Nobody’s taking risks anymore in the Big Apple.
For average-income earners, they may be surprised to find out about how former apartment buyers in Manhattan are abandoning their plans of closing a deal these days. In a report by the New York Times, buyers who once paid between $780,000 and $1.1 million, are not pushing through with their plans of ownership anymore and yes, they are no full refunds.
The foregone deposit could’ve purchased a new home in other cities, as you may say. However, potential buyers are backing out of the deal even before they get buried in unmanageable mortgage payments. Liquidation damages is the best solution next to renegotiating the price that should reflect current market value.
The rising vacancy of apartments in the area is so severe that Joe Wiesenthal of Business Insider writes, “Sellers are now adding 1,500 units per month to listed inventory and brokers are only getting contracts signed on about 300 units per month that means 4 years of inventory if no new listings added or 1/4 of all listed homes will never, ever sell if metrics remain the same as today.” The editor of Clusterstock also adds that the reason behind this is that sellers are only relying on poor listings.
A few reasons that we could cite include the following three causes:
Banks have increased the percentage of pre-sell requirements from 50 percent to 71 percent of the total units in the building. Since the market is in a downturn, it could be one reason why they could provide limited mortgages. Many developers are still adamant about renegotiating the contract even if competitors are forced to do such move.
Overall consumer confidence remains low and the gloomy sentiment is putting a lot of potential buyers in cold feet.
The loss of value among properties remains an issue not only in NYC. but For the middle-income borrowers, the proportion of their deposits on an apartment or a single-family unit in the suburbs to their current income can impact the savings that they’ll have in a very unreliable future for the real estate market.