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July 30, 2007

Pinching Pennies To Save Up for a Down Payment

This week's cover story in the New York Times real estate section is about people who've scrimped and sacrificed— sometimes for years— to save up enough money for the down payment on their first home. One guy survived for an entire year on a daily diet of a $2.95 chicken special and a 99-cent coke; another woman started drinking only at happy hours. It's notoriously hard to save from paycheck to paycheck in New York City; we were lucky that a real estate deal we worked on back in 1999 paid off well enough a few years later to enable us to come up with the downpayment on our house. (That, and we had the good fortune to flip a couple of one-bedrooms in Manhattan between 1997 and 2000, when we cashed out thinking the market had peaked! Got that one wrong, huh?) There must be lots of tales of self-deprivation in the name of nest-egg building. Anyone care to share?
Every Penny Counts [NY Times]

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Comments

I wonder how many homeowners have additionally saved the widely recommended 3 to 6 months income for job loss or other shock(s).

Posted by: Anonymous at July 30, 2007 9:37 AM

It just takes patience and discipline, people. My wife and I brought our lunches to work for years, cooked at home, skipped vacations and finally saved up the downpayment to get our piece of the rock in Park Slope even though we were both working low-paid jobs for nonprofits.

Oh, also, it was 1997. So also, you should go to 1997. They have bargains there.

Posted by: Anonymous at July 30, 2007 9:55 AM

We watched all of our friends move to swank apartments in Manhattan, while we suffered in NJ for four years in an $800/month apartment to save for our first place. It really paid off in the end though, so we're glad we did it.

Posted by: Amy at July 30, 2007 9:55 AM

We saved a 40% downpayment, plus money for renovations. It helped that we knew we were in a housing bubble, and thus had to wait eight years for prices to return to normal, buyable levels.

It also helped that we married relatively young, and knew we really could only afford to spend one salary.

The other salary? Well, it's lower net due to the higher marginal tax rate to begin with. At first the second salary was for the downpayment. Then it disappeared for a few years, as we both worked part time while parenting. Then there is college savings, retirement, charity. Se we set out to be semi-independently wealthy.

Self-deprivation? Not by historical standards, or the standards of our parents AT THE SAME AGE, or the standards of the rest of the world.

With no need for a car and lots of free things to do, NYC would be cheap were it not for the cost of housing. And when credit standards adjust and downpayments are again required, those who have them will be in a powerful position in the housing market. The market will have to come to such people.

Posted by: WT Economist at July 30, 2007 10:03 AM

We saved for the downpayment for 8 yrs, paid down all our debt as well. Now own a house we love. We first saved for a buffer of 3 mortgage payments, Now we are saving aggressively the 3-6mo os emergency family savings 9:37am mentioned. After we have that we'll start saving for major projects like the kitchen renovation. I stopped getting manicure/pedicure, stopped ordering food in, stopped shopping for expensive chees & bread etc.

Posted by: Anonymous at July 30, 2007 10:12 AM

I sold both my kidneys to put a down-payment down for these new condos that are going up on 1st Place in Carroll Gardens. I can't wait to move in!

Posted by: Jones at July 30, 2007 10:15 AM

I read that article. Helps to be a couple.

One guy saved all of his earnings from an extra job while living off his wife's salary. The other couple had enough money to shove from their $45K wedding(!) to a down payment.

One single woman put $7000 for a down payment on a credit card.

One single guy already had 50K saved.

Are these typical people? As a single woman with an art job and no money saved, I'll never be able buy (but from my experience reading this blog, I think renting is the better option anyway, to have what you want in the city)...

Posted by: supergirl at July 30, 2007 10:30 AM

I bought my first place in a far away land called 1991. It was at 24th and 10th -- a pretty sketchy area. I wonder if that area ever got any better?

I bought it with the tuition money I got back when I quit law school after the first week. Thank God. Thank. God.

Posted by: Anonymous at July 30, 2007 10:33 AM

All I know is that it's getting harder and harder. My wife and I bought a 2 bedroom in Clinton Hill (we closed the day of the MTA strike). The ammount of money we had to put down (32%) in order to feel comfortable with the monthly payments on our mortgage was almost the same (only $38K less) than what my parent payed for their 4 story townhouse in 94 (just over 11 years later) Ridiculous!!! They ended up with a 15 yr mortgage at $1600 a month vs ours $2100 for 30 yrs. Theirs included taxes, we have an additional $900/month for maintenance and taxes.

