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March 11, 2009
To Buy or Not to Buy
We rent a two-bedroom in Park Slope for over $3,000/month. We have $120K sitting in the bank ready for a down payment and could easily make a payment of up to $4,500/month. We could afford to buy an apartment, but we are in no rush as we live comfortably now. When we do buy, we are looking for a 2 bedroom w/ outdoor space. What are your thoughts about the market - should we hold off and sit tight until the market falls further, or should we jump in now? Is there a general sense it still has up to 30% to fall?
Comments
I would definitly buy. There is a very good chance of some serious inflation around the corner. This will lead to your savings being worth much less. I highly doubt park slope in particular will see much of a fall...however, if your looking in east flatbush it would be a different story.
The good news is that I don't see the inflation hitting us for at least another 6 months...so it gives you time to look and find a place you really like.
The govt. is printing more cash then ever. Once this hits the major population, the value of the mighty dollar will fall.
Posted by: landlord at March 10, 2009 6:08 PM
Ah, do you really think anyone can give you the definitive answer on an anonymous blog? Warren Buffet can't get it right, I'm sure we can.
Half the answers will be buy now, the other half will be wait for the next 30% decline.
Posted by: denton at March 10, 2009 6:32 PM
It's settled then....buy half now and the other half after the 30% decline....
Posted by: raphael9 at March 10, 2009 7:06 PM
I agree with the previous posters....
... also, now could be good, prices have already come down in the 10-20% range (depending on the building). Will they come down another 30%? Who knows? As I like to ask "30% off what? Prices now? Prices this time last year?" We could be closer to the "30% market" drop than people realize. We could could have another 30% off today's prices to go. No one knows.
If you have the funds, look. If you find the place you love at the price your are comfortable with, buy. That may take a week it may take a year. Get out there and start the process. You'll have a better sense being in the mix than watching from the side.
Posted by: christopher at March 10, 2009 7:09 PM
You buy now you will become one of the suckers these sleezeball real estate agents are looking for. You don't want to be called a loser like all these homebuyers that are distressed and underwater? Do you?
Posted by: hannible at March 10, 2009 7:23 PM
If buildings are starting to ask for 20% down, you'll probably need more than 120K for the type of place you are looking for. Though some condos are still permitting 10%, so you may be fine. Look, if you are staying in the place for only a few years, dont buy if you are looking for any positive return. If you dont care about the return or are staying put for more than 5 years, then go for it.
Posted by: saminthehood at March 10, 2009 10:20 PM
saminthehood has it right. 120k down in NYC will not get you a better place in a desirable neighborhood.
An established co-op will certainly not take less than 20 pct., plus they'll want to see a year of maint/mortgage in cash. Let's say a decent 2-br co-op (parlor floor of brownstone co-op) costs 800k. You'd need 160k for the dp, plus 50k in maint/mortgage. So you really will need 210k, plus some left over so you can sleep at night.
You MIGHT find a condo that would take 10%, but i'd lay off the bklyn condo market for few years until it shakes out.
No one can say if the market will fall another 30pct. No harm in looking but I think you'll be disappointed.
Posted by: Bolder at March 10, 2009 11:39 PM
Kepp looking until you find something that you really like and that you can afford. Prices may come down but interest rates may go up. No one here can give you a "correct" answer. Only do what you feel financially comfortable with. If both of your credit ratings are well into the 700s you may be able to get 90% financing but many buildings may not allow it.
Posted by: daveinbedstuy at March 11, 2009 8:14 AM
I think it definitely pays to look now even if you don't buy so that you have a much deeper understanding of what's out there. Plus you can get a better estimate of what your real carrying costs would be--the mortgage in addition to taxes, maintenance and heating, for example.
Posted by: tinarina at March 11, 2009 9:59 AM
DIBS has the right advice. I will add one thought -- if you are looking to buy more or less the same set up that you currently rent, you may be looking at a shorter time horizon for resale if you think in the future you may want to trade up to a larger apartment or house, if that is in your future (starting a family, setting up a home office, there are many reasons why you may want to expand later). If you are looking anyway, you may want to see whether this is the right time for you to buy something you may want to hold onto longer, perhaps a 2-family house in S. Slope, Greenwood, WT, Bed-Stuy, Crown Heights, etc. You will be guaranteed outdoor space, will be less exposed to short-term market fluctuations, and will have more options for putting 10% down than if you limit yourself to coops and condos. And, as DIBS noted, rates are quite low right now.
