Poor, poor Manhattan

By: PAUL JACKSON
September 8, 2008

Via the New York Times, news today that the nation’s foreclosure mess is starting to creep into the hallowed ground of New York’s Manhattan:

… in recent months, mortgage lenders, real estate brokers and financial counselors have noticed that more apartment owners in Manhattan are missing payments, putting their apartments up for sale to avoid losing them to foreclosure and seeking advice about keeping up with payments.

Court filings show that some of these apartment owners have well-paying jobs as lawyers, professors and bankers …

The number of Manhattan homeowners whose names have appeared in court filings for missing three or more mortgage payments — the first step in the foreclosure process — rose by 78 percent in July from the corresponding month a year earlier, according to data tracked by the research firm PropertyShark.com. In raw numbers, foreclosure filings jumped to 93 in July 2008 from 52 in July 2007.

Not that anyone should have sympathy for the better-off, but there is emerging evidence of trouble in nearly every housing market. Which shouldn’t be surprising: a much more experienced credit hand than myself once said that “price declines are the single largest driver of foreclosures,” and he’d been through more than a few such cycles, including the oil patch days in Texas.

HW reported recently that asking prices resumed their downward trending in August after a seasonal bump. If those declines translate into further downward pressure on prices — and I expect they will — we will see more high-end housing markets affected. The destruction of equity, given current market dynamics, does not discriminate among credit classes.