Does Atlantic Yards survive....
the recent troubles in the financial markets?
Let me explain. That huge wooosh you thought you heard last Wednesday morning was the sound of millions of dollars of wall street bonuses going down the toilet as every firm on the street was racking up huge losses in their fixed income business. The woosh you heard on Thursday morning was the losses being taken all around the rest of the world (the famous foreign money that is supporting NY real estate) as those markets reacted to what was happening in the US. That final smaller wooosh you heard on Thursday afternoon was the first of what will be thousands of layoffs yet to come fom all this as Bear Stearns announced they were cutting 200+ jobs in their nortgage trading department.
Combine this with the increasing difficulties that even good credit borrowers are having getting jumbo mortgages, the increased scrutiny that every bank is going to give every deal before financing it, and, even if they do approve a project, the increased cost of borrowing for corporations as interest rates shot up the last few weeks.
Bottom line for NYC...I think...is that a huge amount of the money that has been supporting the NY real estate market, and all the building and condo development that has been going on...is about to dry up. By spring you's start to see the market soften up and prices start to come down as developers won't be able to sell all of these high end condo they are building all over Manhattan. Planned projects will eventually be put on hold as a glut of apartments go unsold.
That of course has reprecussions for Brooklyn and AY's in particular. Those are some mighty expensive apartments that BR wants to build over there, and if there not selling in Manhattan they sure won't be viable in Brooklyn. This is a very expensive project to build and if they don't think they can sell the apartments for the price they need they won't build it. Simple as that.
My prediction is for one of two scenarios to play out. The first is is that FCR will continue to indicate the project is on track, and it probably will be until the spring. Then they will announce a delay for some reason or other, then another and another all the while assuring everyone the project will be built. Five years later it's still a hole in the ground.
The second is that they begin construction but never get past the arena and the first building as it becomes clear that they will have difficulty selling the units.
I know FCR is strong financially...they have a $600 million revelover with a group of 11 banks, so eveyone right now is happy to do business with them. All I'm saying is that the landscape has changed...alot...in the last three weeks and NYC is going to feel the impact. I think that AY has a strong potential to be one of the casualties.
Anyone else care to predict?
Not trying to turn this into a discussion pro-or con about AY. Just wondering if others think that NYC is headed for a huge correction in RE prices going forward which will in turn ampact the AY's project.
Let me explain. That huge wooosh you thought you heard last Wednesday morning was the sound of millions of dollars of wall street bonuses going down the toilet as every firm on the street was racking up huge losses in their fixed income business. The woosh you heard on Thursday morning was the losses being taken all around the rest of the world (the famous foreign money that is supporting NY real estate) as those markets reacted to what was happening in the US. That final smaller wooosh you heard on Thursday afternoon was the first of what will be thousands of layoffs yet to come fom all this as Bear Stearns announced they were cutting 200+ jobs in their nortgage trading department.
Combine this with the increasing difficulties that even good credit borrowers are having getting jumbo mortgages, the increased scrutiny that every bank is going to give every deal before financing it, and, even if they do approve a project, the increased cost of borrowing for corporations as interest rates shot up the last few weeks.
Bottom line for NYC...I think...is that a huge amount of the money that has been supporting the NY real estate market, and all the building and condo development that has been going on...is about to dry up. By spring you's start to see the market soften up and prices start to come down as developers won't be able to sell all of these high end condo they are building all over Manhattan. Planned projects will eventually be put on hold as a glut of apartments go unsold.
That of course has reprecussions for Brooklyn and AY's in particular. Those are some mighty expensive apartments that BR wants to build over there, and if there not selling in Manhattan they sure won't be viable in Brooklyn. This is a very expensive project to build and if they don't think they can sell the apartments for the price they need they won't build it. Simple as that.
My prediction is for one of two scenarios to play out. The first is is that FCR will continue to indicate the project is on track, and it probably will be until the spring. Then they will announce a delay for some reason or other, then another and another all the while assuring everyone the project will be built. Five years later it's still a hole in the ground.
The second is that they begin construction but never get past the arena and the first building as it becomes clear that they will have difficulty selling the units.