We bought our "starter home" in 1996, a 2 BR co-op with a small garden in a prime Slope brownstone. While we could never have bought our house had we not bought when we did, we kick ourselves for not having reached further for a small house in 1996. I am not saying this is the right route for you, only that you should look into your future a little bit, think about it and see whether it fits your long term plans.
Posted by: slopefarm at March 11, 2009 9:59 AM
we're thinking of selling our 2br, 1-1/2ba condo in ditmas (fiske terrace, to be exact) if you're interested. it's in a victorian style house - 1 of 2 condos. we're on the bottom floor, separate owner on top. front and back yard with wood deck and garden.
been posting our place on craigslist, i'll put it up again this week.
Posted by: ditmaspark at March 11, 2009 10:05 AM
Can I just throw my 2 cents in... since you're looking in the range of probably $700,000 or more.
Is it just me, or is it ridiculous that a 2-bedroom apartment with a little outdoor space is the best one can hope for. Seriously?
This city has gone squishy in the head. A couple DEEP in the 6-figure territory for income is looking for a TWO-BED with a Patio?!!!? And the market says that's appropriate.
I'll probably never be able to afford to buy in this city, but I'm not sure if I'd want to. To be house-poor and live in a space most college-students have in any other city... man o' man.
Screw "location, location, location" -- Brooklyn and New York City in general is losing this battle. New York is only awesome if you can afford it. And if I have a household income of $200k and still have to worry about $$ because of my house... fuck that noise.
Posted by: tybur6 at March 11, 2009 10:10 AM
I will offer my usual advice. There is a lot of potential downside to buying right now. There is very little potential upside unless you are actually going to buy and hold for a very long time, which relatively few people do. With very few exceptions, renters who have down payment savings would be well advised to wait at least a year, maybe two, before jumping in to the market.
As for interest rates, if they go up prices will go down even further to compensate, and your down payment will be worth even more.
As for inflation, the asset you want to buy is housing, and that is starting a deflationary period. Other assets might appreciate (eg stocks) but housing in the Brooklyn market will continue to depreciate for some time.
Bottom line: You are in a very strong position to be patient and sit on the sidelines while prices fall. Don't squander this opportunity by jumping in too quickly. Lack of patience in a falling market is a classic mistake.
Posted by: lechacal at March 11, 2009 10:11 AM
25% down, 6 month mortgage payments in the bank, and if 60% of the building isn't already sold, getting the bank to cooperate could be difficult
Posted by: binnyG at March 11, 2009 10:16 AM
Not sure how long you've been on this site but if you look at the archives, you'll see the majority of comments were saying prices were going to come to come down in almost every single post (even for years while it was still skyrocketing). Eventually they were right as all markets are cyclical but no points given for timely calling of the fall.
In other words, take any advice you get on this board with a heavy load of salt. No one will know when we hit the bottom. Once we know, it will be far too late to take advantage of it.
Posted by: Mrs. Limestone at March 11, 2009 10:16 AM
Why look for an apartment when for the same money you can get a house ? Frankly I dont get the maintance fee business. I'd rather "maintain" my house and now exactly where my money is going (into equity). Im not sure if you are a young couple or not. If you are planning to have children, believe me you will outgrow that second bedroom as soon as the child starts to walk - wait until the grandparents and other guests start to spend the weekend with you...a house is the way to go. With 120 thousand you can easily get a place in Crown Heights North and have some money left over for renovations. I would look closer to Franklin. There are some beautiful 4 storey houses there that are in the 800,000+ range. And this area is changing fast. Park Slope is great in my opinion, IF you managed to buy 10-15 years ago. If I were to buy in Park Slope now, frankly I'd feel like a "sucker" - that is someone else would have made alot of money off of me ! If youre in for the medium term CHN is the way to go.
