EREALDEALwww.TheRealDeal.corn NEwYonr Rrnl Esrlre News Vol.7 No.12 December2OOg $3.oO

Follo*it-rg New York's foreclosure fr enryNumber ofhomeou)ners defaulting still on rise citywide, uith eaen

Manhattan shouing more signs ofdistress9YMusuDsge McGq

| | fhile greenshoots mayhavesproutedinsomesectonoftleNewYorkCityrei-

!f!f aentiA meket,thercreplentyofotheraeuwherethatisfufrcmtherue.f f Forelozuq@ntinuetonwgeneighborhoodstlrrcughouttheouterborcughs

- most notably southem Queens and parts of Brooklyn - md more distrss is quietly

creeping into the Manhattln rqidential market.In this month's Q&A appraisere, ualysts and brokers who follow foreclosura told

Ihe RealDalthrtwhile ertain uea of the city re starting to level offwhen it cone toforelosuro, in others it's difficult to even find a "regular'nondistresed sale,

One expert from NewYork Uniwnityb Furman Center said that the third quart€r of

2oo9 saw 6,000 forcclosure filings in the city - the largest number since the research

center started tracking quarterly data in the esrly lggos.And mrisome trends ue on the horircn. Forone, prc-forelwurg or Japarderu, fil-

ings re up in Manhattan, even ifthe borcugh is still rclatirelyinsulated ompared to theouter borcughs. In addition, the kind ofhomemer tlroughout the city who rc fallinginto foreclqure is shifting ftomjust those who got into unefordable modgsge situations tothose who re lcingtheirjobs. Finally, beauee NryYorkStat€ hr the longest forulosurecycle inthe muntry, the nunber roybe undestatingthe werityofthe prcblem hw.

Formore on howforqlcuro rcinpactingprcpertyvEluc,whw nwone mlnppingup ud howbrcken rc getting in on foreclosure sals, we tum to our pmel of experts-

Sam Heskelfornder, HMS Associates

Whatb happenlngwfth rcsldontlal foteclosuca ln thc walallilew York Clty marketattba moment?It's an unfortutratetrend. Itb there mdweprobably havent scu

the worct ofit yet. I have heanl there is atwo-year backlog, and there is a lot more

in the pipeline. Ifyou look dt all oftle bor-

oughs, tiere are close to u,ooo listings ofdistresed sale ofall sorts, including fore-

closures md bank-omed REOs.

What ara you seelngln Manhaltan In

tems of iorcclosur€, and how dca thatcomparcto last yearat thls tlme?It's still not much when you compare

Manhattan to the other boroughs. There

are 23 scheduled foreclosures [now]ompared to Drcember'o8, when tJrerc

were 19, In Manhattan there are close to600 distrGsed listings, meaningforeclo-

surs, bank-omed REOs, whatever. For

ompuison, Bmklyn hs over3,ooo mdQueens h6 over,l,ooo.

Do you orpect foreclosurog to start3pfeadlng to Manhatttn In grcater nucbcB as uncmploymnt contlnue3 to rbe?I think therewill have tobe a rise in fore-

closure on the high-end apartm€nts. Ient see how they ae going to be able

to maintain themselves. We re talkingabout [rently] laid offpeople or poplewho were laid offayear ago and they stillgot some good bonuser or they still par-

tied lrutyean But they re not going toma&e those figure again mJrtime eon.

whlch nelghborhood3 arc belnghlt ha1il

Gat by fbroclGurc! In Ncw York, and

whetl thc outl@k llkc tor those placc!

Itr thc comlng mrths?Southem Qusns is a disster - Jm&i-ca, Ozone Park, KewGardene, CambriaHeights, Queens Village - the whole area

is in distres. ln Bmklyn tlrerc is Eut

NewYork, Browille, Bed Stuy mdOem Hill. It's not ro bad r Quens, butin those aru itb wry hard to find a regu-lersale,

What'3 th6 mst lurprlslng oxamployou've ton of lomeone In toGclosuc?I did m appraisal at 20 Pine StreeL Theguy paid Sl,ooo per squ{e foot. The real-ity is, somebody purchoed it ayan lateru a short sale. You'd be surprisbd. People

cover up e lot ofthings.

What eftsct has Obama'8 mortgage mod-

mcatlon prognm had on forcclo3uleg

end dlst?$r ln New York?

It deffnitelyhelped - some ofthe people

ithelped pemanendy and some, itjustbought them some time until they ue inforalosurc again.

What klnd ol lmpact b tho IncreaEe In

dbtressed homcowners In Now York hfl-Ing on prepody Yaluos hete?

