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Don't buy in Queens now. Wait 2-3 years for market correction to kick in. Owners still expecting ridiculous prices idiot neighbors got during housing frenzy of past 5-10 years. Recommend you continue renting/saving during wait time.
Best.
Miles, how are you buddy?! I think that's what we'll do. For now, however, I want to become more educated and gather as much information as I possibly can. I want to be a smart investor.
I still want to hear a pro-ownership argument which outweighs pro-renting. Yes the place is your own, but if you can't rent it out to whomever you want or if you don't want to rent it out at all, what exactly is the benefit? You can rent a beautiful apartment for the same price and get excellent amenities without the burden of the debt or the $20,000 lost on the principle/interest rate. I can think of many things I can do with that 20K. It's easier to move around if you are renting, where as if you're selling it may be a pain or you may even lose money.
What am I missing here, except the status advantage?
Miles, how are you buddy?! I think that's what we'll do. For now, however, I want to become more educated and gather as much information as I possibly can. I want to be a smart investor.
I still want to hear a pro-ownership argument which outweighs pro-renting. Yes the place is your own, but if you can't rent it out to whomever you want or if you don't want to rent it out at all, what exactly is the benefit? You can rent a beautiful apartment for the same price and get excellent amenities without the burden of the debt or the $20,000 lost on the principle/interest rate. I can think of many things I can do with that 20K. It's easier to move around if you are renting, where as if you're selling it may be a pain or you may even lose money.
What am I missing here, except the status advantage?
Hey Entangled, good to see you! I'm attaching a graphic from the NYT where you can plug in variables and see how long it takes to breakeven in a rent vs.buy scenario.
Just bear in mind that the national, state, local economies are in their present demise largely because of the high living and overspending of the past 5-10 years. Banks and other financial institutions heralded the days of champagne and caviar by lending money to anyone who had the subway fare to make it to their offices, regardless of ratio between income and home price. The mad frenzy included debt of any and every kind - credit card, mortgage, home equity, unsecured personal loans.
For 5-10 years, owners, flippers, investors, brokers, banks had a heyday. The frugal who stood aside while this madness exploded, are unfortunately now being asked to pony up to help bail out the spendthrift institutions and consumers. Yeah, we are all foced to be our brothers' keepers.
Nowhere is the greed still rampant as in Queens, NY - a borough which I happen to love and consequently am deeply disturbed at the status quo which is stalling my own desire to purchase a home there. You look at the market there and you see some crappy homes, 100 years old, in need of total overhaul, still on the market for half a million to three quarter million dollars! The same avarice can be found with the sales prices of co-ops and condos. Co-op and condo boards continue to insist that owners request purchase prices from prospective buyers based on prices that are no longer valid.
True, much of the rest of the country has started to adjust downward to more realistic levels. I fear that in NYC - especially in Queens, Manhattan, Brooklyn, it'll be a while before owners, boards, brokers, etc., pull their heads out from that body cavity where their heads do not belong, and learn that banks are no longer lending 100% to buy a home and that futhermore, lenders are now returning to traditional criteria that look at income vs. home price.
I suggest that you and hubby hang in there, if you have a nice place to rent now, and wait for a few years.
Miles, how are you buddy?! I think that's what we'll do. For now, however, I want to become more educated and gather as much information as I possibly can. I want to be a smart investor.
I still want to hear a pro-ownership argument which outweighs pro-renting. Yes the place is your own, but if you can't rent it out to whomever you want or if you don't want to rent it out at all, what exactly is the benefit? You can rent a beautiful apartment for the same price and get excellent amenities without the burden of the debt or the $20,000 lost on the principle/interest rate. I can think of many things I can do with that 20K. It's easier to move around if you are renting, where as if you're selling it may be a pain or you may even lose money.
What am I missing here, except the status advantage?
It's a little more than that,Entangled.
For one thing ,a well run coop or condo is usually better maintained and can provide a more civilized life . Quieter,cleaner,etc. It comes down to a quality of life issue. Granted this is not always true but it tends to be.