Posted by: crownheights2007 at March 11, 2009 10:19 AM
As someone who has been following the market VERY closely for years now (including studying the past very carefully when we first bought years ago), I urge you to take your time in buying. If you have a comfortable affordable rental, and don't need to move, time is on your side. That does not mean you should not be looking - we basically have looked continuously since we first started thinking of buying in 2000 and even after that since I became interested in the market and knew our first place was a "starter" home and that eventually we'd want more space. The advantage is that I became extremely familiar with the market which is always very important to be an informed buyer. Prices now, while starting to come down, are still very high by historical metrics, and there is nearly unanimous consensus that they have significantly farther to go down to correct (the debate is the exact % of declines, but pretty much everyone concedes they will fall more - some say 15% more, some more draconian think up to 50% from peak, which is not crazy when you factor in a 300% rise in the last 10 years). That said, you may get lucky and find a motivated seller who does not want to wait 6-months to a year for this to happen, and may cut you a big discount (some say this decline will ultimately be steeper than previous ones). And, if you find the home of your dreams, and you can afford it, and - crucially - plan to stay there for a LONG time, go for it. But I would especially caution against buying a starter place now that you will outgrow in 5 years or so (which is what happened to us with our first apartment) since it could decline in value from here forward and then take a long time to climb back up. I myself can afford to buy but am also renting a very nice, economical apt and feel absolutely no rush - I am certain my patience will be rewarded and we'll get a much better deal - but I am constantly looking out for what's out there, to keep informed and possibly spot a deal...
Posted by: Miss Muffett at March 11, 2009 10:21 AM
I'd get a cheaper rental, save more and hold. If you're paying $3K a month your rental is probably nicer than what $4500 a month would cost you to own -- however, you're already at the high end of the current rental market for 2-bedrooms, so why not economize there?
Posted by: Heather at March 11, 2009 10:23 AM
It is currently common wisdom among many people in the Brooklyn market that one who is able to buy should do so regardless of where we may be in the market cycle. I find this view to be held largely by those who already own.
I believe that in the next few years it will become common wisdom that one who is able to buy should wait. It is then that the greatest buying opportunities will present themselves.
Posted by: lechacal at March 11, 2009 10:24 AM
Mrs. Limestone - I must take issue with your comment that it will be too late to act when we hit bottom. Real estate moves slowly and so what you say is just not really true. I mean, yes, perhaps you cannot time the bottom exactly, nor should you aim to, but missing out and having to deal with galloping price increases is really the least probably scenario anytime soon. Even the rosy forecasts that predict a relatively short-lived downturn concede that what follows will be very modest growth, nothing like what we witnessed in the previous decade. Those who predicted price declines earlier were calling out that the emperor had no clothes and were mocked, but ultimately were proven correct. We are now in a totally new environment, and I think it is irresponsible to scare people into "missing out" and buying precipitously.
Posted by: Miss Muffett at March 11, 2009 10:26 AM
Miss Muffett, if you had bought a 4 storey house in 2002 and sold it in 2007, as my cousins did, you would have walked away with 500,000 USD. What are you waiting for ? Laughter...if you find something you love, and know it is your home, negotiate hard and make an offer. Dont wait. Just pls dont go for an apt. with that kinda of money Get a house. You will regret it one day.
Posted by: crownheights2007 at March 11, 2009 10:28 AM
Miss Muffett;
Please take a deep breath. Reconsider the use of paragraph spacing in your posts.
To the OP: please take the LONG message without paragraph spacing as an indication of the mental "investment" someone has in their position.
Posted by: benson at March 11, 2009 10:33 AM
Benson - Money is tight all around now, and contrary to your suggestion, I'm a civic-minded person. I would hate to see this person make a big financial mistake.
I'm not saying no one should buy now, so this is not about my "investment in my position". To someone who finds the house of their dreams, at a price they can really afford, where they can stay for a very long time, I would say: sure, take the plunge if the property is unique and you love it. It will almost certainly go down in value (perhaps a lot) in the short-term but if you stay there for 20 years, it will also likely come back up.
But buying a 2 BR today - unless they want to stay there for a very long time, which I guess is possible if you don't have kids, or like smallish spaces - seems unwise, verging on foolish, unless you find a deeply discounted property.
Posted by: Miss Muffett at March 11, 2009 10:39 AM
my theory on this:
prices fall in different areas on different pace.
Prices in bad areas fell quickly because there is a lot of people used strange assumptions when took loans. A lot of blue callar jobs lost, people in bad areas did not have savings/401Ks to fall back. There is a lot of foreclosures, which drive prices very rapidly, etc. On the other side "good areas" do not have foreclosures, which drive prices down. A lot of houses in good areas do not have mortgages and owners not in rush to sell house in discounted price. So there is obviously a gap widened between good and bad areas as prices fall.
