ATTN: stevejhx -- POST HERE

Real estate has gone down recently, so people say, focus on the recent results and extrapolate the possibility or likelihood that a buyer will continue to lose money.

Gold has gone up recently, so people say, focus on 350 years of evidence of the typical investment returns from owning gold, don't just look at the recent run-up.

"Yes, printer, I do own a vacation home. You're wrong, however, that the same thing could be had by renting. It's simply not possible."

One of the most hilarious things you've ever written. So for every owner in this city, you can find a comparable rental, but your vacation home is special? Nice.

And re-read kyle's post - people have, can, and will continue to pay a small premium to own. Maybe you think they shouldn't, and your neat and pat formulas tell you as much, but it's not reality. The very fact that you say "All things being equal, I would own over renting. But all things, presently, are not being equal" should be all the proof you need that there SHOULD be a premium. If, ATBE, you consistently pick one scenario over the other, don't you think that means you ascribe a greater value to that choice? Basic stuff.

another steve-ism: "you can't rent on Fire Island"

steve's assertions are a combination of idiotic and bizarre.

Prices now are nowhere near a 50% premium to rent. Not even close. His rent-buy analysis has been shot full of holes for years now, but steve's insanity forces him to insist on sticking to it.

And his "break-even on day 1" stupidity has no intelligent support. Most people prefer to own than rent, and most people realize that over time, fixing the large majority of your monthly cost today, and owning a valuable asset after you finish paying your mortgage, rather than paying an increasing monthly rental cost over your lifetime, warrants some day 1 premium.

Only an obnoxious, stubborn person who can't understand basic concepts, like steve, would argue otherwise.

In steve's bizarro world, a 900sf rental in a dumpy building on 52nd and 8th is equivalent to brand-new high end condos, but a vacation home has no equivalent whatsoever that a person can rent anywhere.

The combination of dumb and crazy continues . . .

my rental is a perfectly fine home, and to buy, in my case, would easily be 50% more expensive year over year, and put me in a risky, illiquid, attention demanding investment--my numbers and tax circs are described above--and the more than enough money i have to buy if i'd like, has grown at a much greater rate than any approach to owning New York City real estate would have

my weekend house cost nothing to buy and costs nothing to hold, relative to NYC RE --it won't hurt me much), it's abit of an indulgence, it gathers dust mostly....whatever

to call my approach money grubbery, kyle, is idiocy

and for those who assesss big value in owning, terrific--but to say other than that they pay dearly to own, in the curent environment, unless buy prices rebubble soon in a significant way; and that this has not been the case historically; is where i respectfully differ

and imbedded in my POV is the hope that current owners get hammered, so that prices may be once again competitive with renting, at which point i will buy again--owners need one hell of a rebubble to do well by owning, and of course for me to get hammered as i rent

wbottom, if you are renting a place that you are happy with, and buying an equivalent place would cost you 50% more, then buying obviously makes no sense. But the 50% premium is, from what I have seen in my neck of the woods, an outlier. For the 2/2 UES market I am in, it is pretty close to even. For larger places, it intuitively makes sense that the buy/rent differential is greater - it always has been, because the wealthier you are, the more willing and able you are to spend to have things exactly as you'd like.

"So for every owner in this city, you can find a comparable rental, but your vacation home is special?"

My vacation home is a 3-bedroom 2-bath co-op on Fire Island - they do not allow sublets, and I occupy it by myself. The remainder of the properties are group shares, which I don't want, and I can't afford a private home all by myself, nor would I want one, because with an apartment there is a staff that takes care of the maintenance, water-on, water-off, etc.

You're attempting to compare Manhattan to a sandbar with a grand total of 750 dwellings, including 100 co-op units. It can't be done.

Also, I bought over 5 years ago, when prices were much lower. I would not buy now.

LICCdope - your comments, as usual, are without support. Why you continue to blog about Manhattan when you live in Long Island City is beyond me. There is an air of old poverty in everything you write.

"For the 2/2 UES market I am in, it is pretty close to even."

Give us some comps, would you, printer?

When you say owning is 50% more than buying, are you taking into account changes in rent over time, and the changes in the value of the home over time? Also are sale transaction costs taken into account? Or is it just for the year in question?

