Condo Market: You Can't Handle the Truth!

inventory in Manhattan spiked to 7600 units this morning. NYC is about to have a correction in pricing.

Posted by: guest at May 8, 2008 9:32 AM

This article is about six months too late.

The Market has already turned the corner. The Fed has announced the Credit Crisis is over, employment figures are on the rebound and most analysts say the same is true for the real estate market. WSJ reports that real estate is now as affordable as any time in the 90's!

The beauty is that the NYC never really dipped like the rest of the country, it just stalled for a few months.

Sure its cliche, but there never really has been a better time to buy before the boom begins again.

The slow down is ending and the economy is beginning to take off again. Good times.

Posted by: guest at May 8, 2008 9:37 AM

Is it just me or is there really not that much condo inventory on the market in BK? If you are looking to spend $650,000 to $800,000 and you don't want to be in a downtown high-rise your options are very limited. And if you are a potential buyer who does not have 20% down, condo's are going to be your only option.

Posted by: guest at May 8, 2008 9:38 AM

Get thee to the the Toren sales office, 9:37. Don't forget to take those blinders off before crossing Flatbush though.

Posted by: guest at May 8, 2008 9:42 AM

9:38

I respectfully disagree on the highest level.
The BK market is not only saturated with non Downtown condos btw 650 and 800 , its practically overflowing to flood level. Options are bountiful.

And 9:37

Nice Pollyanna thinking. Lets all play the Glad game.

Posted by: guest at May 8, 2008 9:43 AM

9:38

I respectfully disagree on the highest level.
The BK market is not only saturated with non Downtown condos btw 650 and 800 , its practically overflowing to flood level. Options are bountiful.

And 9:37

Nice Pollyanna thinking. Lets all play the Glad game.

Posted by: guest at May 8, 2008 9:43 AM

Housing may be turning the corner in places that have already taken a 30% haircut (i.e., Phoenix), but markets that were late to the correction, (i.e., Seattle and New York), are likely to see significant declines in the next couple of years. For a really good round-up with lots of numbers to back it up, go to http://seattlebubble.com/blog/

Posted by: guest at May 8, 2008 9:45 AM

9.37 - I just read an interview with George Soros in the NYRB that says you are completely wrong.

So do I believe 9.37 or Soros - one of the world's richest men who makes his money by successfully predicting the markets?

Posted by: guest at May 8, 2008 9:47 AM

Phoenix did not have the wealth to support high prices.

New York does. Every market is different.

Soros has not been right in 20 years. He was put to pasture some time ago.

Posted by: guest at May 8, 2008 9:54 AM

NY crashed 2 years after the national market in the 80s. Given the combination of wall st meltdown, massive layoffs, toxic tax increases at the state and federal level, mortgage rules changes, etc, game over.

Posted by: guest at May 8, 2008 9:55 AM

9:38 Would you mind telling me what those condos are? I am in the market and besides the junk on 4th avenue and Downtown, I have not seen much.

Posted by: guest at May 8, 2008 9:56 AM

9:38 if you want a condo in that range go to williamsburg. Hundreds of condos for sale. If you are buying a condo right now you have the wrong idea .

Posted by: guest at May 8, 2008 10:00 AM

Sorry, I meant to exclude Williamsburg. I think we can all agree that is the most overexposed area of the whole city and faces the greatest risk severe price declines due to overbuilding. I also think it attracts a different customer then those looking in Ft. Greene, Park Slope, Cobble/Boerum Hill, etc. (which is where I am looking)

Posted by: guest at May 8, 2008 10:04 AM

I think it is foolish to say it is a terrible time to buy. If you have a 7-10 year plus time horizon for remaining in the property, why not purchase now if you find something you like. Sure, you could have maybe waited 6 months and gotten something for 5% less but over the long term you will still be ahead of the game and will be enjoying your residence for years to come.

Posted by: guest at May 8, 2008 10:13 AM

My point is that condos in Brownstone Brooklyn are indeed a scarce commodity and therefore it may not be a bad time to buy. From what I hear lending on co-ops is much tighter then on condos right now if you don't have a substantial down payment. So if you were thinking of a co-op in Park Slope or Ft. Greene, etc. and you are now forced to go condo your options are limited if you don't want to go to one of those "less desirable areas".

Posted by: guest at May 8, 2008 10:17 AM

10:13 in my opinion prices will correct 20-30 percent. So is it smart to throw away all that money? To the guy who cant find a condo in historic districts. well lets just all pray for that guy

Posted by: guest at May 8, 2008 10:20 AM

10:20 is there a reason we should value your opinion?

