Property Grunt

Wednesday, March 28, 2007

What about Manhattan?

It looks like Jonathan Miller was on the money when he said that the sub prime mortgage crisis was going to dominate the headlines. Wherever you go there is some report about how the sub prime mortgages are f**king up the program. Even Bernanke’s calming words weren’t enough to build confidence in the stock market in fact it appears it just freaked them out even more.

Curbed and Gothamist have also jumped on the sub prime mortgage band wagon and are focusing on two articles in the Daily News and New York Times regarding foreclosures and the sub prime market.

What I do want to ask is the question that has not been answered, in fact it hasn’t been raised by the local media which is “Where is the data on Manhattan?”

From what I have heard in the media there has been a lot of talk of new developments, the market softening and there has been reports on foreclosures in the Manhattan area. But I have yet to year any reports about the sub prime effect on the Manhattan. market For the love of mike, we have data on Newark. But what about this island called Manhattan?

Whether it is sub prime, interest only, ARM or fixed rate, a mortgage is a mortgage is a mortgage. Sub prime doesn’t just apply to single family or two family homes. So I will not accept the excuse that sub prime only deals with certain types of homes.

Manhattan is obscenely expensive and during the height of the market it was even hard for people with high incomes to get the money together to buy an apartment. So there must be a significant segment of the population that had to go through more creative means to acquire a mortgage. So I would not be surprised some buyers exercised the sub prime option.

I am not trying to pull an Oliver Stone, but I suspect the Manhattan data does exist and we haven’t seen it as of yet it might be for the following reasons.

1.Manhattan is the flagship of the real estate industry. While the rest of the country is crashing and burning, Manhattan is still holding its mud against forces of the real estate correction. If there is evidence that Manhattan is in the same position as Queens and Brooklyn, there are might be fears that it might set off a panic.

2.There maybe some developers who aligned themselves with lenders who could prepare sub prime mortgages in order to entice buyers to purchase something they couldn’t afford. Perhaps some of them do not wish to be exposed or perhaps there are some developers who are relying on sub prime to pull them through.

I accept the possibility that sub prime mortgages do not exist or are very rare in Manhattan. It might be a class issue where sub prime mortgage are considered to be gauche. Also co-ops are very particular about their requirements, looking over a buyer’s mortgage and determining whether the buyer could keep up with the payments. So mortgage brokers might steer their buyers away from them.

So, let’s end the speculation and clear the air. I think we all have a right to know how bad or good things for the sub prime market in Manhattan. Or that if the sub prime market even exists in Manhattan.