"and for those who assesss big value in owning, terrific--but to say other than that they pay dearly to own, in the curent environment, unless buy prices rebubble soon in a significant way; and that this has not been the case historically; is where i respectfully differ"

Wbottom, the thing is, there are people out there (myself included) who pay less on a monthly basis to own than to rent the same apartment. That's not to say there aren't people (and lots of them) out there who overpaid, but again, there's this tendency to make blanket statements that doesn't sit well with me.

"and imbedded in my POV is the hope that current owners get hammered, so that prices may be once again competitive with renting, at which point i will buy again"

I appreciate the honesty, but that pretty much says it all, doesn't it? A bit of schadenfreude and wishful thinking makes for a pretty biased viewpoint.

"You're attempting to compare Manhattan to a sandbar with a grand total of 750 dwellings, including 100 co-op units. It can't be done."

Yes, I'm comparing and island to an island. Give me a break. There are plenty of other vacation homes (I'd like to see proof of your inventory numbers, regardless).

here's one steve: http://streeteasy.com/nyc/sale/532221-coop-239-east-79th-street-yorkville-new-york

printer, I want to own, just when we are out of bubble territory.

Porsche = leased, got $12K equity... cost me less than a prius (overall ownership cost);
50 foot sailboat = $250K built in equity cause the bank (you taxpayers) sold way way way below mkt;
1bdrm coop = in cost basis (1995) $100K=> still cheaper to own than rent on a cash on cash basis, on a mkt sell and rent, I AM a lemming..... but that 1bdrm represents less than 5% of my net worth and like 2% of cash flow....

SO take a breath, IF the monthly nutz (mortgage/cc) is something that would make you sweat like a penguin in a hot tub... well it's time to rent or at least move to queens......

bjw, IF the mkt sale price of your "home" would/will have a significant impact on your overall financial well being, then it is better to sell now as the bubble is slowly deflating...... and buy back the same unit in 3 years at 50% off while you bank the "savings" on the own/rent differential..... if you are basing your rent/buy analysis purely on the fact you bought in 1995, and have $800K in built in mkt equity.... that is lemming finance... now you CAN tell me that $800K makes no difference to you like my $500K in phantom equity, then come aboard my 50 foot Swan.

Manhattan is not the same as Fire Island. Manhattan is the same as Florida. An old rental building is the same as a new condo. And gold is the same as a tulip.

Oh, and if you pay down your mortgage at the same time that housing prices decline, then your cash bonus gets taxed in a year you didn't receive it.

"Or is it just for the year in question?"

Just at present.

printer - where's the comparable rental? Because looking at the cost of buying 7H for $3,400 versus renting 2H for $2,800

http://streeteasy.com/nyc/rental/587290-coop-239-east-79th-street-yorkville-new-york

or 10H for $2,795

http://streeteasy.com/nyc/rental/597980-coop-239-east-79th-street-yorkville-new-york

it doesn't seem like such a bargain to me.

well, that would be correct, steve, as you are comparing the cost of renting a 1 bed with buying a 2 bed/2bath.

w67th, if I sold and stayed in a similar (rented) apartment in the area, I'd be paying more per month. While I can afford to, it's not something I really feel like doing, you know?

bjw, that's with you paying yourself 0 for the equity your are sleeping on everynite...... ONCE again, the "equity" you have in your home must be accounted for...... you may choose NOT to (like myself). Now my $3MM 3bdrm unit.... that does make a dent in my finances... so I WILL wait till rapture... .it will come.

And of course steve doesn't take into account the tax and mortgage deduction.

I seriously doubt wbottom's comparable apartment to buy is 50% higher. That is as ridiculous as some of the things steve says.

w67th, accounted for how?

what happens if you lose some or all of it?

Hey LICCdweller

My nums and my tax info are in my post--do the math

and show me your nums, timing details, and tax bracket for your LICdwelling--ill do the math on you

LICC has owned in that area for some time now, a veritable pioneer if you will. wonder if he bought at citylights, where sellers are getting reamed.

http://streeteasy.com/nyc/sale/539781-condop-4-74-48th-avenue-long-island-city

leveraged equity lost or gained--and opportunity cost

why is that confusing?

No I'm not comparing a 2/2 with a 1/1 - I posted rentals for what I could find. Where is your 2/2 comp is my question?

"you can't rent on Fire Island"

Not without a group share, you can't, unless you rent an entire house. Sorry.

"And of course steve doesn't take into account the tax and mortgage deduction."

Yes it does - it just doesn't take it into account twice, or three times, as you're fond of doing.

Of course you think that bond fund managers manage their funds without trading bonds, so god knows what other nonsense you're liable to come up with.