Posted by: guest at May 8, 2008 10:22 AM

Soros hasn't been right in 20 years? Did you hear about that little thing in 1992 perhaps?

Posted by: guest at May 8, 2008 10:26 AM

10:22 no reason at all. just my opinion

Posted by: guest at May 8, 2008 10:27 AM

1992 was 16 years ago.
that's a lot closer to 20 than it is to today.

Posted by: guest at May 8, 2008 10:32 AM

OK, he has not been right in a decade. You get the point.

Posted by: guest at May 8, 2008 10:34 AM

BrooklynNative: Small minded thinking? Small minded thinking is blindly assuming that prices will decrease upwards of 20-30% without any salient points to back that up. As someone mentioned on a post yesterday there are people who seem to think that real estate just began in 2000. While that was meant as an insult it also illustrates a point that there has been a secular change in the real estate market that has brought a lot more people to purchase properties rather than paying rent. There will be (and has already been) a cyclical adjustment in real estate prices and there may still be more of a drop to come. There is no way it will be these large double digit increases people are throwing out there. When the previous real estate recessions occurred was the stock market up? How significant was the overbuilding? so on and so forth.

When you look at the Brooklyn market it makes even more sense that the downturn would not be double digits due to the secular shift. People who are renting one bedrooms in Manhattan for $3500+ are more and more realizing that they can own their residence by moving to Brooklyn.

Plus if prices drop 30% we are all totally f-----. Even if you bought your brownstone in 1995 or you are renting. 30% price drop in NYC means the economy/country are completely in the shitter and soon enough it will look like I am Legend. (well some of you do actually think that I guess.)

Posted by: guest at May 8, 2008 10:41 AM

"If a condominium project has been on the market for over 12 months, and there remains units to sell, then those units need to be re-priced as rentals until the next cycle." This shows how smart Two Trees was that they converted 110 Livingston to rental. It's a really nice rental building.

Posted by: guest at May 8, 2008 10:51 AM

quote from the article:

"Sales activity remains strong in Park Slope section of Brooklyn. For example, the Argyle Condominium located on the west side of Fourth Avenue, which many consider the wrong side of the street, and is not in the preferred school district has a sales office on Fifth Avenue has had steady and consistent sales," Mr. Rutter said. "The average sales price per square foot is $740, and about 60% of the units have been sold with the building's steel still in process. Another sign of the frothy Park Slope market is that these sales have occurred from floor plans and not from walking the actual units."

Posted by: guest at May 8, 2008 10:59 AM

"This shows how smart Two Trees was that they converted 110 Livingston to rental. It's a really nice rental building."

9 units at 110 Livingston went rental.

I don't call that a rental building.

Posted by: guest at May 8, 2008 11:01 AM

The problem is that buying has become much more expensive than renting. I went with a friend to look at condo in Bed Stuy. 2bdrm w/ garden for 425K. Estimated mortgage with maintenance was 3250. There is no way in hell you could ever rent that place out for 3250. And no way in hell that place should sell over 310K.
I saw a place in Clinton Hill for 575K- same story. People do the math- if you can save more than a 1k per month by renting then buying is not a good deal!

Posted by: guest at May 8, 2008 11:22 AM

Wasn't Soros one of the five guys who made a billion dollars this year in the financial industry? He can't be that dumb.

Posted by: guest at May 8, 2008 11:25 AM

Sure, the market is saturated with condos. And yes, they are almost all high rises and in places like downtown and 4th Ave. Antything that isn't, and is in a smaller building on a brownstone street, is going to go faster, is my guess.

But the article referenced doesn't make sense. It does not make sense to buy into an unfinished condo building (or just finished) when the market is down (not if you want to live there - I can't speak to investor/speculators.) If the developer still needs money from banks and isn't selling apartments fast enough to keep the banks happy, the finishing up may be long and incomplete. Even if finished, if others aren't buying, you may end up in a rental or mostly rental building (fine, as long as you prepared for that.) I'd stick to established condo buildings if buying in this sort of market. And even there, financially, you be better off in a coop (though I'd never buy a coop again myself) - because you don't know the precarious financings of the other owners in you condo and may yet face foreclosures in the building, which will have an impact on you (that's unlikely in a coop because they don't generally allow risky mortgages or creative financing.)

Posted by: guest at May 8, 2008 11:26 AM

I agree with you 11:22, but you have to take the tax savings from the mortgage interest deduction into account. Still, it is STILL usually cheaper to rent now, with these prices, even when you take that into account.

Posted by: guest at May 8, 2008 11:28 AM

People looking for a deal now better jump in, they are going to wake up one day real soon and find that the good deal days are over. Quit trying to time the market and buy one now before its too late, Thier are alot of good deals in Bklyn now. Within 5 years you'll double your money with this brooklyn renniassance going on. Take it for what its worth, if you snooze u lose.

