Anyone buying in NYC now is outta their freakin' mind... (Yonkers: sale, apartment)

[Guywithacause]

Miles...NYC is certianly not immune to anything..as we have had declines in prices in the not so distant past. The point is...even if people bought during the worst of times, i.e the 70s, and early 90s, with the 70s being a far worse situation than what we have today (rampant arson, destruction of entire neighborhoods, and hundreds of thousands fleeing the city), they would in fact be reaping the rewards today had they had a longterm perspective.

You can try to time the market, but that is a losing strategy 99% of the time. If you have a longterm plan, and buy for the right reasons (and not just to flip or make a quick buck), you will do fine buying at any time and will likely reap the rewards in the future. Is this guaranteed? Nope...but buying a home should not just be about making money..it should be a lifestyle choice, a home, setting roots down, stability, and ultimately security (financially and otherwise).

Playing the waiting game is fine..and works sometimes no doubt. But why pass opportunities on the chance, and that's all it is because nobody actually knows, that there MAY be a better deal down the road? Who knows..I see opportunities and take them..no matter what the environment. If you buy for the right reasons, you will be rewarded. Period.

[Wild Style]

^^

great post

[SouthQueens149]

Originally Posted by Guywithacause

SouthQueens..who cares about historically at this point? Historicall the city has been 99% white...so what? Historically people lived without electricity, with no windows, and no bathrooms..so what? The city has changed since the days that "historically your mortgage should be 3x whatever." Who cares..that is not the case anymore...as demand to live in the city by a global population, not just nationally, is at an all time high, and driving prices through global wealth, not just national anymore.

Life changes,.....it is not expensive to buy into this city. Whether you believe it is worth it to you is moot..as it is clearly worth it to the many who are continuing to drive up the prices. There is no doubt that leveraging has played a role, but what is leveraging without demand? People want to buy here...and are using more leverage out of necessity. At the end of the day..if you believe it is not worth the price to live in this city..99% of the rest of the country is affordable and will provide you with whatever lifestyle you seek.

However, it should be noted that buying anytime is a good idea..so long as you do so for the right reasons (not just to flip) and are a longterm investor. Those who bought when the city was burning, people were fleeing, and the city was at the lowest point of its history, are sitting on huge gains and are reaping their rewards today because of the longterm horizon. Buying then was arguably the worst decision...but clearly..it was not. Same goes for the recession of the early 90s, when housing was abysmal..those who bought during the worst of times are reaping their rewards today.

Same applies to now..those buying..in the longrun...will likely reap their rewards in the longrun. Is this guaranteed? Nope..nobody knows...but I will gladly put my money in real estate in a city that attracts a national and global population, is attractive to all ages, ethnic groups, and races, is the financial engine of the country, and the world for that matter, has phenomenal wealth, has a broad and dynamic high paying, high skilled employment base, the best public transportation in the country, an impressive, historically significant, and extremely diverse housing stock, and STILL alot of upside in developing neighborhoods.

Then again..you can just stick with your formulas.

So the new norm for a mortgage SEVENTEEN TIMES avg. income? Face it, if you make 100K and you live in NYC, you are NOT participating in the real estate market unless you buy in one of the city's more dangerous areas, like Brownsville, which IS NOT undergoing ANY gentrification as we speak. You need 200K to buy a home or 3 bedroom condo in any 1/2 way decent area. The idea that 200K gets you into a wealthy area is FALSE!!!! In fact, name me a few 'wealthy areas' and we'll let the readers here plug in those zip codes into any MLS real estate site and we'll see what homes go for in those area.

Wealthy neighborhoods like the Upper East Side (10021, 10022, 10028,10065,10075,100128) UWS (zip codes 10023-27), are COMPLETELY out of your range at 200K, unless you are single and can deal with living in a very small space (which is fine when you are young and single, not so hot when you have kids)


You can plug in ZIP codes here and look for yourself. Clicking on the map sell sites usually tells you the sq. footage. 444 sq. feet in one listing goes for 435K. How can you POSSIBLY raise a family in 444 sq. ft, and what makes you think someone making 170K wants to live like that? (and this site doesn't tell you the taxes or monthly maintenance, which can get pretty steep in REAL wealthy areas)

REALTOR.com - Real Estate Listings & Homes For Sale

You can use a mortgage calculator here

Mortgage Calculator, Mortgage Payment Calculator - Yahoo! Real Estate

If you mortgage 435K at 6%, you end up with a monthly payment of $2600, and that doesn't include taxes and maintenance. Taxes and assessments on condos tend to be higher that houses. A condo in this zip code is easily paying 5K a yr in taxes. You can check NYC tax rates here

Property Tax Rates

And you can look up the assessed value and property info here

http://webapps.nyc.gov:8084/CICS/fin1/find001I


Who cares about historically?!?!?! Has math changed in the last ten yrs or so? If so, maybe you can tell me how America went from being a country where you needed a 20% downpayment to get a mortgage roughly three times your salary, to a country where just about anyone who can fog a mirror could get a mortgage. In case you haven't noticed, real estate around the country is collapsing because of people who said "who cares about historically?', and many of the jobs in finance that were generated from this industry are NYC jobs. Have you seen the layoffs taking place at Lehman Brothers, Goldman Sachs, Citigroup, Morgan Stanley, etc? That is less money that is coming into the NYC area.

