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]
3:34 – the “way its always worked” in RE investing was actually to make money on the INCOME; re-financing as the income levels increased and using that $ to buy more Cash flow positive properties.
The concept of buying into areas on the speculation (i.e. where income barely covers expenses) that it will improve and appreciate is a relatively new one (since for many generations, areas didnt improve for one).
3:33 – very simple – if you invest the $ you DON’T pay in interest (after deduction still pay about 60%), don’t pay in maintainace, taxes, brokerage fees, taxes, plus the return on your money that you DON’T use as a downpayment (tax free muni’s? 4% in a money market, whatever) and again if your home DECLINES in value then you make money by NOT losing.
Your “I can’t lose in RE” is exactly the mentality that has resulted in the disaster across the country (and eventually maybe here)-
there are no ABSOLUTES in this world except death – it always depends….. and the fact that you cannot concede this is absolutely frightening.
3:@6 – actually I own my apartment along with about $15M in commercial RE….
And anyone who tells you that under ALL circumstances owning is better then renting is (by definition) Not credible.
Please (roughly) outline a model where owning is better then renting if the value of the asset declines by 10% over the period of ownership????
Again I will repeat if the asset APPRECIATES then your right – owning is probably better – but otherwise it is likely that renting will work out better.
I mean what your saying is so stupid – In your world renting a rent-stabilized 6room apartment for $1200mo would be financially worse then buying the same apartment (lets say in Brooklyn Heights) for 2 million dollars – even if the apartment didnt appreciate over the period of ownership- its ridiculous – it ALWAYS depends – on the cost of owning, rent levels, the cost of borrowing, the lost opportunity cost of $, price appreciation, cost of up keep , etc, etc, etc.
The best way to make money in the current real estate climate (and this has always been the case) is to search out the next best thing…
Go buy in Kensington or Ditmas or Brooklyn College area. These are areas that are undervalued and while they may see a harder drop in home price in the near-term, their potential for long term growth is significant.
This is how it always worked.
3:28 – you are hopeless. Keep on renting you will never be able to figure it out.
None of those things depend on a rising market.
Have you ever purchased a property?
Please explain to us how renting makes you ANY money even $1.
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.
-Without selling – how are you going to “pull out the $”?
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.
-NOT tax free – tax deferred and only if you identify another property withing 90 days – great in a rising market – when things are a little dicier doesnt exactly leave a lot of time for due dilligence
You can make a 1031 investment property into a primary residence after a year and a day of rental.
-Except your basis is the lower amount – so when you sell you’ll have a larger cap gains tax to pay.
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.
-Out of your primary residence?? – Let me tell you, if you can guarantee a 500K return every couple of years on single family housing units you would be a billionaire – all these plans you have depend on 1 thing – a rising market!
I think the primary reason most people decide to buy instead of rent is because who out there wants to end up at 65, on a fixed income, wanting to retire and have to succumb to rent hikes, evictions or the like???
Buy if you want a stable life.
Don’t buy if you’re fine to wing it.
It’s as easy as that.
3:21 – I feel sorry for you.
Renting is never the best bet.
Renting is something you do when you cant afford to buy.
You obviously have never owned and have no idea about finance.
You have no idea about monthly costs of owning versus renting. If you have tried to model it out, obviously your model is completely wrong.
Talk to ANY investment advisor (credible) they will NEVER tell you renting is a better bet than owning.
All will tell you to buy whenever you can and plan on being there for a while.
Do you also promote smoking to be healthier?
2:41 -1st I disagree that apartment for apartment the maintainance/mortgage payment is comparable to the rent (in my experience – currently the rent is significantly less).
Second only a small portion of your monthly payment goes into equity – the rest is the same as rent – thrown away (albeit only about 60cents on the dollar for interest&tax component due to income tax savings), not to mention you lose the return on your down payment (conservatively 5%).
You have also zero maintenance costs on a rental and when you move you have minimal to zero ‘closing costs’ (i.e. even if your coop’s value goes up a bit – brokerage, taxes, fees etc….will eat into the “profit”)
So I’ll say again this is a pointless debate – if housing goes up between the time you buy and sell then your right – ownership makes the most sense, and if prices fall or even stay flat – renting is probably your best bet…..what does the future hold – NO ONE knows