Local Housing Market Headed for the Trash Can?
Real estate experts are convinced that the New York region’s housing market is about to undergo a serious correction, according to an article in yesterday’s Times. Analysts expect the coming bust to be significantly worse than it was in the early ‘90s, particularly in New York’s suburban markets. Nevertheless, Manhattan—and by proxy, pricey Brooklyn—has so…
Real estate experts are convinced that the New York region’s housing market is about to undergo a serious correction, according to an article in yesterday’s Times. Analysts expect the coming bust to be significantly worse than it was in the early ‘90s, particularly in New York’s suburban markets. Nevertheless, Manhattan—and by proxy, pricey Brooklyn—has so far mostly weathered the national housing meltdown, and the decline in values here isn’t expected to be as bad as in our outlying suburbs. During the year that ended in November, prices in the NY metro area fell 4.8 percent, according to Standard & Poor’s/Case-Shiller Home Price Indices—a drop that pales in comparison to Sun Belt cities, many of which saw double-digit declines. Still, economists predict that house prices in the region will drop by at least 15 percent in the current correction. Ouch.
Home Prices Start to Dip, Recalling ’90s Slump [NY Times]
I think that what 2:50 is saying – is something the naysayers dont understand.
There are many reasons to buy, not just purchase price.
People will continue to buy during this “downturn”. People will buy for many more reasons than purchase price.
People who make money from Real estate understand finance, tax shelters, etc.
People who make the argument about sagging sales price have never really been in the RE business, and have no idea how to make money.
Its the same principle on why some investors buy and make money when the stock market goes down.
Its a case of serious real estate investors vs arm chair quarterbacks.
Sneaky Pete
2:50….i know a lot of people who have done exactly what you say.
thanks for that.
1:38 you asked about plans for tapping equity. no you dont have to sell and live in a box.
You can take a tax free $250K from the profits on the sale of your primary residence. $500K for married couples. that means you can pull out $500K tax free and put it in the bank if youlived in a property that appreciated for two years.
Also if it was an investment property you can roll over all of your gains into another rental property without paying taxes. its called a 1031.
You can make a 1031 investment property into a primary residence after a year and a day of rental.
If you make smart investments and understand what you are doing you could pull a tax free $500K out of your properties every coule of years.
I can now sell my investment property that has 2 mill in equity, buy a brownstone, and rent it out. If I am smart about it I can use a cash purchase to get a few hundred grand off the sale. After a year of renting it out, I sell my primay residence, pocket $500K and move into the investment brownstone making it my primary.
I sit on it until the market is ripe for a sale, sell it and pocket another $500K tax free and roll the $2million into another 1031.
What tax breaks on renting do you get that work out to mean hundreds of thousands in your pocket tax free?
I agree, 2:41.
I don’t know how these people are ok to plunk down 4000 a month in rent for a 2 bedroom.
Who cares about whether it’s better, worse etc. It just doesn’t feel good to rent.
And that plays a big factor…perhaps the largest factor in people’s decisions to buy. ..
2:02; not sure I’d agree with you that the cost of ownership favors renting in NYC. As expensive as it is to buy, rents in the city are out of control. You can buy an apartment and have similar monthly mortgage/maintenance payments as you would by renting, except you build home equity rather than just throwing cash out the window. If someone makes a conscious decision to rent because they can’t afford a down payment, fine. Or if someone is just waiting because they think the market’s going to crash, fine. But I hardly think that renting is the better overall economic option.
My full time job is for the IRS, but I also teach music out of my home. I’m just saying…I know what’s going on…I know the risks, and I don’t under report so I’m not worried about it.
Studios were definitely hard hit during the last downturn. I remember looking to buy a studio in the mid-1980s and they were running about $90,000 to $100,000 – – a few years later they were down to $60,000 and less — and previous poster was correct that banks simply would not give mortgages on studios. Who wanted a studio for $50,000 when you could buy a 1-bedroom for $60,000?
For the poster with the 450 squ ft studio for $175 K — if the market suffers a serious correction, you may have to stay in your place for a while, but as long as you don’t mind, you will be fine. But the likelihood is that its value will (temporarily) fall more than a larger apt.
You work for the IRS out of your studio apartment – and see “clients”!
I call B.S. on your entire thread
AS a CPA I can tell you that writing off part of your home as business is definately a red flag. However,even if it raises your odds of an Audit by 500%, there is still less than a 3% you will actually be audited. In addition, they will negotiate with you and in the end you will probably still pay less than what you actually owe. It is not a crime unless you are undereporting by more than 25%.
Some risks are worth taking…