The question is: is this gap realistic? Slowly the gap will narrow to get in line with income difference. In other words prices in bad areas fell sharply, but quickly. Prices in good areas will keep falling slowly. So I would expect Park Slope prices to fall.
PS I own house in BayRidge so it would be natural for me to give opposite advice - buy, save the prices, save my equity.
Posted by: bobjohn at March 11, 2009 10:44 AM
And CrownHeights07 - I agree with your 2002-2007 numbers, but if your cousin had waited til 2009 to sell, the profit would have been much less (and probably even less in 2010). What am I waiting for? The right house, at the right price, and those prices indeed were back a few years, and I am convinced we are heading back there.
Posted by: Miss Muffett at March 11, 2009 10:44 AM
If you are up for exploring other neighborhoods, be aware that the brokers have not hit in full force in some of these other neighborhoods. We bought in Windsor Terrace last summer, off Craig's List and significantly below market. The house was on the market for 5 hours, there was a bidding war (which we lost) but the seller liked us and felt the house should go to us. This happens still. I know of a handful of houses over here that have been sold recently on Craig's List or by word of mouth, no broker involved and prices are good (not the inflated prices you see from Corcoran, et al). One on my street just sold by owner in less than a week for asking (but asking was way below comps). Something to think about. We bought even with the impending financial crisis b/c we knew the house was already 30% below comps, plus we loved it and it is a very long-term investment. In your shoes, I would look, look, and look some more. Be creative, look beyond the brokers on 7th Avenue, and when you find the right place and the right price (which yes, even in this market I think might exist, sometimes), buy it. If nothing seems quite right, wait until you find it. You will.
Posted by: WTbound at March 11, 2009 10:54 AM
Obviously you should keep saving and wait until the market drops, but it's worthwhile looking around see what's out there so you know when to pull the trigger.
You gotta admit it makes no sense that real estate prices are so high despite the near collapse of Wall Street and the widespread recent reductions in rents. It's a waiting game. Sales prices have to fall.
The inflation argument Landlord makes may pan out, unless, of course, he's completely wrong and we experience massive deflation instead; supposedly that's what occurred during the Great Depression.
Posted by: IronBalls at March 11, 2009 11:09 AM
Getting back to a serious discussion...
Lechacal;
I'm taking aback by your statement that inflation might benefit assets like securities, but not real estate. Really?? Has there ever been such an economic environment??? I don't think so. Inflation always accrues to the benefit of HARD assets(real estate, gold, commodities), and to the detriment of soft assets like stocks, but especially bonds.
Can you be so sure that the Fed is not inducing an inflationary period, given the money that is effectively being printed out? It takes a while for inflation to set in.
I do not claim to have sufficient knowledge to predict whether or not we are headed into a deflationary or inflationary period,and I doubt that anybody on this thread does, which goes to my advice to Miss Muffett: don't lock yourself into a situation wherein you do not have sufficient "mental" and financial flexibility to adjust to whatever scenario may occur. In fact, this would be my advice to the OP. If you find a house now that is WITHIN YOUR MEANS, and you intend to stay for a while, go for it.
I purchased my first house in 1988,and put 20% down. Almost as soon as I closed, the market crashed by 20%, and stayed that way for 10 years. If I had sold my house during that period,I would have lost my down payment. I had no plans to move,the payment was within my means and I didn't sweat the situation. I eventually sold the house in 2004, at a very nice profit.
Posted by: benson at March 11, 2009 11:24 AM
Looking is not buying and now is the perfect time to really LOOK. Look at non-prime areas that are set to appreciate in the next cycle; look for space and neighborhoods where you will be comfortable for the next 20 years. And, if you meet a decent broker along the way, let them know that you are able to purchase -- but not deperate. If you are dead set for prime PS -- no chance. But if you could imagine living on one of the beautiful blocks in Crown Heights, drive around neighborhoods at different times, try a local supermarket ... see if you can feel comfortable. And then keep you eye out.