Posted by: Anonymous at July 30, 2007 10:45 AM

I bought my first place in Clinton Hill back in 2001 - right after 9/11. Back then, I found a place that I pretty much knew I wouldn't want to stay in long term - but it was cheap - 115k - and they accepted %15 down - which made a huge difference. With down payment, lawyers, closing costs, etc, it all added up to about $25k to purchase - and between cash I'd saved because I had cheap rent at the time (a crappy place, but it was only $500 a month - another BIG help) and credit cards, I was able to do it on my own, without help from the parents.

I sold that place for 3x what I paid for it last year, and was able to move up. It does seem like it's much harder now since I NEVER see places for under $200k.

Posted by: Anonymous at July 30, 2007 10:59 AM

Anon 9:37, probably the same amount of people that don't spend what they should invest for retirement on housing.

Posted by: Anonymous at July 30, 2007 11:00 AM

I was so happy to read this article. Finally, accolades for the unsung minority who sacrificed and bought a property without help from mommy and daddy. My wife and I, both employees of non-profits, saved for four years. We don't own a car and gave up vacations, eating out, movies, and paid cultural performances. We checked out DVDs from the library, took our lunch every day, redeemed cans and bottles, and rolled loose coins. It was hard work but well worth it. We now own in PH and love watching our apartment and neighborhood appreciate. The generous tax returns from the mortgage interest have enabled us to sock away at healthy nest egg, too.

Posted by: Anonymous at July 30, 2007 11:04 AM

20 bucks says Brownstoner got money from his or his wife's parents to help him out with that "real estate deal" that got him going way back when.

Posted by: anonimouse at July 30, 2007 11:05 AM

I wish I was like those people who could scrimp and save by eating one chicken meal a day. I admire their discipline. I am becoming much more frugal now owning a brownstone, which has turned out to be a pretty expensive proposition. I bought my first coop in 1984. If I wasn't burglarized several times on the upper upper east side (at that time, lower east Harlem), I might have lived forever in my cheap railroad apartment. It was very cheap and I had a decent job so I could put aside money without too much deprivation, though I didn't grow up with money so I wasn't in the habit of spending much. When Lincoln Savings Bank (yeah, them) lent me 100,000 for my first mortgage I couldn't believe their recklessness. (Turns out it was one of several reckless acts since they were key players in the Savings and Loan crisis.) Once you get one property, you are on the train so to speak and it becomes easier to trade up as the place appreciates and/or you make more money. Anyway, I appreciate what one poster wrote about spending too much money on housing rather than saving for retirement. That is real and something I am struggling with now. Sometimes I wonder about dropping that 1,000 dollars for some work or other when it could be 10 shares of Exxon which will probably do me much more good when I retire.

Posted by: anon at July 30, 2007 11:28 AM

We did something really risky back in '90. We were in our 20's, just married, and had really small art job incomes. We went for a "no money down" deal from a developer who held the note for the down payment separately. Apartment was a 5th floor walk-up on a sketchy, not-so-pretty block in Boreum Hill. Barely had enough to cover monthly expenses to begin with and promptly got laid off 3 months after closing on the place. Then watched the apartment market completely tank, esp. in Brooklyn. Yes, folks, the market can go down. So we didn't scrimp to get the down payment but spent the next bunch of years living that way to make it work. No vacations and really controlled spending for what seemed an eternity.

We were literally stuck there- our apartment was in a building with less than 50% owners and for years we couldn't even refinance since lenders got really particular about lending in buildings like ours when the market tanked. But we hung in there (15 years!) and sold in Dec '02 for 3x what we bought the place for. So did all the folks who bought in the neighborhood five years before we sold but we were building some equity the whole time and enjoyed living there. We watched the area become the place where we loved to live.

We used the money from that for a house in Kensington. Yes, we could've made more on the apt by waiting longer but back in '03 Kensington was barely on anyones radar and we got the whole house with backyard for what a 2bed/bath apartment was going for in Boreum Hill. We couldn't have afforded the house here if we had waited much longer to look here. We made out OK and we are really happy here but there were 7-10 solid years of financial hardship carrying that apartment and note. I guess you have to decide when you want to scrimp or just be smarter than us and buy what you can afford when you can afford it.

Posted by: Anonymous at July 30, 2007 11:28 AM

And so what, anon 11:05?
If I was in a position to help my children make a real estate purchase I certainly would! Although the fact that I can't doesn't make me hate people who can.

