Recent mainstream media coverage of the real estate market has made bleak predictions that may have done more to discourage investors than to provide any useful insight. Like a modern-day Cassandra, some claim that the end is near. But there is still plenty of lending and building in all of New York City’s markets.
So what about the bubble, you ask?
Yes, New York is in a bubble. It’s an impenetrable one that has sheltered it against busts in the past and, likely, now. So why all this Chicken Little talk? At the crux of it are editors and publishers looking to fill pages with what sells the most: PANIC.
It’s no surprise that one of New York magazine’s most popular issues of the year is their annual “real estate scare” issue. Another example, to pick from many, is a recent New York Post headline that read “Home Wreck,” about real estate prices skidding.
As part of the media, we are conscious of our responsibility to be cautious of the hype and to bring you just the facts, as diligently as possible. We try to guard against any sort of spin — whether it’s spin from prognosticators saying the market can do no wrong, or spin saying the market can do no right.
In this issue, for example, you’ll find a Q & A with senior-level brokers who say the market is holding up well despite the credit crunch (see Q & A: Sounding off on the health of the market), and another article about how mortgage lending hasn’t changed dramatically for solid borrowers (Not necessarily a tough time to finance a home). You’ll also find stories about lending practices altering dramatically for less than stellar borrowers (Ground shifts for borrowers) and about the large numbers of mortgage lenders and brokers going out of business (Mortgage brokers hit hard by downturn). There is a balance there.
While those in the industry know the market is complex and has underlying strength, consumers are extremely sensitive to what they read in the mainstream press and see on television. What’s most misleading about many of the real estate stories is their lack of context. Often their sources and data apply to markets outside of New York, which are suffering more than the city and its suburbs.
New York is unique; it doesn’t march to the same beat as the rest of the country. One of the reasons the city has avoided the meltdown that is hurting other parts of the country is its alternate sources of funding. We have foreign capital flowing to the city and foreign buyers who want to make this their home — or second or third home. And as the dollar continues to weaken, the euros will pour in even faster (see More lending oversight for overseas shoppers).
Also in this issue, we profile real estate titan Harry Macklowe. Macklowe is a New York figure who has taken his lumps from the local press. His “wage it all” attitude about buying buildings makes him seem like a gambler with a history of lucky streaks. Some feel that his luck may have come to an end with his latest gamble on a portfolio he bought from the Blackstone Group for more than $7 billion. Still, many others believe that Harry will somehow always come out on top, and must have some cards up his sleeve. (His new residence is certainly on top. It’s the $60 million dollar penthouse at the Plaza Hotel.) Check out Macklowe’s mess.
Mort Zuckerman of Boston Properties once said, “Law is the opposite of sex: Even when it’s good, it’s lousy.” Old Mort might have a hard time convincing attorney Jonathan Mechanic of that. A regular at closings for some of the biggest deals in the city, Mechanic is the subject of our Closing piece.
Finally, our previous supplement on the national market drummed up such an enthusiastic response that we decided to do another special report on markets outside of the city. This time we chose not to stray too far, and we focus on the suburbs in the New York metropolitan area and how they are reacting to the recent changes in the market.
Enjoy the issue,
Amir Korangy