The Hollow Economy

Under the direction of the Center for American Progress, Lou Dobbs tells his audience about the housing bubble and what is happening as it deflates:

New York Ain't Cheap

The city that never sleeps just got a whole lot more expensive for a place to put a bed down in. Apartment prices skyrocketed 23 percent across the board in the five burroughs. While housing prices have stagnated in many parts of the country, NYC is oblivious to any signs of slowing down. The average apartment is now $745,000 dollars or $671 dollars per square foot. Of course that is broken down further when you look at places in throughout the burroughs. Obviously you aren't going to find Queens prices in Manhattan.

From New York Business:

Manhattan, once again, took the lead with the highest average sale price for apartments at $1.1 million. Brooklyn was second at $441.000, while Queens came in third at $257,000.

In Manhattan, the average price per square foot for apartments rose 3% to $1,103, while in Brooklyn and Queens had prices per square foot of $476 and $348, respectively. Percentages for Brooklyn and Queens were not immediately available.

In the five boroughs, the average sale price for one-to-three family homes climbed 7% to $595,000, while median sale prices grew 8% to $540,000. Manhattan saw the biggest increase of 16%, on average. Sale prices in Brooklyn and the Bronx rose 7%, Queens sale prices gained 4% and Staten Island sale prices edged up 3%.

Basically all the numbers show that the boom isn't stopping in NYC anytime soon. No matter where you go, expect high prices all around in this regional sellers' market. The question for renters who are looking to buy is when to do it. Do you wait for the market to level out or jump in as soon as possible. The latter would seem to keep the fuel on the fire of the market....but no one wants to be left behind.

Boom And Bust In The Housing Market

For a few years many people were enticed by low mortgage rates offered by an insurance industry that suckered people into a bad situation. Senator Chuck Schumer released a report on the upcoming spike of foreclosures that is going to hit his hometown burrough of Brooklyn especially hard. The lenders that offered homeowners what looked like a good deal is going to leave thousands homeless.

From The Bayridge Courier:

The most popular “affordable” subprime loans are adjustable rate mortgages that offer an initial fixed rate that is set low.

But the rate resets after an initial fixed rate period to a more onerous rate that leads to a significantly higher mortgage payment that low-income borrowers will have difficulty affording, Schumer said.

Schumer’s analysis showed that in the next two years, 91,000 families will be at risk of foreclosure because of these lending practices. In the New York Metropolitan area alone, an estimated 53,000 families will see their mortgages reset to onerous rates, he said.

“The bottom line here is that the subprime bust is leading us right into a foreclosure boom, and thousands of Brooklyn residents will be left in the lurch,” Schumer said.

I think it is great that Senator Schumer is finally highlighting this serious issue that leaves thousands homeless from predatory lenders. My question is why did it take so long? Schumer is no stranger to the world of finance, thats for sure. The article also interviewed experts around New York on this and they have the same question.

Oda Friedheim, a staff attorney with the Legal Aid Society said the issue is nothing new.

“Too bad it took Wall Street’s pain to put the problem on the spotlight,” she said. “They have a bellyache because they swallowed too many bad loans,” she said.

“Our clients have been suffering for years under these abusive mortgages,” she added.

Deyanira Del Rio, the associate director of the Manhattan-based Neighborhood Economic Development Advocacy Project has been tracking mortgage lending and foreclosure data for the past seven years.

“What we have seen is that consistently higher priced mortgage loans are overwhelmingly concentrated in neighborhoods that are overwhelmingly black and Latino,” she said, noting her group will soon release a study showing this trend.

So why the outrage now Senator? It is unfortunate that it has to come to this to help out people that have been targeted for financial exploitation. Hopefully his intentions are genuine and meant to help those in need and not the Wall Street crowd.