Posted by: guest at May 8, 2008 11:30 AM

11:22 + 11:28 = delusional
Keep on renting in ignorant bliss

Posted by: guest at May 8, 2008 11:35 AM

WALL STREET JOURNAL
The Housing Crisis Is Over
By CYRIL MOULLE-BERTEAUX
May 6, 2008; Page A23

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.

The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.

Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.

Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.

Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.

Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.

This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.

When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.

More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.

A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.

We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.

Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based

Posted by: guest at May 8, 2008 11:39 AM

11:26 the speculators are in Brownstones as well. Clinton Hill Bed Stuy and Prospect Heights are high risk. Look up some of the mortgages that have been taken out the past couple of years on some streets t=you like in those areas and you will see lots of interest only Arms and crap like that.

Posted by: guest at May 8, 2008 11:42 AM

11:22 here. I'm not against buying. I've purchased a few places in my life. Just sold a place in Europe. The reason I sold was the market had reached a high point and it was time to take my money out.
But what sense does it make to buy a place with a huge net loss compared to renting? If you got into financial problems like a job loss, you could not unload the property by renting it and you probably couldn't sell it either at what you paid. Therefore, in my very humble opinion prices in NY still have a lot of adjusting to do. But like always the banks created this boom and their lack of capital to loan out will create the correction.

Posted by: guest at May 8, 2008 11:42 AM

williamsburg is the best bet for long term investment. it is the closest neighborhood to midtown and most of manhattan in Brooklyn. has jaw dropping views, tons of amenities that the rest of brooklyn lacks - especially culturally (art galleries + music venues by the dozens) - best restaurants, salons, clothing shopping, furniture shopping and in williamsburg proper - no housing projects.

also, rental prices are through the roof in williamsburg. so, buying a condo is a safe bet because you can always rent it out.

this being brownstoner, not sure that the majority here understand the waterfront boom that is coming to williamsburg. the entire waterfront area will be developed including parks, athletic fields and public open space.

add to this, the 50 million - hello! million! dollar pool renovation.

now, if living next to the cities BIGGEST bloody housing project in fort greene/dumbo/clinton hill sounds better to you... be my guest.

Posted by: guest at May 8, 2008 11:47 AM

only someone who is fearful about their neighborhood and property value would come on here and tout it like you just did 11:47.

not to mention that you've written that EXACT SAME COMMENT on many other threads.

50 million dollar pool and all.

Ever heard of a little place called Prospect Park, btw?

I've been to your "waterfront" area. It's open odd hours and has two saplings, they pawn off as trees.

Posted by: guest at May 8, 2008 11:51 AM

What people are not realizing is this...

When you pay off your mortgage in 30 years...in my case at the age of 60, the rest of my life...perhaps 20 or more years I will have almost NO HOUSING COSTS.

When you want to talk about the benefits of renting over owning, you need to factor in that you will be renting for an additional 20-30 years beyond the time most of us will have finished buying a house.

Please explain to me how you plan to afford what will be approximately a $15,000 rental for a 2 bedroom in the year 2038 on a fixed income???

Posted by: guest at May 8, 2008 11:54 AM

New York city rents are high, so at some point people get forced into buying because the monthly with the write off is cheaper, and it keeps your monthly output at the same place as rents rise. Also, it's a forced savings plan which most need.

NYC real estate in the short run, the mid run and the long run will always be a great investment. wherever you buy.

Posted by: guest at May 8, 2008 12:00 PM

dave: thanks for pointing out the obvious. No way the carrying costs would be that high on a $350k place (even factoring in mortgage insurance)

Posted by: guest at May 8, 2008 12:00 PM

11:54:

I like the cut of your steak! Good question...

Posted by: guest at May 8, 2008 12:03 PM

I agree with 12:00 #1.

And 11:54.

Posted by: guest at May 8, 2008 12:04 PM

11:54 - if you think you'll have "no housing costs" maintaining a 30+ year old home you are delusional.

BTW - as alluded too in the article - the condos (decried over and over here) on 4th Ave in Brooklyn appear to be selling steadily - not a prediction on price drops (I expect some and maybe substantial) but clearly there is demand which may mitigate the effect of tightening credit and rising unemployment.

Posted by: guest at May 8, 2008 12:07 PM

Renters have no thought to their future.

That's why they rent. They only think about the here and now. Not a good way of thinking since the average life span is increasing as we speak.

11:54 bring up a VERY good point. People who are buying homes now are thinking about years down the road and are not so quick to brush aside the thoughts of a stable life for the long haul.

