Roosevelt Island Condo/Rental Market

Here are links to NY Times, Streeteasy.com and Craigslist for Roosevelt Island sales and rentals as of today. Craigslist has a 530 sq. ft. studio at Building 3 of Related/Hudson Riverwalk Southtown development listed at $445,000 or $839 psf.

Work is progressing quickly at the fifth of an eventual nine Related/Hudson Riverwalk buildings at Roosevelt Island development site as shown in picture above. I have been told that the building is scheduled for occupancy in January 2009. Here is a Youtube construction video of site.

What type of real estate market will New York City be in when these new condo units come up for sale? Of course nobody knows, owners hope that prices in NYC are immune from what is going on in the rest of the country and will continue to rise or at least not fall and buyers who are new to market or have been waiting on the sideline for the inevitable drop in prices are hoping for the opposite.

Urbandigs had an interesting post on future of lending environment stating:

We are returning to a lending environment more like this! We are in the very early stages of tighter lending and underwriting standards after we got so used to no standards at all for the past 3-4 years! Looking forward, buyers will have to prove their earnings and employment. As Michael McGivney, a Wells Fargo Private Banker, said back on Aug. 10th:

Last week, a client getting approved for an interest only product, like a 5 year ARM, on a $500,000 loan qualified on the payment of $2604 at a rate of 6.25%.
Today, that same client, to qualify for the same loan, will need to have enough income to qualify for the "fully indexed, fully amortized" payment. That means they MUST qualify at a rate of 11.25%, fully amortized. That means a payment of $4863!!!!!! That's nearly DOUBLE the payment. That means they must have nearly DOUBLE THE INCOME!!!

And they will need to have the documents to prove that income before the loan gets committed to! Adjust accordingly and be prepared! This credit squeeze is only 5-6 weeks old in the tradable markets minds; although many have been waiting for this to happen for years.
It's going to take more than a few months to adjust to such a different world after years of loose lending standards. For any seller thinking about accepting a deal from a buyer whose income is derived 100% via self-employment, be sure that they can back that up with documents so you have no issues with the deal closing!

The market for new condo units in Washington DC is in trouble. Is this the future for the new condo projects coming on line in NYC. According to the Washington Post:

A growing number of condominium developers are backing out of projects as the worsening real estate market causes lenders to tighten their standards.
... In the past 12 months, nearly 20,000 condo units have been removed from the glutted local development pipeline, said Gregory H. Leisch, chief executive of Delta Associates, a real estate research firm in Alexandria. By Delta's count, in the second quarter of this year, developers abandoned plans for 22 local condo projects.

More here:

During the real estate boom that ended two years ago, developers could get loans even if they presold only one-quarter of their units, said Peter Antonoplos, a real estate lawyer in Carter Ledyard & Milburn's District office. But then sales slowed drastically, and many would-be buyers cancelled their contracts. Now lenders are asking that 50 percent or more of the units be sold before construction, he said. Others want the developers to contribute more of their own money.

"Institutional lenders don't have the appetite for condo properties that are going to sit around and present a credit risk," Antonoplos said.

Developers are more likely to get financing for rental properties because the rental market is healthier, real estate experts said, hence the push to convert condos to rentals. However, there are concerns that the recent turmoil in the mortgage market could cause that financing to tighten.

Does this sound familiar?

Still, analysts said that because of local job growth, they don't expect the condo market to melt down in this region as it has in other areas of the country. The result here will be a healthier market as supply and demand reach an equilibrium, analysts said.