I know FCR is strong financially...they have a $600 million revelover with a group of 11 banks, so eveyone right now is happy to do business with them. All I'm saying is that the landscape has changed...alot...in the last three weeks and NYC is going to feel the impact. I think that AY has a strong potential to be one of the casualties.
Anyone else care to predict?
Not trying to turn this into a discussion pro-or con about AY. Just wondering if others think that NYC is headed for a huge correction in RE prices going forward which will in turn ampact the AY's project.
Comments
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This is a storm, and NYC is a teacup. Once bonds are properly rated and everyone knows where they stand in a couple of months, it will be more or less business as usual in equity and credit markets (but with increased vigilence for a while). Shave a little off bonuses and growth in 2008 (2007 bonuses are already earnt). Demand for condos in Manhattan and in and around Brownstone Brooklyn continues, due to rising population, with prices rising slowly. FCR isn't a subprime borrower, and the project will proceed more or less on course, which is to say some of AY will be built more or less to schedule, some cancelled or put off indefinitely.
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FCR isn't a subprime borrower, but I think the days of people getting morgages at 90% LTV are gone for a while as are the sub 5% downpayments. Putting those two things together, what is going to happen is that folks buying into AY are going to need a lot more cash upfront. So those folks that had saved up 30k to get into a $299k condo (which is the probably going to be among the cheapest units in AY) will need 60k instead. That means several years of additional savings and slower moving units. For folks on the higher end this may not have much impact, but for those coming in the units as $500k-600k and below activity is going to slow down a lot.
My guess is that they will build out at a slower pace and possibly some of the condos and co-ops will instead be rentals until another economic upswing occurs. -
Subject: LOCK YOU INVESTMENTS?
Yep, it all sounds confusing but I had a conversation with a friend that used to deal in hedge funds and munnies. I'm not the expert but let's see if I can make some sense out of that conversation.
The US makes a money selling our debt abroad, i.e. China is our biggest T-bill holder. Subprime mortages do have a direct affect on the economy for this reason: Hedge, munnies and other funds invest in financial packages, some of which have grown to include the debt from US Bank products such as Subprime (and other) mortgages, and different types of loans. This debt was seen as profitable but over-valued. As you saw in the news, US markets do play a direct role on European markets. His analogy is that last weeks financial buckle is more like the sand falling out between the bricks of a building.
His feeling is that the Feds stepping in is a bad sign that was only done to prevent people from over-reacting and the market should be able to correct itself (over a long adjustment period).
I've been trying to follow up on this. It sounds bad. Are we really that doomed?. I sorta understand it, but does anyone have any other insights on this or a better explanation?
China's T-Bills: Fortune Magazine Excerpt from CNN
http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/14/100024842/index.htm
Subprime Fiasco: From the Market Orcale UK
http://www.marketoracle.co.uk/Article566.html
LOCK YOU STOCKS?? -
We are not doomed (except as a result of old age). In a year's time, it will be like looking back on the crash of '87 in '88, rather than the re-run of the Great Depression that the media were forecasting at the time.
I agree the local condo market will probably go slow for a while, perhaps closer to the long-term average, but when do we expect AY's units to hit the market? 2015-2016? Surely the secondary mortgage market will have stabilized by then.
Also: by the time they hit the market, the fmae/mac conforming limit will have risen substantially. And not all condo buyers are first time buyers with a first time deposit; people move every 6 years on average. And among first time buyers, not all want >80% LTV -- I waited until I had 20%.
The most important driver as always is supply and demand: people keep moving to NYC, they want to live in nice parts of Brooklyn close to Manhattan, new construction is barely keeping pace with demand, so prices aren't likely to fall unless there's a serious recession that causes a jump in unemployment and puts the brakes on immigration. -
Dr J - I agree with some of what you are saying but not everything. I work in a bond department for one of the biggest firms on the street and I'm not kidding when i say that our first seven months of gains were virtually wiped out in the last two weeks. We'll recover some before the end of the year but 2007 bonuses were not in the bank, never are until end of October or early November. They will be down substantially on the entire street. (Even though stocks might do OK if earnings are down for the firm everyone pays a price at bonus time.) And I guarantee you there will be thousands of layoffs. Not $12 an hour support people but people who make upwards of $100,000 a year. As I mentioned in my first post BS hasn't even waited for the dust to start settling. To soon to tell what will happen with 2008 bonuses.
