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December 22, 2008
to buy or not to buy...
I'm struggling w the decision of whether or not to move forward with purchasing a home & am seeking advice - we've been looking for a house for about a year now & recently found a house in a good location & put in a low bid which suprisingly was accepted. We really like the location & love that the monthly payment (after the tax deduction for mortgage interest) would be less than we're currently paying in rent, but (and this is a big but for me)...I don't love the house. Unfortunately the homes I love (the lime/brownstone w the original detail in a neighborhood that is somewhat close to the park) are all pretty far out of our price range. So, my quandry - do we purchase a house that I'm feeling lukewarm about or wait (months/years?) until we can afford the house I love? It may seem silly/petty, but I would really like to *love* my house & be really excited about purchasing it. For what it's worth (if it's not obvious already) I'm a first-time home buyer.
Comments
It's great that you love the location. The answer all depends on you, but I can tell you that I and everyone else I know bought some kind of just OK "starter" house or apt, which then doubled in value in five years, and sold it to buy something they actually like. This seems like a good time to buy, especially if buying is cheaper than renting.
Curious what you don't love about it, and if you might be able to find something you love in the same location in your price range.
Posted by: mopar at December 22, 2008 11:11 PM
I agree with Mopar however...in this market you may lose value on your home for some time to come before things *normalize* again. That said, you may have to live in the home a while before it gains any significant value making it possible to sell and upgrade. You should be planning long term. You can wait a little longer and see where the bottom is which would perhaps make the home you really want more affordable.
We waited a long time for our first home so it was important to us that I bought what we wanted (a historical brown/lime or brick townhouse). Since we couldn't afford to do that in the neighborhoods we really liked in Brooklyn we decided to make the hop over to Jersey City where we could get just that for the price we could easily afford. I am not suggesting this is what you should do. What I am suggesting is that you look at your priority list. Is it neighborhood or are you open to more fringe areas? School district? Type of home? What is it that makes you want buy a home and plant roots? What's your deal-breaker?
Posted by: TownhouseLady at December 22, 2008 11:48 PM
Look, you love the location so buy it. You can always move up or come to love that house if that's how it pans out financially. At least it's cheaper than renting.
I was thinking of Brooklyn Heights or Bay Ridge when we were looking in 96 but we couldn't afford it. I'm way the heck out in Mill Basin and I don't *love* this house but I like it. You make concessions.
Posted by: pattunia at December 23, 2008 3:52 AM
Given the financial environment, I'd never buy a house I didn't love. Not only may you suffer a significant short-term loss, you'll be in a house you don't like. That may get you pissed off later on. Unless you plan to do renovations to address what you don't like about it. There will only be more houses for sale at better prices in 2009. Wait for one that turns you on,
Would you marry someone cuz you like the neighborhood s/he lives in?
Posted by: denton at December 23, 2008 8:36 AM
Since it's not a financial decision but one based on loving a house or not it does become more difficult. No one here can tell you whether or not prices have bottomed nor when they will. You need to be prepared to live in the house for more than just a few years to recoup the added expenses of closing and anything else you may do to upgrade the house.
If the homes that you like are only 10-20% above your price then MAYBE they will fall further and you could wait it out and be much happier. If you don't need to move right now and you are comfortable renting then I'd at least stick it out a bit longer. Although we have seen a dramatic uptick in mortgage activity, house prices ARE still falling and sellers are accepting low ball offers, as was your experience. Thos two divergent trends may actually continue for a bit longer.
There are noclear right or wrong answers in this environment and anyone that says categorically that there are should be taken with a grain of salt.
Posted by: daveinbedstuy at December 23, 2008 8:47 AM
I know this will sound a bit cooky, but I believe that you have to love your house. There will be many times when that love will be tested over and over, and if you don't love your house enough, you will get very frustrated very quickly.
If this house needs any work at all, or even if you think it will not, believe me, every step will take 10 times longer and more effort (and money) than expected.
I have been in my new place for only 4 months, and I have had major problems (many) with heat, boiler, hot water, insulation, bad advice from so-called professionals, sewage backup from clog in main drain, trash pickup problems, insurance issues, etc, etc, etc. We want to renovate but can't until the SLOW process with architect and DOB move forward. It is a struggle. BUT, I LOVE this house, and no matter what happens, I will still love it! So it is all worth it.
