Buying With Help From The Rental Units
The Times dishes on the New York City real estate market’s dirty little secret — that it’s being fueled in great part by the retirement-age parents of twenty- and thrity-somethings who wouldn’t otherwise have a shot in hell of owning even a studio apartment. When we bought our first apartment — a 950-square-foot prewar one-bedroom…
The Times dishes on the New York City real estate market’s dirty little secret — that it’s being fueled in great part by the retirement-age parents of twenty- and thrity-somethings who wouldn’t otherwise have a shot in hell of owning even a studio apartment. When we bought our first apartment — a 950-square-foot prewar one-bedroom in Manhattan — for $160,000 in 1996, it was still possible for a 27-year-old and his fiancee to buy something on their own. Now, though, the idea of having socked away a downpayment of $150,000 or $200,000 (instead of $30,000 or $40,000) by the age of 30 is realistic only for those in a small handful of professions. Enter Mom and Dad. In Williamsburg (where Natasha Agrawal, bottom right, got hooked up with a $900,000 penthouse by her parents), one Douglas Elliman broker estimates that one quarter of the condos are being bought by parents or the trust funds they have set up. The twist, The Times notes, is that these hand-outs often come with some (creepy) strings attached, such as extorted promises not to let a boyfriend or girlfriend move in.
Buying With Help From Mom and Dad [NY Times]
Editorialiste: Hope there’s a bubble burst or move to the Midwest, because if this trend continues you’ll be a RFL (renter-for-life). Unless, you get a job on Wall Street.
10:24 says why can’t the 26 year-old indie record label promotion girl live in bay ridge, south slope, sunset park or kensington? what’s wrong with buying her a place that’s worth $250k instead of 900k? why does it have to be in williamsburg?
Heaven forbid, BROOKLYN 😮 😮 😮
Is helping with the DP the only form of a “handout”? what about paying for college, does this qualify as well? I need to know so that I can start doing the least possible for my child. No, not **everyone** I know helped their kids with a DP, only those who could afford it. Same for the people who paid for their kids to go to college.
How is it on this site that it’s a negative for people to get help from their parents for a DP, but it’s a positive that a one bedroom is upwards of 500K and a brownstoner 1M++??
10:24 here…i also think the trust-fund/handout trend has gotten weirder in that the amounts of money we are discussing are absurd, and the level of amenities and comfort that young people seem entitled to is startling. (and i ain’t that much older than the kids profiled in the article.)
why can’t the 26 year-old indie record label promotion girl live in bay ridge, south slope, sunset park or kensington? what’s wrong with buying her a place that’s worth $250k instead of 900k? why does it have to be in williamsburg?
I suspect it’s partly because this is what the PARENTS vicariously want for themselves in many cases – a trophy crash pad, and i don’t think this type of financing arrangement benefits junior in the long run. doesn’t help to develop a sense of value or appreciation for growth and hard work, and in the end, it’s just pretty sad.
now in my 40’s, i have a valuable place here in brooklyn, but i started small and traded up several times (and did receive an initial loan of $5000 from my folks to help with the down; i have no problem with that.)
but, as i wrote earlier, be wary of the trust fund condo buyer, sans mortgage, that decides he doesn’t have to pay his common charges anymore and/or doesn’t have to abide by the rules of the building – i’ve seen it happen and it’s extremely frustrating.
and i would like to think that buyers who have personally earned (most of) the money they have spent on a home behave this way much less frequently.
in the old days, i think trust fund kids were coached better at being more financially savvy, and in many cases they worked harder and were expected to demonstrate knowledge and respect for money before they got big handouts from the family chest. just my opinion, but i think i’m (sadly) correct…
As someone about to graduate from a NY college, I can say with certainty that this kind of practice by my peers disgusts me. I’m all for parents helping out their children – after all, my parents helped me with college – but when will kids grow up?
Now that I’m almost graduated, I live on my own finances (with school loans covering the rest). That all ends in May. I’ll be 22, college degree, and have about $100 to “put down.” Short of being a lawyer, doctor or investor, how exactly can I forsee purchasing a place (with my significant other) in my beloved Brooklyn before the age of 30 – or worse, 40?
Mentally, I’m ready to buy. But with financial plateaus like this, I’ll never be able to anyway – even with pristine credit. How’s a non-law/med/business couple supposed to buy a place in New York without a handout from above?
“Dirty little secret??” Um, this has been going on for the last 20 years and it’s one of the reasons why the market is so out of control. BTW, the same goes for renters whose parents pay cash for a years rent upfront. It’s more prevelant than you think and one of the reasons why artists and other creative types who struggle for momentum in the beginning of their careers are no longer welcome in the city. The market is dominated by investor parents. In the end it’s turning the city (and the boroughs) into one big Mall of America and NY is rapidly becoming REALLY boring and irrelevant.
when the market softens this is going to be the kind of property that really gets hit – the 25 year old with a job in “promotion” at an “independent record lable” will find something else that interests her at some point outside of nyc. so now mom and dad have an empty apartment, but no buyers at anything close to $900k, because people with real jobs at real companies have many more options due to the building glut. and by the way i’m not someone who takes glee in pointing out the impending problem – i’m just about to buy, so this line of thinking keeps me up at night.
most of the people i know who have bought, did so with the help of parents. some are from wealthy families, but many are not-they were helped in the form of low interest loans from parents who just want to help. if you missed on the starter apt. when you were working and single-it’s pretty hard to catch up with the large amount of cash needed for today’s prices once you’ve got kids and need space.. it’s sad.
The 900k apartment is rediculous. What 25 year old needs a penthouse? I’m not against parents helping their children but the whinging about the strings attached? Blah blah blah.
I’d like to hear a story from the NYTimes about someone who made it on their own. Hard work, saving pennies, small starter apartment…apparently they don’t exist anymore. Pity.
11:13 – EVERYONE you know got help on downpayments? Well it’s good to see that we all have diverse sets of friends here on Brownstoner. Silly me, with friends and family who can’t afford such things.