I do agree with you that the turmoil is not going to last forever but it will last another 6-9 months and it will continue to be painful. Overall I think this is a very healthy correction to the market...it has been way out of whack for the last 2-3 years. There was no risk premium. In addition I think alot of managers were investing in synthetic products without fully understanding what it was they were buying. While right now everyone is overreacting the other way, when it settles down risk premiums will probably end up where they historically have been. But how much carnage will have occurred between now and then?
Overall I have been perplexed for some time regarding where all the money is coming from to support the NYC market. A million plus for a one bedroom apartment. I've always assumed that the good years on WS have been a huge part and so has foreign money. But an awful lot of WS employees live in the burbs and not NYC. I don't know, do other industires pay cross the board as well as WS firms do? I suspect law firms might but what about publishing or advertising or media or other industries etc. I don't know enough about them to know if they can carry the NY real market for a year or two till WS gets back on track. Maybe I'm just wrong about who is supporting this market but I can't think of any other major City (with the exception of SF) that seems to be able to support market rates like NY. LA is starting to fall, Chicago, Boston, forget Miami..that's a train wreck.
As far as FCR. They are certainly no Kara, Beazer or Standard Pacific but it is also difficult to tell how strong they are. They're 10Q's are murky at best and you can't get any read on how thier other projects may be working out. Do you know how Stapleton is going? The commercial part looks done but I can't get a good read on the residental.
It is interesting to hear what others think. I know one person putting their house in Morristown on the market in Sept and he is very afraid that there won't be any interest. I know two others looking to buy and both are thinking the same as me and are going to wait to the spring since they also think prices will start to fall (both have ben sitting on cash for quite a while in anticipation of buying something). The person selling their house in Morristown got turned down by Citibank for a million dollar mortgage on their new place even though he has a mid seven figure income. They also have excellent credit and had paid down 80% of their mortgage in 7 years. Not exactly sub-prime. Another bank happily approved it but i think that is an indication of what may be coming.
Anyway it will be intersting to see how it plays out. I wish I could be as optimistic as you are. -
I don't understand a word of any of this, but I'd like to know what it means for someone beginning to look at buying an apartment or house in or around ph over the next year or so-- someone with average credit.
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pensodyssey wrote: I don't understand a word of any of this, but I'd like to know what it means for someone beginning to look at buying an apartment or house in or around ph over the next year or so-- someone with average credit.
But you can't even claim that it's all Greek to you! :jocolor: -
If you want to buy, and find a place you like, and have the deposit, I say go ahead. If you intend to spend less than $521,250, have 1 year's household income to put down as a 20% deposit, plus 10-15K in closing costs, and a credit score over 700, are a US citizen or permanent resident, you'll have no trouble getting the cheapest possible mortgage. (calculating at 6.5%, and assuming your repayments aren't more than 30% of gross income, as banks like to see).
Bond market meltdowns are unlikely to affect this equation; there will be no interruption to conforming loans. Nor do I expect 30yr fixed rates to deviate outside 6.25-6.75% in coming months.
A bunch of places on the market have had 20-50K price cuts in recent weeks, but $/sf for places sold isn't moving much, up or down. Nothing is cheap, but volumes are low and some sellers may be flexible. Especially if they're in a panic about market meltdowns. -
Carnivore wrote: [quote=pensodyssey]I don't understand a word of any of this, but I'd like to know what it means for someone beginning to look at buying an apartment or house in or around ph over the next year or so-- someone with average credit.
But you can't even claim that it's all Greek to you! :jocolor:
If it was, I could understand it!
Thanks, too, Drj. -
Dr F wrote: Dr J - I agree with some of what you are saying but not everything. I work in a bond department for one of the biggest firms on the street and I'm not kidding when i say that our first seven months of gains were virtually wiped out in the last two weeks.
