Humanly possible for a mid 20s couple to afford to buy? (New York: sale, 2010)

[wolfgang1]

Originally Posted by SLP247

You are looking at short term. 10 years is a typical Real Estate Cycle. Historically, since the Great Depression, homes have always appreciated in value over a 10 year period. This is not Artificially Inflated Prices. There is a famous quote " Buy Land, they are not making any more of that stuff" Its true and because of such, land, especially improved land, does increase in value. What made a property (house) appreciate $50k or more per year? DEMAND! Had nothing to do with the people who lived there, had nothing to do with the banks. BUYERS were fighting over properties and started to Out Bid each other. This and THIS alone pushed home prices North faster than Appraisers could keep up with it. Once demand was filled and inventory levels began to increase, prices started to stabilize and then drop.

There are still many areas in NY where homes are continuing to appreciate and demand is out pacing inventory.

It is hard to believe, but 10 years ago, salaries being offered to college graduates were unheard of. 10 years before that and no one could imagine that anyone coming out of college could earn that much money.

Same applies to housing.

Yes, 10 years from now, todays buyers will have positive equity in their homes. even people who bought 5 years ago still have equity if they did not already pull it out.

It would be hard for me to argue that a home today will have a higher pre-inflation market value in 10 years time. Predicting what the market will look like in 1 year is difficult enough.

That being said, I think what we can do is take a closer look at the source of the demand in the last 10 years. Was it a true desire to live in these towns, or was it a "Gold Rush" mentality? In my opinion, panic buying accounted for a significant amount of the home value appreciation in this boom.

As I said earlier, Westchester is showing resiliency. California's bubble exploded in comparison to NY thus far. I think much of NY will have a slow leak which still has some time to go. The Dow can drop 10% in a single day. Real estate markets can not.

Originally Posted by SLP247

I think this is called Entitlement and its a very dangerous attitude to take as there is no satisfying it. Never before in history of our country have so many young people lived so well. Our parents and our parents parents struggled just the same as many are struggling now. It is not an age issue.

Many of the housing laws on the books today were put in place to stop over crowding that occurred when our grandparents or their grandparents would live 4 to 5 and even more in a one bedroom apartment because thats all they can afford.

If you really want to buy a house, regardless of the type, it is possible and now is a great time to buy because of the housing prices coming down to levels not seen in a few years.

Of course my parents and grandparent made sacrifices, there is no denying that. My generation is notorious for having a sense of entitlement. I think my generation has had a lot of opportunities. We are well educated, driven, and I admit- very lucky. But that instant success doesnt equate to much. We can buy cars, clothes, and eat at the most expensive restaurants (Note that this is a general comment about my generation, and I am actually very frugal in order to save for my future) but homes are a different story.

The point here is, logically, what do the 20somethings do in this area? My friends are Lawyers, Bankers, Accountants, Teachers, etc. Some took the plunge and drop thousands on mediocre apartments somewhere near NYC. The majority live with their parents with no end in sight. Ironically, most of these people actually make as much or more money than their parents. After college, it's high school all over again in this area - Minus the school, plus the job.

What now for our young professionals? Do they suck it up and settle, or flee? And if they flee, who buys? We are the first generation to be up against a real estate market that is not nearly in line with incomes. We have an interesting decade ahead of us, and the end result may mean westchester becomes a county with an average age of 70.

[SLP247]

Hi Wolfgang,

When I quote home appreciation figures, I am going back to when we started to keep records on such. That's the 1930's for most areas in mid to southern Westchester. Northern Westchester started around 1940 and up.

If you talk to people who have lived up here for a long period of time. 20+ years or more; Everyone of them will tell you the same thing. Either They or their parents moved "Up Here" because they could not afford to live in the city, Southern Westchester or any place in or around Manhattan.

I myself, do not live in Westchester anymore because I could not afford it. I grew up in Northern Westchester. My parents moved there because they could not afford to live in Pelham Manor area where their parents lived. It just keeps repeating its self.

I sell houses every year to a couple that is moving north because they can not afford the prices that are south of where they are currently looking.

So NO your situation is not unique, it is not new and it has been around since the inception of Manhattan. For the record, here is how it works. People start off in Manhattan and continue to move north until they retire and then they head south, either back to Manhattan or to any number of Southern States.

There is a term: First Time Home Buyer. This is who I specialize in working with because the reward for exceeds the pay check. First Time Home Buyers appreciate what you do for them. Buyers who are simply upgrading to one of their mc mansions (not happening too much these days) are usually very demanding and most, not all, are unappreciative of anything you actually do for them. The ones who are appreciative are usually long time clients working their way up the property ladder (another term that tells it like it is. Start at the bottom and work your way up)

So what is someone like you to do? Move to a place you can afford. The area around Manhattan is surrounded by GREAT places to live. This includes Westchester, L.I., N.J. and Pa.

I have plenty of neighbors here in Dutchess that commute to Manhattan every day. FYI: 1 1/2 - 2 hours each way! They do it because they have to.

[havoc315]

SLP hit the nail on the head. For the most part, Westchester prices were not inflated by a "gold rush" mentality. For the most part, it was simple laws of supply and demand, at a time when New York City jobs were producing a great many affluent workers.
It's not that people wanted to live in Westchester because of some fad, or because they erroneously believed that the roads were paved with gold.
People want to live in Westchester, because it's a nice suburban area, with excellent schools, CLOSE to Manhattan.
Whether today, or 25 years from now, Westchester will be close to Manhattan.
And as long as top paying jobs are located in Manhattan, then Westchester will always have a premium.
Yes, it may be "sad" that a middle class worker can't afford many Westchester communities. It can be deemed sad that a family composed of Scarsdale teachers, can't afford Scarsdale for themselves.
But it's the simple rules of free market supply and demand. They aren't making more land. Even with improved transit over time, other areas are not going to become 30 minute commutes to Grand Central.
So as long as Manhattan churns out workers earning 200K+ per year, many of those workers are going to want to settle in Westchester, and will create a high demand for homes.