Oh yeah - that buying in Long Island City was a good idea.

What it is isn't confusing - just curious how he wants to account for it in a monthly nut calc.

printer's comp http://streeteasy.com/nyc/sale/532221-coop-239-east-79th-street-yorkville-new-york

with 25% down carries for appx 5500/mo, rents for 3750, id guess

taxes/bracket would have to be considered as well as amortized transaction costs and opportunity cost of down pmt--all simple stuff

how do you get that it would be cheaper to own this place?

bjw, for many people who currently own the rent/buy numbers support ownership. it is very unlikely that pmg, who has stayed in the same studio since the beginning of time, would find a cheaper option if he/she sold and then rented.

but for most units currently for sale the rent/buy analysis, without taking into account the psychological benefits to many of owning, argues in favor of renting.

your personal situation in williamsburg is relatively unique.

hmm, wbottom - please find me a 2/2 2nd ave or west, btw 72nd and 86th for 3750. maybe you get a 2/1 on York for that. though if that is your idea of 'comps' then no wonder you think your place is such is a great deal.

if i buy a place for cash--it's cheaper on a cash basis for me to own than rent

if i have huge equity in any piece of RE for any reason (as in i bought 50 years ago), it's cheaper on a cash basis

you win, i fold

and when I say 'pretty close to even' I look at it on an annual cashflow basis, so mtge+maintenance-interest deduction. which for this place would get you to about $4200-4500, depending on what type of mortgage you take, which is about what it would cost to rent.

Anything beyond that, regarding opp cost, transaction costs, appreciation/depreciation, rental inflation/deflation etc. is a) pure speculation and b) pretty much gets you to the following conclusion: if prices go up, buying is better, if prices go down, renting is better, if prices are flat, it depends on your holding period.

"The great irony is that the 3 loudest anti-own people on this board - stevejhx, AR and w67 own, respectively: a vacation house, a vacation house, a boat."

Another possibility is that each of them could afford to buy their respective non-Manhattan-RE items, whereas to purchase a Manhattan coop, condo or townhouse was not affordable for them at the time. Owning their non-Manhattan-RE items then makes it even less affordable to buy a class of property that starts at a cool million. This then colors their perspective on the million-dollars-plus real estate - only fools buy it, the market will come back down to where they can own it, they're better off with what they have because it allows them to have their luxuries that they'd have to give up if they owned a Manhattan townhouse or three-bedroom condo, etc. They firmly hold the belief that they are the ones who should comfortably afford what today they cannot, so the problem is external to themselves, not a corner they painted themselves into. Just a theoretical possibility most people's formalae and numerical analyses have not worked out. Try this - take annual gross income, subtract out X, Y, Z..... c'mon, folks, you can do it!

oops - can't spell "formulae" for @#$%^

750k at 4.5 is 4300/month--and rates have gone up--you paying maintenance in cash? 1330 worth$

and you got the 250k cash to put down?

and yes there are bldgs of this quality in yorkville where one can rent a 2bdrm for<4K/month

shit i gotz work to do--yikes

The noise the noise......... Uggg

Is it better to sell at top of bubble? Or at the bottom.

"My vacation home is a 3-bedroom 2-bath co-op on Fire Island - they do not allow sublets, and I occupy it by myself. The remainder of the properties are group shares, which I don't want, and I can't afford a private home all by myself, nor would I want one, because with an apartment there is a staff that takes care of the maintenance, water-on, water-off, etc."

This is hilarious. Special circumstance on fire island but special circumstance could NEVER occur in Manhattan. Try finding a quality family apartment (3+ 2+) on the UWS for rent. Don't even bother sending me your nybits.com crap, it doesn't exist. There are always special circumstances in certain segments where it makes sense to buy AND you will pay a premium over renting. This isn't just a Fire Island phenomenon.

lowery, that was true when we bought upstate. at the time we could not afford both a country house and to purchase a home in the city. so we traded in the condo for a rental + an upstate home. that is no longer true, but i'm still in no hurry to buy (besides, it looks like this place may be going coop, so it would be dumb).

the upstate home is 4 bedrooms, 4 bathrooms, a historical, renovated center-hall colonial on 2.5 acres with a horse barn, paddock, pond and stream. i bought it for less than $400k in 2004, $100k below initial ask (the owners had already bought and were carrying two mortgages). the area hadn't even started appreciating when i bought. i'm about to re-fi, i'll let you know what the appraisal comes in at.