Right, and this year's return on my retirement savings and some of the principal was wiped out too. Good thing there's plenty of years to come.
Here's the thing: when you work on The Street, in The City, it is easy to be infected by the mood swings of those around you. And it is easy to view The Street as the epicenter of everything. And in one way it is: The Street performs an important function in helping the real world run more efficiently, but it's not the real world. It's possible for a lot of Streetworkers to get fired without the real world noticing. The old money rich will stay old money rich, as will many CEOs and owners of successful businesses. Everyone will still need doctors, lawyers, engineers, scientists, architects, programmers, bankers, top designers, top tradespeople, etc., and these people will still earn good salaries. Ordinary people will continue doing ordinary jobs for ordinary salaries. And multinational companies will still need headquaters, and continue to move IP and knowhow from the US to emerging markets, and goods from emerging markets to the US.
As for housing prices, no one knows, but given that there are plenty of world-class cities as expensive or more expensive than NY, but without The Street, I don't expect a collapse if y'all don't get your bonuses this year.Dr F wrote:
It will indeed be interesting. I will stop being optimistic (or rather, neutral) and eat my words if I see a large drop in economic growth and a rise in unemployment in places like Germany or Japan. In the meantime: it's only markets, not the real global economy.
Anyway it will be intersting to see how it plays out. I wish I could be as optimistic as you are. -
"it's only markets, not the real global economy."
Isn't that what Dr. Bernanke was saying 2 weeks ago? On Friday that word "appreciably" was a stinger and that Fed statement was among the worst I've seen in my, granted, short time watching. Beyond that, Wal-Mart's comments about the paycheck cycle were brutal last week. Wal-Mart is a company that lives off of those who live check to check. And last week, they said (for the first time ever I believe) that their customers were running out of money before the end of the month. Ouch. I eagerly await the first Friday of September. -
its too complicated for words
renowned economist writer, misora hibari and professor of economics, dr. eri chiemi explain it best in this video -
Just in case your Japanese is a bit rusty, here's an excerpt:
"As an economist, I'll try my best to put the current Wall Street
situation in layman's terms: Why, look who's here --
it's silly old Mr. Bear! Grr! Roar! Run, Mr. Bull, run!"
-- Professor Eri Chiemi -
I am so glad I got my stupid mortgage at 5% down a few years ago. this subprime shit might actually fuck over some of my friends in finance, even lawyers in finance, despite the fact that they work for the only banks doing biz lately. SUX. I'm just Not Happy.
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doctorj wrote: Here's the thing: when you work on The Street, in The City, it is easy to be infected by the mood swings of those around you. And it is easy to view The Street as the epicenter of everything. And in one way it is: The Street performs an important function in helping the real world run more efficiently, but it's not the real world. It's possible for a lot of Streetworkers to get fired without the real world noticing.
This sounds like a good justification to be worried. The real world of thousands of people failing to pay their mortgages has infected the "unreal" world of Wall Street. It also turned out that Wall Street has a lot of money in the instable world of subprime loans.
This doesn't mean that the markets can't sustain a little instability. But it looks to me that the average investor is a little too relaxed about the situation, whereas people with real experience who are usually calm about market swings are using words like "panic."
My impression is that Atlantic Yards is just the most gargantuan example of the real estate bubble. People have been predicting the burst for years now, but eventually the people crying wolf will be correct- it's just hard to tell when. But there are many many many huge huge huge developments going on all over New York, and Downtown Brooklyn and into Fort Greene are being transformed. The new documents that Jim Brennan brought to light also show Ratner's cost projects to be very optimistic.
Basically, Brooklyn has been getting huge new developments along the waterfront, which has been a great place to build luxury apartments. Ratner assumes that the wave of luxury apartments will continue inland into Prospect Heights. Ratner also assumes that as the competition for amenities gets greater, the costs will not rise.
One other development that works against Ratner is that the Downtown Brooklyn redevelopment plan was supposed to bring new office space, and presumably, these new office workers would want to live in Atlantic Yards. But instead of office buildings, more and more residential buildings have gone up, which might be competition for Atlantic Yards, instead of a source of new tenants.
