Housing's Macro Effect: Eye On New York [Housing Tracker]

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

Quote of the Day

“This is not going to be a feel-good time.” – NY Mayor Michael R. Bloomberg. (NY Times, Sept. 22)

Macro Effects of the Housing Slump

Master Overbuilder. “Through the first nine months of 2008, Toll Brothers’ (TOL) new sales contracts were down 49% from 2007, and 76% from 2005. The company reported a series of huge losses and has been forced to take massive write-downs—about $1.5 billion to date—on the value of its assets and landholdings. To mitigate the damage, Toll has laid off several thousand employees, nearly half his workforce, and walked away from numerous projects.” (Conde Nast Portfolio, Oct. 2008)

Retirees Filling the Front Line in Market Fears.  “Older Americans with investments are among the hardest hit by the turmoil in the financial markets and have the least opportunity to recover… Employee Benefit Research Institute survey: Today’s retirees have less money in savings, longer life expectancies and greater exposure to market risk than any retirees since World War II. Even before the last week of turmoil, 39% of retirees said they expected to outlive their savings, up from 29% in 2007… Center for Retirement Research, Americans over age 63 pulled $300 billion out of their home equity through refinancing from 2001-2006, lowering their net worth.” (NY Times, Sept. 22)

New York City May Raise Property Tax. “Mayor Michael R. Bloomberg, worried about the effects of the global financial crisis on New York City’s economy, said on Monday that his administration is considering imposing a 7% property tax increase on homeowners in January… [This] would generate an additional $600 million in revenue next year and require City Council approval, [and] help the city weather a worsening fiscal situation. NYC is heavily dependent on the financial services industry: An estimated 10% of its tax revenues come from Wall Street… Even before last week’s Wall Street crisis, the Bloomberg administration was predicting a budget deficit in the 2010 fiscal year of $2.3 billion.” (NY Times, Sept. 22)

CoreNet Update: New York in Mild Recession, But Real Estate Stays Afloat.  “Marisa Di Natale, a senior economist for Moody's Economy.com: “NYC has seen a delayed recession compared to the U.S. overall… attributing the holdup to reported Wall Street losses only now showing up in data. Ten thousand jobs may have been lost, but severance was not counted towards the job loss, and the lay-offs are only showing up now… Real estate is still strong, she continued. Investment banking and security brokerages [have] lost 7,000 jobs [each] since August, and October, [respectively].  Overall, Di Natale expects a loss of 70,000 jobs in the metropolitan New York area over the next year, but foresees a quicker rebound.” (Commercial Property News, Sept. 19)

                                                     

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Comments

[Pete Bertine:]

You won't find it on their website

www.prudentialelliman....

But if you check out their Williamsburg office window on Bedford Ave and 1st Street you will see that the condo's that have erupted along the waterfront are now offering a rent to own option. What's next? Seller financing?

2008 Sep 23 08:21 AM

[Responsibility:]

To encourage people to be responsible, we should have tax penalty and special points for future loans on load defaulters and tax incentive to people who keep their mortgages, to those who take on new mortgages, and to those who increase their mortgages, similar to tax on big cars and incentives for small/hybrid cars. Please spread this if you agree so that the politicians will do something.

2008 Sep 23 02:19 PM

[Responsibility:]

To encourage people to be responsible, we should have tax penalty and special points for future loans on load defaulters and tax incentive to people who keep their mortgages, to those who take on new mortgages, and to those who increase their mortgages, similar to tax on big cars and incentives for small/hybrid cars. Please spread this if you agree so that the politicians will do something.

2008 Sep 23 02:26 PM

[Urbane Gori...:]

Responsibility.... I sure hope you're joking.... jegan ;-)

2008 Sep 23 02:40 PM

[Time Tracker:]

As a former NYC resident that's paid obscene amounts of money in rent over the years, I think it's about time for a change. Granted, no one wants to see anyone lose money, lose jobs, and lose business, but at the same time, prices in the general New York Metro area have been so out of touch for such a long time...it's about time the bubble burst.

2008 Sep 24 03:37 AM

[Pete Bertine:]

Greedy banks are AGAIN responsible for destroying the housing market.

Trend: As the cost of living in Manhattan is too high, people are moving out of Manhattan to find a better quality of life in Brooklyn.

After an exhaustive search and intense research into the possibility of purchasing a new 2 bedroom apartment in Wiliamsburg Brooklyn, it is now a verifiable fact that many owners of new buildings are not allowed to drop the price of their apartments to meet the market rate (direct quote from thedevelopersgroup.com agents and verified by owners of buildings ie. Trump). Banks have put clauses in their loans that forbid the owners of new buildings to sell the apartments below a specified price. No new apartment can be purchased at a reasonable discount to reflect the current market.

Also, the people who have purchased in new buildings with mortgages at the market high face a situation where the banks will make them pay down the mortgage if similar apartments are sold for too much of a discount... in some cases $100,000 or more below. This is also forcing unrealistically high asking prices that can not be sold at a reasonable discount.

Result? Many buildings are defaulting on the construction loans now, some buildings are bankrupt and no one in their right mind would purchase new construction.

Conclusion: starting in 6 months reality will hit and massive defaulting will occur that might trigger another bank crisis. If New York City takes this almost inevitable plunge the national market will be shaken again.

Resolution: immediate regulation of banks forcing them to allow owners to sell at the market rate without penlty.

Chance of resolution in time? - Slim to none.

Jan 26 12:50 PM

[toplister:]

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Nov 27 01:15 AM