“They buy the biggest property they can afford, they leverage to the max, and they assume that their careers are on track,” he said. “A lot of these people tend to think that they are smarter than the banks and they have a better use for the money than put it into real estate.”Sounds like Birmingham. Or anywhere. If you thought that the variable rate mortgage catastrophe was hitting the rest of the country hard, wait until we see what all of the career-on-track professionals who are smarter than the banks do when the rates start swinging on these multi-million dollar mortgages, or they just don't make enough to cover the loan. Maybe in Detroit you feel sorry for people who are foreclosed on, but I'll be happy to pick up my Manhattan condo for pickles in 2010 when these guys have washed out. They went into it with their eyes open, they did not get conned into signing something.
If you read the whole article you see that:
"...many new buyers in Williamsburg work in the financial industry and pay off chunks of their large mortgages when they receive bonuses. She said that most buyers prefer to hold on to their cash and use it for enjoying life after logging long hours at work.
“It’s going into lifestyle,” she said. “They can enjoy themselves. They can get a summer share in the Hamptons. The thought that you should have everything go into your down payment is very disturbing to New Yorkers.”"
We'll see. The idea that you can leverage your way to home equity wealth has clearly crashed in the rest of the US, so why should Manhattan be different? If anything, the vast sums involved will make the crash bigger and harder. There is a school of thought that suggests that by the time a trend like this makes the papers it is on the way out anyway, so watch the classifieds.