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Mathjak, you have provided a lot of good information lately and I am sure many, including me, have appreciated it. I want to comment on a couple of things
New York City is the absolute worst place to be a landlord. It is THE example on how Rent Control (and later Rent Stabilization) does not work. I think once you limit rents to other than market rates, landlords do less, developers build less, etc. I do not blame you one bit for wanting out of the the landlord business. It can work in other areas however.
I think inflation has caught up with housing prices in a lot of areas. It has mine. Nobody is building new homes here because they cannot build them for less than the price of existing homes.
most of nyc has converted to co-ops over the decades to have a light at the end of the tunnel for multi-family dwelling landlords... as soon as the origional tenant moves out in a co-op that apartment is no longer rent controlled. then market forces take over and take rents to what ever level is the level at that moment. thats regardless of what you yourself may have as your monthly nut as the owner.
more typically here in nyc rents are good for 2-3% a year in increases. even now in this enviornment we ourselves got a increase of 3% a year just 2 days ago in our new lease.
except for luxury co-ops which are deregulated there has been no rental buildings put up in all of nyc since the 70's as far as i know except some low income deals the city put up. the end result is nyc has higher rents for everyone else except the select few that have been in their apartments for a decade or more. there really is a shortage of good rentals. but even so it still takes almost a decade here for a landlord to break even based on todays purchase price vs rents.
rents have just not kept pace with the increased costs involved with buying here... while fewer people had the money to buy as prices rose even fewer people could afford the rents associated with the costs at those higher prices so we have a big disparity here beween the rental prices vs cost to buy. it can be as much as a 30% difference not counting the down payment and closing costs between the 2...
i would never go by costs of putting up new homes anymore and what the true costs are. , we are seeing now where builders are selling 350,000 dollar homes at 250,000 prices and still making money, these are driving down existing home prices in many of the areas we looked when we were searching for our PA or upstate new york home.
most of nyc has converted to co-ops over the decades to have a light at the end of the tunnel for multi-family dwelling landlords... as soon as the origional tenant moves out in a co-op that apartment is no longer rent controlled. then market forces take over and take rents to what ever level is the level at that moment. thats regardless of what you yourself may have as your monthly nut as the owner.
more typically here in nyc rents are good for 2-3% a year in increases. even now in this enviornment we ourselves got a increase of 3% a year just 2 days ago in our new lease.
except for luxury co-ops which are deregulated there has been no rental buildings put up in all of nyc since the 70's as far as i know except some low income deals the city put up. the end result is nyc has higher rents for everyone else except the select few that have been in their apartments for a decade or more. there really is a shortage of good rentals. but even so it still takes almost a decade here for a landlord to break even based on todays purchase price vs rents.
rents have just not kept pace with the increased costs involved with buying here... while fewer people had the money to buy as prices rose even fewer people could afford the rents associated with the costs at those higher prices so we have a big disparity here beween the rental prices vs cost to buy. it can be as much as a 30% difference not counting the down payment and closing costs between the 2...
Where are you getting your information from? Rents are plentiful and going much lower in NYC. This is what I've heard anecdotally, and what I've read in the NY Times as well:
rents in desirable areas are not coming down in any numbers.. the rent stabilization board passed a 3% one year, 6% two year increase effecting every rental that falls under their guidelines, pretty much 6 family and over are under their guidlines unless they meet special guidelines and are exempt .. thats over a million apartments with an increase right off the bat. that pretty much governs where un-stabilized rents go.. you see some deals in the newspapers or craigs list but most new yorkers have seen their rents increase because we are mostly multi family dwellings in manhattan and queens
that article is pertaining to the luxury market which is over 2,000 a month... they are a tiny part of the rental market here and are not under any rent guidelines.. some of that segment has come down but they were way high to begin with.
where do i get my info? ... i got my new stabilized lease on friday
as well as we own apartments ourselves with rent stabilized tenants as well as un-stabilized.
Last edited by mathjak107; 11-02-2009 at 06:51 AM..
