Housing Bubble Starting to Lose Air?
We don’t usually get around to the Op Ed page ’til later in the day so we missed Krugman’s piece yesterday on everybody’s favorite topic, the housing bubble. Among the signs he points to that the bubble is already losing air are: The bubble doesn’t burst with a bang–inventory builds as sellers hold out for…
We don’t usually get around to the Op Ed page ’til later in the day so we missed Krugman’s piece yesterday on everybody’s favorite topic, the housing bubble. Among the signs he points to that the bubble is already losing air are:
Is there any hard evidence that properties in New York are sitting on the market for longer?
That Hissing Sound [NY Times]
metaphysically Mississippian ceaselessness squealing whitens .
I think people have lost sight of how this discussion started. Questions were being posed about whether or not it’s still possible to buy a home in Brownstone Brooklyn. With prices running away from us and the threat of higher interest rates. For the most part, I don’t think people are rubbing anything in anyone’s face. Wanna Be is genuinely concerned with “how are people doing it” I offered my own personal story. Which is extremely relative. Some may think I’m lucky!… I don’t because had I not been of the camp that real estate prices are entirely too high.. I could have bought a Brownstone on Decatur between Lewis & Stuyvesant (the coveted block) for $450 a year earlier. But instead, I was hard headed and later sucked it up and bought a few blocks North a year later for $100K more.
Now if my dad new that I was more than Half a Million bucks in Debt.. he’d turn over in his grave. So by no means am I rubbing anything in anyone’s face.
I just think Wanna be has some real, plausible ways to become a home owner in a desired neighborhood with a household income of $100. But if you decide there are certain things you absolutely will not allow.. Like being a landlord or paying over $650K… your choices become limited. Maybe Queens is an option or parts of Jersey.
The other part of the discussion revolved around the whole “BUBBLE” thing. And I still maintain. Just like a Bond.. If you hold it until maturity, it doesn’t matter what the market does, you’ll never lose a Dime. (assuming you have a fixed interest rate..) 🙂
Native Gal – I, too, am glad it all worked out for you… Just curious, how old were you when you started to breed, after all that planning…
Hi anonymous at 8:09am. I have to laugh at the notion that I did so much planning. I’ve planned for 2 things only…
1. I knew I wanted to live in Brooklyn forever, which meant I needed to own. I’m not a good saver so automatic savings via my 401k worked best for me. My desire to stay in Brooklyn forever is so strong that my husband & I are saving to buy a burial plot in Green-lawn cemetery before they run out of space.
2. I always knew I wanted to be a mom. After 4yrs of infertility we started on the adoption path. We looked for a home we could afford & still have money for adoption fees. We looked for over 2yrs before we found our house. This was coincidentally 2days after my 38th b-day and 2days after I completed my first trimester of a very unexpected pregnancy.
So long story, short. We started to breed at 38, but started trying at 31y/o. Financially we would have been better off if we’d had children earlier(free child care availiable & cheaper housing expenses)or stayed in our apt until I went back to work, but we were stuck in house buying mode. It’s worked out so far.
For those who can save enough to come up with a down payment I agree with you, why not rent. Unfortunately, I travel in a circle of friends/family that want to buy but have no choice but to rent (due to multiple reasons i.e. salary is not high enough to survive and save simultaneously Or they have family obligations to care for children and/or older family members etc.) and can not afford to buy. Unfortunately, I guess these people will probably never be in a position to buy because all there cash flow goes to survival and the owners who are using their rental income to pay off their debts. It’s a vicious cycle hence my theory of the haves versus the have-nots. You have to be either lucky, make a ton of money, Or sacrifice dearly to pull yourself out of this type of situation. For this population I am afraid that the rent until prices fall theory will never come to fruition.
Although I’d like to buy, Anon. at 1:02, I agree – if you have no pressing need, why not rent? After all, it’s the NY way. The feeling of a need to buy is part of the frenzy surrounding real estate now.
For me, renting is the smart way to go. I have thousands of dollars just pouring into my savings account every month. So even if prices don’t cut in half, by this time next year I will have a 20% downpayment on a higher priced home. And I will have had a year to enjoy my cashflow!
