Real Estate & Refinance News

THE NEW YORK TIMES REPORTS April 9, 2009 on the dramatic fall in Manhattan real estate prices.

Some housing markets in the West are leveling off.

Prices on condos and co-ops (98% of Manhattan's residential property) are down 25% in Manhattan and sales are down 60% compared to a year ago.

The stress is most severe at the high end of the market. There are 350 apartments and town houses for sale in Manhattan with asking prices of more than $10 million, and inventory has been growing. It would take about six years at the current sales rate to absorb all those listings.

“For the last three years, it was the bigger the better,” said Dolly Lenz, a broker at Prudential Douglas Elliman. “Now the key words are smaller, livable and affordable. Before no one asked what the maintenance was. Now everyone wants to know.”

Mortgage foreclosure rates are low in Manhattan.

Limited borrowing opportunities hurt Manhattan real estate values. More than half of all apartment sales in Manhattan are above even the expanded limits of conventional mortgages, which carry lower interest rates.

In New York, the financial industry accounts for more than 30 percent of all wages, and at least some of the wages of half of all very high income households, according to the New York City comptroller’s office.

THE NEW YORK TIMES REPORTS APRIL 9 that bailout bonds may be offered to the public aka small investors.

An advantage of this offer is that it would quiet talk that only Wall Street plutocrats will get rich from buying troubled bank assets.

Public anger at bonuses paid to top officials in finance companies could hinder plans for creating a fund to buy troubled assets.

The NYT says: The funds, the thinking goes, would buy troubled mortgage securities from banks, enabling the lenders to make the loans that are needed to rekindle the economy. Many of the loans that back these securities were made during the subprime era. If all goes well, the funds will eventually sell the investments at a profit.

But, as with any investment, there are risks. If, as some analysts suspect, the banks’ assets are worth even less than believed, the funds’ investors could suffer significant losses. Nonetheless, the administration and executives in the financial industry are pushing to establish the investment funds, in part to counter swelling hostility against the financial industry.

THE NEW YORK TIMES AND WASHINGTON POST REPORT that President Obama is pitching his mortgage relief package.

Applications to refinance mortgages are up dramatically. Lower rates and the president's plan are credited for this surge.

"The main message we want to send today is that the programs that have been put in place can help responsible folks who have been making their payments, who are not looking for a handout, but this allows them to make some changes that will leave money in their pockets and leave them more secure in their homes," Obama said.

Obama plans new housing programs to be made public soon. Reducing foreclosures will stem home price declines and stabilize the market.

The refinancing boom has been fueled by lower mortgage rates. The average rate on 30-year fixed notes was 4.87 percent Thursday, slightly higher than the 4.78 percent last week. Still, it was the lowest level since 1971, which the president used to bolster his two-pronged argument for why refinancing is so important.

Those with big mortgages, so-called jumbo mortgages, will have a hard time getting refinanced.

"We hope that everybody takes advantage of it. The Web site is makinghomeaffordable.gov — is that right?" Obama said, repeating the address five times in five minutes. "So get on the Web site, find out what's available."

You don't have to have much equity in your home to take advantage of this new refinancing offer.