Bubble Wrap: September 2008

The Default Phenomenon Comes to N.Y.

This Thursday’s Sun details how defaults are starting to creep into the market, with no buildings immune. With higher unemployment and stricter financing requiring more money down, some buyers are finding it difficult to close on their new development contracts, choosing to walk away from their deposits.

“If you got pre-approved a year or two ago, there’s a 95% chance that your financing is no longer available,” the chief executive of Manhattan Mortgage Co., Melissa Cohn, said. Because of the high cost of New York City housing — in Manhattan, the price of the average apartment now exceeds $1 million — an additional 10% of the purchase price is difficult to acquire on short notice, even for wealthy buyers. “What’s amazing is that if you look at these people and their income, they’re able to afford these apartments,” Ms. Costa said. “The lending isn’t based on qualifications — it’s a set of rules because we got into this credit mess.”

Downturn strikes at Hudson's heart

The Jersey Journal considers the effect of the Wall Street crisis on the Jersey City real estate market as the financial industry has driven most of the city’s growth in recent years.

Developers of housing projects who cannot unload condos will probably look to Jersey City to help bail them out. They will line up to rework their tax abatement deals similar to that given by the city to Canco Lofts, the development at the old American Can Company property on Dey Street, which now makes lower in-lieu-of-taxes payments than originally agreed.

Another Season, Another Market

In the Time’s Big Deal column Josh Barbanel writes that Manhattan closing prices are off 7 percent from last quarter, excluding 15 Central Park West and The Plaza. At the same time, closings surged at lower priced buildings like 90 William, making the season’s latest numbers harder to interpret.

Jonathan J. Miller, an appraiser who prepares market reports for Prudential Douglas Elliman, said the decline in aggregate prices was a combination of seasonal trends and weaker conditions. But he said he was worried that the market might deteriorate next year, if the economy weakened and Wall Street bonuses were cut sharply.

Brooklyn Arena Builder Plans to Break Ground in December After Delay

The NYTimes recently came out with the story that Bruce Ratner plans on moving ahead to break ground on his Atlantic Yards project in December, but with current economic conditions and a ruling still out on his tax exempt bonds, the project’s feasibility is still questionable.

“While it is a tough market, we have secured more than $1.5 billion in construction loans this year so far,” Mr. DePlasco said. “And this is the most exciting project in the country and the most exciting arena in the world.”

One reason Mr. Ratner may be forging ahead is his deal with Barclays Bank, which officials say provides him with $20 million a year for naming the arena after it. The naming rights contract requires Forest City to close on the land and the financing by the end of November.

Top outer borough condos: Aspiring addresses in Brooklyn

The Real Deal covers the race for the highest priced sale in Brooklyn, with three buildings in contention. Several potential sales could reportedly bring new heights to the Brooklyn luxury market.

The addresses of the most expensive condominiums in Brooklyn — One Brooklyn Bridge Park , One Main Street and On Prospect Park (located at One Grand Army Plaza) — appear to herald their top rankings. Those three buildings, between them, account for the borough’s top 10 sales. In two cases, the developers applied for an official address change to get the aspirational number in their monikers, the equivalent of Donald Trump naming his newborn son “Barron.”

Englewood builds on trends

The Bergen Record describes how Englewood has changed over the years, building up its density in new mixed-use developments with offices, a hotel, and many condominiums.

Unlike the suburban, single-family homes built in the decades after World War II, Englewood South consists of condos and apartments, reflecting the density of new development in the area. About half of all new residential construction in the state is multifamily, according to Patrick O’Keefe, an analyst with the accounting firm J.H. Cohn in Roseland and former head of the New Jersey Builders Association. And much of this dense development is concentrated in Bergen, Hudson and Essex counties, he said.