disconnect: dumbest article ever? (not saying market is not tough, but …)

not THE dumbest EVER, but …
Curbed linked this week to a Real Deal article by a smart Manhattan real estate guy (really) that does not make much sense. I am thinking it has got to be the editing, rather than the writing. (Before posting this I came to my senses: there are so many truly stupid articles that would qualify as The Dumbest long before this one, this one won’t make even a Top Hundred list.) But I still think they dropped a paragraph or two; they certainly left out a thought or two.

The thrust of the article is that few actual closings are actually taking place these days, because buyers are walking away or delaying the close to get their mortgage money together (or not). It’s not that I don’t believe this thesis; it is that they don’t deliver news (facts). Here’s a teaser early line:

While many brokers and developers are hyping to the public that there are sales taking place, the truth, according to industry leaders, is that little or no sales activity has taken place since the fall of Lehman Brothers in September.

But the first hint that there’s an … intellectual … problem comes in the next line, and the one following (


is mine):

And units that are closing, some experts say, are generally those in buildings that have made some headway in terms of construction.
"Sales of condominiums in buildings which are not in final stages of completion of units are far and few," said a managing director at one of New York’s leading residential brokerage firms, who asked for anonymity.


… there are




sales" in buildings that are not complete (or

very, very nearly

complete, and have a Temporary Certificate of Occupancy). It has nothing to do with making "


headway". (New developments tend to close floor-by-floor, as


are issued serially.) The anonymous MD of a leading firm was probably not talking about "closed sales" but about "contracts", of which there


be few and far between.

the nugget (small)

The next line in the article


a real nugget, and I would love to hear more details about this — this is (would be) really informative:

Trade sources say that at least 10 percent of scheduled closings are not taking place due to purchasers’ inability to secure mortgage financing. In the rare case where closings are taking place, developers are "overjoyed that closings have finally occurred," the managing director said.

Sorry … but saying (1) that closings are few and far between, and then saying that 10% of closings don’t take place is a little … jarring, without a bridge. (


of deals closing is not consistent with

few and far between

.) Sorry (again), maybe i just expect too much (especially from [actual] experts such as Michael




probably does talk to enough people on the front lines — lawyers, title companies, lenders — to have interesting and fact-based things to say on this topic. I just wish he had.

stumbling along, from one anecdote to another (for now)

I would love to hear real data about the number of people who can’t drag enough cash to a closing to take title, but in the meantime I will just stumble along with my Manhattan loft anecdotal stuff (about developments such as 15 East 26 Street as an exception, for example; December 26:

bringing (a lot) of cash to closing / news from the top of the market at "Madison Square North"

). But the Real Deal article is talking about two related but very different things: (1) how many buyers who are contractually obligated to close on X date walk away (or postpone), versus (2) how many buyers are signing contracts now to close at some future date when (if?) the developer finishes the darn building. The General Terrible Local Economy might impact both of these things, but they are at very different stages in the marketing of new development.



knows that. The Real Deal knows that. (Curbed probably knows that; some of its readers …

not so much

.) It does not read well, as written. Bah, humbug.

I know a guy involved in lending to A Brand Name New Development, whom I ask (every time I see him) about People Walking Away. There’s never enough data in his responses to present in an interesting (informative) way, so you have never heard about it. Usually (most often he says something like, "most closings are happening"  but I have never pushed for data (let alone quotable data) about how many are delayed or canceled. So I was really disappointed by this garbled thing from Michael Stoler printed in The Real Deal.

© Sandy Mattingly 2008 


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