We have moved our site. Please visit us at www.gotham-realestate.com.
Thanks,
Rich Bouchner
Happy New Year to all. Here's hoping for a better 2009! While many feel as though we are in for more of the same, I like to think that as all of the liquidity that has been injected to the economy over the last couple of months finally kicks in, things will start to improve. Also, a new administration should be a plus as well. On the other hand though, Manhattan real estate still will be in for more pain. The New York City economy will continue to contract as the lack of Wall Street bonuses starts to take hold. Restaurants will go out of business, commercial vacancies will increase, and new condos will go unsold. Hey, we all enjoyed life while the bubble inflated...well now we will have to deal with some pain as the air gets let out. We didn't creat this mess overnight, and we will not get out of it overnight either.
My wife and I are enjoying some R&R in the Carribean, and the condo complex where we stay has more units on the market than either one of us can ever remember. One owner who bought his condo in 2008 is all ready trying to sell and he also has his home in CT on the market as well. His stock portfolio is down 40%, he is leveraged, and he is seeing the last 40 years of his hard work go down the tubes. Unfortunately, he is not an isolated case. So while New York City is down 20% from Q4 of 2007, there may be more pain ahead for Manhattan real estate. Great opportunity for first time home buyers who have down payment cash that they kept ut of the stock market....not such a good time to be one who needs to sell.
Bloomberg posted an article today that effects many home owners in major US markets (read: New York, LA, San Francisco). While conforming mortgage rates have been dropping and mortgage applications are way up (45% or so in the last week), jumbo rates (for mortgages above $417,000) have stayed high. The spread between conforming and jumbos is more than 200 basis points, which is 10 xs above normal. However, there should be help on the horizon later in 2009. As more people refinance their conforming mortgages, banks will have increased liquidity, which they should be able to redeploy in jumbo land, which in turn should help to drive jumbo mortgage rates down. Also, as the Fed continues to buy Freddie and Fannie bonds, that too should help add liquidity to the market. So hold on all you New York jumbo mortgage holders...help should be on the way by late 2009!
By Kathleen M. Howley
Dec. 24 (Bloomberg) -- Jumbo mortgage shoppers in the most expensive U.S. housing markets such as New York and San Francisco aren’t getting much relief from lower borrowing costs.
The average 30-year fixed rate for home loans of more than $729,750 remains almost 2 percentage points above conforming rates and the spread between them may set a record this month, according to financial data firm BanxQuote.
Banks remain reluctant to lend after recording $678 billion in mortgage-related losses and writedowns in the past year and as house prices plunge. Jumbo mortgage rates may come down next year as more buyers refinance, helping banks improve liquidity, said Keith Gumbinger, vice president of mortgage-research firm HSH Associates Inc. in Pompton Plains, New Jersey.
“A guy in a low-cost market like Des Moines probably doesn’t care much about helping someone in New York buy a million-dollar apartment, but if he refinances his conventional loan, that’s exactly what he’ll be doing,” Gumbinger said. “He’ll be giving lenders the liquidity they need to rebalance their loan portfolios and compete for jumbo borrowers who typically are the best in terms of credit quality.”
The average 30-year fixed jumbo loan rate was 7.32 percent on Dec. 22, compared with 5.38 percent for a conforming loan, according to BanxQuote of White Plains, New York.
Wide Spread
The difference between them has averaged 2.13 percentage points in December, 10 times the average spread from 2000 to 2006 and above last month’s 1.95 percentage points that was the highest on record.
Jumbo borrowers New York, San Francisco, and Boston may see rates fall in 2009 because of Federal Reserve Chairman Ben Bernanke’s plan to buy at least $500 billion of agency debt, said Gumbinger.
The Fed’s mortgage-bond buying program, announced Nov. 25, also provides for the purchase of $100 billion in direct debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
Bernanke’s plan adds to previous government actions aimed at lower home-financing costs, including the September seizure of mortgage-finance companies Fannie Mae and Freddie Mac. As part of that takeover, the Treasury announced its own program to buy mortgage-backed securities to bolster the worst housing market in at least 70 years.