In your case, you have to think whether you can at least grow to love your house or not...
Posted by: townhouser at December 23, 2008 9:45 AM
i say - buy, no question. location is so important. if you love the location you can make the house your own. you can add details - trust me many people do. if you have a workable layout, just renovate it to your liking. when we were house hunting we found a house that i loved - details galor, one of the most beautiful houses i have seen to this day! well, the location i did not love. so we went with the house in the location i love and the house that was fine, good. our home did not have alot of details - they were not taken out, the area/architect that built the homes on our block just didn't have the details of the homes of the other block. we added details - chair rails, crown mouldings etc..to make the house our own. after all of the work - i started to love the house. i could not come home to great house in a area that i did not love.
go for it!
Posted by: bkny at December 23, 2008 10:06 AM
I was certainly not in love with my house... a little worried about it, and nervous, but wanted to live in the neighborhood. It took us a good year to settle in and feel like it is ours (and suffer some renovations) but now I LOVE my home. Having rented for so long, I think I just couldn't get my head around actually owning something. It isn't perfect, and our reno was done by shit-handed asshats, but it's our home and we love it.
Posted by: mshook at December 23, 2008 10:38 AM
I don't want to sound too "new agey" but houses sorta find you... let's say you kinda like this house and you decide to move forward with the purchase. if the house wasn't meant to be, something will undoubtedly happen that will make it VERY difficult to but said house(of course am not wishing this on you)
I think if you can stand paying rent for a few months keep actively looking - things open up and I wouldn't be surprised if the next house you do find is the one you love...
Then again I am in a house that I wasn't up at night dreaming about when I was moving ahead with the purchase, but then I came to appreciate the quirks and the cool qualities of my house - it's a toss up that none of us can really weigh too much in but wish you luck whichever decision you do make.
Posted by: gemini10 at December 23, 2008 10:40 AM
So the house is near the park but doesn't have original details?
In my experience, original details don't affect the price one way or another. But then again, I am not looking in places like Park Slope. I tend to buy places with original kitchens and baths and original details. What I had to compromise on for price was apt vs. house and one bedroom vs. two bedrooms.
It's true that some detail can be added back. Moldings, for example, are easy to add and not horribly expensive. Old-fashioned bathroom cabinets.
Posted by: mopar at December 23, 2008 11:46 AM
Since it's unlikely you will ever make the big bucks previous home owners made in the short haul, why live in a house you don't love. In this market you can wait until prices fall even lower and buy another house you don't love, but at least it will be easier to get your money back when you do find one you love and want to upgrade. Keep in mind all the taxes, closing costs, renovations, etc. so there may not be a big difference even if you sell it for a few hundred thousand dollars more. Of course interest rates are great right now, so you have to consider that.
If you do decide to buy the house and want original detail, shop around for original material. It can be cheaper and of course greener.
I lived in a house I hated and it never became a home. I finally found one on the Hudson and we are renovating it now, all from salvaged material and it will be a home. Good luck.
Posted by: Iknow at December 23, 2008 12:50 PM
A good location and the fact it's affordable to you is really important. If not most important. Especially when we're looking at a crisis that was caused largely because people bought houses that were out-of-reach, feeling entitled to having their dream house and never settling for less.
I totally understand what others are saying about loving the house, but people seem to be missing this part of your post:
"Unfortunately the homes I love (the lime/brownstone w the original detail in a neighborhood that is somewhat close to the park) are all pretty far out of our price range."
You're saying your dream houses are way out of your price range. It is what it is. I think it sounds like you found a great situation with this house. Everybody gets a little freaked out before closing on a house. Work on the house over the years and make it special. Congrats and good luck.
Posted by: traditionalmod at December 23, 2008 2:52 PM
What is it about the house that you don't "love" at the moment? An awful lot can be done to a house to turn it into your own.
If it's a specific feature that you really want (eg a garage, high ceilings) that can never be a part of this house then walk away. Otherwise, use your imagination and overcome the issue.
Posted by: the chicken at December 23, 2008 2:57 PM
If this location in general is in your price range, you can find a place located there with the original details you love at a price you can afford.
