I would be interesting in seeing that FHA default analysis. Maybe the default rates are similar to not FHA loans during a bubble, but it will be an entirely different story on the way down. There is no doubt someone is more likely to default when they are underwater, and you are much more likely to be underwater with 3.5% down. There is a reason why mortgage rates go down the higher percentage your downpayment is

Agree with northsloper here, FHA is just yet another way the gov. is propping up housing price, in effect making them unaffordable to most. It is our tax dollars subsidizing homebuilders and realtors, as well as sellers who overextended themselves

Posted by: dcorreale at November 18, 2009 11:38 AM in response to A Few More Sales Trickle In at BellTel

Well, if they bought it cheap enough, which I imagine they did, they can set the appropriate prices. Could have a dramatic effect on all new developments in the area

Posted by: dcorreale at November 12, 2009 9:46 AM in response to Second Life For Be@Schermerhorn

It is a city of rentals, but mixed buildings are undesirable for buyers...and developers admitting they can't sell and are forced to go to rental when it wasn't their first choice does not help the area. Granted, it is a bit of a chicken and egg that feeds off of each other, but either way, the area is clearly less desirable than the developers assumed

Posted by: dcorreale at July 29, 2009 11:29 AM in response to Taking the Pulse of 4th Avenue's Inventory

Well 1) they make it less desirable to buy in a building with rentals 2) make it more likely that a potential buyer of this area will rent first, especially in this environment and 3) just prove the area is not selling and bring the general hype down

Posted by: dcorreale at July 29, 2009 11:18 AM in response to Taking the Pulse of 4th Avenue's Inventory

I would guess those numbers are vastly understated. Corcoran lists 8 available at The Argyle, but I would be absolutely amazed if the other 52 are actually in contract and have any likelihood of closing. And while the Crest and Novo have been around awhile, I still think they are holding back inventory, at least the Novo. And not sure buildings moving to rental improves the situation?

Posted by: dcorreale at July 29, 2009 11:11 AM in response to Taking the Pulse of 4th Avenue's Inventory

I took a look at this about 9 months ago, penthouse was nice (I believe it was where the sales office was located). Price has come down to fairly reasonable, although with high maintenance. And the locations is borderline Carrol Gardens, really close to Gowanus

Posted by: dcorreale at July 27, 2009 12:46 PM in response to Condo of the Day: 505 Court Street, #10C

My understanding is it is a free year of mortgage payments. Even so, this is only equivalent to dropping the asking price by about 5% when you do the math. Another way to look at it is $12,000 off of a 1.25MM apartment (the amount of equity you would gain after putting 25% down and making 1 year of mortgage payments) and a year of free rent. Of course the cost of that is the lost return on your $250,000 down payment, and the fact that there is a good chance you will be underwater by the time you make your first payment

Posted by: dcorreale at July 1, 2009 11:24 AM in response to Come On and Take a Free Ride (at Northside Piers)

But what if they can't get mortgages...their downpayment no longer represents 20% of the value of condo. If there were mortgage contingencies, it is an easy way out. If not, alot of people could be out of their downpayments. But the bottom line is, in this environment, as others have mentioned above, in contract is very far from actually closing. I will be amazed if this building is 70% closed

Posted by: dcorreale at May 26, 2009 12:50 PM in response to DOB OK's the Argyle

Petunia, even if you are not disciplined, you still have extra cash. If you want to go spend it on Disney World every year, then so be it, and if you want to invest it instead of paying down your mortgage, again, to each his own. But the fact remains you have more cash in your pocket instead of in the banks

Posted by: dcorreale at May 14, 2009 4:37 PM in response to Refinancing: How Sweet It Is

Thanks for that definition of amortization what, it has really cleared everything up for me :) But you are right, I am an idiot, because I just spent the better part of a day trying to convince you of some very simple math, the same math you profess is behind your logic. Oh well, it was fun

Posted by: dcorreale at May 14, 2009 4:35 PM in response to Refinancing: How Sweet It Is

What the what is really ignoring is that it doesn't matter what he already paid. He got to live in the house for those 3 years What, do you realize that? he borrowed $1,000,000 and had to pay interest on it. That is how it works, its not like he gave the money away for the right to pay less interest later

Posted by: dcorreale at May 14, 2009 3:34 PM in response to Refinancing: How Sweet It Is

