Pete Bertine

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

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.