Posted by: mopar at December 23, 2008 2:59 PM
"...I and everyone else I know bought some kind of just OK "starter" house or apt, which then doubled in value in five years, and sold it to buy something they actually like."
Bad basis. The housing Mad[e ]off[ with your money] model has collapsed. We're in the downside of the cycle and it is going to get brutal.
Go ahead only if the price is half off peak comps. You might not love it but you should still come out ahead (or at least even) in resale or rent-out. But if you're still undecisive, err on the side of caution and wait. Good thinks come to those who do.
***Bid half off peak comps***
Posted by: Brownstones Half Off at December 23, 2008 3:28 PM
I agree with everyone that says don't buy a house you don't love right now. Why would you? time is on your side - the crash isn't even half over. it will get way worse before it gets better.
Posted by: gkw at December 23, 2008 3:50 PM
I recommend that you buy. If the mortgage payment is the same as your current rent, you'll get the benefit of the tax deduction that you don't have now. Why waste your money on rent? Also, having lived in Park Slope for 40 years, it has been my experience that the high end houses (park block, limestone/brownstone with original details, etc.) don't usually tank when the market gets bad, they just don't go on the market. The sellers of these homes just wait if they can. So... I would buy now if you think you are getting a good deal and wait for appreciation. Then buy the home you love which actually may turn out to be this one. That happens a lot.
Posted by: broker at December 23, 2008 4:13 PM
I wouldn't wait until the price is half off peak comps, but I agree with Townhouse Lady you should assume the worst and figure the price on any place you buy won't come back for ten years. Just in case. So make sure it's something you could live with for a while.
Posted by: mopar at December 23, 2008 4:20 PM
One more thing: Rents are falling too. Don't look at listings for evidence. Like sales listings, they're just asks. Look at unemployment and the condo-to-rental trend. Rents will have to give. Consider negotiating on a sweet brand new condo-gone-rental if your current rent is that high.
"Why waste your money on rent?"
Why waste your money on depreciation, interest, maintenance, fees, etc.? Do you waste money when you rent a car? No, you get a car for a few days without strings attached. With a rental, you get shelter. It's not like you're literally throwing your money in the trash can. Not in a declining market like this. Those who were in Madoff probably scoffed at people who had their money in a savings account. Why be the last sucker?
"...having lived in Park Slope for 40 years, it has been my experience that the high end houses (park block, limestone/brownstone with original details, etc.) don't usually tank when the market gets bad, they just don't go on the market."
40 years too few. You haven't experienced an economic depression. You have no idea. Broker.
***Bid half off peak comps***
Posted by: Brownstones Half Off at December 23, 2008 6:13 PM
"the price on any place you buy won't come back for ten years"
Could be far more than ten years. Think about it. When was the last time we had a run-up of +200% (a tripling) in value? Do you really think you'll see 2008 prices in 2008 dollars in your lifetime? Nominally, yes. Really, most likely not. Don't pay anywhere near the top of this market.
Please do post a follow up when you've reached your final decision. We'd like to know how you've made out. Good luck.
***Bid half off peak comps***
Posted by: Brownstones Half Off at December 23, 2008 6:19 PM
So glad to have found this post. I'm in a similar situation. Like a place, don't love it.
Here's my approach, for what it's worth. I'm bidding very low. If I get my price, I know I'm going to love the deal. If it all goes through and I move in, I'm guessing that any "shortcomings" I feel with the place can be counterbalanced by my saying, "But I got it for a song!" And I do like the place very much.
And in time, if I outgrow it, I'll move...
Posted by: zuzubird at December 23, 2008 8:46 PM
OP here. thanks all for your wonderful feedback. To provide a bit more info, I'd really only want to live in this house max 4-5 yrs before I 'upgraded' to a home I really loved. If the market continues to tank, then clearly not a smart move. Crystal ball question: does anyone think it'll be possible to purchase a brownstone w details in PH, WT or South Slope in the near future for under/around a mill? Or is there just too much demand for this kind of place to ever see that happen?
Posted by: be2bk at December 24, 2008 12:03 AM
"brownstone half off" you don't waste your money on interest. You get to right it off, that is what is so good about owning. I own four buildings in the neighborhood and would not rent if I did not have to.