$15 martinis and $500 Manolo Blahniks might be fun today, but they really won't come in quite as handy when you're 80 sitting in your 10K a month studio in Ocean Hill.

Posted by: guest at May 8, 2008 12:08 PM

I said ALMOST no housing costs, 12:07. I love how you misquoted me.

And yes, there will be mainenance on my property.

But you still didn't answer the question.

Where are you coming up with the rent 30 years from now on your fixed income?

Hope you're saving about 500K a year to get you through old age.

Posted by: guest at May 8, 2008 12:10 PM

what if my rent is lower than your maint?

Posted by: guest at May 8, 2008 12:15 PM

renters are fools.

plain and simple.

Posted by: guest at May 8, 2008 12:18 PM

what if I get fired and leave my rental and move to Hawaii.

What if you get fired and get stuck in NYC with no job and crazy maint.

what if I retire and move to south east asia and eat fish.

what if you retire and stay in your shitbox condo.

Posted by: guest at May 8, 2008 12:25 PM

my rents 800. thats less than most maint.

my are people scared of renters freedom.

Posted by: guest at May 8, 2008 12:26 PM

12:10 - You have to save for retirement no matter what - if renting remains 'cheaper' (year over year )till then, then presumably you will have been able to save more and should be able to handle any reasonable rent increases - and if buying becomes cheaper at some point then obviously it would pay to take the money accrued and buy.

If your going to rent (or even own) and save nothing, then your correct - you are screwed - so what - people are making an economic argument not a psychological one - it is correct that psychologically many people need the forced savings of a mortgage - doesnt mean they arent potentially "paying" more for that.

Posted by: guest at May 8, 2008 12:26 PM

1) What is with all the Soros bashing?

In 2007, the Quantum Fund (his hedge fund) returned almost 32%, netting Soros $2.9 billion.[10] see http://en.wikipedia.org/wiki/George_Soros

I suspect that's more than any poster on this board made. It's also the second best performing fund in the country last year.

www.crossingwallstreet.com/archives/2008/04/top_hedge_fund.html

So, if he says that NYC real estate is in for a correction, you should listen.

2) Brownstoner -- why don't you set up a poll of where people think the brooklyn condo market will be in 2 years?

3) what ever happened to the 6-month ago HOTD look back?

Posted by: guest at May 8, 2008 12:29 PM

www.gothamist.com

Posted by: guest at May 8, 2008 12:38 PM

Man, the owners who post on this site are increasingly pathetic.

Posted by: guest at May 8, 2008 12:40 PM

the cost of renting is going down this year as opposed to the cost of owning. some years renters win some years owners win. The past 8 years owners have won. This year is diff. though. If my landlord does not lower my rent i can just simply move to one of the many other spaces going onto the market. I can get the same space I have now with all new stuff for about 10 percent less then what I pay and in the same area. I started renting in 2006 when i sold my place. The supply of avail. rentals is much greater now then in 2006 for my place or sim. units.

Posted by: guest at May 8, 2008 12:41 PM

Biff - you forgot to add - when housing prices are going to fall 20+% - then it definitely makes sense to rent.

Posted by: guest at May 8, 2008 12:43 PM

12:41...you are going to ask your landlord to lower your rent or move???

yeah, that sounds fun. move every year.

what a nice life you have set up for yourself.

Posted by: guest at May 8, 2008 12:43 PM

Seriously...the renters on this blog sound like they are missing a chromosome.

Posted by: guest at May 8, 2008 12:44 PM

i'm in contract on a new condo and can't wait to close and move in... the cost of my sublet (in greenpoint, yeah, greenpoint!) is hundreds more than my monthly costs are going to be after i move into the sexy new condo. i really don't get why people rent in this town. sure, i did the first year i moved to brooklyn, but bought as soon as i could, more than doubled my money, and now i'm trading up. not to be harsh, but renting is for losers. especially those out there who can afford to buy and don't because they think they're going to strike the market at just the right time...too late suckers.

Posted by: guest at May 8, 2008 1:01 PM

12:43 - you are making the same mistake that many make here - the question of "which makes more financial sense - owning v renting" is an ECONOMIC one - it is simply a matter of adding up all the costs of both and figuring out which is higher - there is a definitive answer.

Issues like having to move or the inability to renovate for example are genrally not economic issues (except for the direct costs of a move for example) but lifestyle ones - and while certainly valid, everyone has different desires/tolerences etc... and therefore there isnt a definitive answer.

Posted by: guest at May 8, 2008 1:03 PM

If one adds up the cost of renting over a LIFETIME, compared with the cost of ownership (typically 30 years), even with no appreciation, the owner will pay less in the long run.

