Oro Gets FHA Approval
Everybody wants in on this FHA thing! And who can blame ’em: It’s a heck of a lot easier to sell condos when you only need to require buyers to put down 3.5% of the purchase price. Already this week, we’ve had news of The Edge getting approved by the FHA and The Toren getting…
Everybody wants in on this FHA thing! And who can blame ’em: It’s a heck of a lot easier to sell condos when you only need to require buyers to put down 3.5% of the purchase price. Already this week, we’ve had news of The Edge getting approved by the FHA and The Toren getting in its application. Then yesterday the flacks for The Oro sent out a press release heralding the Downtown Brooklyn tower’s admission to the club. With buildings going into foreclosure recently, buyers are reluctant to commit, said Robert Scaglion, Senior Managing Director of Residential Marketing for Rose Associates. The FHA approval is very reassuring to the marketplace. Well, to buyers at least. The rest of us haven’t forgotten the downside to low down payments and easy money.
Oro Now Approved to Throw Money at Buyers [Curbed]
The Toren Holds First Closing, Wants in on FHA Program [Brownstoner]
The Edge Gets FHA Approval [Brownstoner]
dont forget all the tax revenue refi and purchase FHA loans generate…
Free markets,….let it play out. If you can’t rent your place to cover your mortgage, it’s too damn expensive IMO
Only someone unfamiliar with the area would describe Palmdale as “luxurious”. It is a windswept, barren wasteland proximate to gang infested Lancaster. The only reason builders built houses there is because it is (barely) within commuting distance to LA – if you like a 2 hour one way drive. The owners in the WSJ article are being economically rational. It makes sense to walk away, California mortgages are non-recourse, lender takes the property, your credit is trashed and you move on. The inflation in house prices was completely driven by vast amounts of liquidity created by the government. Freddie and Fannie put a floor price on sub-prime loans so it made sense for a lender to make loans and sell them to the govt agencies. Wall Street jumped on the bandwagon by creating mortgage backed securities on junk loans. Sub Prime mortgage bankers (many owned by the investment banks) proliferated and created huge amounts of crap mortgages for the securitization machine. The rating agencies were stupid enough to rate them AAA and the institutional buyers were stupid enough to buy them.
It all started with Freddie and FNMA, if they had tightened lending standards in 2002 the market would not have inflated. Politicians of the “progressive” stripe and stupid laws like CRA and failure to supervise Freddie and FNMA (Thanks Barney Frank) are the root cause.
A run on FHA in spectacular fashion. This is awesome!
You can just see the collapse. She’s beautiful!
***Bid half off peak comps***
“I would agree with that, but I have to wonder how many home owners would still list their properties at ridiculous prices. Look at the market now and how many Brooklynites are listing their homes at 2006-2008 prices despite this pop in the bubble.”
The prices would come down eventually, but it would take time for the lowered demand to result in lower prices.
It wouldn’t be anything you could see happen in real time, but if you looked back 2-3 years later you would see it:
Jan 1, 2010 — all mortgages require 20% down
Jan 2, 2010 — absolutely no change in asking prices whatsoever
Mar 1, 2010 — # of sales down, # of properties listed for sale increasing, prices little changed
Jun 1, 2010 — # of sales still down, # of properties listed still high, some price cuts are made on properties on the market for a long time — newly listed properties still have “high” price listings
Sep 1, 2010 — same story as June, most sales are for places with price cuts or the most desirable properties — “average” properties with “average” prices sit on the market a long time
Dec 1, 2010 — recent sale prices are lower than in previous years, more price cuts, more sales at lower prices
Jan 1, 2011 — newly listed properties are matching prices to recent sales, list prices lower than 12 months ago
Mar 1, 2011 — newly listed properties have lower prices than ones that have been on the market a long time — they sell faster — properties that have been on market a long time get pulled off market or get price cuts
Trend continues until either demand increases (economy picks up or 20% down requirement is removed or loans become easier to get or even more people want to move to Brooklyn) or supply decreases (fewer owner’s interested in selling, less new construction, etc.).
But, the thing is, none of this happens quickly and it is tied to the larger economy and desirability of living in this particular area.
Real estate is a complex and inefficient market.
Joe, I would agree with that, but I have to wonder how many home owners would still list their properties at ridiculous prices. Look at the market now and how many Brooklynites are listing their homes at 2006-2008 prices despite this pop in the bubble.
Nycdelisauce, good point – “By treating our mortgage laws as an investment tool rather than a means to home-ownership, they make a seemingly credit-worthy demographic a riskier bet.”
i didn’t borrow from bank of mom and dad, my mom gets to live thanks to the bank of cg_ups. too bad i dont’ have FDIC insurance for my imaginary bank. haha
that said, it seems like a tie between where i’d be more scared to buy (if i were interested in either neighborhood), downtown brooklyn or williamsburg. yeeps.
snappy, if we required 20% down, it would decrease demand and prices would fall.
If bankruptcy laws are too stringent, people won’t borrow. If too lenient, lenders won’t lend (or lend at very high rates). It’s all about finding a balance (caveat: bubbles tend to make everyone act irrationally). In an ideal world, we would have the most people getting loans at reasonable rates with a low default rate – greatest benefit to the greatest number of people.
People who default on their mortgages when they actually have the ability to pay screws up this balance. By treating our mortgage laws as an investment tool rather than a means to home-ownership, they make a seemingly credit-worthy demographic a riskier bet. I understand they are acting (legally and logically) in their own best interest, but it is not in the best interest of the majority. It is the job of the government to do something to limit this practice.