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October 27, 2008

Quote of the Day

quotation-icon.jpgI had two condo developers call me over the weekend, leaving messages that they had drastic price reductions and that I should come and look at their places again. They had my number from one of those sign up sheets. I'm going to go look. But, man, I can feel the desperation and fear...

— by THEANDREWLEE in The Housing Crisis Has Arrived




Posted by Brownstoner at 3:28 PM | Comments (10)
Categories: QOTD

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some developers might start reducing, but the small ones probably not... they've got banks to pay and need your money to do so, can sit on the sidelines til it all comes back around and rent them and hold-em. the only ones selling now must have to, but as far as drastic reductions in prime areas - not happening. some negotiability will happen, not so much. and you really sound like you are bssinggg, unless you are talking about williamsburg, which we all know has been bs from the beginning...

best of luck,
lee

Posted by: lee_maison at October 27, 2008 4:06 PM

Some people have to sell, they need to move, they're getting divorced, they die and their heirs want cash.
Not everybody can just hold on indefinitely until prices stabilize. tht's absurd. Prices will keep going down substantially for a while. if you wait a year you may end up getting less than today. In fact I bet you will.

Posted by: sam at October 27, 2008 4:38 PM

It is a buyers market. So there is no doubt you will get purchasing incentives that can save you tens of thousands of dollars (appliance upgrades, closing cost reduction, free HOA fees, etc). Even more for high-end units. Price reduction is usually the last resort as it is the least desirable for the current buyers in contract, agents, and developers. And in the bigger picture, the neighborhood.

The downside is, can you get a loan? 700 FICO and 20% down often does not cut it anymore. Banks want 750+ and 20% down and one year reserve. So even with the price going down, your actual purchasing power will need to be stronger than it was at the height of the boom. Ironic isn't it?

This is why I said in various threads that the rich are the one that benefits the most during recessions and depressions. Their purchasing power becomes stronger. Renters are in good position to buy ASSUMING they have the asset and have been growing their money from the lower cost of renting.

Posted by: crimsonson at October 27, 2008 4:45 PM

"and you really sound like you are bssinggg, unless you are talking about williamsburg, which we all know has been bs from the beginning..."

Well, never thought I would be quoted, but saved voicemails don't lie. And I'm sure I wasn't the only one called.

Just to be clear, though, the two developments are new construction and smaller developers. One in the Prospect Heights area. And one in Lefferts. So not prime Brooklyn -- like Brooklyn Heights or Park Slope. In any case, the Daily News article was more about these farther out neighborhoods.

Posted by: theandrewlee at October 27, 2008 4:54 PM

"The downside is, can you get a loan? 700 FICO and 20% down often does not cut it anymore. Banks want 750+ and 20% down and one year reserve. So even with the price going down, your actual purchasing power will need to be stronger than it was at the height of the boom. Ironic isn't it?"

I'm sorry but that is incorrect. Any Fannie/Freddie/FHA loan does not require 750+ fico and 1 year reserves.

Some portfolio lenders are requiring unusual reserve requirements and lower LTV's but that isn't the norm and they are usually for larger loan amounts.

Not one single lender/investor requires a 750+ fico score.

I do this for a living, I know what I'm talking about.

Posted by: Adam Dahill at October 27, 2008 5:10 PM

We found ourselves in a very similar position in 1992. We had looked at a number of condos but were not ready to make the plunge at the asking prices. The brokers of the Mill (Carroll Gardens), then a new development, called us twice to offer price reductions.

I think "Lee's" analysis is quite suspect. If a developer needs cash, no matter the neighborhood, or his size, he will make deals. Smaller developers, without cash flow from other projects or cushions, may be much more likely to make a deal.

Posted by: very bored at work at October 27, 2008 5:18 PM

"I'm sorry but that is incorrect. Any Fannie/Freddie/FHA loan does not require 750+ fico and 1 year reserves. "

Unless you don't want to get point increases up the ying yang. 739 or lower will require 25% down or BETTER (30% to 40%) in order not to get point penalized. 680-700 WAS considered the borderline. Not anymore. 720 may become the new standard for conforming loans. For Jumbo loans - all bets are off. You will need 750 or better. Or at least have major assets to cover. Remember that Fannie/Freddie is not the one that actually giving you the loan. The banks has to still do that for you. Each bank have their own standards. And many of them are higher than FM/FM. Ask your lender if you don't believe me.

New rules as of Oct 1.

Posted by: crimsonson at October 27, 2008 6:29 PM

Offer 130K

Posted by: Xander Crews at October 27, 2008 6:36 PM

crimsonson- I am a lender. You are still incorrect. We can go back and forth all day long but you are posting incorrect information. I have been doing this for a living for years and I continue to do this today. I portfolio loans, sell directly to Fannie/Freddie, sell to individual banks, and broker loans. I'm not trying to paint a rosey picture of the lending market but when you post that you need a 750 fico and 25% down to get a mortgage you are posting inaccurate information.
I'm not sure who you are talking to but it seems that someone is giving you bad information (or trying to get you to pay points.)

Feel free to contact me if you would like to discuss further.


Posted by: Adam Dahill at October 27, 2008 7:33 PM

From 2 different agents (Chase and Wells).
Both are asking 20% down. 750 or better for preferred rate (aka no penalty points). If the condo is not warrantable, then there is at least a .5 penalty point added on top of other points.

Posted by: crimsonson at October 27, 2008 7:55 PM

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