With the economy acting as though it's on a roller coaster given concerns about credit and mortgage markets, NYC real estate brokers are feeling the pains. Some potential buyers who would have qualified before issues with the mortgage markets now find themselves struggling to get the loans they need and being asked to put more of their money down. However, we will say it's hard to be sympathetic to someone looking for a $3.3 million mortgage or someone who makes $500,000/year failing to get an $850,000 mortgage, which were two examples in the NY Times.
The Post spoke to a number of real estate brokerages. Prudential Douglas Elliman's vice chairwoman Dolly Lenz says that apartments over $5 million would probably be hurt by the stock market's tumult, but activity is still healthy for apartments under $5 million. Appraiser Jonathan MIller suggests that "Bonus income" - often what fuels many new home purchases - "may be impacted as profits in the financial-services market begin to recede." Verdict on potential NYC residential real estate market slump: Mixed (perhaps there will be some bargains at the top of the market - like get that $8 million apartment for $7 million). But some think that the market turbulence is good for commercial real estate.
And many traders all over the world are probably thinking, "Thank God It's Federal Reserve Discount Rate Cut Friday!" The Fed decided, in a surprise move, to cut the discount rate, which is the rate that the Fed loans to banks, and the Dow Jones Industrial Average increased almost 300 points this morning. You can read the full text from the Federal Reserve here - the Fed said, "Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth." One Lehman Brothers economist tells Bloomberg, "I think it was exactly the right thing to do" because it will "basically do more to unclog the credit channels."
More fun: Subprime mortgage graphic from The Onion, via Curbed.
Photograph of new construction by Goggla on Flickr