All of this confirms what I have long believed. Atlantic Yards will probably not be anything like the projections. A slowdown in the real estate market may not come this year or next, but Atlantic Yards will probably take another 15-20 years to build, and it's likelier than not that we will experience a real estate slump in that period.
This is one reason why it's a really bad idea to tear down the Ward Bakery. Ratner wants to replace it with interim parking, but "interim" may mean several decades, unless the real estate market continues to boom for the next 20 years without a pause. -
The ups and downs of Wall Street may not have that much of an effect on the US as a whole (except during a major recession or depression or something), but it does seem to have a significant effect on the economy of NYC. Didn't Bloomberg just mention in a speech last week that the recent volatility will mean big losses of tax revenues for the city this year?
I am curious about the link between the economy of the city and the ups and downs of the financial industry here. What do you all think?
I'm curious too about whether the ups and downs of the contemporary art market here are linked in some way to the ups and down of Wall Street. -
leet wrote: I'm curious too about whether the ups and downs of the contemporary art market here are linked in some way to the ups and down of Wall Street.
I'm neither a stock broker nor an art broker, but I'm going to hazard a guess that there's a direct relationship between the two markets. You have to have serious money to collect art, and people with that kind of money usually have a lot of it in investments, so dividends and capital gains are part of their income. It's not like they'll starve if the market drops, but they're less likely to spend thousands of dollars on luxury goods when they lose some of that income, no? -
If I remember correctly, the art market was booming back in the 1980s, then crashed in the late 1980s. It was slow from then until about the mid-90s. It has been doing really well for quite a while now. Since the mid or late 90s, and still going strong.
If that's right, the last wall street crash seems to correlate (within a few years) with the last time the art market declined. -
raulism wrote:
Actually, I think that illustrates how large the gap is between Wall Street psychosis and homeowner reality. Those people who got nice houses at cheap rates on poor credit with no money down, some of whom will lose those houses, are the winners. They may go back to square one, but in the meantime they've been enjoying a better place than they could afford, on the dime of speculators and derivatives traders. More importantly: the money being lost in the real world due to actual foreclosures on bad loans is a tiny fraction of the monopoly money being lost in the gambling on various non-sovereign securities and repricing of risk. Subprime mortgages are a small fraction of all credit. The crisis is about panic, uncertainty regarding the future, and the correct price for these large bets. Those mortgages were a trigger, but the herds of gamblers could have panicked over something else, as they have done in past and will do again.
This sounds like a good justification to be worried. The real world of thousands of people failing to pay their mortgages has infected the "unreal" world of Wall Street. It also turned out that Wall Street has a lot of money in the instable world of subprime loans.
It only becomes a real world worry if the panic continues to such a degree, and despite whatever measures central banks take, that it interferes with what ordinary people want to do on a daily basis (produce and consume). And it's simply way too early to know whether that will happen to a broad and noticeable extent. Snippets here and there from e.g. WalMart don't impress me much; it's never hard to find some data to confirm fears. I'm waiting for key economic indicators around the world based on data collected since this started, and the actual responses, if any, by central banks.raulism wrote:
I think most people agree there's widespread panic in some parts of the market. Panic = temporary disconnect between markets and the real world. In a while, one will catch up with the other, or they'll meet in the middle somewhere.
This doesn't mean that the markets can't sustain a little instability. But it looks to me that the average investor is a little too relaxed about the situation, whereas people with real experience who are usually calm about market swings are using words like "panic."
Your average investor hasn't taken a risky position in securities derivatives, isn't facing margin calls or redemptions, and doesn't stand to lose 100% or more of their investment, be it their home or their retirement funds. How relaxed is too relaxed then, and how would average investors being less relaxed improve the situation?raulism wrote:
That's good, right? Not especially for me personally, but for average people and especially the young, for the good of the majority, we want prices to stay still for a while.
My impression is that Atlantic Yards is just the most gargantuan example of the real estate bubble. People have been predicting the burst for years now, but eventually the people crying wolf will be correct- it's just hard to tell when.raulism wrote:
That's also good, isn't it? Huge developments help keep prices down; population and demand for city living keep increasing, and so must either supply or prices in the long term. Should we be upset or worried if FCR doesn't eventually make as much money as they'd hoped?