The longer you rent, the more money you are wasting.

Posted by: guest at May 8, 2008 1:07 PM

12:43 Hell yeah im going to ask him for lower rent! He will most likely have to give to me as well. The market is softening. The market simply is not commaanding the price I pay. He knows it and he also knows he cant afford to lose the income for a month or two when he finds another tenant. within 3 blocks of my place I can find about 5 places that are 10 percent less and all new. Rents are coming down

Posted by: guest at May 8, 2008 1:07 PM

There are 10 people waiting in line to take your apartment, 1:07. You are either dellusional or live in a REALLY crappy part of town.

Here's an example. I have a 1 bedroom that was up for rent a month ago. Park Slope...asking rent $2150. It's small...maybe 500 sf.

Want to know how many people showed up from the Craigslist ad? I'd guess 60 or 70. Easy.

I had it rented in approximately 10 minutes.

Posted by: guest at May 8, 2008 1:10 PM

Amazingly, Biff actually makes an astute observation @ 12:35!

Posted by: guest at May 8, 2008 1:12 PM

The rental vacancy rate in New York City is 1%.

Posted by: guest at May 8, 2008 1:13 PM

I'm with you 1:01, renters are TOTAL losers, I moved to Brookyln three months ago bought my first place more than tripled my money the next WEEK. Then I doubled it again!! And I'm trading up BIG time. Not to be harsh...but hell, why not be harsh!!! I'm killin' it, I can be harsh if I want! Renters are all total LOOOSSSSERRRSSS!!! They aint got no money, they aint got no game!! They just SUCK! There's never a good reason to rent, you always, ALWAYS make money if you buy and anyone who says any different is a LOOOSSSERRRR REENNNNNTTTTERRRRRRRR!!!

Posted by: guest at May 8, 2008 1:17 PM

Here is why I rent:

My rent is -ridiculously- low.
My apartment is -ridiculously- large.
I'm saving to afford a healthy down payment.

So, you see, there are no absolutes.

Posted by: guest at May 8, 2008 1:17 PM

New York used to be a city of unashamed renters. And then the Midwest moved here en masse and brought their "buy buy buy!" mentality and susceptibility to advertising with them. Now we who have lived her since birth are to follow like lemmings and invest in a shoddily-constructed condo or crumbling townhouse to which we will be tied financially for 30+ years, at a time when the market is disintegrating and prices are falling.

You may have made a poor buying decision, but there's no need to splash your insecurity all over those of us who decided, quite sensibly, to see where the market was headed before committing to a long mortgage, inflated maintenance costs, and high property taxes. Right now, renting makes stronger financial sense than buying--yes, even in New York City--for many people. The only ones who say otherwise are brokers and developers and terrified buyers eager to keep the market buoyed to unsustainable levels.

Talk about pathetic.

Posted by: guest at May 8, 2008 1:23 PM

"Rent's are coming down".

Are you in bizarro world or something? Good luck with the rent reduction.

Of course there are circumstances that exist where someone has low rent, for a large apartment, yada yada yada. And that's great, and it probably makes a ton of sense for that person to continue renting. But aren't we talking about the broader market here, and on the whole what is better. The fact is, rents are generally going up, and by a significant amount. There just can't be any debate about that.

Posted by: guest at May 8, 2008 1:25 PM

Biff, Hi.
This is 1:17

No joke, my rent is close to nothing. My landlord loved me when he met me and hasnt raised rent in 15 years. I live in Cobble Hill. You can run laps in my living room. My bathroom doubles as walk in closet. My dog has his own room.

For real.

Posted by: guest at May 8, 2008 1:25 PM

1:25
Rents have come down since 2006 im my area. Park slope is a red hot market so i don think you can use Park slope as a baseline for all of Brooklyn. Doorman buildings in Manhattan are giving a free month now so if you think rents are going up you are smoking some Gowanus Crack

Posted by: guest at May 8, 2008 1:38 PM

"but there's no need to splash your insecurity all over those of us who decided, quite sensibly, to see where the market was headed"

Um....since I've owned in NYC, the market has headed up 500% or so.

How long exactly are you going to wait and see where it's headed?

If you haven't noticed, it's gone no where but up in the long run.

Posted by: guest at May 8, 2008 1:39 PM

1:23 here:

I grew up here. My parents rented, as did all of my friends' parents, and nearly everyone I knew. My parents moved to the suburbs after I left for college, but it has only been in the last 8 years or so that buyers mania overtook the city as it has.

New York once followed a more European model, in which renting was commonplace and people weren't necessarily tied to one home for decades at a time. Adventurous people don't mind the "insecurity" of not owning property. It's not a superior mindset but it does reflect different priorities.