But for someone in Wannabe’s predicament, why is it so important to buy now? If buying a house/apt. means making so many compromises, and you can only afford to live in a desired ‘hood if you rent, why not rent for a while longer?
It opens you to more uncertainty, true, but there’s just as much uncertainty in stretching yourself and buying a home that will have to appreciate a certain % within a few years so you can move up to a better situation.
I know people have been saying for years that prices will cool off, but they will – maybe in 2 years time, maybe in 5 years. Probably won’t be a dramatic drop but then you’ll have saved more $ while renting too.
I posted the “have†versus the “have-nots†msg on 8/9 at 8:17pm. I am afraid that my comments and maybe some others that suggests the “you should move†mentality was taken out of context. It is an option that you must consider especially if you are not willing to make the necessary sacrifices to obtain your goal Period. In my opinion it is a reality that one who is not wealthy, or have a job paying big bucks, or someone who is not very lucky to be in the right place at the right time should consider while living and/or surviving in the big city. For the record I own and by no means am I rich. I am just very lucky. I just got over the 70K/year salary mark (base that is) recently and teamed up with someone who has a comparable salary after 7 years of service in the financial/technical world (not everyone with college degrees and 5+ years of service in these professions are making 6 figures). Together we are just very lucky to have taken advantage of realizing a huge gain after 2 years of selling a 700sqft co-op (that I thought was insane to buy in the first place at that time in 2001) and leveraging an existing multi-family property that was inherited to buy a fixer upper b-stone in a less-gentrified neighborhood. If I did not inherit a multi-family property Or my partner did not make a 2 year sacrifice of saving every dime earned during their less than 35K per year salary we could not make it and would be forced to leave the city if we wanted to buy something NICE. So to clear the air, I say if you find your self backed up against a wall I don’t see it getting any better and would suggest taking your dollars to a place where it will go further than here in NYC. I feel sorry for those who make promises to themselves thinking that things are going to change for the better and that someday prices will fall to a level that will work for them. Prices may fall but chances are they will not fall far enough Or as they fall and your salary and/position may be compromised as well prohibiting you from making that purchase. Before you waste X number of years of your life (hoping/wishing/praying) I say enjoy it. A lot of folks back in late 90’s and early 2000’s (including me) thought prices would have dropped by now but look prices are 10X worse. Those same folks who couldn’t pull the trigger for whatever reason back then are still in the same position (renting and is priced out). My advise is if you want immediate satisfaction and do not want to rent anymore move to a place where the cost of living is a bit lower and buy something Or wait for the bubble to burst or shall I say the ARM’s and/or interest only’s start kicking in and prepare yourself to take a huge risk by purchasing that property in the nabe you want to be in. Nonetheless I wish you good luck. On the other hand you should probably consider purchasing a property (that you can easily afford) in a nabe that is not published in the papers/on the net as much and make your start there if you plan on staying in NYC. At least at a low price (under 100k) you can realize some tax benefits and rent it out when you decide to move to the place of your dreams if/when the property value increases. Look at it this way…if the property value drops you can at least afford the apartment during the down cycle of the real-estate market and buy another day by weathering the storm.
Wannabe-What were the neighborhoods you were looking in that you were laughed at when you topped out at $300k? Also, what are your reasons for giving Jackson Heights, Ditmas Park and Riverdale as your 2nd choices for places to live?
I’m the person who is apparently high on Bugaboo fumes for thinking the condo I bought in 2002 for $820k won’t go below that price…. Wanted to add that I am a single mother, with a more-than-full-time professional job, and I have made it work with a variety of childcare arrangements over the years, nearby schools and a good network of other parents in the neighborhood. It’s true, the feminist movement paved the way for women to do it all, but didn’t prepare us for how hard it is to actually manage when our society doesn’t provide much of a safety net or other support for families! But it is possible, just as it is possible to buy a home if you’re willing to make the requisite compromises. If you’re not, then moving elsewhere is a viable option. I was willing to give up certain conveniences that would be available in the suburbs or a “Flatland” city in return for the stimulation of living and raising my children in a diverse, vibrant city … but it’s not necessarily the right choice for everyone.