Loan Applications Rise
Mortgage applications in the U.S. jumped 48 percent last week as the lowest borrowing costs in five years promoted a surge in refinancing.
The Mortgage Bankers Association’s index of applications to buy a home or refinance a loan rose to 1,245.4, the highest since 2003, from 841.4 a week earlier. The group’s refinancing gauge rose 63 percent and purchases gained 11 percent.
While many homeowners are trying to lower their mortgage payments, buyers remain on the sidelines as prices fall.
The median U.S. home price plunged 13 percent in November from a year earlier, the largest drop on record and likely the biggest decline since the Great Depression of the 1930s, the National Association of Realtors said yesterday in a report.
Home prices are tumbling as foreclosure-related sales accounted for 45 percent of the month’s transactions, according to the Chicago-based trade group.
“The real elephant in the room is falling house prices,” Glenn Hubbard, former chairman of the Council of Economic Advisers under President George W. Bush who is now dean of the Columbia University Graduate Business School, said in an interview on Monday. “We can fix this by lowering mortgage interest rates.”
Prices Sink
Declining prices won’t be helped by the Federal Housing Finance Agency’s announcement last month that it will lower the size of so-called jumbo conforming mortgages that can be purchased by Fannie Mae and Freddie Mac. Congress authorized raising the conforming limit of $417,000 to as high as $729,750 in about 90 of the nation’s most expensive housing markets in 2008 as a temporary measure to support housing.
On Jan. 1 that cap drops to $625,500 following the formula set out by July’s Housing and Economic Recovery Act. The law, known as HERA, specified a loan limit of 115 percent of an area’s median home price, rather than the 125 percent limit approved for this year by Congress, said Andrew Leventis, an FHFA economist. The change means more buyers in high-priced areas will have to use jumbo mortgages, he said.
The Fed on Dec. 16 cut its benchmark interest rate target to a range of zero to 0.25 percent and said it will add to the announced $500 billion in mortgage bond purchases as needed.
“Over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities,” the policy makers said in a statement.
My wife and I lived on the upper west side until a year or so ago, and there are MANY things that we miss about the neighborhood. We really like having all the room that we now have in Harlem, but we our new neighborhood still needs more restaurants, bars, coffee shops...
The NYTimes has a piece about Fairway and the changes to the UWS over the last 30 years. A very entertaining article.
By DAVID W. DUNLAP
Published: December 17, 2008
Calling Broadway the main street of the Upper West Side, Paul Goldberger wrote in “The City Observed: New York” (1978) that it was “like a child’s room that is permitted to remain in disorder by parents who feel that children should be permitted to have their own mess.”
“If you doubt the economic wisdom of letting a street be that way,” he continued, “count the empty storefronts: there are virtually none from Lincoln Center to Morningside Heights.”
The best single block to illustrate this jumbled vitality for Mr. Goldberger’s guidebook was between 74th and 75th Streets. In a 213-foot stretch were a celebrated fishmonger (Citarella), a well-known greengrocer (Fairway), a supermarket (D’Agostino), a clothing store (Pandemonium), a coffee shop and a popular bingo parlor called Broadway Hall.
Revisiting the block 30 years later, one finds Fairway and Citarella. Period.
The competing markets, which long ago expanded beyond their original specialties, now occupy all the street-level retail space.
This is a tribute to the West Side’s enduring character as a neighborhood where homegrown food businesses can thrive, cheek by jowl. But it also underscores the growing big-box monotony on Broadway, even when the boxes are, happily, one of a kind.
Fairway was founded in the early 1930s by Nathan Glickberg as the 74th Street Market, a fruit and vegetable stand. In the early ’50s, the Glickberg family turned it into a supermarket called Fairway, adding groceries, meat, dairy products and frozen food. After the business changed hands several times, Howard Glickberg, one of the founder’s grandsons, recreated it as a high-end produce shop in 1974. Fairway expanded into the coffee shop in 1997. Two years later, it took over D’Agostino’s space and the former bingo hall upstairs, which had more recently been a Bally’s Jack LaLanne Fitness Center. There, Fairway runs a cafe and steakhouse.
