Banks are cutting down their lending to luxury condo according to an interview by the The Real Deal with lenders and brokers. However, developers remain positive and confident that their product will continue to sell. They also try new ways to regain financing to continue with their business venture.
According to Michael Stoler of the New York Real Estate TV, worries began to creep in at everyone with everything at $2,500 or more per square foot and lenders are becoming more prudent this time. Miller Samuel, an appraisal firm, said that an apartment's average number of days being sold in the market soared to 47 percent. Aside from that, there were also a lot of luxury condo units that are set to rise in the market this 2016 that will continue up to the next year, that's why lenders feel like it is time to slow down. The Real Deal also came to a conclusion that there are not enough rich buyers out there that will cover the overly priced condos in Manhattan.
Adi Chugh head brokerage of the Maverick Capital Partners said that developers are still in the old mindset while lenders are already having the 2016 thinking and the challenge according to him is on how to bridge this gap of expectations. At least some of the developers have accepted the fact that this year might not be their year opposed to the prediction that was made many years back.
Reports at Bankrate said that financing a condo does not only depend on the borrower but on the project itself. Lenders want to see owner-occupants to have a higher concentration and financially healthy developed condos. They also want to see that the condo fees delinquency rates are low.
However, developers with good reputation and high financial strength will continue to find lending windows open.
