Posts (RSS)New York Condos to Enter Foreclosure List Inventories
If condo developers and owners in Manhattan and other parts of New York do not reduce their prices to match market prices, more units will stay empty and more units will be added to foreclosure list inventories, according to real estate brokers and agents selling units in higher-priced condo complexes.
Housing analysts said that New York developers thought that condo developments in New York, especially high-end distressed condo properties in prime locations in Manhattan, would be immune to the effects of the foreclosures that battered other cities.
But they were wrong.
When Wall Street collapsed because of the mortgage-backed securities crisis, many high-income financial executives who were expected to buy the high-priced condos suddenly found themselves without jobs.
Last year, as other cities suffered from bargain foreclosure list prices, New York condo developers still held expensive parties to launch and sell their condo complexes.
But soon, the parties stopped after financial executives either received pay cuts or termination slips. There were no more financial hotshots to buy the condo units, as financial institutions like Bear Stearns and Lehman Brothers collapsed.
Rick Hoffman, a senior vice president for high-end broker Corcoran Group, said the foreclosure crisis downed Wall Street and New York’s high-end real estate sector.
In April, sales of new condo units fell by an overwhelming 71 percent compared to April 2008, as condo developers refused to reduce their prices even if foreclosure list prices and other property prices were falling down around them.
Jonathan Miller, market analyst for real estate firm Prudential Douglas Elliman, questioned the wisdom of retaining high prices when the market is demanding for correction. He said that more condo units will ultimately end up in foreclosure list inventories if prices are not adjusted to be competitive with other developments.
Housing analysts have observed that some cities of states battered by foreclosures such as California, Nevada and Arizona have been showing signs of recovery because their markets have made the needed price corrections. Their low foreclosure list prices have attracted groups of first time homebuyers and investors, cutting down large portions of foreclosure inventories.
One problem of condo developers in New York is the complicated mortgage loan structures they obtained to be able to design and create glass towers that appeal to high-income financial hotshots. Now, the developers are facing difficulties in getting approvals from their lenders to reduce unit prices.
Without significant price reductions, New York condo units would not sell. They would instead be added to foreclosure list inventories.