It depends how common it is in the neigh-

borhmd. If there ue one or two, it dffin'thave such a negative effect, but when it is

spread out and there are a lot ofdistressed

sals, it brings dom the value. Nobody

would pay $loo,ooo more for a house

wben there are three similar homq on

the block in distres that lrcu @n get for

$loo,ooo l6s. ItdGtrcys the neighbor-

hmd - boarded-up or abudoned homehave a negative effet on the neighbor-

hood s awhole.

How hilo fobclosures changed theworld ot brekoilng? AE a lot ol b0keEtrylnC to gct In on REO3 and sholt salos?

I think that's t}le hottest thing. It reeru tobe the trend now in the borcughs, at leutin the neighborhoods that haw beo hittheh*dest. Everybrckerisnegotiatingshort sales today. Everybody suddenly be-

came a professional on short sals.

Ingrid Gould Ellenco-faculty director; NYU Furman Centerfor Real Estate aud Ulban Policy

Whatb happonlng wlth rcsldontlal tole

clo3urc3 ln tho oveEll New York Cltymartet at thc moment?Foreclqsuru continue to rise in NewYorkCity. In the third quarter of2oog, therewre netrly6,00<lforeclosure filings -the lag€t number sine w begu trrck-ing querterly forcdosure data in the wly199os. That is up ftom about 5,5oo filingsin the seond quuterof 2oog, md therehave alreadybeen more foreclosure filingsin the fiEtthrequartere of 2oog thu inallof2ooS.

What arc you scelng In terms ot foreclcsurc mw compaled to thm months ago,

dx months ago md a year ago In theclty?In the prot yeu, we have seen an increroein the number of ondos and fire-plw-unit buildings going into foreclosure-

In 2oOZ 345 buildings with more thanfive units received a foreclosure ffling. In2oo8, thet numberjumped to 454.Ard inthe fiEt tltr@ quarters of 2oog, there have

been 55,* forclosure filings on fire-plw-unit buildings already. This is aworri-some trend, beeuse it reflects an increu-ing number ofrenter households living inbuildings entering foreclosurc. Horcver,while it needs to be wtched, the overall

numbers are still fairly small, and the wtmajodty offoreclosure are taking place

on one- to four-family properties.

Do you oxpact a rbe In torecloaurcs In

New York Clty golng foruard? 'I do not expect foreclosures to diminishanpime smn. We ue beginning to see the

nature offorelosurc change, with fewrrooted in subprime loms md morc rcoted

in job loss and income declines. We uealso likelyto se acontinued inme inmultifmilyforcdosue.

What about ganoral dlstreEa, rven ot-lldg ottoloclosuro? What rro you 3oclngon that frmt In Ncw Ysk Ctty?

Acros the cit5r, we ue wingtrcublingsigns, such r stagnmt inrcms md in-cress in swere overcrowding, whichtend to happen when families re trying tosave money. The shce ofhouseholds that

ue severely crowded @pt up to 3.6 per-

cent in 2OO8, from a steady nte ofabout2,4 per@nt for the p$t three yeN.

What efrect har Obama'B moltgags mod.lncatlq pregram had or forcclo3urc3lnd d|3trcls?The progrm hc begun trial modifie-tiom formore than 650,000 borowesuound tle ountry. I think the progrowill help mmybomwere stay in theirhomes. That said, there ae manyborrcw-ers out there who ffint being reached.

Also, the prctram w6 very much de-

signed to aid borrcwem who had reeivedunafrordable loms. Unfortunately, the

foreclosure problem is now shifting, mdmore foreclosures ue likely to result fromjob loss. It will not offer much sisteeto bonowen who default on their mort-gags due tojob los.

Bill SanifordCEO, PropertyShuk

What's happonlngwlth rc.ldentlal tocdGuEB lntha ovenlll{ew Yolk CIB mar-

ket?Mmhattanhro re-

mained stable. Thereha ben verylitde

rctivity with foredosurs in Muhattan.-the one thatlooks interestingto me is

the Brou. There h* been a significantincreroe in the number offoreclosurointheBrcn - mudTo percntysover5rcu, Brcoklyn hs remained steady.

It is dom about 5 percent yeff overytrQueens bu rctually improved: It's dom20 pe(ent, md the Eme with Ststen Is-

land. [But] when we re talking aboutforedosure in general md not getting

into percentags, we still se the wrstborcugh being Queens; those numbemre fuud awythe lsgst inthc city.

They are lugerthm rll ofthe other num-ben ombined,

What ara yo( tcalng In Manhattan In

tom3 of ioFddrcs, and how dcs that

8e Dc@mbcr 2oo9 w.TheRc6lDeal.@m