NEW YORK CITY- Prospective borrowers are scrambling to navigate the uncertainty around banking and credit in the current economic environment amid the coronavirus pandemic as lenders bear down on their underwriting. Banks intend to lend, and interest rates are low. However, work-from-home issues and secondary market liquidity have created 3- to 6-month jams, Michael Rossi, CEO of Elegran, a tech-driven real estate brokerage firm headquartered in New York, tells GlobeSt.com.
“Liquidity will slow purchase velocity, as holdings of equity and other liquid assets have been severely affected. This will, in turn, impact available resources and risk tolerance,” Rossi said.
In both the CRE and residential markets, credit will become harder to get as bank underwriting tightens and as loan defaults are expected to soar. Sellers are more likely to hunker down and ride out the situation in place, temporarily shelving plans to sell thus limiting supply, while at the same time buyers are becoming more guarded, according to Rossi.
As a result, prices will move inversely to the side because of supply vs. demand, which is the hope it will normalize first. “Banks are not getting paid enough for the risk and the secondary loan market is down approximately 20 percent,” Rossi said.
In the meantime, as the new developments in the market are made known, Elegran is helping its clients overcome challenges by shifting the focus to forging long-term relationships with necessary stakeholders that will be invaluable when the market normalizes.