Now is a dangerous time to be looking

Plantar,
In a normal market you'd be dead on; Spring and Summer bring out the confidence in sellers AND soften the buyers hence the term "spring selling season." However this year may prove to be a different story. Not only is there a huge supply of unsold apartment but mortgages are still very difficult to obtain. A seller whose property has been languishing on the market for 5 months needs to sell it and though they may view the uptick in traffic as a positive sign, ultimately they'll see that buyers are looking for Bargains just as they were when it was dark and gray outside.

Are mortgages hard to come by? Within reasonable standards? 70/30

Mortgages are EASY to come by. You make $500,000? We can easily get you a $5,000,000 mortgage. Credits are flowing, Wall Street is back, the recession is over. I saw so much activity today. Everyone is buying. REMEMBER, Manhattan is the most desirable island in the world and it has limited land and your the apartments are moving quickly.

BUY BUY BUY....you will kick yourself when priced go back up and the deals are GONE. BUY BUY BUY.

Manhattan,
I am a realtor not a mortgage broker but I have seen firsthand, buyers who wanted to buy a property but could not obtain financing. That being said, 70/30 appears to be the magic number to secure a loan (with excellent credit)!

Are you looking to buy new development or a resale..this also plays a role in getting the loan.

Jeff Krantz
City Connections Realty
jeffk@ccrny.com

RR1,
Deals?
Take your broker BS else where.
OK, you made the noise, back it up.

'Wall Street is back, the recession is over'
'Everyone is buying'

falco - umm, I think you may have missed the sarcasm in RR1's post. Just a touch, mind you. Very subtle...or not.

Having an angry RE day.
Check this out...
http://www.streeteasy.com/nyc/sale/405433-coop-370-east-76th-street-upper-east-side-new-york
Today's bargin basement price is $1,275,000
This apartment changed hands 04/2007. Selling price was $915,000.
Anyone can sell aything at any price. That is the sellers perogative. If I'm not mistaken this one changed hands at the top of the market and you can check the selling price yourself. So either we have a delusional seller with a complicite Agent or we have a delusional agent trying to gain the prop. to sell or it's some clever, and I use the word sarcasticly, tactic to drop the price in a couple of weeks to get attention. I'm not even interested in this property and it's irritating. While I'm on a rant here is another one!
http://www.streeteasy.com/nyc/sale/387327-coop-10-east-end-ave-yorkville-new-york
Open house, to be fair, this apartment shows very poorly. So forget that and look out the window. It's not the worst view I've ever seen because once I visited a basement of a chinese resturant with no windows where 30 illegals lived. This one was a close second. There are redeeming qualities to the place like 3 bedrooms but, going to take alot of $$$ and time to breath life back into this old mare. My complaint is pie in the sky pricing. For some in this town it's as if the last 7 months never happened. Ther are days where my patience wears thin.

Falco, what's wrong with the view at 10 East End? I haven't seen it but the pictures look ok. It's not like you are abutting a blank wall. Am I missing something?

Bedrooms (all 3) face close by opposing terraces/windows and the view(slight upward gaze) industrial air conditioning units. The large spacious terrace is in a tight building canyon with no significant view. In that canyon, you on your terrace, are the view. It's a big city and I know their are those that could care less what's out the window just, not me. By the way I don't hate the apartment just the inflated price. It will come down assuming some desperate 3br. buyer does not knuckle under from seach fatique. Also, unless the smell of piss and asprin was the aroma you where shooting for the place is going to need a fare amount of rehab. I stick my finger in the air and say(best case senerio)...6 months start to finish rehab w/o you living there. I also thought it looked good from the photos...thats why I went. By the way it was a busy open house where everyone left quickly and w/o questions.

These threads are exhausting.

Love the analysis falco- hope you have another "angry RE day" soon, keep it coming.

honest question to falco: why are you looking?

I've been thru a few down markets in the last 30 years and what there are usually a good number is people who think the market is going down, but are looking to buy anyway, but since the market is going down want to buy at next years lower price. (NB: falco, I'M NOT SAYING YOUR ANALYSIS OF THESE 2 IS FAULTY). if you think the market is headed South, DON'T BUY. But don't look and wonder why sellers are dropping their pants and bending over when you walk in the door, either. There's no reason to be 'angry" with Seller's who are unrealistic in their pricing: only brokers who tell you one thing to get you to look at a unit and it's a total lie which you realize the second you walk into the door and they have wasted your 9vulauble) time. But "angry" at how someone has decided to price their property? If that's a valid emotion, imagine how livid the seller is that he's not getting what he thinks he's supposed to be getting? The more emotion you put into Real Estate transactions, the more chance you will end up with a bad deal.

