To buy or not to buy?

i don't think prices will go much lower than about 15%.

if you're in it for 5 years, i think you'll be just fine.

by 2010, i think we'll certainly see prices beginning to rise again.

can't go wrong with park slope.

Posted by: guest at January 10, 2008 5:52 PM

I agree 100% with above poster (5:52pm). That being said, I think it's mostly about how badly you really need to buy/move right now, and whether of not you love the house you mention. You say it's not your dream home, and that you wouldn't be heartbroken if you didn't get it. If I were lukewarm about the house, and if I wasn't in a hurry to move, then I'd wait. On the other hand, if you have to buy because you have to move now, I wouldn't worry about timing the market, and I would just try to get that 10% price cut. And I agree that Park Slope is a great investment. Good luck.

Posted by: guest at January 10, 2008 6:09 PM

If you can answer yes to the following questions, then you should buy now and feel good about it. And I also agree that Park Slope is a good place to buy in this uncertain market.

1. Can you afford the house payments, and continue to do so for the foreseeable future? The apartment purchase shouldn't make you "housepoor".

2. If the market does decline, are you okay about living in the new place for 7 or even 10 years, instead of 5 years? Eventually, the market should recover, so as long as you don't have to sell when the market is poor, it's fine.

3. (Optional) Is this a place you can sublet should you have to move immediately but be unable to sell? Some co-op boards have very strict rules about sublets which was a problem for many people who could not sell their places in the last downturn and could not rent them out. People with boards with looser rules were able to sublet for long periods of time, and hold off selling until the market recovered.

Posted by: guest at January 10, 2008 6:34 PM

5:52 here....

the other thing to note is that if prices do continue to fall modestly over the next few years, you'll be that much closer to a place you do love and perhaps want to spend many, many years in.

and it will only be lower in price as well.

so while you might take a small hit on the place you are buying now, you will also get a deal on a bigger, better place. so it all works out. in the end, park slope real estate is going to be a good bet, i'd say.

that's if you look at things in a glass half full kinda way.

Posted by: guest at January 10, 2008 7:30 PM

You're buying at the top. Might as well throw your money away.

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

Totally agree with 6:34. Park Slope isn't likely to take as big a hit as other, more recently gentrified neighborhoods.

That said, you could be stuck with an apartment worth less than you paid for it for 7-10 years. Yes, history won't necessarily repeat itself, but if you bought in '87-'89, you couldn't sell your average, nice, even really super-nice, P.S. 2-3 bdrm apartment for what you paid for it from '89 until '97. You'd still be trying to sell in it '96 for 25% less than you paid for it (I know, I was looking to buy then.) Though you didn't say if you were looking at a house or apartment - in the last downturn, houses held their value better than apartments.

Which doesn't mean you shouldn't buy - but you should take that "could we live here 7-10 years if we had to?" very seriously. And that doesn't mean it has to be your dream place (you can usually do a lot to make it much nicer to live in, despite some drawbacks - others, like lack of light, are sometimes unachangable), but it does mean it has to be big enough. Babies take up little room; kids have way more stuff as they grow to toddler age, and are you planning on another child in the forseeable future (you say this is the 'first')? If that's the case, and the new place isn't big enough to accomodate, I'd say you are better off renting 'til you find a place that is big enough for 7-10 years and nice enough that you can see staying that long - just in case you need to stay, even if you aren't currently planning on staying that long.

Rent a bigger place - it is cheaper to rent than to buy right now anyway - it isn't like you are saving on rent anymore by buying like one did a few years back. I'd only buy if I found something that could possibly work for 7-10 years, (meaning something nice enough and big enough), barring the unforseeable, in any market, because you can't time the market, you just can't.

Which also means they may not go any lower than they are now - you really can't time it. And when they start to go up, they go up fast. The ones I was looking at, at 25% off what people paid in the late 80's in late '96 started going up in '97 and by '98 were twice the price they were in '96. But in '96, if you looked at buying a 2-3 bdrm in P.S. from someone trying to sell for 25% less than they'd paid, you've have thought it wasn't a good investment - and you'd have been wrong, because you just can't time it. Like you, I was concerned about the market - so I got a large place, so it fit my 7-10 year horizon if prices stalled or dipped again. And I got a really nice place - because I figured it would be easier to sell in any market, even a bad one - it may dip like the others, but it will sell faster while others sit on the market. And if I ended up staying a long time, I'd still like it (which I did.) If you are worried about the market, you should buy something that will be seen by other buyers as desirable (you didn't say why it wasn't a perfect, dream home - whether it just lacked something you'd want, or whether it was a desirable apartment or house, generally, given what's available in the P.S. market.)

So, since you can't time the market, focus on size, and buy something big enough and nice enough for your growing family, or else rent something big enough and nice. Unless we are in a market where you save every month by buying the same size place you are renting, once you take the mortgage interest tax deduction into account, (and we're not in that market), then enough room and how nice a place it is to live are more important than owning right now.