Secondly, you really can't rent an apartment for the same price after you factor in the tax benefits that you get from ownership.It all depends on your tax bracket of course but there are great benefits to deducting all of your interest payments,and share of property taxes.I now get a huge refund after I file my income taxes where i used to get none. In a way,it's like extra income.
If you have a long term commitment to living in New York nothing can be better. I regret that I didn't buy an apartment 25 years ago when a lot of my friends did. A lot of them are nearing the end of their paltry $250.00 a mo mtg payments and sitting in huge comfortable apartments for less than 1000 a month including mortgage and maintenance on apartments that they would have to pay 4,000 or more a mo to rent today.To say nothing of the fact that in some cases they paid like 70 or 80,000 for apartments that are now selling for a million or more.
I guess it boils down to the fact that as long as you are renting your rent will continuously escalate into the future with nothing for it ,whereas by owning you are sort of paying the rent to yourself.
Nowhere is the greed still rampant as in Queens, NY - a borough which I happen to love and consequently am deeply disturbed at the status quo which is stalling my own desire to purchase a home there.
True, much of the rest of the country has started to adjust downward to more realistic levels. I fear that in NYC - especially in Queens, Manhattan, Brooklyn, it'll be a while before owners, boards, brokers, etc., pull their heads out from that body cavity where their heads do not belong, and learn that banks are no longer lending 100% to buy a home and that futhermore, lenders are now returning to traditional criteria that look at income vs. home price...
I agree with most of what you say here Miles but re "the status quo"... markets don't always behave the way people expect.An apartment in my building in the same line as mine and in exact same condition as mine when i bought a year ago just sold (closed) 2 weeks ago for almost 10% more than I paid.So in some cases it's not just that sellers and boards have their heads buried in the sand. In certain areas and in certain price ranges thing are selling .
I was a little perplexed by this until it was explained to me that in The Bronx and presumably Brooklyn and Queens the coop and condo market is holding up well at the same time as the numbers on houses are going down.The reason is that many buyers who were looking for a house when things started to go down and financing became more difficult have switched gears and are buying apartments instead.It's like they were looking for a 3 br house for 450,000 and had actually saved up a $45,000(10%) downpayment which suddenly became not enough so their retreat to safety was to make that 45,000 a 25% downpayment on a 200,000 or 250,000 2 br apt.
There also seems to be significant numbers of people who had been looking in Manhattan and Brooklyn who are now looking and buying in The Bronx and maybe Queens too as a more "conservative" move.
None of has us any way of knowing if these trends will continue but it just illustrates that markets sometimes have a mind of their own.When the downturn started it was predicted that values in secondary areas( the boroughs) would fall first and the most but so far that hasn't been what has been happening.
Everyone should forget about looking at their shelter as a money making thing.
Thats what I don't get...too many people are trying to be fake real estate moguls by flipping apartments. Since when did owning a home lose so much respect? Nowadays its looked upon as an investment instead of a place to raise your family. My mother and father bought their condo in Far Rockaway for $50,000 in 1982. 3 bedrooms, 1.5 baths, driveway, indoor garage, pool access and about a 30x12 backyard. now the house has been appraised for $450,000. never in their dreams did they think they would get so much appreciation on the house because they were looking at it as a place to start their family. i think the investment issue should be looked at as the icing on the cake. i dont look at owning a home in that way. if thats where i'm going to buy, i'ma stay put until i'm retired (maybe). thats about 40 years from now. no way in 40 years ima lose money on something i bought 40 years ago.
__________________
"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
although we call a home an appreciating asset its part of a much larger picture called your overall housing costs... because you live in it these costs are all paid by you and accumulate over a lifetime unlike rental property or investment property which you pay off the income . . the rise of the house in value over time merely offets the giant lifetime expenses of all the costs a homeowner has for the priveledge of owning that home..... your taxes, mortgage interest, repairs,renovation,maintaince,landscaping,insuranc e ,the gardner,the snow plow guy, the list goes on and on.
a lifetime in housing costs are really measured in who lost the least the buyer or the renter, not who made the most as those expenses whether you rent or buy usually eclipse the value of home appreciation over a lifetime. it never stops accumulating even if you sell a home and buy another... like rent just keep adding it all up over a lifetime.