btw, how can you say that someone who has owned four properties is anti-buy? i have a unique situation in that i have rental security, but absent an obscene credit-induced bubble i think buying is fine. at this point in my life i prefer the mobility of not owning, but i certainly understand the preference to own. buying in PCV will involve a mere pittance as an investment, and it will be part of our estate for our daughter.

ar, that's as fair (and good) a post as there's been in this thread. I don't want anyone to think that my situation is as easy as going to a broker and paying the asking price on the first property you visit - I would hope it's obvious that it doesn't work that way. But I did buy at a time when more than a few people on here made constant blanket statements that buying anything was a bad idea. I've said this more than a few times, but I completely agree that for many people, renting is kind of a no-brainer in this environment, and that it takes a lot of work/time and a lot of luck to find the right place, even if you are in a good position to buy.

"There are always special circumstances in certain segments"

Did anyone ever say there weren't? If you absolutely, positively must live on the Upper East Side between 67th and 69th Streets right now, then you're stuck with what's there right now. If you want to live on Fire Island then you're stuck there right now. But neither place is immune from the vicissitudes of the market - which is your claim.

No one needs to have a vacation home on Fire Island, including me. And not at any price, either: I bought after prices had been stagnant for 10 years. They subsequently went up again. Now I wouldn't buy. In fact, I've been trying to sell, but the insane board of directors tripled the maintenance in 5 years, instituted a flip tax, and completely mismanaged the buildings to the point where we have to re-replace a roof that was just replaced 5 years ago. Now nobody wants to buy - at any price - so I'm stuck.

Therefore, though I can easily afford the place, I know what it's like to be stuck holding an illiquid asset. I also know that condo and co-op boards in NY are uniformly crazy and incompetent - see my $100,000 lawsuit to evict a dog post - and I would never own one here again EVER.

Somewhere else with different laws, maybe - but not New York.

http://www.nybits.com/search/?_a!process=y&_rid_=4&_ust_todo_=65733&_xid_=pL09V3z6cCXOoZ-1289930038&!!atypes=3more&!!rmin=&!!rmax=&!!orderby=neighborhood&submit=+SHOW+RENTAL+APARTMENTS+&!!nsearch=morningside_heights&!!nsearch=upper_west_side

"There are always special circumstances in certain segments where it makes sense to buy AND you will pay a premium over renting. This isn't just a Fire Island phenomenon."

JuiceMan, couldn't agree more. I love that Steve's excuse is that it's an island.

"I also know that condo and co-op boards in NY are uniformly crazy and incompetent"

See my points earlier about blanket statements.

Flmaoz. I like to 'own' meaning no debt..... What do want me to prove to show you I have $1mm in cash. How about $500k in our joint grocery Chking Acct. Do you wnt me to screen shot my Acct and send it to columbiacounty or aboutready. Flmaoz.

Thanks for the nybits postings steve, you again proved my point. North of 97th,South of 60th, on 87th in what is actually a 1 bedroom, or $10k+ a month. Special circumstance much?

"I love that Steve's excuse is that it's an island."

I made no such "excuse" - in fact, I agreed with JM that there are special circumstances, but that special circumstances don't make the rule.

Unlike you, bjw, I don't claim that being an island exempts a market from market forces. Quite the opposite. What I did say is that, for me, there is no acceptable rental alternative, b/c I work on weekends and so can't have a lot of noise and distractions from roommates, and I don't drink or take drugs so that rules out most roommates out there, too.

"...Now I wouldn't buy. In fact, I've been trying to sell, but the insane board of directors tripled the maintenance in 5 years, instituted a flip tax, and completely mismanaged the buildings to the point where we have to re-replace a roof that was just replaced 5 years ago. Now nobody wants to buy - at any price - so I'm stuck..."

It's unfortunate that you havn't factored this when you bought. There are so many people is this situation now...They bought into what they knew was a grossly overpriced asset only because they were convinced RE only go up anyway...

Now, the market is still crashing , these charges keep going up ( wait until you see these RE taxes go up too), and you feel like a sucker.

That's why it's also wrong to buy now. With mortgage interest rates as low as they've ever been, you'd be stucked with paying at a still very high price until the end of your mortgage because there are very little chance than over the next 30 years mortgage interest rate don't increase...Who's gonna want to refinance at a higher rate in 7 or 8 years? Nobody! It's better to wait until rates go up, so prices will undoubtly go down....

