This Week in Comments

New York /
Jun.June 26, 2009 05:58 PM

How does this downmarket compare to past downmarkets?
This is the first real estate cycle that was dependent on cheap credit, which was itself dependent on securitization vehicles and structured credit products like CDOs. Those didn’t exist in 1990, which was a market that crashed even without the prevalence of structured credit. This one could be much, much worse, especially in commercial real estate.

Which condominium do you think is the most overpriced?

1. It would make more sense to ask which building do you think is not overpriced.
2. Even if developers read the news, they are usually on the hook for tremendous amounts of money by their lenders, who would rather let the units sit and rot than take a loss on paper.

Isis condo revamps pricing for entire building
1. Hate to tell you this mister, 5 percent isn’t enough.
2. You gotta give it to Alchemy for at least trying. However, given that this hasn’t worked at their other project, they will have to come down another 20 percent just to start getting interest.

Rent board approves increases
1. Buying a [rent-stabilized] apartment building has the same risks as buying any other piece of real estate. If the value goes down and taxes go up, owners will get hit, regardless. Why is it up to the tenant to make up the difference so the owner can make a profit? If the property is not profitable, sell it!
2.  If landlords didn’t think they could make profits on rent-stabilized buildings, then why did they buy them in the first place? No one I know buys real estate to lose money. Putting higher costs on the tenants to make up the difference (especially for those who cannot afford it) is plain wrong.

Selling William Beaver with master leases  
Does this scheme make sense to anyone? According to the data given, an apartment allegedly selling for $1.4 million is renting for $3,500 a month. If the owner were to receive the entire amount put in escrow, assuming no expenses (ridiculous assumption), the return is 3 percent. After that you have several risks including trying to keep the apartment rented or selling it, as well as maintenance costs. Who would do such a thing?

C21 NY Metro moves into commercial market
These companies are grasping at straws. The commercial market will provide no more financial relief for them than the residential side does. The market is dead for a while in both sectors.


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