Quote of the Day
Deadbeats are deadbeats, and I have no sympathy at all for people who borrowed money they could not reasonably expect to afford to repay — especially because they are largely responsible for driving up MY housing costs the last few years as the end of the housing bubble coincided with me reaching a point in…
Deadbeats are deadbeats, and I have no sympathy at all for people who borrowed money they could not reasonably expect to afford to repay — especially because they are largely responsible for driving up MY housing costs the last few years as the end of the housing bubble coincided with me reaching a point in my life when I was tired of living in a crappy rent stabilized apartment. In fact, my gut feeling is just to let all of these places get foreclosed as it will drive down property values so that when I eventually do buy a place it will be even cheaper yet. But I feel more and more like this is a case where my neighbors have built a poorly designed dam upriver from me, and while I may think they are irresponsible, selfish, and stupid, it doesn’t change the fact that the bursting of the dam will drown me too, so it has become in my best interest to see their problems fixed.
— by northsloperenter in Citigroup Puts the Kibosh on Foreclosures
Would it interest you to know that just 12 years ago the houses on both sides of me in Williamsburg sold for less than 100K? I helped both my neighbors sell theirs back then, and they both had to accept a lower offer than their asking price. I gave 69K for mine about 15 years ago. 6 years ago I thought about refinancing to do some improvements and my house appraised for $350K. Luckily I changed my mind. Houses on my street were appraising for 1.2-1.5 million in 2007 and still over 1 million this week. We are talking aluminum sided wood frame 3 stories. I could rebuild it if it burned tonight for less then 150K. So out of whack might be the understatement of the year. The “this is New York” idea is total bunk and total hype and usually used by people in denial that their house could return to normal price levels. And New York isn’t really that much different of a place than its been all this time. Some areas better, some worse, but overall it averages out to be able the same place as it’s always been in terms of crime and amenities. Maybe it’s better than when the Five Points and Tammany Hall were around, but since I’ve been alive and been here (43 years) it’s not been a lot different. Plus, it’s been New York for 400 years and only in the past 6-8 have prices been this much out of line with the rest of the country. New York has always been expensive (maybe 1.5 to twice as expensive as other areas in my experience and I’ve been all over the country and still own properties down south), but working class families have always been able to afford a single family or two family house if they really wanted one. I don’t know of a single person on my block who could afford to buy their house now if they didn’t already own it, and I know everyone on my block and surrounding blocks and we all have decent jobs, but none of us make what it would take to pay that kind of mortgage for the next 30 years without serious problems as financial and job cycles happen, medical emergencies, periodic $600 fuel oil bills, kids needing braces, etc. I can’t wait for my house and all in the city to drop in value to normal levels, albeit higher than other parts of the country, but cheap enough that people can actually live here without having to have 3 jobs or live 5 families to a house just to pay the bills. If you’re not over 30 you probably don’t even remember what New York used to be since it’s only been changing up to this wacko price level for about 8-10 years now. 11217, how many months away from foreclosure would you be in you lost your job tomorrow? I pray to God that doesn’t happen, but realistically in this upcoming/ongoing recession/depression we might all suddenly be out of work for a few months. You think the Lehman Brothers employees saw this coming back around July or August? So everyone reading this blog better have 3-4 months of mortgage payments in the bank just in case. That’s hard to do when your monthly mortgage is in the thousands. Also hard to collect rent when all your tenants are unemployed – and even harder to get them out and new ones in place in this city before the bank takes your keys from you. Just saying. Not that I want to bring everyone down 🙂
I am an owner, and I don’t feel anxious at all. I bought my first place in Park Slope at the age of 30, can afford my payments easily and think about the future. I would like to retire before the age of 80.
I am not a real estate shill, but I rather like the idea that at the age of 60 (or probably before that since I often pay a little extra on my principal) will have no housing costs except maintenance and taxes.
I am terrified at the idea of living in the city when I retire in a 5k a month rental, looking to retire and being a prisoner to rising rents on a fixed income.
Some of those who talk highly of renting don’t seem to realize that if you never buy, you will be renting for a lifetime…NOT just for 30 years.
I also don’t agree that we should be saying that homes in NYC should cost 400k. That’s kinda ridiculous. This is New York. I recall when my parents bought their house 20 years ago in a suburb of a B level city and it cost 400K. That was WAY before the housing boom and no where near the cosmopolitan haven that is New York City.
I do think prices are a little out of whack, but honestly more in the neighborhood of 20% or so. My mortgage payment is about 400 bucks less than the typical rental for my size apartment and when you factor in the tax deductions, more like 600 or 700 bucks less. And I bought in 2006.
I’m down to 28 years left until I am free and clear, and that’s a really nice feeling to me.
“This has to be a first on this website. Usually someone suggests that fact, and yes it is a fact, and twenty others try to disprove it and talk about what a great buy that 900K fixer upper SRO in need of a complete tear-down is in (insert some historically bad neighborhood name here), and how just buy it now and in a couple years when prices “recover” you’ll make a profit.”
So 2007 Williamsburg guy. For several months now this board has been engaging in these kinds of discussions. You won’t find too many people talking the way you characterize it above. There are a few very obvious real estate shills around and they get soundly beaten down when they post.
Um, hard to complain about others being unfairly subsidized when you are in a rent stabilized apartment, no?
bkny: “people over extend themselves everyday in everyway.”
Not everyone. Some people make a real effort to NOT overextend themselves in any way.
Its the American materialism, greed and usury that would make you think that -everyone- overextends themselves.
But its not all of us.
Let this be a lesson to all the good boys and girls: following the rules like good scouts can often end up biting you in the f…ing ass.
36% of monthly gross or net?
Honestly curious, because that makes a huge difference in what one can sanely afford. I’m assuming it’s net?
Wow, a thread on Brownstoner where people are actually agreeing that prices have been crazily overinflated over the past few years because of these insane lending practices. This has to be a first on this website. Usually someone suggests that fact, and yes it is a fact, and twenty others try to disprove it and talk about what a great buy that 900K fixer upper SRO in need of a complete tear-down is in (insert some historically bad neighborhood name here), and how just buy it now and in a couple years when prices “recover” you’ll make a profit. Because we all know that at $4 a gallon all those middle states people are going to be rushing up here to buy those $900K+ houses. Folks, anything over $400K is much too high for any average working family in the good old USA even here in NYC – whether that’s an apartment or fixer upper brownstone/or aluminum sided woodie. I truly found it interesting today when the new housing rescue plan was announced and they actually reinstated the old 36% debt to income level for sane decision making on these loan workups. If your house payment is anything over 36% of your monthly income, you are in over your head and somewhere between now and 30 years from now when the note is paid off, you will more than likely end up in foreclosure or in a position that will be almost impossible to recover from (ie paying your mortgage instead of food, clothing, or electricity for instance). Those are historical facts in the financial industry. Just wait awhile. There will be affordable houses in the city before long once sellers either come to reality, or the life event occurs that proves to them why that 36% level is the maximum rational amount sets in and the bank gets their house back.
cwbuecheler is where I’m at.
The sad thing is that you save your money, count your pennies and act responsibly. Then, you are told you have to help other people who acted irresponsibly, and if you don’t help them, the damn will break and water will crash onto your head.
I don’t mind being a renter right now. These days, seems like people who own should be labelled “anxious owner” rather than “smug owner”. In any case, rent or own, the more important thing is financial stability.