Yeah! May be the sucker who bought at peak will want to hang on to his place, but the guy who bought in the 90's and is retiring away won't...

"gets you to the following conclusion: if prices go up, buying is better, "
I disagree. That is bubble thinking: buy now or be priced out. Look at the price history of this apt:

http://streeteasy.com/nyc/sale/483840-condo-44-east-67th-street-lenox-hill-new-york
02/20/1997 Previous Sale recorded for $620,000.
12/15/2000 Previous Sale recorded for $1,075,000.
05/11/2004 Previous Sale recorded for $1,450,000.
12/11/2009 Listed by Modlin Group at $2,595,000.
02/04/2010 Listing entered contract.
03/23/2010 Listing sold.
03/23/2010 Sale recorded for $2,500,000.

300% increase in 13 years; 72% increase from 2004 to 2010. For me, RE is a long term purchase, I'm not a flipper. When I look at this history, I can see the market is bubbly.

"so mtge+maintenance-interest deduction"

You don't get the deduction until year's end, so IMO, ya gotta look at monthly out lay, cash flow.

"and yes there are bldgs of this quality in yorkville where one can rent a 2bdrm for<4K/month"

hmmm, nybits shows 2 doorman, elevator units between 3500 and 4000 that are 2/2 on the upper east - one is on 96th, the other on 78th and east end, and only has 1 bathroom. go up to 4000-4500 and there is just one - a nice sized place on 94th and 1st. go up to 4500-5000 and you have something closer to comparable - up on 87th between 2nd and 3rd.

so you are right, if you add $1k to your estimate.

"Unlike you, bjw, I don't claim that being an island exempts a market from market forces. Quite the opposite. What I did say is that, for me, there is no acceptable rental alternative, b/c I work on weekends and so can't have a lot of noise and distractions from roommates, and I don't drink or take drugs so that rules out most roommates out there, too."

Ridiculous - where did I say that? Please show me. I pointed out your rationalization, that's all. The island aspect is irrelevant really. And there are acceptable rental alternatives for comp purposes. You may not like them, but they're there, and in the end, you're paying for the factors that your particular situation requires. See kylewest's point about life not being a contest to see who dies with the largest bank account. Are you starting to get the picture now?

"you longs cant admit youre paying to have your money tied up in a non-performing asset"

Wbottom raises a key issue: When you purchase a home, you no longer have that money to invest, but that is true whether or not the RE market is bubbly. A home is not an investment & doesn't generate income. So, you can take a downpayment & invest it & rent. Or, buy a home & forgo the ability to invest the downpayment.

"That's why it's also wrong to buy now. With mortgage interest rates as low as they've ever been, you'd be stucked with paying at a still very high price until the end of your mortgage because there are very little chance than over the next 30 years mortgage interest rate don't increase...Who's gonna want to refinance at a higher rate in 7 or 8 years? Nobody! It's better to wait until rates go up, so prices will undoubtly go down...."

sledge, you do realize that higher interest rates are likely to negate price decreases, right? Because what you're advocating is pretty silly. Now if interest rates stay low and prices drop anyway, then you're talking. But that's not what you're saying.

"See kylewest's point about life not being a contest to see who dies with the largest bank account. Are you starting to get the picture now?"

I highly doubt it

dwell, it all depends - if you would owe taxes without the deduction, then you should be making quarterly estimate payments, which you wouldn't have to if you won't owe, or owe less, if you have the deduction. If you will be getting the money back, but need the monthly CF and can't afford to float to the IRS, then you clearly don't have the liquidity to be owning in the first place.

and to your second point, I never said that prices only go up. clearly they can go either way. I am saying that if CF is pretty even (with a 25% downpayment), then you could go through the process of accounting for all the variables (among which are property appreciation/depreciation, rental inflation/deflation, return on downpayment, transaction costs (renting and buying), upkeep, etc.) but you'll quickly find that a 1 or 2% change in appreciation either way will overwhelm the decision. In other words, at CF breakeven, the answer of 'is it better to buy or rent' comes down to 'will the property appreciate or depreciate', which is pure speculation. You may want to speculate "we're going to have a second leg down" or "buy now or be priced out forever", but that is what you are doing.

"A home is not an investment & doesn't generate income. So, you can take a downpayment & invest it & rent. Or, buy a home & forgo the ability to invest the downpayment."

