It isn’t very often that the real estate market sees a convergence of three great conditions that make for a true buyers’ market: low interest rates, government incentives and plenty of housing stock. 

So where are all the buyers in the Bronx?

“It’s slow,” said Avi Kahn, a broker with Sherry and Sons who deals primarily with co-op sales and rentals, about the buying market. “And the few things that are moving are hard to close because of the banks.”

With the financial collapse that began last spring, and the stunning realization that most banks counted among their assets billions of dollars in bundled risky mortgages that had plummeted in value, the loan market dried up practically overnight. Banks shut the vault doors to sort out the mess and by last September, U.S. Senator Charles Schumer (D-NY) was holding hearings on the near impossibility for an average American to secure a car loan, never mind a home loan.

‘Don’t Wait!’

But Linda Lebowitz of Fieldston Properties says the first-time homebuyers’ market in the Bronx is robust right now, at least for properties under $300,000.  One new development she is listing, Kingsbridge Condos, has sold seven out of 12 units. It helps that she has Federal Housing Administration approval for the units that allows her to take as little as 3 percent down. 

But even government incentives are not enough to convince banks to relax lending standards. Instead, brokers complain that banks put the potential buyer through the mill with multiple income checks and frequent demands for more documentation. “Even up to the day of closing they want to see pay stubs,” Lebowitz said.
But for Susan Goldy, of Susan Goldy Real Estate in Riverdale, there is a small glimmer of hope.

She says talk of the markets rebounding has taken off the chill in home buying since February. “Overall, there is the beginning of a better feeling out there,” she said. “People feel less scared now.”
Goldy points out that these are the lowest interest rates since the 1950s.

“Don’t wait!” Goldy says about buying. Even if it means jumping a lot of bank hurdles, she says now is the time to buy. The conditions are right and the government is giving first-time buyers an $8,000 tax credit until Dec. 1.  “And you have choice, far greater choice and more time to make a decision,” she added.

Lenders Tighten Belts

And while all that may be true, housing advocates say a rebounding housing market doesn’t help buyers who can’t get a loan or homeowners who can’t stay in their homes because of foreclosure. Gregory Lobo Jost, deputy director of the University Neighborhood Housing Program, says he isn’t surprised it’s hard to get a home loan right now. “Underwriting standards were so lax [before the collapse], now it’s probably gone too far the other way,” he said.

Not just banks, but co-op boards have become tougher with potential buyers, according to several brokers. Before, a board would look at a candidate’s assets, such as their 401K retirement plan. Now, they evaluate people based more upon their savings and liquid assets, or their ability to keep paying their mortgage and maintenance when times get tough. They may ask a buyer for a larger down payment.

Kahn thinks the banks are missing a big opportunity. “These are regular people putting down 10 percent — school eachers, firefighters,” Kahn said.

One of Kahn’s clients, a single woman with a good income and good credit history, wants to close on a co-op, but the bank has kept her hanging since December, asking for added insurance and other documents.  “We’re on top of it and taking care of things, but it’s a slow process,” Kahn said.

“[Banks] don’t want to part with the money,” Goldy said.
Hearing of local realtors’ frustration, a spokesperson for Chase bank said, “The industry as a whole has tightened its standards.” 
(The Mortgage Bankers Association did not return calls seeking comment.)

Nick Palushaj of ZNS Realty, said, “You have to have spectacular credit now.”

A City of Renters

Increasing homeownership has long been one of the goals of the Bloomberg administration. The mayor has said people care more for their neighborhoods and communities when they have a vested interest, like a home, in the area. Yet according to the city’s Department of Housing Preservation and Development, “only three in 10 New York City residents own their homes.  Instead of building equity and savings with a long-term investment in a home, most New Yorkers spend money that they will never recoup on rent.”

Once potential homebuyers know they’ll get that mortgage and they’ve taken time to look at several homes, they should do their homework on the price.

While several brokers said prices for homes haven’t changed dramatically in the Bronx, Kahn said that appraisers find themselves caught between sellers, who want the best price they can get, and banks, which want lower prices to avoid extra loss if overall home prices should fall further.

With a continuing recession and more job cuts possible in the upcoming months, Goldy predicts we will keep seeing foreclosures.

While that could create opportunities for new buyers, they should keep in mind an empty street isn’t great for the market value of a home.

Despite the difficulty with obtaining a new mortgage, Karl Brumeck, an agent at Massey Knakal, said the Bronx real estate sector is healthy, despite its lack of movement. He said they had anticipated a “huge problem” when the banks failed. Many thought the number of defaults and lack of payment would grind things to a halt, but it didn’t happen. “People in the Bronx just kept paying their bills,” he said.