Following New York\'s foreclosure frenzy. Sam Heskel interviewed by Melissa Dehncke McGill from the Real Deal.

1. www.TheRealDeal.corn
EREALDEAL NEwYonr Rrnl Esrlre News Vol.7 No.12 December2OOg $3.oO
Follo*it-rg New York's foreclosure fr enry
Number ofhomeou)ners defaulting still on rise citywide, uith eaen
Manhattan shouing more signs ofdistress
9YMusuDsge McGq 2oo9 saw 6,000 forcclosure filings in the city
- the largest number since the research
| | fhile greenshoots mayhavesproutedinsomesectonoftleNewYorkCityrei- center started tracking quarterly data in the esrly lggos.
aentiA meket,thercreplentyofotheraeuwherethatisfufrcmtherue. And mrisome trends ue on the horircn. Forone, prc-forelwurg or Japarderu, fil-
!f!f
f f Forelozuq@ntinuetonwgeneighborhoodstlrrcughouttheouterborcughs ings re up in Manhattan, even ifthe borcugh is still rclatirelyinsulated ompared to the
outer borcughs. In addition, the kind ofhomemer tlroughout the city who rc falling
- most notably southem Queens and parts of Brooklyn
- md more distrss is quietly
creeping into the Manhattln rqidential market. into foreclqure is shifting ftomjust those who got into unefordable modgsge situations to
In this month's Q&A appraisere, ualysts and brokers who follow foreclosura told those who re lcingtheirjobs. Finally, beauee NryYorkStat€ hr the longest forulosure
Ihe RealDalthrtwhile ertain uea of the city re starting to level offwhen it cone to cycle inthe muntry, the nunber roybe undestatingthe werityofthe prcblem hw.
forelosuro, in others it's difficult to even find a "regular'nondistresed sale, Formore on howforqlcuro rcinpactingprcpertyvEluc,whw nwone mlnpping
One expert from NewYork Uniwnityb Furman Center said that the third quart€r of up ud howbrcken rc getting in on foreclosure sals, we tum to our pmel of experts-
NewYork, Browille, Bed Stuy md clo3urc3 ln tho oveEll New York Clty ue severely crowded @pt up to 3.6 per-
Sam Heskel Oem Hill. It's not ro bad r
Quens, but martet at thc moment? cent in 2OO8, from a steady nte ofabout
fornder, HMS Associates in those aru itb wry hard to find a regu- Foreclqsuru continue to rise in NewYork 2,4 per@nt for the p$t three yeN.
Whatb happenlng lersale, City. In the third quarter of2oog, there
wfth rcsldontlal fote wre netrly6,00<lforeclosure filings - What efrect har Obama'B moltgags mod.
closuca ln thc walall What'3 th6 mst lurprlslng oxamplo the lag€t number sine w begu trrck- lncatlq pregram had or forcclo3urc3
ilew York Clty market you've ton of lomeone In toGclosuc? ing querterly forcdosure data in the wly lnd d|3trcls?
attba moment? I did m appraisal at 20 Pine StreeL The 199os. That is up ftom about 5,5oo filings The progrm hc begun trial modifie-
It's an unfortutrate guy paid Sl,ooo per squ{e foot. The real- in the seond quuterof 2oog, md there tiom formore than 650,000 borowes
trend. Itb there mdwe ity is, somebody purchoed it ayan later have alreadybeen more foreclosure filings uound tle ountry. I think the progro
probably havent scu u a short sale. You'd be surprisbd. People in the fiEtthrequartere of 2oog thu in will help mmybomwere stay in their
the worct ofit yet. I have heanl there is a cover up e lot ofthings. allof2ooS. homes. That said, there ae manyborrcw-
two-year backlog, and there is a lot more ers out there who ffint being reached.
in the pipeline. Ifyou look dt all oftle bor- What eftsct has Obama'8 mortgage mod- What arc you scelng In terms ot foreclc Also, the prctram w6 very much de-
oughs, tiere are close to u,ooo listings of mcatlon prognm had on forcclo3uleg surc mw compaled to thm months ago, signed to aid borrcwem who had reeived
distresed sale ofall sorts, including fore- end dlst?$r ln New York? dx months ago md a year ago In the unafrordable loms. Unfortunately, the
closures md bank-omed REOs. It deffnitelyhelped
- some ofthe people clty? foreclosure problem is now shifting, md
ithelped pemanendy and some, itjust In the prot yeu, we have seen an increroe more foreclosures ue likely to result from
What ara you seelngln Manhaltan In bought them some time until they ue in in the number of ondos and fire-plw- job loss. It will not offer much sistee
tems of iorcclosur€, and how dca that foralosurc again. unit buildings going into foreclosure- to bonowen who default on their mort-
comparcto last yearat thls tlme? In 2oOZ 345 buildings with more than gags due tojob los.
