Market
April 23, 2008
Cash for Condos Grows Scarcer; Equity Lines Vanish
Syndicated real estate columnist Kenneth Harney reports that would-be condo buyers across the country are about to find financing harder to come by. Fannie Mae and Freddie Mac have both recently issued guidelines that require loan officers to perform due-diligence research on characteristics like a condo's legal documentation and the percentage of units owned by investors, and for lenders to assume legal and financial responsibility for the accuracy of their assessments. "Even if you had an 800 FICO score and 50 percent equity," says one mortgage broker, "you still might not be able to get a condo loan." As Harney writes, "It depends on whether the underlying project can pass the underwriting tests, is in a declining market, and has a lender 'concentration' limit on it. Some lenders refuse to finance more than a set percentage of units in a single condo project to limit their risk." At the same time, many home owners are starting to see big reductions, or freezes, on their home equity lines of credit. A poster on the Forum recently wrote the following: "Logged into my bank account today to find that my line of credit had been cut down by more than half. When I called the bank they told me it was due to a "reduction in property value". I know things ain't peachy, but I haven't noticed prices going down that much! Has anyone else had experience with challenging this type of decision? I put 40% down on my home, fer chrissakes, got a great lease on my rental unit and my credit is well above 750. What gives?!" As the Times has reported, banks are freezing equity lines "even in areas where property prices are rising." Ouch.
Condo-Loan Restrictions Tightening [Baltimore Sun]
Incredible Shrinking HELOC?? [Forum]
Photo by Evaonne Hendricks.
April 14, 2008
Housing Collapse: A Global Domino Effect?
The United States' residential housing market collapse is shaping up to be an international trendsetter, according to article in today's Times. The mortgage meltdown that's caused our bubble to burst is spreading to other countries that've seen rapid housing appreciation in the last decade or so, like Ireland, Spain, England, and Eastern European capitals. The article notes that the "synchronized global slowdown, which has become increasingly stark in recent months, is hobbling economic growth worldwide, affecting not just homes but jobs as well." Beyond Europe, prices are also going down in India and southern China. The worldwide troubles are largely being blamed on too-lax lending standards and over-valuation of properties. The situation threatens to sink vibrant economies in countries like Ireland and Spain, where residential investment has played an outsized role in bolstering growth. As new construction slows, unemployment is rising, and houses are sitting empty.
Housing Woes in U.S. Spread Around Globe [NY Times]
Photo by JohnLeGear.
April 7, 2008
Brooklyn's Varied Real Estate Market
The Times' real estate section cover story yesterday on how the four boroughs' residential markets are stacking up compared to still-strong Manhattan pegs Brooklyn as mostly healthy, but weak(er) in certain spots. On the one hand, prices and sales are still healthy in the most desirable brownstone neighborhoods (Heights, Slope) and holding steady—if not breaking records—in areas like Clinton Hill and East Williamsburg. On the other hand, brokers also say they're seeing more caution from buyers, and the president of Aptsandlofts says his brokerage has dealt with a few people this year who bought investment properties in Williamsburg and are faced with the prospect of selling condos at a loss. And so Brooklyn remains a very big borough with a very diverse market.
Taking the Pulse of the Boroughs [NY Times]
Photo by williamsburger.
April 4, 2008
Foreigners Start to Fancy Brooklyn
As has been well documented in the media for a few years now, the weak dollar has drawn droves of foreigners to Manhattan's residential real estate market. The trend hasn't been as pronounced in Brooklyn, though an article in this month's Real Deal says that's rapidly changing. "The pace of the interest by foreign buyers in the outer boroughs is probably double or more than it was a few years ago," said Jonathan Miller, CEO of real estate appraisal company Miller Samuel. In particular, brokers say many overseas buyers are snapping up Brooklyn brownstones as investment properties and then renting out units or trying to flip them. The one Achilles Heel Brooklyn has in terms of foreign buyer interest is the dearth of new condo development in the borough's toniest neighborhoods, such as Brooklyn Heights. On the other hand, the story also makes mention of a recent article in the U.K.'s Daily Telegraph telling readers that Brooklyn home values are sure to increase, especially as massive waterfront condos are finished. "The scale of these projects is so great that some analysts predict that this region of Brooklyn will become a second Manhattan, giving prices a further boost," said the Telegraph story. First Carrie and her crew, now the foreigners—what's next?
Foreigners Crossing Pond and the River to Brooklyn [TRD]
Photo by Vipal