Will downpayments slow down Manhattan

"attractive" FICO?

Maybe they contacted the NYPD and found out that you called them to report that your husband was committing a felony gun crime, and even though you were lying, they decided that you weren't the type of family they wanted to lend to.

> As someone who just tried to refinance a jumbo, I couldn't find a mortgage anywhere that didn't require 30% -- and I have a rather attractive FICO.

how much is the minimum down payment for a purchase jumbo mtg right now? wonder whether that down payment requirement changed with respect to 2006-2009

Most people want 30% at that level with additional cash reserves, which I do not think is excessive given that Manhattan real estate has not come down like the rest of the country. Let the crash happen here!! However, I know that is more of wish than a real possibility. Very few people need to sell in prime manhattan.

> Very few people need to sell in prime manhattan.

how do you know that?

> Most people want 30% at that level with additional cash reserves

by "most people" you mean co-op boards? what do mtg originators want?

Last year, just 0.87 percent of the city’s stock of buildings changed hands, a paucity of deals below previous record lows set during past economic downturns and real estate collapses in the early 1990s and 2000s.
In 1992 and 2003 for instance, Bob Knakal, chairman of Massey Knakal, explained during a breakfast this morning in midtown to discuss the year’s results that there had been a 1.6 percent turnover rate, what he had previously believed to be a baseline driven by unavoidable circumstances like “death, divorce, taxes and partnership disputes.”
The 25-year average turnover rate was 2.6 percent and in 2007, when sales reached a furious peak, the rate was 3.04 percent."
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The unavoidable circumstances of “death, divorce, taxes and partnership disputes.” (i'll add disease to that one) keep on happening. They are just not being reflected yet.

notadmin: what is the source of the above post on 0.87% of city's housing stock changed hands last year. 2009?

http://www.rew-online.com/news/story.aspx?id=850

Massey Knakal

"One way or another, Knakal seemed to indicate that the market can’t remain jammed. He estimated that there were between $30 and $40 billion of problem deals that will have to be flushed onto the distressed sales market, a process he anticipated would begin this year and last though 2012. "

There seems to be a difference between "0.87 percent of the city’s stock of buildings" and "0.87% of city's housing stock". Massey Knakal appears to concentrate of sales of full buildings, not sales of individual apartments. That's a specialized subsection of the market that most of us probably aren't interested in -- I'm not saying it has no bearing on the larger rental/sales market for individual apartments.

The stats in this article seem rather odd, as in hard to fathom....:

"The company reported that the median sales price for walk up apartment buildings ended the year at $488 per square foot, 20.1 percent below a peak in 2008 but up 2.5 percent from the first half. The median price for elevator residential rental buildings meanwhile finished the year at $452 per square foot, 13.4 percent below peak 2007 levels for that property type, but up 11.9 percent from the first half of 2009."

...

Wealthy New Yorkers may not currently see real estate as a sound investment or want to put, say, 35 percent down on an apartment when its resale value still comes with a big question mark.

http://www.nytimes.com/2010/10/24/realestate/24Deal1.html?_r=1&ref=realestate

Well, according to the NY Times, I guess the answer of whether the current high down payments will affect the market --is yes. I was thinking it might affect the mid market but I guess the high end is also vulnerable.

frankly, if you only have $200k available as a downpayment on a $2mm place, you're not ready to buy something that expensive. To take on a mortgage of $1.8mm, with only the interest on the first $1mm of that deductible, you have to be grossing at least 6-700k a year, which means that if you only have $200k saved, you've made that for at most 1yr. I think to take on such an obligation based on such a limited earnings and savings history is not a very prudent thing to. To save up that other $400k should take what, another 2yrs?

"So are professionals who have just started out in the past 5-10 years or so and who will not have such windfall bonuses or escalating salaries, going to have trouble putting down 30% on a 2MM apt that can accommodate a baby."

The problem with today's younger generation "just starting out" is that no one wants to be "just starting out" in a "starter" home anymore. There's this overwhelming sense of entitlement that just because you've "just started" making a six-figure salary, you're entitled to the kind of home occupied by professionals who've been making that salary for 25 years.

And thanks to what we see on HGTV these days, that home had better be "done" to the max, with high-end everything! None of those ghetto "Hotpoint" appliances or Delta faucets for these professionals who've finally "made it" after "struggling" for both of those years after college! Formica? Fuhghettaboutit!!! Absolutely nothing less than a white glove doorman building in "Prime Manhattan" will do!

Because, of course, God knows that there are absolutely no apartments under two million dollars that can "accommodate" a baby!

I did not buy an apartment in my early to mid 30's as many of you have. Looking back, I think that it would have been better to have bought an apartment with 20% down rather than buying an apartment now with 50% down. I have no interest in taking on a 30 year mortgage as I would have had I bought in my early-mid 30's. Requiring people to wait until they can pay for nearly one third in cash means that the only people who can buy apartments at a reasonably young age are those with family money or great jobs or else they will need to buy much smaller apartments.

30% down was the norm in coops, so I assume we're talking condos. Bigger down payments clear take some buyers out of the game, but also protect the other owners in the building...

And another point, if the price of real estate rises, as it has versus ten years ago, then the risk has gone up and a bigger down payment makes sense. The risk of a 10% decline is not constant year to year.

lobster>>one third in cash means that the only people who can buy apartments at a reasonably young age are those with family money or great jobs or else they will need to buy much smaller apartments.

or else prices have to come down.

> I was thinking it might affect the mid market but I guess the high end is also vulnerable.

same here!

> or else prices have to come down.

imho that will happen regardless (irregardless according to AR)

1. Riversider, I have seen many coops which require 25% down with a few requiring as much as 50% down. Have you seen many 30% downpayment coops?

2. Apt23, you are correct about lower prices but prices never seem to decline as much as you would think especially for "prime" neighborhoods. NYC seems to attract enough wealthy buyers, whether people working in finance or rich people who relocate here from other states or countries. I agree that 30% downpayment makes sense to protect other owners and banks, but I wonder if prices will ever drop to the point that one or two regular income people can buy a home with 30% downpayment required.