You are selling people a pipe dream that they can afford a mortgage in an avg., desirable neighborhood making 100K a yr. Unless they have a substantial downpayment, they are not going to be able to afford the mortgage, and will become yet ANOTHER foreclosure in a city with a rising foreclosure rate.

Anyone who wants can look up zip codes and prices and taxes at the above websites. If you can crunch the numbers and get yourself into one of NYC's wealthy areas for 200K, then please share it with the rest of us.

[Guywithacause]

Southqueens...I think you are confusing mainstream American with NYC reality. If you are seeking 4 bedroom, 2 baths, 2 car garage, on a 1.2 acre...NYC is not for you...but 99% of the rest of the country is. If you are looking to find a large home to raise a family and send your kids to public schools..NYC is not for you...but 99% of the rest of the country is. If you are seeking a suburban lifestyle, where kids can play freely in the street, without a care in the world for their safety, or yours, then NYC is not for you..but much of the rest of the country is.

$100,000 salary, depending of course on the size of the downpayment and the debts you currently have, will afford you a variety of housing options, including a co-op, condo, and some multifamily options (which include Tenant rental income towards financing). You can be living in anything from a studio in the upper east side, which is quite nice, to a large co-op in Parkchester, to multifamilies throughout the Bronx, parts of Queens, and Eastern Brooklyn, and other options.

The game, for better or worse, has changed..and it now takes alot more money to buy just about anything in NYC. Sacrifices have to be made, it will cost you, and if it is not worth it to you, step aside, because there are others that are buying. I don't make the rules, I am not pushing anything, but that is the reality.

You may choose to deny the reality of 10x income, or 1000x income, whatever the case may be, but this is reality now in NYC. I am not selling anyone a pipedream, I am just making people aware of the reality of living in NYC today, and likely for the foreseeable future. If you believe that all that goes into the valuation of housing in NYC is affordability, it is no surprise why you do not own anything in this city, and likely will never. Furthermore, if you believe that prices will come down to the "3x income" valuation, you will be renting for a long time I suspect.

And for the record..you can get into one of NYC's wealthiest areas, like the upper east side, but you will be living in a studio. If it is not worth it to you, then that is something different than not being able to afford it. The options are there..the question is...is it worth it to you? And for you it sounds like no...but for many...it continues to be yes.

[UpsonDowns]

Guywithacause, I understand your numbers but your argument sounds very similar to the "new economy" days where all the rules had changed during the tech boom - until it went bust.

I don't think things in Manhattan real estate will slide that much, mostly due to co-ops requiring 20% down. But I know plenty of people (with good credit and great income) who bought in other boros with adjustable mortgages with plans to refinance when their property appreciated. I think that is going to be a big problem for at least a few years and will help to push home prices down.

[SouthQueens149]

Southqueens...I think you are confusing mainstream American with NYC reality. If you are seeking 4 bedroom, 2 baths, 2 car garage, on a 1.2 acre...NYC is not for you...

Show me where I said anything about a 4 bedroom home. My examples were a 3 bedroom home, which is what most families of 4 need, and I posted listings as small as 444 sq. ft--That is NOT 4 bedrooms!

$100,000 salary, depending of course on the size of the downpayment and the debts you currently have, will afford you a variety of housing options, including a co-op, condo, and some multifamily options (which include Tenant rental income towards financing).

I gave you every tool in my prior post to help you make that argument. Go ahead, crunch the numbers, tell us what kind of downpayment is needed to afford what kind of space in which neighborhoods. People from all over the world are looking at this website trying to figure out whether or not they can afford NYC, and all you do is talk it up without providing any examples. Hopefully, the above websites I posted will help people do their own math, and I assure you that a 100K salary will require a SUBSTANTIAL downpayment to lower the mortgage to an affordable level.

You may choose to deny the reality of 10x income, or 1000x income, whatever the case may be, but this is reality now in NYC. I am not selling anyone a pipedream, I am just making people aware of the reality of living in NYC today, and likely for the foreseeable future. If you believe that all that goes into the valuation of housing in NYC is affordability, it is no surprise why you do not own anything in this city, and likely will never. Furthermore, if you believe that prices will come down to the "3x income" valuation, you will be renting for a long time I suspect.

