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The problem facing Manhattan and virtually every housing market in the country is that banks do not want to lend in this economy. TARP issues aside, a recession, rising unemployment and falling housing prices are making lenders more restrictive than ever to issue a mortgage. By being more conservative, they are damaging the collateral?housing?they are trying to protect.
The blue line is based on the Federal Reserve's Senior Office Opinion Survey, which provides a general reflection how difficult it is to get a mortgage. The problem today is not about mortgage rates and tax deductions being discussed in Congress. It’s about getting banks to lend in a reasonable way?a happy medium. Somewhere between the borrower having a pulse (2005) and the lender requiring an arm and a leg (2009).
· Change in CPI-Adjusted Median Sales Price v. Mortgage Loan Standards [Miller Samuel]