But there are many many many huge huge huge developments going on all over New York, and Downtown Brooklyn and into Fort Greene are being transformed. The new documents that Jim Brennan brought to light also show Ratner's cost projects to be very optimistic.raulism wrote:
Certainly, a slump, a recovery, maybe another slump. And I agree the date of completion and what gets built when are fluid. Too far in the future to model accurately, and too far in the future to know what effect, if any, current market panic could have. Sooner or later though, I expect the land will be put to use.
All of this confirms what I have long believed. Atlantic Yards will probably not be anything like the projections. A slowdown in the real estate market may not come this year or next, but Atlantic Yards will probably take another 15-20 years to build, and it's likelier than not that we will experience a real estate slump in that period.raulism wrote: This is one reason why it's a really bad idea to tear down the Ward Bakery. Ratner wants to replace it with interim parking, but "interim" may mean several decades, unless the real estate market continues to boom for the next 20 years without a pause.
You may be right. I'm no fan of parking lots, but was that buildling actually being used for anything productive the last decade? When did they stop making bread there? -
leet wrote:
I think that the more the world becomes electronically interconnected, so that information moves rapidly from one sphere to another, the more highly correlated asset prices in general become. Art is tricky -- it's even more purely aesthetic in value and non-productive than gold, less liquid, not fungible, and subject to the randomness of fashion and taste -- but a component of the ups and downs of the contemporary art market should reflect and be reflected in the bipolar moods of Wall Street. As a risky asset, art would be expected to drop in price at a time like now when people are worried about holding too many risky assets, and rise at a time when people are seeking alternative speculative things to do with their profits.
I'm curious too about whether the ups and downs of the contemporary art market here are linked in some way to the ups and down of Wall Street. -
doctorj wrote: It only becomes a real world worry if the panic continues to such a degree, and despite whatever measures central banks take, that it interferes with what ordinary people want to do on a daily basis (produce and consume). And it's simply way too early to know whether that will happen to a broad and noticeable extent.
Yup- I think we basically agree.doctorj wrote: [quote=raulism]My impression is that Atlantic Yards is just the most gargantuan example of the real estate bubble. People have been predicting the burst for years now, but eventually the people crying wolf will be correct- it's just hard to tell when.
That's good, right? Not especially for me personally, but for average people and especially the young, for the good of the majority, we want prices to stay still for a while.raulism wrote: But there are many many many huge huge huge developments going on all over New York, and Downtown Brooklyn and into Fort Greene are being transformed. The new documents that Jim Brennan brought to light also show Ratner's cost projects to be very optimistic.
That's also good, isn't it? Huge developments help keep prices down; population and demand for city living keep increasing, and so must either supply or prices in the long term. Should we be upset or worried if FCR doesn't eventually make as much money as they'd hoped?
I have two responses. The main thing is that if Ratner was risking his own money, it wouldn't be such a big problem. Unfortunately, he's risking my taxpayer dollars. Atlantic Yards is an example of public risk and private profit.
Also, I'm all in favor of optimism. I can be painfully optimistic at times, so maybe the word I should have used was "unrealistic." From what I can tell, AY will not bring the benefits it promises (and those benefits are pretty meagre when you look at them closely).
Markets always go boom and bust, and they generally do grow in the long run. Nobody can predict when the next bust will happen, but some people will lose their shirt when a building starts going up and isn't finished. That's not a good thing.
It's especially not a good thing when it's done on the taxpayer's dime.
I'm not asking for anything outrageous. I just want some accountability and reasonable financial projections, which is what any businessowner would want.doctorj wrote: [quote=raulism]This is one reason why it's a really bad idea to tear down the Ward Bakery. Ratner wants to replace it with interim parking, but "interim" may mean several decades, unless the real estate market continues to boom for the next 20 years without a pause.
You may be right. I'm no fan of parking lots, but was that buildling actually being used for anything productive the last decade? When did they stop making bread there?