It's still not much when you compare What klnd ol lmpact b tho IncreaEe In five units received a foreclosure ffling. In
Manhattan to the other boroughs. There dbtressed homcowners In Now York hfl- 2oo8, thet numberjumped to 454.Ard in
are 23 scheduled foreclosures [now] Ing on prepody Yaluos hete? the fiEt tltr@ quarters of 2oog, there have Bill Saniford
ompared to Drcember'o8, when tJrerc It depends how common it is in the neigh- been 55,* forclosure filings on fire-plw- CEO, PropertyShuk
were 19, In Manhattan there are close to borhmd. If there ue one or two, it dffin't unit buildings already. This is aworri- What's happonlng
600 distrGsed listings, meaningforeclo- have such a negative effect, but when it is some trend, beeuse it reflects an increu- wlth rc.ldentlal toc
surs, bank-omed REOs, whatever. For spread out and there are a lot ofdistressed ing number ofrenter households living in dGuEB lntha ovenll
ompuison, Bmklyn hs over3,ooo md sals, it brings dom the value. Nobody buildings entering foreclosurc. Horcver, l{ew Yolk CIB mar-
Queens h6 over,l,ooo. would pay $loo,ooo more for a house while it needs to be wtched, the overall ket?
wben there are three similar homq on numbers are still fairly small, and the wt Mmhattanhro re-
Do you orpect foreclosurog to start in distres that lrcu @n get for
the block majodty offoreclosure are taking place mained stable. There
3pfeadlng to Manhatttn In grcater nuc $loo,ooo l6s. ItdGtrcys the neighbor- on one- to four-family properties. ha ben verylitde
bcB as uncmploymnt contlnue3 to rbe? hmd boarded-up or abudoned home rctivity with foredosurs in Muhattan.
- -the one thatlooks interestingto me is
I think therewill have tobe a rise in fore- have a negative effet on the neighbor- Do you oxpact a rbe In torecloaurcs In
closure on the high-end apartm€nts. I hood s awhole. New York Clty golng foruard? ' the Brou. There h* been a significant
ent see how they ae going to be able I do not expect foreclosures to diminish increroe in the number offoreclosuro
to maintain themselves. We re talking How hilo fobclosures changed the anpime smn. We ue beginning to see the intheBrcn - mudTo percntys
about [rently]laid offpeople or pople world ot brekoilng? AE a lot ol b0keE nature offorelosurc change, with fewr over5rcu, Brcoklyn hs remained steady.
who were laid offayear ago and they still trylnC to gct In on REO3 and sholt salos? rooted in subprime loms md morc rcoted It is dom about 5 percent yeff overytr
got some good bonuser or they still par- I think that's t}le hottest thing. It reeru to in job loss and income declines. We ue Queens bu rctually improved: It's dom
tied lrutyean But they re not going to be the trend now in the borcughs, at leut also likelyto se acontinued inme in 20 pe(ent, md the Eme with Ststen Is-
ma&e those figure again mJrtime eon. in the neighborhoods that haw beo hit multifmilyforcdosue. land. [But] when we re talking about
theh*dest. Everybrckerisnegotiating foredosure in general md not getting
whlch nelghborhood3 arc belnghlt ha1il short sales today. Everybody suddenly be- What about ganoral dlstreEa, rven ot- into percentags, we still se the wrst
Gat by fbroclGurc! In Ncw York, and came a professional on short sals. lldg ottoloclosuro? What rro you 3oclng borcugh being Queens; those numbem
whetl thc outl@k llkc tor those placc! on that frmt In Ncw Ysk Ctty? re fuud awythe lsgst inthc city.
Itr thc comlng mrths? Acros the ue wingtrcubling
cit5r, we They are lugerthm rll ofthe other num-
Southem Qusns is a disster Jm&i- - Ingrid Gould Ellen signs, such r stagnmt inrcms md in- ben ombined,
ca, Ozone Park, KewGardene, Cambria co-faculty director; NYU Furman Center cress in swere overcrowding, which
Heights, Queens Village the whole area for Real Estate aud Ulban Policy tend to happen when families re trying to What ara yo( tcalng In Manhattan In
-
is in distres. ln Bmklyn tlrerc is Eut Whatb happonlng wlth rcsldontlal tole save money. The shce ofhouseholds that tom3 of ioFddrcs, and how dcs that
8e Dc@mbcr 2oo9 w.TheRc6lDeal.@m