The reality is that a 1% increase in the mortgage rate is somewhere pretty close to 10% decrease in the value of the property (s far as your payment is concerned). You may wait for a bottom but get hit by rising rates..

Jeff Krantz
City Connections Realty

jeffk, how likely do you think that is, given the option-ARM issue, over the next two years?

That's the bull case. The bear case, is that sales will drop further.

Jeffk, for people buying, e.g., studio - 2 BR apartments that they'll outgrow within 7-10 years, do you think it makes sense just to focus on monthly payments?

Whether rates will increase or decrease is not a bull / bear case - rates can only go up from here.

Whether prices will increase or decrease when rates go up is not a bull / bear case - prices will decrease when rates increase - real estate is just math when there's not a bubble.

Substitute "broker's" for bull in my previous post. GG With and without double entendres.

It's not rates only: it's the availability of the loans at the rates.

A guy goes into a butcher shop and asks for how much a pound of ground sirloin is. the butcher tells him "$7.99". The guys incredulous "$7.99? The guy across the street sells it for $4.99!!!!".

The butcher then asks "Well, why don't you buy it across the street, then?"

The customer says "He's out of it".

The butcher answers "Well, when I'm out of it I sell it for $4.99 also".

My point? It doesn't matter if rates are low and no one is lending, but then they go up and people start lending. If people couldn't actually get the loans at the low numbers, it didn't effect prices much to the upside, so if rates go up and all of a sudden people can get loans, it doesn't have that big an effect on depressing prices.

Look at the sub-prime fiasco: it didn't drive prices up only because rates were low, it drove prices up because of the spigot being turned on to "max flow".

30yrs, yes, and that's why these rates don't affect NYC so much. our loans are not the ones that the powers that be have told everyone to buy with a free pass.

the rates are available, but only to those people the taxpayers are currently subsidizing.

30yrs....question for you. Lets assume for the moment that demand for RE in Manhattan remains largely equal to what we see today (in terms of the number of buyers). Absorbtion rates aside, what do you believe will happen when rates move higher despite the FED's best efforts? Will RE prices climb, stay stable, or fall faster (at the margin)?

I'm trying to get a sense of the validity of the 'buy now before rates go up' argument.

Do you mean that banks are now actually determining and weighing if a person can actually afford their mortgage? scandalous!

walterh7; it's hard to tell because to some extent the current rates aren't "real" (that's what the butcher joke was about). the validity of "buy now before rates go up" is total bullshit for a large number of people - i.e. anyone who doesn't currently qualify: they CAN'T buy now, so how could it apply?

All that said, I find it hard to believe that rising interest rates wouldn't put at least SOME downward pressure on prices. Unless, of course, you have rising interest rates coupled with GREATLY increased leniency in lending criteria. in other words, if demand increases because 3 times as many people can buy due to relaxed lending, it very well may overshadow the effects of the rising interest rates. the problem is that you can't isolate any one of these issues in a vacuum, because it's my belief that one of the reasons you're seeing the tightness in lending is because who wants to lend at these low rates? Remember, we were sold a bill of goods with the entire bailout program to begin with: it was SUPPOSED to be to inject liquidity into the market and allow banks to make loans. But from everything i have read, the banks took the money and didn't start making mortgage loans with it.

I guess I'm saying as with all economic models, the problems aren't with the analysis, but with the assumptions. (old economist joke :assume a can opener). I don't know how you guess what happens when rates go up without know what else is going on, because they aren't going to go up and everything else stay constant. other stuff will change as well, and the other stuff may very well overshadow the effects of the rates going up. Sorry for the lack of a clear cut answer.

"Now is a dangerous time to be looking "

Good thing nobody is looking then...

30 yr....thank you for the response. I've pretty much come to agree with what you've written, but was hoping that someone else could push me from the very top of the fence to one side or the other.

I too believe that it will put pressure on values, but the real kicker is the cause of the rise in rates. Economic activity or over-indebtedness/monetization of the fabulous debt now being incurred on the federal level.

nyc10022
4 days ago
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"Now is a dangerous time to be looking "

Good thing nobody is looking then...

Not so sure nyc10022, with the equity market up on the year, 8 of the last 9 weeks up, and as the OP suggests a nice bright beautiful day, I suspect plenty of looking.