From the WSJ Developments Blog:
During the boom, home builder Hovnanian Enterprises Inc. launched its biggest tower, a 48-story condo showpiece in Jersey City, N.J., offering Big Apple views just feet from the Hudson River. Now it’s set to debut in an environment gone bust.
The address remains prime, but nearby Wall Street’s continued turmoil is feeding the region’s unemployment, affecting many purchasers and depressing sales and prices. Foreigners, long a key buying group, are battling what has become a worldwide economic crisis.
That could mean unsold units, an elevated cancellation rate and fights over deposits at Hovnanian’s 77 Hudson project, expected to start closings in the late spring/ early summer.
Even interested buyers with good credit may get tripped up: The building isn’t eligible for loans guaranteed by government-backed mortgage agencies Fannie Mae or Freddie Mac. Fannie now requires at least 70% of units to be presold. Hovnanian says it is offering competitive rates through various partnerships.
The builder “is backed into a corner here,” said Vicki Bryan, senior high-yield analyst at Gimme Credit. “They’re trying to get [buyers] to the table, I guarantee you, every way they can.”
But that was the old New York. In the last six months, Hudson County’s property values have experienced a depreciation rate nearly twice the nation’s, according to the Clear Capital Home Data Index. Real estate Web site Zillow.com says Jersey City’s condo values fell nearly 7% in the fourth quarter compared with a year earlier. From their bubble peak in 2007’s second quarter, values have taken an 11% hit.