Posted by: bolletje at July 30, 2007 11:32 AM

I lived in a dumpy 300 sq ft rent-stabilized studio in Chinatown for all of my young carefree single days. After my husband and I got married, we moved into my place instead of his place (which was much bigger and nicer, but much, much more expensive). Clawing each others' eyeballs out in RS squalor allowed us to save almost $2000 a month for two+ years. That got us to about half the money we needed. It still took a buyout from the landlord, a well-timed business commission, loans off 401k plans, and very generous help from both sets of parents to get into our modestly-priced dreamhouse in the G-slope. The Times article left me feeling like some critical piece of each story was still missing. We made all those sacrifices too -- cut down on meals/drinks out, took PBJs to work for lunch, both spouses still have to 'turn their key' for purchases over $100 -- and we still couldn't have possibly bought real estate in Brooklyn without A LOT of help and luck.

Posted by: Anonymous at July 30, 2007 11:41 AM

yeah, i have to repeat the so what, anon 11:05. particularly for a single person, it can be near impossible to save the kind of money needed for a down payment, yet buying real estate young can really set the stage for financial security throughout life. if a parent can help, why wouldn't they?

i bought a place four years ago with help from my mom (a small loan that was repaid with a healthier amount of interest than she would have made in a mutual fund)--at just over $100k for a studio in boerum hill, it was manageable. but in today's inflated market i would need double or triple that amount to get started. there's no way that at the under $50k salary i was pulling in at the time i could have done it, despite having managed to save about $10k in two years by squirreling away my tax return and having a small portion of my paycheck directly diverted to my savings account (you just learn to live on less when you don't realize it was there in the first place).

Posted by: Anonymous at July 30, 2007 11:44 AM

nobody said anything about hating anyone whose parent's help them out - you're the one who used the word 'hate', which causes me to wonder what you really think. i don't hate brownstoner cause his parents feed him cash left and right, i just have the kind of snarling envy that makes me want to paint every other brownstone in clinton hill white, that's all.

Posted by: anonimouse at July 30, 2007 11:45 AM

(The Times article left me feeling like some critical piece of each story was still missing. We made all those sacrifices too -- cut down on meals/drinks out, took PBJs to work for lunch, both spouses still have to 'turn their key' for purchases over $100 -- and we still couldn't have possibly bought real estate in Brooklyn without A LOT of help and luck.)

We couldn't have bought at current prices either, despite living on one salary for eight years, making similar sacrifices to all of the above, and saving like mad. Either the prices have to come down, or Brooklyn has become unlivable.

Posted by: WT Economist at July 30, 2007 11:53 AM

Hey! What's the point of living on 2 dollar chickens and coca cola just for the sake of owning? Why not rent a place, go to the movies and buy a large popcorn while you're at it? Then when you get a couple of free days, rent a car, drive down to Puerto Rico, and live on the beach drinking fruit juice and eating fried crabs! I mean, it sounds like such a nicer life than living like a Trappist just so you can put nails in your wall without worrying about your spackling abilities at a later date. Three cheers for the present and for not jumping on what all the adults around you say you SHOULD do.

Posted by: the chime at July 30, 2007 11:54 AM

word up to the chime.

Posted by: carrie at July 30, 2007 12:05 PM

i wouldn't admonish anyone for accepting a gift from their parents for an apartment or house anymore than i would someone who had their college tuition paid by their parents. i personally went to college and grad school for free on full scholarships, and then last year when the time came to buy an apartment in park slope, my parents offered to help out.

they had saved big bucks from my college days.

SO WHAT??? to quote another poster.

i appreciate those who save and i appreciate those who are lucky to have their parents help out.

i don't understand how some people aren't able to take a look at themselves and see how bitterness and jealousy is consuming their lives.

Posted by: slopehead at July 30, 2007 12:13 PM

I don't think a critical piece of the story was missing. The diff may be that the people in the story did NOT buy their "dreamhome in the G-slope" but apartments in not great areasS

Posted by: Anonymous at July 30, 2007 12:13 PM

I've earned between 100k and 400k a year for over 10 years now, but not consumed like my peers, and I've saved up over six figures during that time, of after-tax earnings. No windfalls. No checks from daddy. No booming mutual fund that I just picked randomly six years ago.

But I *still* cannot really _afford_ to buy a brownstone in the slope. The mortgage and yearly running costs are just too high.

Maybe I'm wrong but I think my level of savings are extraordinarily high relative to my income - which isn't too shabby as well.

Without family, or $ luck, the vast majority of buyers in new york are in the same boat as the couples in that story.

Wall street over-compensates a lot of people, yes, but not everyone is 30 and works for goldman.

