Knakal says crisis is debt, not real estate

The New York City housing market slump is less a crisis of real estate than it is a crisis of debt, according to Robert Knakal of Massey Knakal Realty Services. In a blog post yesterday, Knakal said that the market needs to “go through a massive deleveraging process” before it can improve, because “properties simply cannot support the debt loads that currently exist.” Unfortunately, tight credit among lenders and banks makes refinancing debt and mortgages increasingly difficult. Subsequently, Knakal said, the market downturn could extend further than many anticipated. “As things play out, it is becoming more apparent that our distressed asset flow will not be in the form of an early 1990s-like tsunami but rather a series of rolling waves extending as far as the eye can currently see,” Knakal said.