As we move closer to the New Year and look back on what was 2008, so much has changed. We began the year knowing of the strength of Bear Sterns, Lehman Brothers and AIG. Also….people had jobs. The situation now seems absolutely dire. All you hear about on the news are new scams, new indictments, more foreclosures, less credit, etc. Aside from the staggering unemployment figures we are facing, there is one…very very large…diamond in the rough. It looks like its never been better for someone to purchase some real estate in New York City. Let me please be clear about this. It’s a great time to buy some property in New York as long as you have a sizeable downpayment, good credit, a stable emergency fund, and are not looking to get on any TLC shows for “flipping”.
Why is that? Well for starters mortgage rates are great and it looks like they will likely fall to historic lows pretty soon. If people thought 6% was good, imagine having a 4.5% mortgage 10 years from now. Perhaps even more importantly is that you are starting to see a ton of unsold inventory around New York City (specifically Brooklyn). Prices in many of these new construction buildings have dropped anywhere from 10-20% already, and its likely they will fall even further (Im beginning to sound like a sales rep). But without even expressing opinions on the market (because no one is ever right about that), the one thing you should know is that if you are purchasing any property in New York City right now, keep negotiating as hard as you can. My clients have had transfer taxes and a large amount of closing costs paid by the sellers on several recent deals (not promising the same will happen to you, but it seems to be happening more and more). Sellers are sitting on new construction developments with huge construction loans and they have to get rid of these units. They’re really not interested in keeping your 10% deposits if you can’t close on time as they need the entire purchase price. Having said that, make sure you are aggressive in terms of the price you ask for, as well as the credits you ask for (transfer taxes, etc.). When you combine all of these with low mortgage rates, a lot of qualified (say it with me…qualified) people who can afford the home they are purchasing will be in a great position very soon.
Also, please be wary of this FHA loan nonsense that is flying around. FHA loans are not some savior loan that will make your couch more comfortable or the air smell fresher as they make it seem on TV. Its a loan. With a lot of drawbacks and points and escrow amounts that you have to put aside. Sometimes its good, and sometimes its not so good. Make sure you look into the pitfalls and benefits before you decide to go FHA.