Posted by: Anonymous at July 30, 2007 12:18 PM

I saved alot of money for my downpayment by re-using my condoms. I was able to put over 50k down. !!!!

Posted by: Anonymous at July 30, 2007 12:24 PM

We (double income no kids) spent years looking at Manhattan and Brooklyn real estate listings trying to imagine how we would ever save a 20% downpayment and still have the astronomical savings required by most co-ops, which were often as high or higher than the 20% downpayment. I couldn't imagine how we, or anyone like us (people without help from family), could do it. Then the emerging condo market came along which seems to to have helped many people get into the market, but it has also brought a lot of $1M per sq. foot apartments into previously "affordable" Brooklyn.

We just waited it out until we could afford to buy. I used to worry about how high the market would climb while we saved, but it's not something you can control so you just have to keep your head down and keep saving. We were finally able to buy this year with our retirement savings untouched and a decent cushion left in the bank. I'm glad we didn't overreach a few years ago just to get into the market, even if we could have gotten more for our money. Owning is too scary if you are stretched too thin, especially without a parents who can provide a financial safety net.

For those who question why homeownership is worth it, it definitely has nothing to do with being able to put nails in your walls without worry about future spackling. When the goverment is willing to essentially finance your home purchase with generous tax deductions based on your mortgage interest, you truly can't afford to stay out of the market forever. Before we bought, I was paying well over 1/3 of my paycheck in taxes every week with write offs and maximum deductions and come April I always had more to pay. Next spring we will be getting healthy tax returns that we can invest. And we're essentially paying ourselves when we pay our mortgage rather sending our hand earned money to our old slum landlord with no return other than a temporary roof over our heads.

Posted by: it took years... at July 30, 2007 12:29 PM

It's so frustrating to read articles like this...I mean, congrats to them for saving like that and finding their own place, it's very impressive, but I would love to check back with them in 2-3 years and see how happy they are with their purchases. Especially the ones who moved to outlying areas. We have this discussion all the time...do we trade our 2 BR rental for an owned studio we could afford, in the same-ish neighborhoods, or do we have to move to the ends of the earth in order to find something approaching our current situation?

Posted by: Anon at July 30, 2007 12:32 PM

Maxed out my student loans. Best financial decision I will have ever made.

Posted by: Rusty at July 30, 2007 12:33 PM

you're frustrated by hearing about people saving money to buy a home???

lordy.

doens't take much, does it...

if buying isn't right for you, so be it. but sounds like envy more than it does frustration.

Posted by: slopehead at July 30, 2007 12:42 PM

Chime, if you want to "drive down to Puerto Rico", you'll have to rent a submarine, not a car, and those are considerably more expensive.

Posted by: anon at July 30, 2007 12:45 PM

"or do we have to move to the ends of the earth in order to find something approaching our current situation?"

and it's been said before on here many times, but it is not your god given right to own a brownstone in brooklyn, so yes...you might need to go a little farther out. there are PLENTY of places within 30 minutes of manhattan that are neither prohibitively expensive nor at the ends of the earth, as you say.

you just need to open your mind a little bit.

Posted by: slopehead at July 30, 2007 12:46 PM

Just wait for the crash, it has already started.

Posted by: Anonymous at July 30, 2007 12:51 PM

that's interesting, 12:51. i just yesterday heard a report from the head of the leading homebuilding conglomerate...i forget the name...but they are responsible for 80% of all housing built in the u.s.

he said while prices may and are sagging through the end of this year and part of 2008 that all demographics point to an uptick beginning in late 2008 or early 2009 and then a move upwards for the next few years after that.

housing is based on supply and demand and apparently there are a lot of people entering the house buying stage of their lives in about 2 years.

he said the best piece of advice he can offer is that you should never try to time the market.

Posted by: slopehead at July 30, 2007 1:00 PM

slopehead, thanks for the info on the submarine rental, but they built a bridge to get down there three years ago - i just drove it the other day with the family; it's a delightful little bridge with a taco stand and a scenic vista at the midway point.

Posted by: the chime at July 30, 2007 1:13 PM

that wasn't me, but good to know, 1:13.

Posted by: slopehead at July 30, 2007 1:23 PM

Slopehead - the entire article was centered around the fact that virtually everyone aged 25-35 are likely to be in the "buying stage" of their life - whether they are married, single, rich, poor or middle class. The point is affordable housing is virutally non-existant in this region. I don't think people want to time markets; rather they don't want to botch the biggest financial transaction they're likely to ever make.