Posted by: broker at December 24, 2008 11:22 AM
OP, it's about where the details were installed in the first place. The kinds of details you covet in the brownstones and limestones near the park in Park Slope are there because the folks who built the houses were rich, some of the most wealthy in NYC at the turn of the century. Whereas WT was a longtime civil servant (cops, firemen) neighborhood and South Slope working class until pretty recently.
The houses totally have potential in WT and South Slope and the new owners are making the houses in WT and South Slope very charming -- but they're doing it by renovating and adding and changing materials and details. Which is what everyone was recommending you do, too.
Posted by: traditionalmod at December 24, 2008 1:07 PM
In other words broker, you have borrowed a ton of money to "own" four properties in the neighbourhood?
Let me ask you this: Would you still have bought those houses if the price was ten times as much? Almost certainly not. How about two times? Very likely not. So there must be a price threshold that you deem reasonable. ie there is a time to buy and a time to rent.
Posted by: the chicken at December 24, 2008 2:36 PM
traditionalmod, there's plenty of streets of smaller brownstones w original detail in south slope & the limestones on Sherman St in WT are gorgeous. If I thought in the future I could find one of those for around a mill, I'd jump on it.
Posted by: be2bk at December 24, 2008 3:28 PM
Hi-
Having just moved from an absolutely gorgeous house far from the park and friends to a major fixer upper with few details (orig or otherwise, and many problems) in a wonderful location much nearer the Park, I have to chime in that location makes much more difference than I knew. It's going to take us years to make this place gorgeous, 'cuz it's not, but we are so happy to be where we are. For us, location turns out to be a big part of loving a house. And although it's ugly inside, it has good bones, and we will make it sing in time.
That said, if you really dislike the house, will hate going in the front door every night, then wait til you find something you love that you can afford. It's going to be your home after all. (Alternatively, can you imagine fixing up a couple of rooms to start, eg, the bedroom and living room, so at least two of the rooms that you spend a lot of time in make you happy?)
Part of what has really helped us is working with a great architect and developing a long-term vision that we love and are excited by, and of course being able to walk to the Park and friends.
Good luck - it's great to own, and the tax return will be a delight. Don't give up - we've always been able to find the right house at the right price, and you either have or can too. The poster who said houses sort of find you I think has it right, as well as are those who have pointed out that in 5 years on, you'll be able to move if you want, with the equity and credit record from owning this house. (Besides rates in January may be fantastic, and good cash flow is nothing to sneeze at.) Happy 2009!
Posted by: riis10 at December 25, 2008 12:11 PM
traditionalmod,
There's no doubt that individually architect-designed houses on the name park blocks of Park Slope have finer details than brownstones that weren't built for the very rich, but building standards (and lumber mill catalogues)in the late-19th--early 20th centuries were such that houses built for middle and working class people in the South Slope, Windsor Terrace, Sunset Park and (of course) our own Prospect-Lefferts Gardens, have details that appear very fine to modern eyes, even though they might have been mass-produced 100+years ago.
Posted by: Bob Marvin at December 25, 2008 12:39 PM
I'd wait. Inventory will have to go up for any number of reasons (mortgage defaults, layoffs, weaker euro and problems foreign buyers are having in their own countries, etc). Your choices will have to improve and it doesn't sound like this property is going to get snatched out from under you given the discount bid.
Also, why don't you find out what the property (or comparable properties) sold for between 2000-2003... I think that will be a decent benchmark for value because it seems pretty clear that the meteoric rise in property values since then was largely fueled by Monopoly money...
However, these datapoints don't seem important versus the sense I get that you simply arent enamored with the place.
Good luck either way!
Posted by: toddk7 at December 26, 2008 12:00 AM
Now is the time to invest!
Posted by: emomr at December 26, 2008 7:22 AM
If you don't like the house or you have bad vibes about it then back off. Don't worry about high home prices in other areas they will come down also and shortly. Don't listen to people that say prices in Carroll Gardens or Park Slope are not going to come down. Those people are just saying that because they are trying to protect their investments. Trust me prices go up when there are no "for sale" signs popping up. From what I see I see nothing but for sale signs popping up so be patient.
Posted by: hannible at December 26, 2008 12:14 PM
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