What...everyone realizes that after year 15 you will have paid off 26% of your mortgage. What is your point? Do you think we don't realize it is not 50%. So you are left with 74% of your mortgage after year 15, $592,000 of an $800,000 mortgage. Guess what, whether your refi or not, it is still $592,000. And if you want to get another 30 year, 15 years later I realize, if you only pay the minimum, you will still have 74% of the $592,000 left on your mortgage versus being paid off. Is this what you are trying to enlighten us with? However, if you take the cash you saved in lower payments and use it to pay principal, you will pay off your mortgage significantly quicker than 15 years

Simple math
Non refi - year 16 of $800,000 7%
$5,322 (monthly payment), $3,454 in interest

Refi - year 16 - 5%
Payment $3,179 per month / $2,467 towards interest
You can put an additional $2,143 towards principal if paying same amount

Thus, in nonrefi, you put $1,868 towards paying down principal each month
In Refi, you put $2,855 towards principal, and this number gets larger more rapidly since you are paying off more principal in this scenario

So, does the extra $1,000 a month in paying principal make up for closing fees. Granted, because of tax deductibility of interest, it is not quite this compelling, but it is still a no brainer

Posted by: dcorreale at May 14, 2009 3:30 PM in response to Refinancing: How Sweet It Is

Actually, he is agreeing with you. He is saying Mr. B is WRONG to think the market is bottoming out, just as I did about 3,000 posts above.

However, you are WRONG to think that past mortgage payments have any bearing whatsoever on whether to refinance now. You are absolutely completely wrong, yet you continue to call everyone else idiots and retards who don't agree with you. Yes, lower rates do not always mean you should refi, you have to consider how much longer you expect to be in your house and how much the closing costs are to refi, but past payments are irrelevant.

Posted by: dcorreale at May 14, 2009 2:56 PM in response to Refinancing: How Sweet It Is

Petunia, I am arguing the "lost interest" previously paid is irrelevant. I don't care if you been there for 20 years and your montly payments are now 75% principal...refi can still make sense. As long as there is enough time and a large amount left on the principal to make up the fees for the refi, it can makes sense.

I feel like people are arguing that you pay a higher rate in the early years to get a lower rate in the later years, but this is not true. You are not going through some rite of passage in the early years, you are merely paying the same interest rate on a higher base, a higher base which is the same regardless of whether you refi or not

Posted by: dcorreale at May 14, 2009 1:10 PM in response to Refinancing: How Sweet It Is

Yes Brownstoner, that is what I have been trying not so eloquently to explain. What is past is past, not relevant. What is relevant if the fees it will cost you to refi versus the monthly savings (and how long you expect to collect these monthly savings, i.e. how long you plan on living there). In your case, a refi seems like an absolute no brainer

Posted by: dcorreale at May 14, 2009 12:46 PM in response to Refinancing: How Sweet It Is

Park sloper, you bring up some important points and other points I believe are not relevant.

Points that do matter:
How long you plan on being there going foward
How much in fees you have to pay for new mortgage

Points I don't think matters
How much interest versus principal you have already paid...I personally do not believe this matters, you were not paying a higher interest rate for the priviledge of paying a lower interest later. You borrowed a sum of money, and you paid a rate on that money, disregarding the principal repayments you have paid. You are not going to reborrow a sum of money, and pay a lower rate on it

Posted by: dcorreale at May 14, 2009 12:43 PM in response to Refinancing: How Sweet It Is

I just don't get the resetting the amortization schedule argument. You can artifically unreset it by using the monthly savings to directly pay principal instead of some principal but mostly higher interest payments due to higher interest rates.

Look at it from the banks perspective...In year 1 of a mortgage they get the same monthly payment as year 30. Obviously, in year 1, about 90% is interest and in year 30, about 10% is interest. Does that mean that they prefer year 1?? The answer is no. They are still getting the same interest rate in both years, but in year 1 you owe the bank alot more money. So if anything, they prefer year 30, because they know their money is now AAA+ rated with all of the equity backing the payments, versus year 1, where default is much more likely. Now of course the bank has a portfolio of mortgages, with both year 1s and year 30s to diversify risk

Posted by: dcorreale at May 14, 2009 12:39 PM in response to Refinancing: How Sweet It Is

Park Sloper, you are still paying the fixed rate of interest on the principal, but it is mostly interest at the early stages because of the amount of principal. It is done so you have an equal payment for all 30 years. Obviously, as you paydown principal, you owe less interest (but at the same rate). Banks are not charging you more in the early years, they are charging you the same amount, but off of a higher base

Posted by: dcorreale at May 14, 2009 12:26 PM in response to Refinancing: How Sweet It Is

They are almost entirely interest payments because you are paying the fixed rate on a larger base. You are still going to pay that fixed rate on that larger base regardless of whether you refinance or not. Banks do not charge higher interest rates in the earlier years, you pay almost all interest because you have a higher amount to payback. So again, do you want to pay 5% or 7% on whatever your mortgage is today?