Ahhh, yes, the 'This Time Is Different' argument. Mankind has heard this refrain many times throughout history, from the Tulip Mania in 1600's Holland to the Tech Bust in March of 2000, to the collapsing real estate market today.

FYI: a mortgage 10X your income is a recipe for foreclosure. If you make 60K a yr and try to mortgage 10x that amount, your payment at 6% interest would be about $3,600 a month--and that doesn't include taxes or utilities (if it's a condo, add in monthly maintenance charges) When you figure that your avg. 60K wage earner only clears about 4K a month, you can see that isn't possible--Can you say 'foreclosure?'

No Virginia, this time isn't different. Go plug some zip codes into MLS and then check your mortgage amounts. If you can buy enough space to settle down here and raise a family on 100K, then God Bless and Good Luck.

[Guywithacause]

At the end of the day, prices will not revert to the days of 1990, or whatever time you believe prices were fair, reasonable, and affordable. Maybe they will..nobody knows...but I believe that prices in NYC due will remain "unaffordable", as there housing "crisis" is in reality, alot of hype..and not much else. Yes foreclosures are up, but I believe of all outstanding mortgages, something like less than 1/2 of 1% are at risk...which is a TINY INFINITESIMAL group.

Will prices in NYC likely slow, stagnate, and possibly decline slightly...sure...why not..that is normal and healthy as the recent run up was fast and furious. Some pullback is normal and needed...and that is what is happening. But if you have a LONGTERM horizon, it does not matter where prices go today, tomorrow, next year...because your horizon is longterm. If you plan to time the market...good luck..as everyone else is trying to do the same..and 99% never succeed.

Buying in the 70s which was buy far the worst time in the city in recent memory, when arson and total destruction of entire swaths of the city, as well as a huge exodus of the middle class and others abandoning the city, was arguably a terrible time to invest in RE. And had you been a short term investor..it would have been! Of course, those that had a longterm horizon, as housing should be, are/have been rewarded immensely.

What does this mean? It means no matter when you buy, in a huge housing downturn (or rather collapse as was the 70s), or during a huge market appreciation (as was 2002-2007), buying with a long term horizon, and for the right reasons, will prove fruitful. Opportunities are available in both housing busts and housing bubbles, it it those that can identify them and take advantage of them whom are successful.

The majority of people, in my experience, maintain the below mentality, and it cripples them from doing anything in life:

1-During the Housing Boom: Housing is escalating too fast...appreciation is unsustainable, the appreciation is artificial based on speculation, leveraging, blah blah blah...it's gonna crash. There is no way I am gonna buy now.

And these same people now have this mentality:

2-Housing Slowdown: Housing is now crashing, foreclosures are skyrocketing, no more mortgages, credit is tight, prices are dropping for a few years, nobody in their right mind would buy now!

What is the result? These people only focus on the negative, complain, and always find a reason to do nothing! These are the same people who complain that areas in need, like Bed-Stuy, Mott Haven, Harlem, etc were abandoned for so many years due to racisim, etc and begged for investment. When investment finally comes to these communities, it is now viewed as an "assualt on the community" and "whites trying to kick people of color out" etc. See a trend here?

You can choose to ignore the hype, and buy based on your personal circumstances, a longterm horizon, and when opportunities present themselves, or you can just complain, be negative, and be paralyzed forever. The choice is clear to me..and to the many who continue to move forward despite the hype...and these are the people who are successful in life.

[UpsonDowns]

Originally Posted by Guywithacause

What is the result? These people only focus on the negative, complain, and always find a reason to do nothing! These are the same people who complain that areas in need, like Bed-Stuy, Mott Haven, Harlem, etc were abandoned for so many years due to racisim, etc and begged for investment. When investment finally comes to these communities, it is now viewed as an "assualt on the community" and "whites trying to kick people of color out" etc. See a trend here?

Actually, I was on the bus in Harlem yesterday and heard two long-time residents discussing this exact issue. They weren't angry at white people, they were upset that long-time residents had not been able to get financing to buy/restore/maintain homes due to redlining in the past. They were upset about the recent financing opportunities that were available to newcomers of all colors and how the long-time residents had been left behind due to economics. Gentrification is often about green, not just black or white.

[Guywithacause]

It's all about the green....America's greed drives innovation, public policy, and is intertwined within our social fabric.

[njguy]

Lets sum this up - If you want to purchase real estate and want to live in the NYC metro area (which includes NJ and a part of CT) earning the average $42K/year salary = YOU'RE SCREWED!