Open House Picks: Six Months Later

First, thanks for the kind words from those that offered them. Traditionalmod, I’ve actually gone out of my way NOT to gloat about my sale – in a way, it was dumb luck. The prime reason for us selling when we did was to get into our school zone of choice. That said, I, like lechacal, was also predicting for a while before our sale that the market would go down, and was ridiculed and called all kinds of nasty names by those who thought I was crazy. In fact, after our sale, I even felt a brief twinge of seller’s remorse at one point, mostly because a home is an emotional place, but also because I did have the passing thought that perhaps, as so many people said, I was making a bad financial decision in a market that, at the time, was still defying gravity in prime NYC (despite falling elsewhere).

Benson, of course I realize that real estate is not a “magic bullet” that will somehow magically make my family’s life perfect. Things are way too complex for that. But I think the reason that real estate arouses such passion is precisely because it does have a HUGE effect on your life, and when you have kids, on your family life. We really do want to buy a home, since we very much enjoyed home ownership, and look forward to being owners again. But for now, we are actually in a very nice rental where our family is very happy and going to a school we really like (our top priority right now). Renting is not the solution for us long-term (for all the benefits of home ownership much touted on this blog), but it’s a great one for now. We love our neighborhood, like our apartment at least as much as our former one where we owned, and our rent is very reasonable. Ultimately, we want to buy a house where we can live the rest of our lives, ideally with some income so that the income pressure on us is eased, so we can have more family time, and perhaps the flexibility to take over more space for our growing family in the future, should our finances permit that. So, a modest 3 story with a rental is the kind of thing we’re looking for – not a mansion on the park as some people like to caricature my tastes, and not for $1. Our budget is fortunately healthy due to the good luck we’ve had in the past, so we are blessed to have capital, but as modest earners, we have to be very careful in our choices.

The main point of my posts, and the reason I’m following the market so closely, is that there now seems to be universal consensus that the NYC market will go back in time to earlier levels (which year is up to debate – 2004 is one I hear a lot, but bears think it could go much lower). And yet, many sellers out there still seem to be in denial of this. Not all of them mind you, so yes, there are deals to be had, but not a lot due to an ongoing stand-off. When I was selling, I was actually prepared to sell for 20% below what we eventually got, since we were very serious about selling, and I guess what I find interesting is why sellers even bother to list at such high asks when their property just sits and sits and sits.

For those who say I’m running a risk in waiting, I think the risk is much greater in acting precipitously. I have yet to hear anyone provide a credible rationale for why prices will begin to move up in the next 12 months – so really, what is the risk in waiting? As for interest rates rising, that will exert more downward pressure on prices that will likely offset the increase in mortgage payments (plus in our case, we are trying to keep a relatively small mortgage so are less affected by interest rates).

Again, I am NOT trying to time the bottom – if we see a house we love, at a price we can afford, we may very well bite, but given unrealistic asking prices, and ongoing price cuts, we see no reason to rush.

traditionalmod: Really? I usually see that information come out in response to someone telling her she chose badly, will be priced out forever, is a renter and is therefore going to “get beat” etc. In any event that strikes me as pride in making a good choice rather than attacking someone for choosing differently. There is a big difference between the two.

I am coming to MM’s defense because I find myself in a very similar situation (sold in 2007 and have rented since then) and frankly see no problem with someone taking pride in that choice. I can tell you that my predictions in 2007 of a coming decline in the NYC real estate were met by derision and contempt from lots of market cheerleaders and realtors. I can’t tell you how many times I got condescending comments about how smart money knows that NYC is different, it will only go up, Manhattan is an island, foreign money will save us all, etc etc etc. I can tell you that it was quite unpopular to disagree with the herd. And now if I point out that I was right all along suddenly I am attacking homeowners? That’s just silly. MM is entitled to point out that she was right when she sold and rented, and I think when she does so she stops short of attacking people who chose differently.

I find MM to be respectful of others. She, like wasder, manages to be level-headed and articulate without attacking those who have chosen differently. It is interesting view into human psychology that she is branded as a “self-righteous” person who “repeatedly gloats” when she explains her own choices without attacking others for choosing differently.

The basic thrust of Homey’s 12:07 post seems to be that he is terribly concerned about whether MM is right or wrong, but he never explains why he has such an emotional investment in her financial well being. I think MM understands pretty well that there is risk in what she is doing. So why is it that Homey and Sebb so actively try to change her mind? Are they worried about what might happen to poor Mr and Mrs Muffett and their kids if they make a bad financial decision? Surely not. Are they worried that she is single-handedly sinking the market for Brooklyn real estate with her Brownstoner posts? Surely not.

The answer – if it isn’t already obvious – is that humans are notoriously insecure about big finanical decisions like home buying, and there is a natural desire to attack anyone who confidently and articulately chooses differently. It’s not that Homey, Sebb, etc. have any real concern about Miss Muffett’s financial well being, it’s that they have deep insecurities about the choices they have made and find it impossible to resist the urge to attack someone who chooses differently and sounds credible and informed in doing so.

MM could attack those who think now is the time to buy, but she doesn’t. She is always gracious to those who buy and those who own even while she explains her own reasoning for not doing so. Likewise, Wasder is always gracious to folks who are on the sidelines and waiting for prices to come down further (as long as they aren’t acting like jerks, of course).

None of us is capable of changing the direction of the market. The market is going where it is going, driven by forces beyond any of our control. Some of us are renters waiting to buy. Some of us are proud homeowners. (and, for the sake of completeness, some of us are just sarcastic jerks who waste their time on this board flinging poo at strangers). Hopefully we can continue to discuss our very different views without attacking those who choose differently. There is a world of difference between disagreeing with someone’s viewpoint (I think the market is going up/down because…) and attacking someone personally (MM is a self-righteous gloater).

It is not my intention to pick on MM. But I do want to make the point that you can over-analyze yourself onto the sidelines and miss some really great deals. Of course MM would like to see predictions and analysis of what the market will be in 1, 2 or 5 years – who wouldn’t. But please let’s not mistake that speculation for fact. My analysis, and I am an very experienced real estate investor who has purchased and sold several properties in NY and Los Angeles, is that you should consider the good deals out there now – as well as in 1 year, 2, and 5 years. Personally, I think 5 years is a long time to wait for a family home. Your younger children may be ready for middle school, or even high-school. Suddenly the neighborhood and primary school district are important, and other things are more so. I have seen some very good deals in this market, and plan to buy something in the next 6 months as an investment. I am looking carefully as price per square foot, not just in NYC, but across the country. ANd as for my comment “life is short,” Well, I stand by it, and figure it into all my calculations. I think it is more accurate than most of the info on this blog. Cheers!