House of the Day: 565 9th Street
This new listing at 565 9th Street in Park Slope has certainly got it going on in the woodwork department, though the oak look definitely has a different vibe from what you might see in a Victorian brownstone. The house appears to be in excellent shape (though we wouldn’t mind seeing a shot of the…
This new listing at 565 9th Street in Park Slope has certainly got it going on in the woodwork department, though the oak look definitely has a different vibe from what you might see in a Victorian brownstone. The house appears to be in excellent shape (though we wouldn’t mind seeing a shot of the kitchen) and there’s a two-story extension to spread out in. The only drawback we can see is that the two-family house is only three stories. Given the condition, the extension and the proximity to Prospect Park, though, we suspect that the asking price of $1,895,000 is within reach.
565 9th Street [Warren Lewis] GMAP P*Shark
And yes, I know you were making an analogy but it’s an important one to the assumptions of whether it’s better to rent than own “for many years.”
In fact, it’s even more cloudy when you introduce the wealth effect of the stock market into the equation, aside from simply using it as the opportunity cost of money.
You really think the P/E of the S&P 500 is 25X??? Then you’re not in the same business as me. The S& P 500 is on target to earn $90-95.00, a P/E of 14-15.
Again, lets start the discussion based on some facts first.
rent roll discussion assumes we are talking about investment properties, which we are not.
DIBS, you and I are both in the same business. When stocks are trading at a P/E of 25, it is generally not a time to be a buyer. Yes, you may find someone else out there who may be willing to pay 30x, but the fundamentals and history would suggest you would rather be a seller than a buyer.
I would argue the same can be said for real estate when sale prices are more than 20x the annual rent roll. Maybe that situation is sustainable and maybe the market goes to 25x, but I would argue there are better places to put your money.
When it is a good time to be a seller, it is not a good time to be a buyer and vice versa. If 12 people are bidding on property and the seller is asking for 12 BAFO’s to play off against the others, I would rather be the seller than the buyer.
“The price to rent equation still significantly favors renting even if you intend to remain in the same location for many years.”
This has to be based on assumptions for what values and interests rates will be in 2, 5, 10 and further years out.
And by interest rates, I not only mean mortgage rates but Treasuries and also the return s for the stock market.
No one can actually know the answer. You can make assumptions but please, before you make sucj a broad sweeping ststement, lay out the assumptions, otherwise it’s ridiculous.
antidote, I base my assumptions (if you wish to call them that) of prices and rents based on what I see posted on this forum and elsewhere. Most recently, my “assumptions” about prices really are 11217’s “assumptions” about recent price action in PS.
If by tautology, you mean that my statement that the price/rent equation favors renting relies on my “assumptions” about the price to buy relative to the price to rent, then yes, you are correct. I would define the data provided by 11217 as “facts” rather than assumptions though.
bkhab- your view of the price / rent “equation” is derived from your very own assumptions about prices and rents. i believe that’s called a tautology, but check with the ‘snark.
By antidope on May 4, 2011 2:27 PM
557 6th ave (16th st) listed about a week ago. asking 1.25.
i called broker yesterday to ask about showings: “we have 12 offers. owner is asking for last and best.”
what is going on?
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Irrational exuberance?
A large percentage of the population moving to a desert island from 2007-2010 and so missing the ill effects of the last great real estate bubble?
I don’t have the answer as to what is going on but once again we see that the masses aren’t exactly the smartest people when it comes to economic decisions. The price to rent equation still significantly favors renting even if you intend to remain in the same location for many years.
I’ve seen far worse floorplans, Stargazer. The floorplan itself is actually quite good. It’s the decisions on where kitchens and baths have been placed that might be better and take down a few walls.
Dave, don’t sell your house just yet.