Yes, it's absurd that a small raised ranch that sells for 200-250K in most of the country, can go for almost a million in Westchester.

But it's simple supply and demand. And Westchester will always be demand.

For buyers, now is a relatively good time. With the slowed economy, especially on Wall Street, there is a dip in demand, and prices are back down their 2002-2003 levels, but if you're expecting prices to return to 1995 levels, then you may as well buy the Brooklyn Bridge.

[wolfgang1]

I do agree that NYC does pump out high earners looking to live in Westchester / LI. This is not anything new. People were making tons of money pre-bubble as well. So sure the true demand can be part of the cause, but not all, or even most. There is no way the Westchester market coinsodentally boomed due to actual demand at the exact same time the rest of the country boomed as a result of the greater fool theory.

Again let me reiterate. I am not looking for a mansion, or even a house. A 1 or 2 bedroom condo in a safe neighborhood for under 250k would be nice though. I won't spend 300k+ for something that was under 150k in 2002. I cant wait to buy a condo somewhere else in the country CASH, or take out a 15 year mortgage for under 1000 a month and pay 1/4 of NY taxes while getting paid a whopping 5% lower than I do here.

Why are we still here?

Let's come back to this thread in a year and see where the market stands. I think Westchester will see a 35% dip from its peak by 2010.

[LightningMcQueen]

Originally Posted by wolfgang1

I know prices are decreasing, but westchester seems to be showing some resilience, at least for the time being. We're looking for a condo/coop in a descent area and in a decent complex. Nothing fancy - 1 bedroom, under 1000 square feet for under 300,000 (the smaller the mortgage the better).

Schools do not matter for us. No kids. We'd prefer to be by a metro north station, and would like to be somewhat more north (no new rochelle / yonkers). We wouldnt mind being near white plains but probably not in white plains as we are concerned with some parts not being too safe.

Our alternative would to flee the NY area completely to somewhere more affordable.

I see you got many reponses. I haven't read thru everything so I don't know if anyone has pointed out that there are 1 BDRM co-ops for under $300K in White Plains and also along Garth Road in Scarsdale. Have you looked at the co-ops in Garth Road?

[havoc315]

Nobody knows when the real estate market will bottom out, but a lot of the so-called experts are suggesting we are getting near the bottom now, at about a 20-25% reduction off their high prices.

Moving to your comparison of Westchester to the rest of the country-- You are correct, prices were inflated almost everywhere, including Westchester. But the point is, Westchester is not *more* inflated than other places. Anybody who is waiting for single family homes in Scarsdale to fall towards the national average of $250,000 for a full house, will be waiting for the apocolypse.

As to your purported salary differences-- It depends on what you do. For some professions, you may be able to make a similar salary in other parts of the country. For other professions, you need to stay in an expensive metro area.

I do believe you should relatively easily be able to find a coop or condo in your price range. I have family living in coop in Mamaroneck, that fits in your description.

[bmwguydc]

If you don't mind being a bit further north than White Plains, check out Mount Kisco and Bedford Hills.

You can also find a good number of townhouses and condos in that price range over the border into Connecticut, around Danbury. Stamford might also have something in range, and you can still find a condo for around $300k in Ridgefield, CT. Ridgefield offers easy proximity to Katonah for the train, making it much more attractive than Danbury which is a longer ride to the Harlem Line train at Goldens Bridge or Brewster. Also, Danbury is a marathon commute via train to Stamford and then into the city, taking the train from Connecticut the whole way. The nice thing about Ridgefield is that one need not fear marginal areas when purchasing at a relatively lower price point for the neighborhood, since there's nothing to fear in Ridgefield. And, you're not far from Katonah/Bedford/Mount Kisco for the train, dining, shopping, etc. There's even a bus link to Ridgefield from Katonah MetroNorth stationnad Danbury to Brewster. It might be worth a look, and can be more attractive when one factors the property tax rates of Connecticut.

Here's a link for HART buses: http://www.hartct.org/schedules.htm Look for the Katonah-Ridgefield and Danbury-Brewster shuttles for information.

[wolfgang1]

How is that Garth Road area in Scarsdale? A lot of coops for sale but honestly nothing that really jumps out at me. Looks like a lot of the buildings are pretty old.

As far as further north, the closer to the city / a train station the better. But as long as there are express trains running that can get me there in around 45 minutes, it's worth looking into.

[hsw]

Know several <30yo financiers who work in Manhattan or Greenwich who've earned >>$1MM+/yr for years who live in rented condos or houses and have little financial interest in buying an apartment/house in future....

Not clear to many astute financiers that owning a well-built and situated house in a desirable suburb is necessarily a desirable investment, even over 10+ yr periods....

Interestingly, would observe that if one compares costs of land and new houses in desirable suburbs (w/competent, safe public schools) of allegedly cheap places like Dallas/Houston, etc, (e.g., Dallas' Highland Park), one realizes that places like Westchester/Fairfield aren't necessarily more costly....largely b/c desirable land is cheap and plentiful (and scenic), as are decent public schools, in many upscale suburbs of NYC...

[jdhall1]

A lot of Danbury commuters do take the train from Southeast or Brewster since it is a lot quicker commute than taking the train to Norwalk & then down to the city. Ridgefield is considerbly more expensive than Danbury. Currently (11/5/08), there are only 9 single family homes on the MLS under $400,000 in Ridgefield out of the 260 homes on the market. However, 20 of the 35 condos are listed under $400,000.

Good luck!