This article is about two residential developers investing in luxury projects in the current market conditions. Mr. Frank Boccunfuso is investing in two luxury projects near the Byram River and in Yonkers, Fleet Mill Street (an offshoot of SFC) will rehabilitate a vacant building in the densely populated Getty Square area near the Hudson River.
Both instances share the basic compromise of using either their own capital or grants from the government. Another compromise is giving up on the idea of selling units in favor of rentals.
The focus of this article is that mortgages are much harder to obtain now and so is financing. Thus, there has been a shift in housing culture from owning a home to renting one instead. However, although developers have had to change their plans, their continued investment shows there is a sign of improvement in the housing market. It is important to understand that the increase in housing prices was not created by higher incomes or increase in population but rather by lower borrowing standards and thus easier financing. This lead to fewer defaults on mortgages, which thus reduced perceived risk of lending, thus more people were willing to lend and therefore this further lowered standards of credit. This vicious cycle lead to the housing market crash. It is reasonable to suggest that with the current market being extremely cautious, consumers will go back to renting housing instead of purchasing (because of increased difficulty in borrowing) because they will not be able to afford the large down payment required.
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