Brokers' thoughts on Bronx real estate market not all hot

An article in The Real Deal gets the reactions of a number real estate agents and brokers to a series of questions on the Bronx real estate market, and the outlook is definitely not all positive. Here are some of the more interesting and revealing comments:

Marco Lala of Massey Knakal:

"There are pockets of the Bronx like Riverdale, Pelham Parkway and Mosholu Parkway, along with some retail corridors along Fordham Road and Third Avenue in the East 150s, where on the surface, the prices are showing little or no returns for the investor for several years. For a borough where one could be assured a double-digit return, those days are far behind us."
"I am noticing banks underwriting deals more carefully. If banks start tightening their belts, it will trickle down to more conservative expectations from investors and ultimately translate into lower purchase prices. But for right now, there still is a lot of money sloshing around."

Aaron Jungreis of GFI Realty Services:

"The North Bronx north of Fordham Road is overrated. To me it doesn't make a difference if you are North or South Bronx, it is still low- to middle-income."

Joe Hasselt of Hasselt Realty:

"[The market] is slowing. It has changed from a seller's to a buyer's market. Before, if the borrower was having difficulty, they could get out of a property by finding a buyer. If that borrower falls behind now, counting on property appreciation will no longer bail him out and he could end up owing more than it's worth. Many have gone to renting rooms and basements to keep ahead of the game. Appreciation has gone flat and there is some depreciation in various segments. I think that we are moving toward a more balanced market but there may be a dip first."
"New construction that popped up everywhere is overrated as a whole. Often, that new housing is severely overpriced in relation to square footage, location and selling price of existing housing. We have heard instances of new home buyers expressing problems with construction defects at a rate higher than one would expect considering the prices that were paid."

Adrian Thompkins of the Corcoran Group:

"The consistently high rate of foreclosure in a few Bronx neighborhoods such as Throgs Neck, Highbridge and Soundview is cause for concern and investigation. I am almost certain it has to do with subprime lending: buyers not fully understanding the terms of a subprime mortgage; already being on a tight budget with a low margin for error; and perhaps some miscalculating the going rate for rental units in their properties. In those buildings all you need is one tenant not paying rent. For a 50-unit building it's not going to make much difference if one or two tenants don't pay their rent, but a three-unit building with a high interest rate to begin with makes it very difficult."
"I see buyers come with mortgages from companies I've never heard of, and it makes me a little nervous. A lot of the major banks are involved in the Bronx, so I don't understand how they go to some of these local companies."

Allison Jaffe of Key Real Estate Services:

"The middlemen -- the speculators are all over the place. These are guys that are doing incredibly shoddy renovations and flipping the building, taking advantage of unsophisticated homeowners who are selling their properties because they think $250,000 is a lot. Some people don't know that it is really worth $350,000 to $400,000. They are preying on both the people that they buy from and the people hey sell to, if the buyers are not sophisticated buyers."