Wednesday, October 24, 2007

Riverwalk Condo Going Up on Roosevelt Island

Construction of the new Hudson/Related Riverwalk Condo on Roosevelt Island is moving quickly and sales should be starting soon. What impact will the credit crunch in the mortgage markets have on this new condo development as well as other new waterfront developments in Long Island City (Powerhouse and Foundry developments) and Williamsburg (Edge and Northside Piers)?

Blogger Urban Digs asks the following question of concern to buyers of new condo developments:

What happens to all those new development buyers that are currently in contract, waiting for building completion to close, if the jumbo credit markets continue to be in distress and there is a much different lending world than when the original contract was signed?
What if the buyer doesn't have the doc's to get the commitment, if lending/underwriting standards have tightened so much in the past 3-6 months? What if the buyer gets a much higher interest rate than was originally anticipated? What if the bonus doesn't come in as expected? What if they lose their job? What if the property becomes unaffordable?

While these are valid questions, they are also on the doomsday side and must be looked at with an open mind; after all, if it wasn't for new dev units we would have an extreme shortage of supply! This is a very wealthy city, with great salary's / bonuses and plenty of qualified demand. But with some 17,000 - 20,000+ units set to close in the next 1-2 years or so, questions should be raised given the change in the macro environment and re-pricing of risk in the mortgage markets!

Strange how this topic has not been raised in the major media? Too negative maybe?
And Blogger Matrix on appraising new condo developments:
The problem with appraisals done in new developments can be more about independence of the appraiser than the use of comps. If the developer arranges financing, they are likely going to own, hire or or have a financial relationship with a mortgage broker or local lender. The appraiser may have been offered a package deal to appraise these properties in bulk or more efficiently for the lender or mortgage broker. The act of saving the applicant $25 on an appraisal fee may also serve to remove independence from the process since killing a sale could cancel 100 future appraisal assignments. duh!


Anonymous said...

The NYC luxury condo market has been flooded by developers lately. I wonder how long they can sustain those ridiculously high prices. Some day supply must outstrip demand and the prices will sink. But then, this is New York. It's got its own rules.