I agree marlets are based on the supply demand equation but what do you do when the supply of reasonably priced housng dries up and wages don't rise? Sounds like an accidental housing crash, to me.

Posted by: Anonymous at July 30, 2007 1:29 PM

Slopehead,

Nobody here is letting bitterness and jealousy consume their lives. I'm simply letting bitterness and jealousy slowly turn me in to a gnarled up imitation of the innocent, naive person I once was. I'm just allowing jealousy and bitterness to slowly nibble away at my soul encouraging me to do all sorts of shadowy things like visit strip clubs when my wife isn't looking and steal pieces of fruit when the mexican has his back turned at the deli. But allowing it to consume my life? Please, enough with the exaggerations. Do me a favor and grant me some space for some healthy envy! I mean please! Haven't you ever wanted to paint your brownstone white just to piss off your neighbor? Brownstoner said his parents bought him his brownstone, and I just wish I was as lucky.

Posted by: anonimouse at July 30, 2007 1:30 PM

(Three cheers for the present and for not jumping on what all the adults around you say you SHOULD do.)

Are you kidding? That believe is so 50 years ago. Anyone who doesnt' feel compelled to spend every dime and them some is counter-cultural in the present environment. Forget what they said. What did all the adults around you actually do? What Madison Avenue told them to, that's what.

Posted by: WT Economist at July 30, 2007 1:50 PM

When did Brownstoner tell us that his parents bought him his brownstone??? Or is this just a white paint-like, unneighborly assumption on your part, anonimouse?

Posted by: huh? at July 30, 2007 1:50 PM

ok 1:30. i hear ya.

it's funny...i have noticed the guy that lives across from me in a really lovely brownstone with his wife and kid (i'm in a small apt. in one directly across) and watched him sneak out last night to light up a cigarette. seeing the look in his eyes of pure bliss of managing to escape and then puff away about 10 houses down wamed my heart a little.

if you could have seen him, you wouldn't have been envious.

Posted by: slopehead at July 30, 2007 1:51 PM

I too was glad to see this post. It is hard to live within ones means. It requires discipline and patience -anyone who does live within their means understands what it takes. And those that don't wont.

It is wonderful when the results of living within ones means allows a person to achieve something that is really important to them. It brings a great sense of pride and accomplishment.

I view people that get help from their parents as being fortunate - not evil, greedy or pampered. I imagine If I had a kid and could help them out with a down payment, I would.

Posted by: practical at July 30, 2007 2:08 PM

"Just wait for the crash, it has already started."

You do realize condos were way up in manhattan and up a bit in brooklyn last quarter right? Most people think the correction will be over by the end of 2008. NYC is already moving up.

Posted by: Retired@30 at July 30, 2007 2:20 PM

Well, I don't think most people think their first home is going to a brownstone in Park Slope anymore. Just like 20 years ago nobody thought their first place would be a brownstone in the West Village. You need to make a LOT more than 400k for that to happen.

More often, people are using proceeds from a sale to fund a brownstone. So maybe you better stop whining about not being able to afford a brownstone in Park Slope and either get a brownstone further out or an apartment. Ever heard of the property ladder?

Posted by: Anonymous at July 30, 2007 2:36 PM

2:20,

LOL. Go ask anyone on Wall St. how everything is fine and dandy these days. you are clueless.

Posted by: Anonymous at July 30, 2007 2:40 PM

I scrimped and scraped together the down payment for my studio apt back in 2000 and then in 2003 stretched myself (by then with my husband) to trade up to a brownstone that needed gut renovation on the fringe of Clinton Hill. When opportunity arose to trade up 2 1/2 years later to a larger house (for the growing family) on a nicer block in Fort Greene to another brownstone needing gut renovation we took it. We're still stretched (not starving) but we have a long term view based on where and how we want to live not based on profit. Surely we don't want to be upside down in our mortgage or take a loss if we sell (many years from now), but there is something about sacrificing to build the life that you want for yourself and your family that is intrinsically rewarding.

I agree with the advice about not trying to time the market. Although I have benefited from the market appreciation and I acknowledge that it has facilitated my ability to trade up but my goal was always to live in a nice neighborhood in a nice house and I've definitely paid my dues and I'm still not finished but on my way.

Kudos to all of those who believe in delayed gratification and sacrifice for home ownership. And I wish all of those who are still in the struggle (with me) all the luck and perseverance.