Posted by: dcorreale at May 14, 2009 12:23 PM in response to Refinancing: How Sweet It Is

And I still don't see it. Lets take a $1,000,000 home, you put 20% down, have an $800,000 mortgage at 7% interest rate, resulting in a monthly payment of $5,322. By the end of year 3, you will have paid off $26,000 in principal, left with $774,000. Whether you refi or not, either way you are left with $774,000. If you refi to 5%, your monthly payment is now $4,154 versus $5,322. What is your point? That there will be an extra 3 years at the end of the mortgage? Doesn't have to be, just continue to pay the $5,322, except now, instead of $808 going towards principal repayment, there is $2,100 going towards principal repayment. You pay the loan off considerably earlier

Posted by: dcorreale at May 14, 2009 12:17 PM in response to Refinancing: How Sweet It Is

"Because you do not understand Money=Time concept! Brownstoner has already made 42 mortgage payments! If he refi's tten he will make 402 Mortgage payments or 33.5 years!"

I completely understand the idea of time value of money. Do you understand the idea of sunk costs? What has been paid in the past is irrelevant, what is left on the mortgage going forward is all that is irrelevant. If there is $500,000 more on the mortgage would you rather pay 7% or 5% on that loan. Yes, it extends it out extra months, but you could go and pay the same exact monthly chunk you were paying before, and just put the extra money towards paying principal instead of the higher interest rate, and you will pay off the loan even sooner than before. You just have to make sure the fees associated with the refi make sense, and dropping 2% on that size loan will repay itself in less than 2 years

Posted by: dcorreale at May 14, 2009 11:51 AM in response to Refinancing: How Sweet It Is

Because you will save more money by refinancing mshook, regardless of whether you can handle the prior payments. If you want to own earlier, just prepay principal. Hell, if you can own outright in 13 years, why not refinance to a 15 year mortgage and get even better rates

Posted by: dcorreale at May 14, 2009 11:31 AM in response to Refinancing: How Sweet It Is

What...I am confused why past mortgage and interest payments are even relevant. What is relevant is future payments, and how much will be saved there versus the fees to refinance. If Brownstoner is not planning on moving nor refinancing in the near future (at rates these low I doubt you will ever have another need to refinance), then why doesn't it make sense to refinance.

Where I disagree with Brownstoner is arguing that lower rates will bottom out the housing market. There are alot more issues at hand, most importantly unemployment rates and job stability, where NYC overindexes in. Add that to the fact that NYC was late to the ballgame and popping this real estate bubble, and I see plenty of downward pressure on housing going forward, including brownstone brooklyn.

Posted by: dcorreale at May 14, 2009 11:28 AM in response to Refinancing: How Sweet It Is

I agree...no reason to believe prices are going anywhere but down, so it seems very illogical for anyone to offer asking price these days. figure out what you are willing to spend, and if you are ready, go and offer it. Smart sellers will at least entertain the offer and use the information wisely

Posted by: dcorreale at April 21, 2009 12:06 PM in response to Price Cuts at Forte

Prodigal Son: This entire section of coops around 105 Ashland

http://www.streeteasy.com/nyc/sale/356145-coop-115-ashland-pl-fort-greene-brooklyn

Posted by: dcorreale at April 21, 2009 12:02 PM in response to Price Cuts at Forte

more4less...depends on where that developer is in the sale process. If they are very early (I believe Forte is about 25% to 30% sold), then they might be inclined to reject market offers if they are not clearing the mortgage. Classic agency problem, the equity holders are making the decisions, despite the fact that the current market suggests there equity is worthless. I am not saying this is where the Forte is, they are at least starting to get it, but it is the case for many new developments. The debtholders need to step in and takeover