Those of us who have always rented resent being told by outsiders that we are "fools" for doing what we have always done (and will continue to do, if not here). It may be wiser to buy than rent in, say, Omaha or Houston, but that's definitely not always the case here, no matter how much buyers and realtors would like it to be.

Posted by: guest at May 8, 2008 1:43 PM

"New York used to be a city of unashamed renters. And then the Midwest moved here en masse and brought their "buy buy buy!" mentality and susceptibility to advertising with them."

I've lived in Brooklyn my entire life (44 years) and bought a house because it was cheaper and potentially more profitable and secure than renting. I wasn't (and still am not) planning to leave the city, so it made sense to stop paying so much rent, pay a mortgage (which is less than my rent was when I rented in Park Slope and Prospect Heights) and own something after 30 years. I bought a two-family brownstone in Crown Heights historic district and haen't looked back. There is nothing inherently wrong with renting, and I can understand why people rent in some circumstances (as I did, when I was saving for a downpayment). But if you're sticking around for the long term in NYC, it's hard to argue against owning if you can swing it.

Posted by: guest at May 8, 2008 1:44 PM

Rents on doorman 1 bedrooms in Manhattan have gone down from $3150 average to $3133 average.

Just so you know the actual facts, 1:38.

Anyone who pays that much to rent something is an idiot.

Period.

I pay 2500 for my mortgage and maint. Not including the tax deduction.

Posted by: guest at May 8, 2008 1:45 PM

1:39, the market has been buoyed by European investors and mortgage scams. Europe is facing its own bubble at the moment, in case you don't read the world financial papers, and when their disaster catches up to ours...watch out.

All good things must come to an end, and this is especially true of real estate bubbles. But far be it from me to try to pull your head out of the sand. I'll happily buy a few years from now when property values are back to normal, sustainable levels.

Posted by: guest at May 8, 2008 1:46 PM

Doorman buildings have been giving month free incentives for the past 5 years (at least). That's nothing new.

I'm not using Park Slope as baseline . . . or even Brooklyn for that matter. Just NYC in general. What's your "area" where rents are coming down?

Does anyone else on this site actually think rents are coming down? I can't imagine anyone actually believes that

Posted by: guest at May 8, 2008 1:47 PM

1:43:

Here are a few facts, just to go against what you believe to be the case and what is ACTUALLY the case. Considering New York City's ownership rate is not even 40%, how exactly is it that you say that Europe has a lower ownership rate???

***

The first place to start is to show the range in the levels of ownership. As the chart shows there is a wide range in the levels of owner occupation. The weighted average for the EU15 countries at the end of 2003 was approximately 64%, but there are big differences. The Southern European countries have the highest levels of owner occupation. Among the EU 15 countries Spain, Greece and Italy all have owner occupation rates of 80% or more. And Germany, while a much larger economy than those countries in the South, has an ownership rate of only 42%. Hungary has the highest rate of owner occupation at 92%, France at 74% and Ireland at 69%.

Posted by: guest at May 8, 2008 1:50 PM

1:17 #2

i am in the exact same situation myself

renting a huge place for fair price

my landlord is renewing my lease this week for another year at the exact same rate

i am saving quite a bit of money every month
just about the same as i apy in rent

i will buy when it makes sense

another thing that makes it difficult is we have a dog so we must look harder

but renting works for us now

i will put at least 20% down on my place
and have at least a year or so expenses in liquid cash after all is said and done

Posted by: guest at May 8, 2008 1:51 PM

Know what I say to the notion that rents are coming down???

LOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOLOL

Posted by: guest at May 8, 2008 1:52 PM

daveinbedstuy, your desperation and fear make a stinky cologne.

Posted by: guest at May 8, 2008 1:53 PM

1:46 - don't count on it...keep on throwing your--i mean keep on renting.

Posted by: guest at May 8, 2008 1:53 PM

And 1:50, are those national statistics or do they purely reflect Paris, Berlin, and Barcelona? Ownership statistics in the United States 20 years ago also would have been quite high, but they probably weren't as typical in New York and, to a lesser extent, San Francisco and Chicago.

Posted by: guest at May 8, 2008 1:54 PM

I'm not worried about it, 1:53. When you're upside down on your jumbo loan a few years from now, you can talk to me about throwing money away.

Posted by: guest at May 8, 2008 1:57 PM

The point is that 1:43 was wrong. They said nothing about Paris or Berlin.

They said Europe.

Dead wrong.

As 99% of the people on this blog are.

Posted by: guest at May 8, 2008 1:59 PM

1:57 when you are priced out of NYC because of skyrocketing rent, enjoy Akron.