Posted by: Anonymous at July 30, 2007 2:43 PM

The first apartment I bought on my way to a brownstone in Cobble Hill was a one bedroom condo in the "Little Cambodia" section of Chicago.

And yes, I'm in my 30s, don't work on Wall Street, and never had any help from mom and dad.

Posted by: Anonymous at July 30, 2007 3:00 PM

I don't have anything against parents lending their kids money to buy -- mine didn't but I'm sure I'd do it for my kids someday. But there are two considerations that make it relevant:

1. If someone (Brownstoner or anyone in the Times article) talks about how belt-tightening or good investments helped them buy a house, but leaves out the fact that they got a parental loan, they're not really being straight about "how I was able to afford a house"

2. When parents giving/lending downpayments becomes common, it becomes almost mandatory -- as a new buyer (which I'm not), you're competing against not just your peers but their parents, and their several decades of wealth accumulation. It's not immoral, it just stacks the deck that much more against people who didn't grow up with money.

Posted by: Anonymous at July 30, 2007 3:05 PM

Just a general question,

If you need a mortgage for a house, co-op, etc., that you are not able to afford outright, do you consider that to be "living within your means?"

Or is the dream of "home ownership" really just a bill of goods?

Posted by: supergirl at July 30, 2007 3:11 PM

supergirl, you just blew. my. mind.

Posted by: Anonymous at July 30, 2007 3:24 PM

Congrats to those who saved their own money to buy their own places. It's a difficult but rewarding process, and makes living in NY easier in the long run.
Having said that, I'll hopefully be giving my son help in buying an apartment, because he's a good kid and I want him to do as well as he can. I never had that assistance, and don't want him to have to go through the same hardships I experienced.

Posted by: anon in bklyn at July 30, 2007 3:33 PM

well considering that in new york it is more often the case that we put down 20%, a lot of us at least own 1/5 of our house.

i totally get what you're saying, but in terms of comparing to the rest of homebuyers out there in the u.s., we "own" a lot more of our homes than most.

i'd have to say that living within your means would have to include some sort of incoming/outgoing cash ratio as well as factoring in debt.

if we are to to say that if you don't own your home outright then you are not living within your means, then we would also have to conclude from that, that every renter does not live within their means by shear default that they own nothing.

which of course is not true.

Posted by: slopehead at July 30, 2007 3:35 PM

3:05, to your second point:

The parental housing leg-up used to make me crazy. I was constantly measuring myself against my "peers" who owned. It was only when I found out how they came to be owners that I was able to relax (a little bit). There is absolutely nothing you do to change the circumstances of your upbringing. You're either born into money, or you're not. The one thing we all can control (if we can't say profession since this can be tied to opportunities which also go back to mom and dad) is how we handle our own bank accounts.

To say that parental help is signficantly stacking the deck against those who don't have it may be a bit of a reach when it comes to NYC - a place where many people's first time home purchase is a $1 million property. There are so many things stacking the deck against those of us who didn't come from money and/or aren't earing a s***load of it in our careers - mostly it's the high-income brackets who can afford insane per sq. ft. prices and are able to pay maintenance fees higher than my old (and sadly quite high) Manhattan monthly rent on top of their financing.

If you parents aren't buying your place for you outright, the majority of them are probably giving (or loaning or investing) part or all of your downpayment. My friends in the latter situation are solely responsible for their mortgages so they could only buy what they could "afford". Their parents have truly helped them, but it's up to the kids to keep the place.

We would have loved to have some help getting into the market, who wouldn't? But one great consolation now is that nothing beats having done it on our own!

Posted by: it took years... at July 30, 2007 4:04 PM

it took years...:

Everyone can define "significantly stack the deck" differently, but suppose 10% of buyers in NYC, or 20%, or whatever, are people who wouldn't be able to buy without their parents. That's that many more people in the buyers' pool, and more buyers + same supply = higher prices.

It's no skin off my back either because I bought my first home more than 10 years ago, but there's no way that can't make a difference.

Posted by: Anonymous at July 30, 2007 4:13 PM

Sometimes I get extremely envious when hearing how people got funding from their parents to help purchase their home. But then I remember that my quest to save was afforded by living with my parents for the better part of my twenties in order to save. They couldn't afford to outright give me money, but I essentially lived rent free far out in Queens while my friends rented cool city apartments. Now, most of those same friends are still renting while I own a great 1-bdrm condo in dumbo. It took a lot of patience and sacrifice... at times feeling like I was missing out on the feeling of independence and hating my commute. But nothing beat the feeling of turning the key to my very own home (in a neighborhood I love) when I finally got it.