Posted by: BH76 at March 11, 2009 11:24 AM
Benson: Perhaps stocks are a bad comparison in this instance (although I do strongly believe that stocks are a vastly better investment at the moment that real estate). The point is not to get into a discussion of the stock market but to point out that some assets may experience inflation while others do not. I very much doubt that any inflation in the coming 10 years will accrue to the benefit of the housing market. Perhaps I will be wrong, but I have placed my bets accordingly.
I would also point out that historical anecdotes (my cousing sold his place for a big profit, I bought my place in 1980, etc etc) are probably not helpful guidance for anyone who is currently considering what to do in the future.
Posted by: lechacal at March 11, 2009 11:35 AM
WE are in Windsor Terrace and had some of the same experience as WTbound. We were in a 3000/mo apt here, with lots of cash in reserve. We missed our first opportunity which closed in a day (it was way under price), so on the second we jumped and placed a bid in the first half hour of the open house. The house was well-maintained and the price was low. However, we would never had known to move fast if we had not been looking for a year and were aware of what was out there. SO like everyne else has been suggesting, take you time--you'll know when it's right.
BTW, a house might be a better deal if you can swing it. Houses in this area can go as low as 750k, and for 800k you can possibly get a 2-family with tenant income. BUT you have to look like a hawk and jump fast.
Posted by: nk at March 11, 2009 11:49 AM
WE are in Windsor Terrace and had some of the same experience as WTbound. We were in a 3000/mo apt here, with lots of cash in reserve. We missed our first opportunity which closed in a day (it was way under price), so on the second we jumped and placed a bid in the first half hour of the open house. The house was well-maintained and the price was low. However, we would never had known to move fast if we had not been looking for a year and were aware of what was out there. SO like everyne else has been suggesting, take you time--you'll know when it's right.
BTW, a house might be a better deal if you can swing it. Houses in this area can go as low as 750k, and for 800k you can possibly get a 2-family with tenant income. BUT you have to look like a hawk and jump fast.
Posted by: nk at March 11, 2009 11:49 AM
We are in Windsor Terrace and had some of the same experience as WTbound. We were in a 3000/mo apt here, with lots of cash in reserve. We missed our first opportunity which closed in 2 days (it was way under price), so on the second we jumped and placed a bid in the first half hour of the open house. The house was well-maintained and the price was low. However, we would never had known to move fast if we had not been looking for a year and were aware of what was out there. SO like everyne else has been suggesting, take you time--you'll know when it's right.
BTW, a house might be a better deal if you can swing it. Houses in this area can go as low as 750k, and for 800k you can possibly get a 2-family with tenant income. BUT you have to look like a hawk and jump fast.
Posted by: nk at March 11, 2009 11:50 AM
OH jeez, so sorry about that.
Posted by: nk at March 11, 2009 11:52 AM
You should buy now only if you plan on staying in the home ten or more years. Anything else is too risky right now.
Otherwise, it depends on the type of home and neighborhood. As DIBS and Bobjohn said, no one knows, but subprime areas have already fallen, "emerging" areas such as Crown Heights, Bed Stuy, and Clinton Hill could be poised for a rapid fall of about 30 percent or so, and Park Slope might go down but more slowly -- maybe 10 or 20 percent. Condos are riskier than coops, and townhouses are the most solid because you get so much more for the same money, they are big enough for families, have green spaces, etc. (They are also a hassle because you must maintain the structure and mechanicals.)
Typically I would advise a first-time buyer to buy a "starter" apt first, like you mention, but in this climate that could be unrealistic because prices might not go back up for ten years.
I would definitely start looking so you are prepared. And if you find a place you love where you want to live a long time and that you can afford, go for it.
Posted by: mopar at March 11, 2009 12:16 PM
What a bunch of "fraidy cats". Everyone wants to own their own home and be in control of their own destiny. Who the hell wants to be at the mercy of a landlord who may raise your rent or sell the home. Not to mention no tax write off. If you're planning on living in a new home for several years, you won't get hurt. It's only those looking for a quick flip that should stay put.
Posted by: cggirl at March 11, 2009 12:53 PM
cggirl,
love the optimism!
Posted by: jdoo at March 11, 2009 1:25 PM
cggirl: If I lose my job, I can just walk away from my lease (with 60 days' notice). No forced sale into a falling market. No sleepless nights. I do not take pleasure in others being in that situation (like What or BHO). It's a terrible position to be in and my heart goes out to anyone who finds himself in it. But I do think that being at the mercy of a huge mortgage and a falling market is much more limiting than being at the mercy of a landlord. I am very much in control of my own destiny.
