Bubble Wrap

The Default Phenomenon Comes to N.Y.

This Thursday’s Sun details how defaults are starting to creep into the market, with no buildings immune. With higher unemployment and stricter financing requiring more money down, some buyers are finding it difficult to close on their new development contracts, choosing to walk away from their deposits.

“If you got pre-approved a year or two ago, there’s a 95% chance that your financing is no longer available,” the chief executive of Manhattan Mortgage Co., Melissa Cohn, said. Because of the high cost of New York City housing — in Manhattan, the price of the average apartment now exceeds $1 million — an additional 10% of the purchase price is difficult to acquire on short notice, even for wealthy buyers. “What’s amazing is that if you look at these people and their income, they’re able to afford these apartments,” Ms. Costa said. “The lending isn’t based on qualifications — it’s a set of rules because we got into this credit mess.”