Developers are buying up every plot of land in our corner of Brooklyn. I'm sure that if Ratner hadn't left it there to rot, somebody else would have snatched it up.
Ratner is an expert at getting government subsidies. If it's such a good project, then he shouldn't need so much of my money. But if he is using my money, I hope to have some say in how it's being spent. -
http://cityroom.blogs.nytimes.com/2007/08/21/sharp-jump-is-seen-in-local-foreclosures/index.html?hp
Data on foreclosures in NYC. -
Here's a graph from http://mondoweiss.observer.com/2007/bloombergs-dour-graph-waiting-nycs-decline
It looks like Bloomberg was predicting a steep decline in housing prices as early as January of 2007. With the dramatic rise of foreclosures (not to mention the predicted absence of Wall Street bonuses this year), it remains to be seen whether the rebound Bloomberg predicted in 2008 will materialize.
This doesn't mean that we'll all end up fine in the end. But the Atlantic Yards construction phase, according to Ratner, is supposed to take 10 years, and there are questions whether Phase 2 will ever happen, or if it does, what shape it will take. -
raulism wrote:
People keep predicting, it was predicted in 2005, 2006, 2007, but it still hasn't happened round here. Looking at what has happened in the inner parts of other world-class cities, vs. outer and rural areas, where the 2000s bubble burst earlier than here, my bet is that you could have significant falls in outer parts of Brooklyn, other outer boroughs and suburbs, like we are already having in the rest of the country. But Manhattan and Brooklyn close to Manhattan will at most slow and flatten for a year or two. The key is supply: not enough land and even with so much development, not enough to meet demand, for a place that is more in step with global growth than it is with the rest of the country. AY (and PH) is at the edge, so it could go either way, see a slight decline if there's a substantial decline for the whole city and flattening in the center.
It looks like Bloomberg was predicting a steep decline in housing prices as early as January of 2007.raulism wrote:
So lets imagine, in a few years' time, it becomes clear that Ratner can't make Phase 2 happen -- entirely possible. Are there any clauses or contracts that the city should have its money back, or that someone else should be brought in to finish the job, should FCR default?
This doesn't mean that we'll all end up fine in the end. But the Atlantic Yards construction phase, according to Ratner, is supposed to take 10 years, and there are questions whether Phase 2 will ever happen, or if it does, what shape it will take. -
I remember this thread from last summer. It came to mind this week with the news about Atlantic Yards. It's an interesting topic to revisit now, seven months later.
bump. -
doctorj wrote: So lets imagine, in a few years' time, it becomes clear that Ratner can't make Phase 2 happen -- entirely possible. Are there any clauses or contracts that the city should have its money back, or that someone else should be brought in to finish the job, should FCR default?
There's been discussion about this in various places, including Brownstoner (see http://www.brownstoner.com/brownstoner/archives/2008/03/atlantic_yards_14.php ):Brownstoner wrote: The Empire State Development Corporation released Atlantic Yards' 361-page funding agreement on Friday, the same day The New York Times ran an article in which developer Bruce Ratner acknowledged, for the first time, that the economy could substantially delay his project. According to the agreement, either party can pull out of the project at any time before eminent domain proceedings have been finalized, pending a decision on an appeal to the federal Supreme Court. In most scenarios, the city would gain control of the land and be required to build at least 1,199 market-rate and 646 affordable units. (By comparison, Ratner's project was supposed to have 4,180 market-rate and 2,250 affordable units.) Even if Ratner proceeds as planned, though, the document reveals that he may take a lot longer to complete it than previously disclosed: He would be required to start arena construction within one year, or four years if forces beyond his control prevent construction. He would be required to finish arena construction within six years, and the five towers of Phase 1 in 12 years. As for the 11 towers in Phase 2, which are expected to contain the lion's share of the affordable housing component, there is no time limit specified. Forest City Ratner spokesman Loren Reigelhaupt said the construction timetable outlined in the agreement is a minimum requirement, a worst-possible scenario. Atlantic Yards opponent Daniel Goldstein, at risk of losing his home to make way for the arena, said new information in the agreement amounts to a bait and switch, and called on the state to take another look at the project.
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