Posted by: lechacal at March 11, 2009 1:28 PM
Take your time.
The economy and time is on your side. You have the luxury to look for what you really want. Price may go down. Interest rate might go up. Inflation might be around the corner. Etc. etc.
It might take you several weeks, it might take you a year.
There is no downside to looking NOW. You will be better informed when you do find the right one.
good luck
Posted by: crimsonson at March 11, 2009 1:36 PM
Four pieces of advice:
1. To recover from the boom, housing prices need to return to year 2000 prices (inflation adjusted). That means you should pay $550-800/sqft.
2. I would wait at least 6 months for things to clear up more. Economy is still in turmoil.
3. Don't buy anything that you won't live in for 5+ years.
4. Keep looking and if you do see your dream house just get it. Unless the price is still ridiculous or you won't live their for over 5 years.
Posted by: bknyer at March 11, 2009 1:37 PM
With respect to the previous posts (I haven't read them), here's my 2 cents.
If you like where you live and can count on keeping it for the foreseeable future, I would stay there. Your costs are great, and right now having cash positions you well to invest in whatever asset class ends up looking promising. In this economy, though, it's hard to tell what asset class that will be - which is why it's best to stay flexible. Sure, cash is also an asset class - but it's the most liquid one, and in uncertain times that's a desirable trait.
Also, I just read lechacal's 1:28 and I agree with all of that.
Posted by: ari at March 11, 2009 1:38 PM
You're looking for a 2BR w/ outdoor space. The correct decision is a slam dunk:
WAIT FOR THE BOTTOM.
I define the bottom as the next month that the NY Case-Shiller Home Price Index records a positive change from the same month of the previous year (aka year-over-year from "red" to "green"). This index is calculated only for used single family homes in the whole Tri-State area. New construction, condos, co-ops and multi-fams are not included. However, it was relevant to Brownstone Brooklyn TM on the way up (+200% from last bottom, mid 90's), it should be relevant on the way down. It is now 15% down from its peak and many Brooklyn neighborhoods (Clinton Hill for example) share this similarity.
EVEN CASH UNDER A MATTRESS INCREASES IN VALUE DURING DEFLATION
If inflation comes (it probably will), you will know it (not from bogus government numbers but from blogs, the grass roots variety) and you can adjust your numbers for it and rethink your decision of when to pull the trigger. But cross that bridge when you get there.
There is absolutely a growing general sense that the market has at least 30% to fall. But, as you have learned already (late recession call, false soft landing call, multiple false bottom calls, etc. etc. etc.), the consensus has been consistently wrong in a bearish way. So expect a more significant threshold in price declines.
2BR's w/ outdoor spaces will come a dime a dozen (maybe even with an extra bathroom). Don't blow your load yet.
Good luck.
PS Do you have a 6-month reserve fund to go with that 120k? If not, take it out when you decide to buy (hopefully at my defined bottom).
***Bid half off peak comps***
Posted by: Brownstones Half Off at March 11, 2009 1:41 PM
...don't put a deadline on the bottom. It will come. It requires patience. Good things come to those who wait. You said you are currently comfortable. The collapse is a process, not an event. It is on its own schedule, not mine or yours.
***Bid half off peak comps***
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Posted by: lanxin at March 11, 2009 1:45 PM
...BuyingAtBottomIsPeace
***Bid half off peak comps***
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Posted by: superstooper at March 11, 2009 2:25 PM
"If you are dead set for prime PS -- no chance". This is patently false. There are plenty of examples of price cuts happening in prime Park Slope, such as the house on 1st Street bet 5/6 that started last fall at 1.750 (seemed reasonable at the time), then cut to 1.6 and now 1.5 and last I heard the owner was entertaining an offer of 1.35 but evidently that fell through. And there a number of 3 BRs on 3rd Street in PS that have had significant price chops (1 is now $899, the other $925 which started well over the $1Mil mark). And of course several big houses by the park have been having price cuts in the hundreds of thousands of dollars of late, but are still very expensive.