soooooooo if your buying a house think of it as a consumption item, not an investment, think of it as a collector does of fine art, or your jewelry. its something you use and consume and costs you money. the fact a home rises may or may not mitigate the expenses to put you ahead of renting
buy a home for all the things a home can give you (good or bad)
the joy of owning something
doing as you please
the security of owning a payed off home
relatively fixed costs compared to renting
the fun of renovating and changing
etc
while technically a renter appears to be at a dis-advantage because hes not buying anything with his rent that may not be true in alot of areas or situations . here in the greater new york area the cost between renting and buying initially is 1/3 to 1/2 less a month and no massive down payment... it takes about a decade for the rent to equal the costs of buying at the 2 to 3% a year rent increases. each year though the renters advantage grows smaller and smaller as the rent goes up . all though just real estate taxes in alot of areas see bigger jumps the costs are offset with tax deductions on some expenses so its all about what the renter did with the money saved each month and down payment money that determines most of how a renter does.
you cant compare renting vs buying unless you have the renter putting equal amounts of money as well into an appreciating asset. thats where most comparisons fool us, they rarely do this. historically equities have outpaced home appreciation by 2x with alot less expenses in the early years of renting.
i can tell you because home real estate appreciates long term just above the rate of inflation in most markets a person who invests the money he planned to buy with and the money he saves each month compared with buying in nothing more than a mix of diversified index funds stands a great chance of coming out further ahead ...
infact i can say with my own expierience that if you were going to pay cash for the house like i did when i bought my house back in 1987 in queens ny and instead put that money in that same mix of funds (i did that also) i can tell you that today you can subtract out all the rent you would have paid for all those years and still have enough left to buy over 2 houses .....
you have to take a step back and stop looking at just one aspect of your overall cost of housing which is where everyone fixates THE HOUSE
and look at the total costs over a lifetime to know if you spent less renting or buying..... chances are they both cost you and took money out of the ole piggy bank and not made you richer .... housing costs are like food costs, they are expenses not gains
for a eye opening idea of expenses look at only 2 of the many components of expenses a homeowner has , taxes and mortgage interest,,, those two alone usually need the house to appreciate at least 3x and probley more in 30 years just to clear the after tax deduction amount you paid in...
most people pull out one piece of the puzzlel the house cost and what its worth without looking at the big picture namely a lifetime of housing costs and merely look at one aspect without the other parts... since we dont know how much future appreciation will be, we dont know rent increases, we dont know your future expenses or how many times you will sell a house and buy another and incurr more costs there is no answer.. in fact the biggest part on the renters behalf who chose to invest else where and rent is we dont know future market returns..... your trying to predict an outcome thats impossible... we dont know who will spend more in housing costs when all is taken into consideration.
picture it as if you were an investor.. you made big bucks on one investment (the house) but all your other investments tanked.... overall your down , the big gains of the one investment merely mitigated the overall loses
the jury is still out as far as whether the age old debate, is it better to buy or rent financially ?... there is no answer and probley never will be
bottom line is:buy a home because you want your own home for all the non monetary reasons you can think of... dont try to compare renting vs buying for monetary reasons... you cant.... there are to many future variables and local market conditions that you cant compute.... typically taxes alone go up more than 10x in 20-30 years
there is no hard and fast rule as to which is better, you guys are arguing about somethings thats akin to arguing about future weather or sports scores......
you want a house, buy a house... in the mean time if you want to think about investing think about what to buy at these sale prices in all asset classes as when these prices turn around eventually there are going to be some very very wealthy people coming out of this
those that had the balls to buy equities, junk bonds, investment real estate etc and watched it drop even further because they boughtv a little early may be rewarded very nicely for their torture....
i maxed out all my equitiy positions this week as we now retraced 1/2 the gains from the beginning of the bull market in the 1980's....... i may be a little early to the party but all im giving up for the wait is 1% or so in money market interest... im expecting the typical 30-40% gain we almost always get the first year out of the hole in the equity markets and i dont mind waiting it out
Last edited by mathjak107; 02-28-2009 at 04:45 AM..
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