William Neuman's novella on the state of the NYC real estate market in yesterday's Times crunches the numbers on mortgages, and finds some real reasons for concern. One biggie: the growing preference of buyers to opt for adjustable rate mortgages, which lock in a low rate initially but can cause sticker shock down the road if interest rates rise. Says Manhattan Mortgage president Melissa Cohn, "They're buying at their upper limits financially and so they're stretching to get into their new property."
Neuman also quotes The Donald, who agrees that residential sales are "very dependent on interest rates. If they do go up, the market will truly tank."
· Will the Market Stay Strong, or Will It Fold? [NYTimes]