I'm not saying PS, or other prime areas, will suddenly have bargain basement prices, but in most parts of the country, and indeed in Brooklyn $1.5 mil is a lot of money for a single family house, so the $2-3Mil+ price tags of the last couple of years were clearly part of the bubble, and for prices on a nice PS brownstone to head close to a million-$1.5 (about where they were a few short years ago) is not implausible at all, nor apartments to fall in price respectively as well. As a slew of reports have confirmed recently, even prime Manhattan areas are seeing huge price cuts, or strong signs that they are about to happen - so why would prime Brooklyn be immune?
Posted by: Miss Muffett at March 11, 2009 4:07 PM
Tyburg, the "city" does not consist only of Park Slope. That's like complaining you can't afford Beverly Hills so you'll have to move out of LA. Buy a house in Queens, the Bronx, Bushwick, East New York -- geez.
Posted by: mopar at March 11, 2009 4:13 PM
BHO is sounding so reasonable today. Wasder, you're sure he and The What are one and the same?
Miss Muffet, Brooklyn prices have nothing to do with the rest of the country. Rich people live here. Or haven't you heard? "Nice" brownstones in Park Slope are not going to fall to a million. That is a fantasy of yours because that is what you can afford.
Posted by: mopar at March 11, 2009 4:24 PM
Mopar - sorry but the Park Slope brownstone on 1st Street I referred to is not moving for 1.35 (it's been featured on this blog twice recently), so why is my estimate of 1-1.5 so unrealistic? My comments are based on close observation of and experience with the market, not fantasy.
Posted by: Miss Muffett at March 11, 2009 4:29 PM
And mopar's idea that only rich people live in PS is another myth. Sure, some wealthy people bought at the peak for the $3million price tags that sprung up, but PS is a big neighborhood and it is just a total fallacy that these wealthy few represent everybody. Spend some serious time in Park Slope, hang out with families who go to the public schools, and you will see what I mean. There are lots of average people trying to get a decent education for their kids, and they are not going to prop up the ridiculous prices of recent years.
Posted by: Miss Muffett at March 11, 2009 4:32 PM
Miss Muffett - how do you know that an offer of $1.35 mil was entertained? From the broker? Just curious, because I looked at that house (and as I mentioned in the comments when it was HOTD, I thought the poor layout was one of the primary reasons it wasn't moving).
Posted by: brooklynguy at March 11, 2009 5:04 PM
Yes, one of the brokers told me. I agree that the layout was not ideal, but in years past, that did not prevent houses like this from selling for much more...
Posted by: Miss Muffett at March 11, 2009 5:16 PM
And in any event, at 1.5, that house is just sitting...
Posted by: Miss Muffett at March 11, 2009 5:17 PM
Exactly, Miss Muffet!!! There are some people living in Park Slope who are not rich. They bought in 1971. Or 1997.
You said "nice" townhouses -- the ones that cost $2 to $3 million. They are not falling 50 percent to $1 million. I'm guessing the house for 1.3 million wasn't nice enough. If it was you would have bought it or it would have been $2 or $3 million to start with.
I know you have school-age children and that is why you are tied to the area. You are going to have to compromise on something -- the house, the location, or the schools.
At least stop the magical thinking "because this is what I can afford, prices MUST come down. It's only logical."
You are competing with millionaires in Park Slope, not average Americans.
Posted by: mopar at March 11, 2009 5:25 PM
Hear is my advice - listen to lechacal and Heather - they are right on the money.
Posted by: fsrg at March 11, 2009 5:26 PM
Oh, sorry, $1.5.
Posted by: mopar at March 11, 2009 5:26 PM
Mopar - sorry, you're just wrong. My thinking is not magical - with each passing day, with each new price cut, even in the prime areas, more evidence mounts. I don't quite get the bitterness I perceive in your posts, but I could not be more confident that my bets are good ones. And by the way, I don't need a fancy house, but yes, I am counting on further price cuts to come and that is why I have not bought yet.
Posted by: Miss Muffett at March 11, 2009 5:29 PM
I also could not agree more with lechacal, who clearly has made the same bets as I. Man, I really fell off the wagon today. Back to work - gotta make the donuts to buy my house when the price is right!
Posted by: Miss Muffett at March 11, 2009 5:31 PM
I just can't stand illogical thinking. Sorry, Miss Muffet. I hope you find a nice place.
