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Happy Fall: Manhattan Real Estate: Business As Usual?

By
Real Estate Agent

It has been a very busy year and summer. The busiest August I can remember. Manhattan has been very fortunate this year compared to the rest of the country.

Our market continues to be very strong. While most of the country has been down 20% we've been up 20% Can it continue? I'm cautiously optimistic. Is Manhattan really an island?

The fall out from the sub prime mortgage meltdown during the last several weeks is now affecting the  mortgage, credit and financial services industries. The stock market has been volatile the feds added liquidity to the markets and lowered the prime rate. What move will the Feds make on September 18th?

Central ParkIt remains to be seen what affect this will have on the real estate market in Manhattan. We still have low inventory. Most of the inventory is in new construction and there seems to be plenty of buyers interested in new development condos.

However, borrowing will become harder for many buyers as lenders are tightening their criteria for loans.

The mortgage industry will have layoffs, consolidation, mergers, take-overs and bankruptcies. Wall Street bonuses might not be as spectacular as the last few years.

It is now more important than ever for buyers to be pre-approved and to have a commitment from a lender before they start apartment hunting. The first step in the home buying process involves a good lender who will determine how much the buyer is qualified to purchase.

My preferred lender is Wells Fargo Private Mortgage Banking. For a free consultation, pre-approval and commitment contact Glen Pedersen.

All CASH and large down payments will become more important terms for sellers.  Cash is King. A couple of weeks ago when I told a sales agent for a new development that my buyer is ALL CASH the response was "they're all cash to us" I think that attitude will change on the part of sponsors selling pre-construction.

Eighteen months from now anything can happen. Someone qualified today might not qualify eighteen months from now. Wells actually has a mortgage product for new construction that will lock in a rate for one year.

When I bought in a new development on the Upper West Side back in 1989 I had to be approved by citi bank the developers lender that financed the construction. I was able to get financing from any lender as long as I was approved by citi and if I couldn't get financing from another lender I had to go through with the citi loan.

I think we will be seeing more of this type of requirement again from sponsors and perhaps listing agents. When I list a property I have Wells Fargo pre-appove the property and provide a financial analysis for potential buyers.

So far September, normally a slow month for real estate in Manhattan because of Labor Day, returning from vacations, school starting and the High Holy days seems to be starting off with a ROAR! 

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Comments (8)

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Interesting Mitchell.  I see new 1 BR condo on the Upper West Side of NY sells for about $750K.  That's about what they sell for in Arlington, Virginia.

 

Sep 05, 2007 12:28 PM
Mitchell J Hall
Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn
Lenn that is very interesting. Are prices in Arlington more or less than in downtown DC or Georgetown? 
Sep 05, 2007 12:53 PM
Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO
I'm still stuck on the 'all cash' part for $750k  or, 2.2 mil.  I love NY!
Sep 05, 2007 03:40 PM
Mitchell J Hall
Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn
Hi Carole, Yes there are many wealthy New Yorkers and many out-of-town and foreign buyers with cash.
Sep 06, 2007 02:51 AM
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

Mitchell - I love when I have a cash buyer; things are less complicated.  You are right that more than ever potential buyers need to be pre-approved. 

The Franchise I am with just switched to Wells Fargo I was glad to see you had good things to say about them.

Sep 08, 2007 07:17 AM
Mitchell J Hall
Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn
Hi Jennifer, I love cash buyers too, but most people need mortgages.  Wells is a great bank, I'm very pleased with them
Sep 09, 2007 03:03 PM
Laurie Mindnich
Centennial, CO
HI, Mitchell.  The attitude of the new construction person simply reflects that fact that to them, at closing, it makes no difference if a buyer is cash or a loan- they make the same money either way.  I would guess that on site people might be less cognizant of the crunch ahead than resale people, but they will be...at which point, they'll likely be fighting over your cash buyer.  BTW, our "buyer" here has your #, but is thinking that they're going to rent through the fall here, then decide if they want to live on the NF.  Not a bad plan.  Either way, sounds like they're selling their NY place, so I hope that you hear from them.
Sep 12, 2007 09:22 AM
Mitchell J Hall
Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Hi Laurie, You make a good point about new construction. Most of these new buildings here don't allow financing contingincies and they are asking for 15%-20% deposits so I guess they don't care if a buyer can't get a loan because they can keep the deposit. I certainly warn my buyers about the risk of signing a contract with out a mortgage contingency.

Renting before buying is a good plan. Thank you for the referral I really appreciate it.

Sep 12, 2007 10:55 AM