Is there a silver lining in the credit mess and its impact on the real estate market? Well, it certainly isn't in the forelosure trends that are rocking parts of the five boroughs where the sub-prime pox outbreak is going to get worse before it gets better. Then, there's the impact of the Fed's rate cut earlier this week, which could be the last one for a while. The brand new Luxury Letter from Leonard Steinberg and the Elliman team portrays a market with "more buyer activity in the way of showings and lower offers" and pricing that "remains very stable." What's more interesting, though, is that it digs into the impact of the credit crunch on developers and concludes that what's bad for them could turn out to be good for buyers in existing buildings. First, the bad news: Some high-quality small developers could be driven out the game leaving only "purely profit-driven, larger developers" to build lower-quality products. Now, the good news: "Maybe many of the recently developed buildings become more valuable as the chances for building properties of a similar quality and pricing becomes not only less desirable, but physically and practically impossible to deliver...In all this, lies opportunity."
The questions for careful consideration: How badly will the credit situation hit developers? Is there opportunity in all of this? Will it prop up prices? Your detailed observations and and opinions ahead in the Comments section.
· Luxury Letter November 2007 [luxuryloft.com]
· Study Links Lenders to Swift Foreclosures [NYT]
· Curbed Roundtable: October State O' the Market Report [Curbed]