Posted by: mopar at March 11, 2009 5:43 PM
To Buy or Not to Buy, or To Be or Not to Be:
That is the question.
Hamlet had this problem: He was both depressed and phlegmatic. Ill from depression, things didn’t seem to matter. Somewhat paralyzed by being phlegmatic (is that the laid-back trait?), it didn’t seem to matter. So why not do nothing after all of that agonizing?
Well, this is a little different scenario. I agree with “Landlord,” the very first poster. From what I hear our dollar is dropping with each breath we take. Money is being printed with no back-up at all. Landlord seems to think there is a time period of 6 months to wait.
There is much good thinking in these posts. It sounds like a balancing act and it is one.
Then there is the unknown factor that well, we do not know. So we scratch our heads and guess and try to do the very best we can.
Brownstoner poster, Jebby, wrote a couple of days ago that he just bought a house, thinking that his money was safer in property than it was in the bank. That is the wisdom I hear from people who are thinking this over. By the time we wait to buy, our money could be worth significantly less, yet we seem to want to wait a little longer. Jebby didn’t wait, he took action. That was his thinking.
Here is another financial web site: moneyandmarkets.com
There are newsletter archives.
Posted by: BklynSoFar at March 11, 2009 8:08 PM
I would see a doctor. Giving 3000 dollars a month to a landlord in rent is not a good thing. I would look for some place much cheaper. Thanks to people like you that overpay. People like me have to overpay for rents.
Posted by: hannible at March 11, 2009 8:17 PM
hannible,
I just spent the last 6 weeks or so looking for a nicely maintained, good sized (~1000sqft) 2br on a good block in PS (north of 10th st, east of 5th ave). We didn't see a single place under $2500 that came even close to being acceptable to us. 2,700 to 3,000+ was the price range where we saw places that appealed to us.
We ended up with a great place on a good block in carroll gardens for 2,700.
Posted by: jdoo at March 11, 2009 9:15 PM
and by the way, we plan on sitting tight until prices come down enough that it makes sense to buy.
Posted by: jdoo at March 11, 2009 9:24 PM
Miss Muffett: for a love of god, what possessed you to compare prices with 2000? Why not 2004 or 1985?
But even if you compare with 2000, you need to factor in 9 years of inflation (at 4%/year it will add up to 42% price increase). You also should consider the mortgage interest rates. Now they are much lower then in 2000. rates came down from 8.5% to 5.5%. It means, that you can get 31% bigger mortgage today they in 2000 with the same monthly payment.
So to compare prices you should at least add 86% to the prices in 2000.
Posted by: bobjohn at March 12, 2009 9:51 AM
I would buy if I had that kind of money. Perfect timing if you were thinking of investing in real property already.
Posted by: karo25 at March 12, 2009 10:04 AM
http://www.halstead.com/detail.aspx?id=1597314&ab=TAB
everything you're looking for
Posted by: PropJoe at March 12, 2009 10:05 AM
Bobjohn, I could not agree more, but you have made the point much better than I could.
Also, Brooklyn, and Park Slope, is not exactly the same place it was in 2000.
"We live in the most expensive shantytown on earth [New York City]....the grandly named County of Kings used to be an afterthought, a bridge-and-tunnel punchline. Now it's rapidly becoming a Zagat guide destination of its own, with rock-star residents and CEO-priced real estate."
Quote is from "Gimme Shelter," a book that came out last week about house-hunting in New York by Mary Elizabeth Williams.
Posted by: mopar at March 12, 2009 12:23 PM
to add to the mopar's point. I picked up BayRidge Courier a day ago. It has some numbers on the recent house price fluctuations in Brooklyn (Q3 2008 v. Q4 2008). Overall Brooklyn prices are down ... except 1-3 family houses in what they call "Brownstone Brooklyn". This is Park Slope, Brooklyn Hights, Red Hook. Median prices in these areas went up 10%. (Though volume is down).
Since Bay Ridge Courer does not have interest in Park Slope, I feel like this is objective numbers.
Posted by: bobjohn at March 12, 2009 2:50 PM
Oh yeah, Brownstoner had a post about that same report a few days ago. It got a lot of comments, and then the whole thing was yanked and disappeared from the site in the middle of the day without explanation.
Posted by: mopar at March 12, 2009 4:52 PM
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