How will TALF affect New York City residential real estate?

By Lynne Miller | March 31, 2009 04:55PM

 Left to right: Jorden Tepper, Jonathan Miller, Adelaide Polsinelli

Brokers, appraisers and other real estate professionals are not expecting the Term Asset Backed Lending Facility to cure what ails New York’s residential real estate market. TALF, as it’s called, is designed to help banks get rid of bad assets and start making new loans. While unfreezing credit would be a step in the right direction, the experts that The Real Deal talked to also pointed to other problems plaguing the market that are not addressed by the Treasury program. Whether TALF can help their businesses remains to be seen.

Jorden Tepper, executive director of sales for Century 21 New York Metro

In addition to unfreezing credit, what else needs to happen to increase home buying activity in New York?

You’ll see more demand for loans and purchases when prices come down a little more to meet buyers’ expectations. The sooner the sellers relinquish their expectations based on the last couple of years [sale prices], and start pricing more toward today’s reality, the sooner we’ll get back to a healthier market.

What impact will TALF have on the local market?

I’m hopeful, and the mortgage brokers I’ve spoken to are all hopeful, that in the next six months, we’ll see the benefits of that money, and the easing of credit flow in larger banks.

What, if any, reservations do you have about what this program can do for the New York residential market?

My only concern is that it doesn’t work fast enough. We haven’t seen enough evidence of when and how fast it’ll take effect.

Jonathan Miller, president and CEO of appraisal firm Miller Samuel

How will TALF affect business for residential appraisers in New York?

Eventually I think we will see work related to the disposition of assets and estimating market value, but no noticeable impact yet. I am fairly optimistic that New York City will benefit in many ways with the concentration of financial institutions located here and as a result, we will too. I am not sure whether we will see the slew of work that we did from [Resolution Trust Company] in the early 1990s after the S&L debacle, because the process has not been very transparent to date.

You are a commercial broker, but you deal with selling entire residential buildings. When do you expect to see mortgages become easier to obtain as a result of TALF?

You hear stories on the conventional mortgage side that there’s definitely movement. It’s improving. That’s what Fannie Mae and Freddy Mac do — deal with the conventional mortgage market. There are other mortgages like jumbo and commercial mortgages that don’t fall into their purview. There should be improved liquidity for jumbo and commercials [after conventional mortgages start getting easier to obtain]. This is going to be a multi-year process.

What other concerns do you have about TALF?

There’s still not a lot of clarity on this issue and what these assets actually are. We have a less tangible understanding than we had in the early 1990s.

Adelaide Polsinelli, associate vice president of investments at Marcus & Millichap

What will TALF do for the city’s residential market?

It’s a small bandage over a really big wound. Maybe in the short run TALF will provide liquidity. What good is liquidity if there’s no velocity? We need stability in the job market. The cost of living in New York City has gone up and, in a bad economy it gives people reasons to consider other options.

When will we see results from TALF play out on the residential side of the market?

I think the issue is more of a fundamental problem with the economy. Why would I want to buy a house right now if I think things are going to get worse, if I’m going to lose my job? I have a lot of clients saying if the cost of living in Manhattan is so high, maybe I don’t want to buy here. Maybe I want to buy in New Jersey, Brooklyn, Westchester or Connecticut.

[This is the second in a two-part Web series on how the federal loan guarantee plan affects New York City real estate. The first part was on the commercial market.]


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