Posted by: dcorreale at April 21, 2009 11:18 AM in response to Price Cuts at Forte

starting to look a little more reasonable, although this "month long incentive" is a new ploy. Something tells me these prices will be permanent, with potential further cuts to come. And you can still get a coop very close to this location for half the price, but the Forte is at least looking very well compare to its Toren and Oro peers now

Posted by: dcorreale at April 21, 2009 11:05 AM in response to Price Cuts at Forte

Yes Dave, and thus a return to pre 2004 prices

Posted by: dcorreale at February 26, 2009 10:40 AM in response to Home Sales Falling, Condo & Foreclosure Auctions Rising

Benson, total supply is completely irrelevant. It is all about inventory, and 22,000 I believe is 50% of current inventory. Something tells me that just might change the supply / demand dynamic a little?

Posted by: dcorreale at February 26, 2009 10:34 AM in response to Home Sales Falling, Condo & Foreclosure Auctions Rising

I do agree the inventory numbers seems high...many in construction will not get finished, and many more will go rental for a few years. But on the other side, many in contract are walking

And the condo market is still part of the market, it will send waves across the coop and brownstone market, it is all about comparables. There is a select group that will never live in a condo, but most buyers are looking for the right space and the right location, regardless of whether it is a condo, brownstone, coop, townhouse or cardboard box

Posted by: dcorreale at February 26, 2009 9:26 AM in response to Home Sales Falling, Condo & Foreclosure Auctions Rising

This is huge news. If auctions of condos begin, team bear will see there 40%+ drop in NY real estate. If the Times numbers are correct, 8,000 current condo units in NYC available, another 22,000 available by the end of next year, at the same time Wall Street is being significantly downsized...it is only a matter of time

Posted by: dcorreale at February 26, 2009 9:15 AM in response to Home Sales Falling, Condo & Foreclosure Auctions Rising

Montrose, you don't think this would be riddled with grey areas. So someone who put 10% down and was dependent on a wall street bonus and has been living a life of luxury but now lost his job. Do you subsidize him? Or how about the guy in small town america who just lost his job, but realizes he will get subsidized if he doesn't take the $8 / hour McDonalds job, while his neighbor from the same factory that shut down does take the McD's job and is able to, through extreme hardship, keep good on his payments. Too much grey area IMO

Posted by: dcorreale at February 13, 2009 10:48 AM in response to Housing Rescue Plan: For Some or For All?

It is logistically impossible, or at least prohibitively expensive, to separate the "worthy" and "unworthy" defaulters.

Posted by: dcorreale at February 13, 2009 10:33 AM in response to Housing Rescue Plan: For Some or For All?

sorry pitbull, thought you were referring to me with the crackpipe comment. I do agree that subsidizing education and irresponsible home buying are two different things, but I think we can all agree buying frivolous video games versus paying student loans is a bit hypocritical

Posted by: dcorreale at February 13, 2009 10:13 AM in response to Housing Rescue Plan: For Some or For All?

Really, you didn't post this yesterday?

"i made a super stupid decision last weekend and went to gamestop and bought a bunch of video games instead of paying back a student loan that is 7 months behind. what does that say about me? about consumers in general? i didnt even play any of those video games. there is something wrong with a lot of people, me included. but i have this general feeling that i dont have to pay back my student loans. why is that? i graduated in 2000. it's now 2009. i think i've paid a total of like 300 dollars towards the 27,000 dollars i have out in loans. the private perkins loan people are MAD annoying and keep messing with my credit report, but the government loan people are fine everytime i call and ask to forbear and just tell them i cant afford it. meh, lots of interest i guess (tho the government one is low). i dont know how to get the private perkins loans people off my butt. (they call my job and harrass me!) the worst part is that i didnt pay that private one for over 7 years and it was written off i believe!!!! but i STUPIDLY contacted my college and said oh hey id like to start paying back this loan. grrrrr. i came to find out that after 7 years i didnt have to anymore. that's not the case with the government loans tho, apparently that never goes away. but the psychic part of my brain tells me that it might be stupid to pay back if i cant afford it."

*r*

Posted by: dcorreale at February 13, 2009 10:10 AM in response to Housing Rescue Plan: For Some or For All?

While I agree Pitbull, aren't you the same guy who is using my tax dollars to subsidize your education, and instead of paying back the government you go out and buy video games

Posted by: dcorreale at February 13, 2009 10:05 AM in response to Housing Rescue Plan: For Some or For All?