09/06/08

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The biggest problems in New York City real estate

Following criticism, Attorney General Andrew Cuomo has vowed to crack down on shoddy construction and is instituting greater scrutiny of developers who break the rules. He is also trying to speed up the new condo approval process, and has introduced reforms targeting the appraisal industry.

In the wake of the subprime and credit crises, problems are becoming apparent even in New York City's usually buoyant real estate market. Although real estate in New York City has escaped some of the ravages the rest of the country has suffered, cracks in the façade are starting to show.

For this supplement, The Real Deal has chosen to bring some plaster: First, we home in on macro difficulties, as well as some less-discussed problems. We then weigh in with the advice of experts on ways to solve these issues.

We take a look at the problem of the liquidity crisis. In the article Crisis or Correction, financial whizzes contemplate how they think the financial markets can ultimately return to a state of normalcy. For example, experts say the only way for the broader housing market to recover is by restoring confidence in lenders' processes to securitize their mortgages.

At the heart of the matter is the role of independent appraisers. Without appraisers capable of standing up to pressure from mortgage brokers to price unrealistically, it will be hard to restore confidence. Insiders consider how to make this happen in Restoring credibility to appraisers.

Besides impacting banks and their ability to make informed investments, the present crisis is triggering fear among homeowners that they may lose their homes. In How New Yorkers spell foreclosure relief, we probe what's being done to control the growing number of foreclosures — and experts share their views on whether the present actions are sufficient.

In addition to these sweeping problems, the city's real estate industry is facing some more local conundrums. One lingering difficulty is the manner in which different real estate firms arrive at different outcomes in their market reports. In Making sense of market reports, analysts reflect on whether the city needs a comparison-providing multiple listing service. Another growing difficulty emanates from spiraling energy costs, and the responses of commercial landlords to those costs. When it comes to energy costs, landlords over a barrel shows that many are turning to alternative energy sources and long-term fixed contracts as solutions.

Finally, no problem has had a more tragic impact and received more recent coverage than accidents at construction sites stemming from crane malfunctions. In Shoring up construction safety, we review suggestions for reforming the city's Department of Buildings and creating a culture of safety and accountability.

Two other stories discuss the mysterious flexibility of offices' floor area over time and the new wave of scrutiny shoddy developers could soon see from the Attorney General's office and the Department of Buildings.