You obviously know nothing about it.
11.49 – you can’t refi if you don’t have enough equity in the house regardless of your credit. The falling values of homes have caught out people in this way – they can’t refi.
Are you lying or are you just ignorant?
Um, no 11:49, Bed-Stuy isn’t merely suffering because people got loans they couldn’t afford, the bigger picture is that people in Bed-Stuy used credit that they shouldn’t have because they assumed prices would go up forever and therefore their risks were minimized to the point of non-existence (sounds like Wall Street). People all over brownstone Brooklyn, the rest of the city, and the entire country did the same thing as a matter of fact. The difference between Bed Stuy and richer neighborhoods is that poorer people feel the crisis first and most acutely. Just because there probably wont be many subprime foreclosures in a few other neighborhoods doesn’t mean the pain wont be felt in different ways, e.g. lost jobs, lost or smaller bonuses, defaulting tenants, smaller profits and therefore smaller salaries etc which lead to lower prices and desperate sellers.
Also, Wall Street money does get spent in the “hood” either directly by people on Wall Street who chose/choose to live there because they actually like it or think its a good investment, or indirectly by people who got pushed out of richer neighborhoods by Wall Streeters with money to burn.