I hear it's lovely this time of year.

Posted by: guest at May 8, 2008 2:02 PM

Are you saying you might have to go back there, 2:02? I'm sure it would be a huge loss for the city if you did.

And 1:59, I assumed you were well-traveled enough to know that people in major European cities are generally renters, and that I wasn't referring to sheep farmers and winemakers. My mistake.

Posted by: guest at May 8, 2008 2:08 PM

1:57 - no jumbo loan...i put 40% down and am quite comfortable with the financing. really think in a few years the value of my sexy new condo will diminish? you're delusional. maybe i can rent out my condo to you a few years from now while your still waiting to get into the market.

Posted by: guest at May 8, 2008 2:10 PM

Rents do seem to have peaked a bit -- right around the time I signed my current lease in park slope last Sept. lol. I left Manhattan after being offered a 40% rent hike (my old building is now one of the "1st month free!!!!" places).

To be honest, I like my place and would put up with a small rent increase, just because it would be cheaper and less hassle then moving. But if my landlord gets greedy, I'm moving. I'm sure he'll find another tenant, and I'm sure I'll find a cheaper place.

As for buying... Maybe in a couple years. Doesn't seem like the right time for me. I'll just keeping saving for a bigger down payment.

I could see buying now if you found a place to live for the long term that you like. There is rarely a bad time to do that.

I wouldn't buy as a short term investment or get a 1 bedroom if a 2 bedroom might be needed in a couple of years.

Looking at what is happening in Queens and North Jersey, it is hard to imagine Manhattan and Brooklyn prices continuing to rise.

All the new construction started during the boom years still isn't complete, so there will be a continuous influx of supply coming onto the market at a time when demand is dropping and borrowing is getting more difficult.

And if Manhattan and Brooklyn prices keep going up, there is always Queens and North Jersey.

Posted by: guest at May 8, 2008 2:15 PM

"I'll just keeping saving for a bigger down payment."

How's the interest on that $75 coming along???

Posted by: guest at May 8, 2008 2:18 PM

2.02 - rents in NYC have not skyrocketed in 100 years, alwasy just a steady slow upward trend. No reason to expect they suddenly will now.

Posted by: guest at May 8, 2008 2:21 PM

lol, the ROI on the 95K is ok 2:18.

Posted by: guest at May 8, 2008 2:22 PM

Renting vs buying

One thing no one seems to mention is how much easier getting divorced is when you rent.

Posted by: guest at May 8, 2008 2:34 PM

Who gets married in this day and age??

You people are so provincial.

Posted by: guest at May 8, 2008 2:39 PM

Not just getting divorced, 2:34. Moving to a new city, taking a dream job overseas, etc. are all much easier when you're only bound to your home for a year at a time.

As I said above, it's a different mindset.

Posted by: guest at May 8, 2008 2:39 PM

Here you want to see an idiotic comment look at 1:45Pm - perfect example of one-dimensional thinking and someone who knows very little about finance except for a few soundbites. (like buying is always better than renting)

"Anyone who pays that much to rent something is an idiot.

Period. "

If the value of your apartment drops 30% (when you have to sell) then renting (at almost any price) will be far far cheaper then owning.

Posted by: guest at May 8, 2008 2:40 PM

Buying is always better than renting.

Long term.

Posted by: guest at May 8, 2008 2:46 PM

Actually I think 2:34 had it right - and the real question is - who can get divorced in this day and age - if you are a property owner

Posted by: guest at May 8, 2008 2:47 PM

Really 2:46 - You think if you bought a house in the Bronx in 1957 and sold it in 1977 - 20 years=long term - adjusted for inflation you think you would have been better off?

Nothing is "always" and whenever everyone believes it is - buy the other-side

Posted by: guest at May 8, 2008 2:51 PM

There's that "desperation and fear" again, Dave...

Posted by: guest at May 8, 2008 2:53 PM

There's nothing wrong with renting, especially if you're young.
I'd love to own something someday, and fully anticipate on doing so.
I'm 24 and work in Finance, and have enough money saved to easily plunk down 20% on a starter studio/1 bedroom co-op in Brooklyn.
However, my rent is only 1,000 dollars a month for prime northside williamsburg, where I greatly enjoy my quality of life. I've looked at apartments i can afford, and it would honestly be a step down as far as ameneties and comfort. Why would I buy something for the sake of buying? Bragging rights on Brownstoner, so i can call people bitter renters?
I'm not about to risk timing the market right now, where I can get a safe return on low risk investments as I work slowly towards something I would stay in long-term.