So thanks Mom and Dad... you couldn't give me the money, but you helped me in your own way.

Best of luck to all those trying to get their foot in 'their own door'.

Posted by: Yippee...I did it! at July 30, 2007 4:21 PM

Anonymous, 4:13:

Since getting help from your parents to buy your first home is as American as apple pie and happens nation-wide, I guess I question how much farther this old tradition tips the markets in Manhattan. In your earlier post you wrote: "When parents giving/lending downpayments becomes common, it becomes almost mandatory".

Probably all of us who are on our own financially have felt the pressure of competing against those who have help. But I wonder if the buyers with parental help are creating market pressure that can even compete with the earning power of many young NYC residents. If we assume that buyers with help are absorbing the bulk of the entry-level / most affordable apartments in the city, then perhaps it is true.

Posted by: it took years... at July 30, 2007 4:45 PM

i don't know. alls i'm saying is ... i think many of you have bought into an american ethic that suggests that home ownership is the paragon of a meaningful adulthood. (who really gets rich off of that belief system?) there are so many who sacrifice so much from 25 to 55 so that they can finally relax and enjoy it all from 55 to 85. my poor Da died of a heart attack at 61, and while i guess he didn't care once dead and in the ground, from this side of the etheral plane, i'd say that i'm not too sure his bet was the wise one. me, i like renting my place, eating my pricey meals out, and driving down to puerto rico. i don't blow all my paycheck in one sitting mind you, i do have the capacity to do some longterm thinking and rest assured that come retirement, i'll have squirrled away enough pennies to get myself a grand slam breakfast at denny's whenever the mood strikes. in the meantime however, rather than patting myself on the back for being such a great, planning crazed american, i'm gonna quietly enjoy the good life - today.

Posted by: the chime at July 30, 2007 5:12 PM

Hey Slopehead --

12:32 here. Um...despite the title of this site, I doubt everyone on here (myself included) considers "owning a brownstone" as their real estate goal, or their manifest destiny. Had you bothered to read my entire post, it would be clear I was talking about being able to own a CONDO, not a brownstone, not a house. And a studio, at that.

And I disagree with your "30 minutes from Manhattan" qualifier. Where, exactly, is that? Do you mean getting to the upper or lower edge of the city? Then maybe. But I'd love to know some truly affordable neighborhoods where at the height of rush hour, takes 30 minutes to get to Union Square, mid-town, Park Avenue, i.e., the major employment centers in the city.

Posted by: anon at July 30, 2007 6:37 PM

I think the question of how Mr. B paid for his first home is extremely relevant. Mr. B has displayed a fair amount of 'attitude' on this site, an attitude that's mostly unfavorable to the kinds of developments that might ultimately provide housing to working people. In that case, I think Mr. B should put up or shut up. He should address how he financed his first home and he should do it right here in front of everyone.

Now that the question has been raised, it's a matter of credibility.

Mr. B?

Posted by: anon at July 30, 2007 7:06 PM

i'd just like to correct an earlier poster: just because a parent lends or gives money for a down payment, doesn't meant someone is "born into money." sure, not every parent can fork over hundreds of thousands of dollars for a downpayment on a brownstone, but i know multiple people who have had parents very kindly take out second mortgages on their homes in order to give their kid a $20-$40k leg up on the down payment for a studio or one bedroom. the cost to the parent is a tax break and a generally modest monthly bill (which their child could concievably take on if they calculated their buying budget correctly) and the risk of a shift in the market. its unfair to assume that its always mommy and daddy just handing over a big bag o' cash.

also, i have to say to the poster questioning why anyone would buy into the "bill of goods" on ownership: putting all these american dream/apple pie issues aside, as a woman, i think owning my own apartment--and subsequently making a profit on it--has given me the freedom to make smarter personal/relationship decisions. i know that sounds strange, but think about how many couples in ny are lured into moving in together way too early because of what they'll save on rent? and how many of those break up and end up taking icky apts that cost too much because they just want out? eh, i've seen it happen more times than i can count on my fingers and toes.

Posted by: Anonymous at July 30, 2007 7:33 PM

My partner's and my parents were in absolutely no position to help us even a little when it was time to buy, so to us everyone else who has family that can comfortably take on a second mortgage or give even 20k are people who come from "money". It's a really loaded phrase (forgive the awful, unintended pun). So my apologies for the vastness the term construes, but whether you get a small amount or "big bag o' cash" it's still nice to have parents who are comfortable and liquid - for their sake as much as your own.