"The delinquency rate on loans in its single-family guarantee business rose 0.28 percentage point to 4.45 percent in August, the most recent data available. That was well above the rate a year earlier when it was 1.57 percent."
Now, who wants to tell me again why it is a great time to buy?
Because you are ready. That's what I did and it worked for me.
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Originally Posted by mathjak107
one of the things i learned in my 24 years as an investor is that if you think your smart enough to time things, any things, odds are your going to get it quite wrong.
think about it, the biggest drops in things happen when things never looked better and that asset class is soaring.
when things look the worst and the word house or stocks make you want to vomit , that where the biggest gains start.
anyone remember business week magazines infamous "death of equities issue" ?
in the 70's stocks performed so bad for so long and with no bottom in sight. buisiness week magazine ran an article in 1979 featuring a tombstone on the cover and officially declaring equities dead as an asset class.
well from the very next day the greatest bull market in history started soaring to new highs for over a decade producing wealth beyond anyones wildest dreams.
in my experience i find those that dont act for one reason or another are always the same folks that wait so long for the ship to come in the pier collapses. by the time they finally make a move to do something the party is half over or over. alot just never act paralayzed with fear that things can still go lower.. then they complain how they never make money in anything and are better off in cd's.
i have always been rewarded well by getting to the party a little early and waiting. i never catch the bottom of anything but i can tell you im usually in that party when it starts even if i have to wait 5-6 months for things to bottom. the biggest gains are always very early in the game while all the chicken littles are still wondering if this is for real or not.
we still have all those people even now waiting to get back in to the financial markets as soon as they see signs we are turning the corner...
i hate to tell them but thats the time to start taking money off the table, they missed the juciest , easy gains, that ship sailed by the time things start to look rosey.
its up to everyone to decide whats right for them, im just telling you whats right for me,.
2 years ago we wanted a house in the pocono mountains of pa . i negotiated the best deal i could for that market and bought a house.. i dont regret it for a second and we will move there full time next year. i couldnt care less if it went up or down...its my home.
prices may not move that quickly on a home but mortgage rates only need to move 1 point and its like the home jumpong tens of thousands of dollars. - WRONG!!!
im not a speculator and i never bet on timing things but id say mortgage rates stand a real good chance of jumping from these historical lows and increasing your payments further then any further price drops will decrease your payments. - RIGHT ON PART 1, WRONG ON PART 2 (prices drop as the cost to borrow money increases)
quite a few areas are seeing slight appreciation too at this loint. we sold 2 central park co-ops we were partners in at prices higher then last year ...good for you, but without knowing the specifics on the comps this could be apples to oranges...and two sales do not appreciation make! Probably didn't hurt that Wall Street was flooded with unfathomable amounts of taxpayer funded stimulus and piles of cash from investors
even slight home appreciation and higher rates will cause a substantial increase in overall costs. dont forget to figure the rent your paying all the while your waiting for prices to drop further. i know we would have spent more in rent waiting for prices to come down on the PA home we recently bought then any drop that materialized further.. LOL, it's simple enough to do a rent versus mortgage (+ property taxes, + insurance, + any HOA dues, + maintenance) calculation. Every area is different - for example, in LA, I can pay 1/4 to 1/3 the monthly cost for a place to rent it. Take that 2/3 or 3/4 difference, invest it in any number of safe investments with decent returns and I would be well ahead of even the most absurd levels of value appreciation for the home (particularly since there is only depreciation at this point for the forseeable future for LA homes)
while typically you would say so ill refinance later on when rates comes down but hystorically speaking this may be a one shot deal at these unusually low rates and even a 6%-7% range mortgage may be something we will never see in our lifetime again. it took 40 years for mortgage rates to drop to where they are now. A mortgage can be paid down...a LOT easier to do that when you are paying far less for the asset, i.e. the principal is a substantially lower amount. Rates may never be lower, but home prices in most major RE markets around the country still have a ways to go. You may choose to believe it or not, but it is much better to pay less in principal than to pay less in rates. You can never change what you buy that house for, while you can always refi or pay off the loan.