What is so wrong with that? I mean, if I was 15 years younger and my parents gave me the downpayment for my UWS apt which i sold for a 2 million dollar profit, I could also own a brownstone in Park Slope. But for many, it's not just feasible.

Posted by: guest at May 8, 2008 2:55 PM

I hear more desperation and fear in 2:51 actually.

Dave already owns a million dollar plus, asset 2:53.

What do you own besides a pair or two of beat up pumas?

Posted by: guest at May 8, 2008 2:55 PM

a 1000 sf apt on the northside of wburg must be a real shithole.

the neighborhood sure is.

Posted by: guest at May 8, 2008 2:57 PM

Dave,

As I'm sure you know, the market is a leading indicator, so the time to short those was last year -- as a quick check proves:

IYR, 86 last year, 68 today
RWX, 70 last year, 56 today
XHB, 36 last year, 22 today

They might still go lower, so I wouldn't buy them, but the easy money has already been made on the shorts.

Cheers.

Posted by: guest at May 8, 2008 2:59 PM

2:57,

No worse than co-ops in prospect heights and park slope i was looking at.

i mean, get more turned on by my brokerage account/savings account balance then crown moldings.....but that's just me.

Posted by: guest at May 8, 2008 3:03 PM

You're not very good at the whole "reading" thing, are you 2:57?

Posted by: guest at May 8, 2008 3:03 PM

dave sounds like you know about as much about the market as you do real estate

Posted by: guest at May 8, 2008 3:10 PM

2:55 no fear or desperation - it is simply true - virtually nothing is an "always" in investing and people who think it is generally get burned or are very lucky.

I dont know what Dave has - but my 1.4M in cash and 5M in other investable assets makes me confident that being conservative and not assuming any absolutes is the way to go

Posted by: guest at May 8, 2008 3:14 PM

"i mean, get more turned on by my brokerage account/savings account balance then crown moldings.....but that's just me."

I get more turned on by having both.

Posted by: guest at May 8, 2008 3:18 PM

3:14 = biggest liar of the day

Posted by: guest at May 8, 2008 3:18 PM

3:18 - Believe that if it makes you feel better

Posted by: guest at May 8, 2008 3:22 PM

3:18 (1)

Well some of us are not in the position to have our cake and eat it too at this point in our lives (yet)

Posted by: guest at May 8, 2008 3:28 PM

Thank god people in Park Slope are so fiscally responsible, and don't buy $15 dollar cocktails so they can afford to be homeowners.

I don't want to have to start seeing strollers at Milk and Honey on a Saturday night!!

Posted by: guest at May 8, 2008 3:31 PM

I prefer eating overpriced thai food.
followed by 3 dollar miller high lifes and strolling home!!

Posted by: guest at May 8, 2008 3:43 PM

Personally I couldnt give a ---- about crown moldings - I prefer being outside (@ home) in a nice garden or roofdeck poping a vicodin, drinking some Rolling Rocks and smoking some weed - with Baseball playing on the radio......now thats what $ is all about

Posted by: guest at May 8, 2008 3:59 PM

overpriced and thai should never be strung together in the same sentence...

Posted by: guest at May 8, 2008 4:12 PM

MHL is so superior to PBR.

Posted by: guest at May 8, 2008 4:31 PM

Dave i dont think that you understand how diff the stock market and real eatste are. Stocks trade much faster then real estate. The homebuilders have already priced in tough times over the next couple of years and the valaations are cheap so shorting them just because you think home prices will come down more would not work unless you short one that is going under which is a hard bet to make. The easy money was already made shorting the homebuilders so i dont know why you are suggesting if people are bearish of real estate they short them. Its the most foolish trade I have heard all day

Posted by: guest at May 8, 2008 4:35 PM

I don't care about crown moldings - but I do love a nice vicodin, a cold rolling rock, and a joint - in a nice garden or roof deck - ahh $$$$

Posted by: guest at May 8, 2008 4:39 PM

The What is dead to me.

Posted by: guest at May 8, 2008 4:58 PM

I hate New Jersey.

All of it.

Posted by: guest at May 8, 2008 5:34 PM

And you have to live in New Jersey.

Sounds horrible, either way.

Posted by: guest at May 8, 2008 5:49 PM

Who's this Jerri character?

He sounds fun.

Posted by: guest at May 8, 2008 5:54 PM

Sorry Dave...I love you, but PA is basically a cesspool. Philly is ok, but the rest...no thank you. They don't know how to drive, they'll slap up a Walmart on a historic monument and the roads haven't been repaved since 1968.

And don't even get me started on the people...

Posted by: guest at May 8, 2008 5:57 PM

I love Center City.

;-)

Posted by: guest at May 8, 2008 7:26 PM