Posted by: it took years... at July 30, 2007 8:40 PM

Mr. B: under no circumstances should you say anything about how you came to own your place. it's just ridiculous for people to ask such a thing.

anon 7:06--you think Mr. B expresses "attitude" on this site? even if he does, guess the reason: it's HIS blog. i mean, come on, if you don't like Mr. B's "attitude", don't visit this site! He doesn't owe you or anyone an explanation.

Posted by: lemlar at July 30, 2007 8:42 PM

Lemlar:

Mr. B *already* "said something about how he came to own his own place." To wit:

"we were lucky that a real estate deal we worked on back in 1999 paid off well enough a few years later to enable us to come up with the downpayment on our house. (That, and we had the good fortune to flip a couple of one-bedrooms in Manhattan between 1997 and 2000, when we cashed out thinking the market had peaked! Got that one wrong, huh?)"

If that's the whole story, fine. If he got parental money and didn't mention it, then he's misrepresenting how and why he was able to buy, which is *the whole point of the thread that he started himself.*

Nobody's picking on poor helpless Mr. B here.

Posted by: Anonymous at July 30, 2007 9:04 PM

By the way, I THINK Mr. B says in this earlier post that he and Mrs B bought their first apartment without help:

"When we bought our first apartment — a 950-square-foot prewar one-bedroom in Manhattan — for $160,000 in 1996, it was still possible for a 27-year-old and his fiancee to buy something on their own."

http://www.brownstoner.com/brownstoner/archives/2007/03/buying_with_hel.php

So it doesn't seem that he considers it to be such a terrible violation of privacy.

Posted by: Anonymous at July 30, 2007 9:49 PM

I ate PB&J for lunch and cut out alot of extra's for a year or so and purchased my first home in a neighborhood that I knew I didn't want to stay in for long. The plan was to stay a while, build equity and sell at a profit to purchase elsewhere. That's exactly what happened. After only four years I sold at twice what I paid and put a substantial down payment down on my home in Ditmas Park in 1996. Although we cannot go back to 1996/1997 as one poster suggested this can still be done. My friend, a single mom bought a home in Brownsville. Not necessarily where she wanted to be but its hers and she and her children are happy. The value of her home has already increased considerably.

Posted by: Anonymous at July 30, 2007 11:47 PM

I cashed out my 401k and all my savings and maxed out my credit cards to buy a brownstone in 2000. Since then I've bought a few more and they've all tripled in value.

Posted by: Anonymous at July 30, 2007 11:59 PM

living with my parents rent free!

Posted by: armchair_warrior at July 31, 2007 12:51 AM

If this site were a mere blog, I'd agree that Mr. B shouldn't utter a peep about how he financed his first home. However, this site is a COMMERCIAL endeavor. Hence, it is perfectly reasonable for people to want to know that Mr. B not only talks the talk, but also walks the walk. So, I think it is very important now that Mr. B be forthcoming about this. As an earlier poster pointed out, this really is a matter of credibility, and if I were one of this site's advertisers I can tell you that I'd want Mr. B to pipe up a.s.a.p.

Posted by: Anonymous at July 31, 2007 10:24 AM

"As an earlier poster pointed out, this really is a matter of credibility, and if I were one of this site's advertisers I can tell you that I'd want Mr. B to pipe up a.s.a.p."

How in the world is this information relevant to the advertisers on this site?

Doesn't sound like Brownstoner had any financial help getting into the market, but even if he did, it was all the decisions he and his wife made with their subsequent purchases and sales that got them where they are today.

It really doesn't matter how Brownstoner, or anyone else has funded their real estate transactions as long as its legal. Even if he did have help, that doesn't mean he now has a credibility problem, or is unable to "walk the walk". What a petty and weak-minded arguement!

Posted by: ??? at July 31, 2007 10:42 AM

if your parents helped you buy your first place...or any place...you are a CHILD not an ADULT...

me:
grew up penniless in south bronx
made wise investments
millionaire

Posted by: mred at July 31, 2007 1:22 PM

1:22 - Having parents' or anyone's help doesn't make you a child. No man is an island and I'm sure that even if no one helped you financially someone gave you something of value (knowledge maybe) that helped you get to where you are.

But then again who cares what you all think.

Posted by: Anonymous at August 1, 2007 10:58 AM

10:58

sounds like you can't make it on your own...some hard work+some education+determination=goes a long way

"But then again who cares what you all think."-

sounds like you lack education

Posted by: mred at August 2, 2007 9:18 AM