these are freaky times with lots of oppertunities as well as risks. True. There is always risk...and we need suckers, errr I mean entreprenuers, opportunists, etc. to continue to catch the falling knife.
interest rates can jump a point or better in the blink of an eye long before anyone can even fill out a mortgage application. ...And then home values will drop in line with the increased cost of the home due to the rate jump.
just for fun take the mortgage calculator and see how much a 1% jump translates to in the same cost as an increase in the house price, its scarey how much of a price increase it equals. Not really all that scary, since the drop in the value of the home will be in line with the increase due to the rate jump
LOL...it's so funny to read these failed and reality/economics debunked myths. My comments are in bold BTW in case you didn't notice.
Interest rates moving up, particularly in a down market (such as the MAJOR down RE market we are currently in the midst of) cause home prices to DROP, not "increase by tens of thousands of dollars". As mortgage interest rates go up, this adds to the downward pressure on home pricing - always has, always will. Because buyers can afford less when it happens, and buyers set and control the fair market value/pricing of an asset.
It is virtually always MUCH better to pay less for the home and pay a higher interest rate on the mortgage, than to pay more for the home and pay a lower interest rate on the mortgage.
the other thing is if your buying a home to live in, your housing costs over a lifetime are in the hundreds of thousands of dollars, maybe even well over a million bucks. we arent talking just the cost of the home but every thing associated with housing you and your family...yes, and? You're giving plenty of arguments against home ownership and in favor of renting and saving/investing the difference, which as you indicate, can be HUGE - "well over a million bucks over a lifetime"...
your interest is almost 2-3x the mortgage alone that you pay and dont get back. , your taxes , repairs , insurance , renovations etc all are part of your housing costs. some you may get a little back, most you get nothing...all excellent examples of why individuals should very carefully weigh the costs versus benefits of owning (owing is more appropriate) versus renting.
if you sell your house and buy another the clock still keeps ticking and adding up the cost of housing you for a lifetime. these costs for the privledge of ownership never stop.. even after your house is paid for these costs still go on. the pa house we just bought has no mortgage and still runs close to 800-1000 a month to run with utilities , heat taxes, insurance , hoa dues , repairs,, the snow plow guy , the gardner renovations etc.. thats now, in 20 years it can be double that amount.
in the scheme of things if you really truely want a home does it make much sense depriving yourself because you may save 10,000 or 20,000 dollars , and now that may not even happen....saving 10K or 20K? How about 100K? How about saving yourself from losing hundreds of thousands of dollars?
its like not buying steak even one time unless it goes on sale for a buck cheaper a pound even though you spend hundreds of thousands of dollars over a lifetime to feed yourself. Ridiculous analogy. Simply laughable. Maybe if steak cost in the 6 figures (or more) per pound and was dropping in value substantially all over the country for a variety of reasons (while the value was trying to be shored up by a variety of special interests), while its cheaper alternative ground beef was available at a steep discount relative to steak and without the added costs associated to steak, etc. But come on...this has to be the goofiest thing I've ever read on the RE forums. Comparing real estate to steak...yeah, okay
think about it, does it make sense not to buy something you really want for what really does turn out to be an amount that may be so small in the scheme of things,...it's not a small amount, not by a longshot. Does it really make sense to **** yourself in a losing transaction?
dont forget to figure in the rent your paying a year while you wait for things to drop further ... you may spend more in rent alone then any further drop especially if rates rise even a 1/2 point. Here we go again, ridiculous and debunked time and again.
we are paying 18,000 a year rent here in nyc,...i highly doubt that house will fall another 18,000 at this point to compensate us for depriving ourselves of a home for another year. if it did then even that 18,000 drop in price wasnt worth depriving ourselves for as we spent it on rent . had i taken a mortgage that amount could have started paying down our mortgage and get the clock ticking there...
LOL. Okay, do you really think you can get said house for a 30 year fixed $1,500 a month mortgage? How about the property tax? Maintenance costs, as you've outlined? Insurance?
Man, more nonsense!
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