And, if it is a coop you are looking at, the coop sublet issue is also real. If it's a big building, you can probably safely assume whatever policies in effect now will stay in effect (if the sponsor is out and they are mostly owner-occupied.) If it is a smaller, brownstone-type building, the sublet policies can change on the whim of the owners, even if the owners don't change.

Posted by: guest at January 10, 2008 8:58 PM

All you need to know is that it is all about price. If you can pay $700/square foot or less then buy the place and forget about price cuts to listing prices. There is big demand at the $700/square foot and less in Park Slope even in the current market environment. Everything I see that is at or below $700/square foot usually sell in the first weekend of an open house and for an obvious reason.

Posted by: guest at January 10, 2008 9:01 PM

5:52's (and 7:30's) comment that the glass is half full if prices decline because the price of bigger places will also decline doesn't really work here, unless you bought at a low. If you can't sell the current place for the cost of the outstanding mortgage, not only are you losing your original down payment, but you have no equity to put down on a larger place, even if the price is low. You are no better off than you'd be if you simply rented until the price of a bigger place became affordable.

That being said, as long as it is a place you are willing to stay in for a few (or 5) extra years, this isn't a problem. And I don't think it needs to be exceptionally large -- if it has 2 bedrooms, you can always have the kids sleep 2 or even 3 in a room for a while if need be. It's not forever, just until the market recovers. Hopefully the market will be fine and you won't have to worry about this, but as long as the worse case scenario is something you can live with (i.e., having kids share a room, being a bit crowded for a while) you can wait it out until the market recovers.

Posted by: guest at January 10, 2008 11:32 PM

Bottom Line, if you're buying becuase you need/want more space don't worry about timing the market, just find a place you like and do it.

Posted by: guest at January 11, 2008 10:55 AM

If you have only one child, and it's an infant (congratulations!) then you can stay in the place longer than 5 years if need be, even if it's not ideal for long term. It's a bigger dilemma for people when there's an older child or more than one child to consider. If the market slows to where you don't want to sell in 5 years, you can hang onto it. It's a nice position to be in. Just utilize outdoor spaces and the numerous cafes and coffeeshops available nearby if the place is small and feels cramped. Also think about getting a storage unit (there's one next to BAM) and use it as an off-site library room and storage room for the next few years. Which eases up the clutter in a smaller than ideal place. Good luck!

Also be sure to get an inspection and make sure there aren't any big surprise repairs or updates on the building coming up in the next 5 years that you as co-op owners will have to chip in and help pay for. If it's a co-op, that is.

Posted by: guest at January 11, 2008 12:45 PM

btw, just to address the thing about all property values except Park Slope dropping if there is a recession - the only way that can happen is if people move to the suburbs and give up on the city entirely, instead of buying in any area in Brooklyn other than Park Slope.

All studies and stats show young white professionals want to stay inside NYC. Those who move to the suburbs right now are people of other demographics. Those young white professionals might decide to rent not buy, but then rents go even higher. Which makes them want to buy. This isn't something one should bank on enough to run out and blow the bank buying a place at top dollar! But it's a major factor to why at least so far, knock on wood, NYC has hung in there when the rest of the country has sadly had a tough go of things.

Posted by: guest at January 11, 2008 1:29 PM

I was sure that I was buying at the top of the market in September 2005 but I was just too tired of renting to wait for the long-awaited housing slump that everyone was predicting. And, thankfully, Brooklyn properties continued to appreciate despite all the bad national stats. Prices in good nabes will stay high as long as Wall Street stays strong and unemployment low in NYC.

The national foreclosure stats will probably increase for another 6-9 months (based on the resets of 2/28 subprime loans) but everyone in the industry knows that, so I think that bad news is priced into the market. As long as the economy doesn't totally tank, you can expect prices to go up despite national trends.

I think your own job security is a crucial factor. Will you be able to weather the storm if things go south? Obviously, the worst case scenario is that you have to sell your newly bought house in a down market because you can't make your payments.

Posted by: guest at January 11, 2008 2:09 PM

have you done the after tax calculations with the deductability of mortgage interest and real estate taxes???

Posted by: guest at January 11, 2008 4:27 PM

OP here - Thank you all once again. Your comments are very balanced and helpful.

4:27- we have indeed done the calc. We can carry the place on a single income (we both currently work) so I think we are in good shape to brace against a downturn. It's more that we're worried about what would happen if we want to move out when the market is still down (grow out of the place, leave the area, etc.).

Anyway, I think at the end of the day, our gut instinct is to try to move forward but be conservative about price and try to keep the emotions out of this. We feel that we have given a fair/generous offer but one that is at least slightly protective against a downturn (about 7% less than ask). We hope it is accepted.

Posted by: guest at January 11, 2008 5:49 PM