And there, Fairway’s irresistible force meets the immovable object of Citarella, which expanded into the Pandemonium space in 1993. The competitors are abutters, too.
Imagine a passer-by from the 1978 photograph — perhaps the man in the vest, flared trousers and mustard-colored shirt (just a guess) with four-inch collar points — propelled forward 30 years.
The time traveler recognizes Fairway and Citarella, of course, but the crowd looks younger, more prosperous and less diverse, and there are more children underfoot. The device in the woman’s right hand could be described to him as being akin to a Dick Tracy two-way wrist radio with a full keyboard and a computer monitor. But it might take all day to explain the phrase “www.fairwaymarket.com” on the awning, where it used to say “Farm Fresh.”
Nice work by Diana Olick at cnbc.com. She really summarizes what is happening today in the mortgage market and what it means to those looking to lock in a low rate.
Mortgage Rates: Just How Low Can They Go?
Posted By: Diana Olick
CNBC.com
That’s the question everyone is asking today, as the Fed’s announcement Tuesday that it would buy more mortgage-backed securities sent the Fannie Mae bond prices soaring and the yields in turn plummeting.
Supposedly that’s what lenders look to in setting interest rates on the 30-year fixed. After the announcement, that rate repriced to around 5 percent. It had already dropped quite a bit after the Fed made its initial Fannie and Freddie MBS purchase plan announcement a few weeks ago.
Mortgage brokers I talked to this morning said the floodgates are open, and it’s mostly refis. In fact, the Mortgage Bankers Association’s weekly applications survey showed that last week, with rates historically low, 77 percent of applications were for refis, not new purchases. One broker I spoke with said he’s got so many refi clients that he’s having a hard time finding the time to speak to potential new home purchase clients, because that takes far longer than current clients who already know him and just want him to lock in a rate.
But another broker cautions, when we’re talking about these low low rates for the 30-year fixed, and this morning it was around 4.875 percent, it’s with no points, and the borrower must have a 740+ FICO score, not to mention at least 20 percent to put down on the home. If it’s a refi, especially cash-out, they want to see at the very highest a 75% loan-to-value ratio. And this is only for old-fashioned $417,000 conforming loans.
No, I didn’t forget about the new conforming loan limit of $625,000 in certain high-end markets, as set by the Housing and Economic Recovery Act last summer. Trouble is that the interest rates on those puppies are a bit higher, not as high as jumbos mind you, but higher than you might thing.
And one more item the brokers are telling me: If a major bank drops its rates in a major way and then gets inundated with applications, it likely won’t be able to handle the onslaught and will be forced to raise rates a tad just to slow the tidal wave. Of course, if they don’t get the kind of response for which they had hoped, they might drop rates even lower. Seriously, stay tuned.
From New York Magazine. Though the New York City coop market should hold up better than the condo market, tThis sounds a bit optimistic to me....
The Optimism Index, Part II
Two weeks ago, we called upon Streeteasy.com’s data team to gauge whether condo sellers were growing less hopeful. That is, we plotted asking (as opposed to selling) prices in 2008 against those in 2007. The results were informative enough that we’re back with more—this time about co-ops, which tend to be a little less volatile than condos because their boards are stricter.
And what do we see? Co-ops’ asking prices are down slightly, too, but the drops are generally a little smaller than among condos. The only marked decrease is in Upper Manhattan, where asking prices fell 6.31 percent. (Note that the average price there is lower, so it takes much less of a dip to create a big percentage swing.) In traditionally high-demand downtown areas, the prices are even up a bit, by 1.36 percent.
As to optimism: We’ll know more when we can compare these asking prices with actual post-meltdown sales, which should begin to become evident around the end of the year.
Data provided by Streeteasy.com.