Agreed, but where are you going to park the money? A lot of people assume a 5% return in equities, conveniently ignoring what happened to the stock market not that long ago. Frankly, most people who are smart/cautious with their finances, if they expect to buy a home at some point, park that down payment money in something safer - a CD or high-yield savings. Those rates aren't much more than 1% these days. Better than nothing of course, but it should be clarified.

well, steve, it sounds like you are stuck in a hard place with your FI coop - could give you a jaundiced perspective on ownership when you think of naive first time buyers who only buy into the advantages and have no idea what they're getting into - but do you realize all the ways you've boxed yourself in with "special circumstances"?

There are other towns on Fire Island; they just don't have as many muscle-clad 25-35-year-old boys running around in bikinis. If it were only the beach, the fresh air, getting away from it all that you wanted, there'd be no reason to say you just HAD to stay in the Pines, ergo you wouldn't HAVE to buy instead of rent one of those faux-Malibu homes and share it to make the rent. If you were to apply for a mortgage right now for your primary residence, you'd have a more difficult time of it than had you sold your FI place by now. Even if you're free and clear, you have the liability for maintenance charges.

And AR, when you really wanted a vacation, your second home just didn't cut it. You may have something like the NYer's dream of a colonial home in the country and an apartment in the city by opting for the RS apartment and the big home in the styx, but you too have that liability on your balance sheet when you go for a mortgage on a primary residence. I have a hunch the $400K sticker seemed like a Christmas gift because in Manhattan you could only get a studio for $400K. Look, hun! We could have all THIS for only what a STUDIO costs in the City!

And now you can afford that much less home in Manhattan. And your kids don't go to school in the styx. And the house has to be cleaned and furnished and maintained, and taxes paid. Everyone juggles the rat race in different ways, and steve's and AR's particular niches in the puzzle color their statements about the Manhattan RE market.

Here's another numbers game these market posts could try: Assume an all-cash purchase of a Manhattan apartment. How does one balance the pros and cons? If I had a million and a half in cash, what could I easily assume as a safe return on my money, risk-free income-generating government paper today? Now buy a condo or coop for $1.5 million. Subtract cc+taxes or maint from market rent...... compare to that fixed income off the 1.5MM parked in ultrasafe paper. Forget the lost opportunity costs. The money would be "invested" with the understanding that future growth is expressly, voluntarily forgone. Does one get a "free" place to live? I think at least the condo market is still overpriced a little bit. Calculate away........

"It's unfortunate that you havn't factored this when you bought."

Unfortunately, my balls aren't crystal. Some increase was foreseeable, but siding a huge complex entirely with cedar, and replacing windows that don't need replacing, and taking out a 15-year self-amortizing mortgage during the worst recession since 1933, at 7 3/4% per year, was not something that anybody in his right mind would have foreseen would be done.

Yet that is what was done.

steve, the man who doesn't understand the difference between managing a bond portfolio and executing a single bond trade, who doesn't think it is possible for bond fund managers to target a duration for their portfolios, tries to comment on managing bond funds.

ar, no one cares about your upstate house.

wb, you didn't give your aparmtent location or sufficient details to judge the comp.

printer,
Oh doll, I makes du quarterly estimate payments, but that's not what I mean. I mean let's say monthly payment for mtg + mtnc is like $9k, but, at year's end ya get an annual deduction of like $24K (cuz $2k per mo is interest). What I'm saying is that ya still have to pay out the $9K per mo, so cash out flow is $9.

Regarding your second point, thanks for clarifying. I basically agree & that's why I look to purchase price history because we can't know what the future brings. So, when I see a property has had big price jumps, it gives me paws. So, I look at price history & general economy & reach a conclusion; I guess you can call that speculation.

bjw, no, I'm not talking about short term parking, I'm talkin bout taking a chunk of cash & planting it long term in a home, which will not generate income.

"compare to that fixed income off the 1.5MM parked in ultrasafe paper."

But where to find "ultrasafe paper" today?

licc, i guess you weren't following the thread. others brought up my country house, not me.

i knew you were unpleasant and dense, but i thought you could read.

"See kylewest's point about life not being a contest to see who dies with the largest bank account. Are you starting to get the picture now?"

I highly doubt it

juicy--sounds like youre in kyle's camp, where attempts to be prudent about real estate investment timing are dismissed as money grubbery

youre marooned in a camp of maroons spewing maroonic irrelevance

and dwell that you cite riskless cd returns as opportunity cost proxy fro leveraged real estate equity is too stoopid to address

back to work--gotta pay my pitifully low rent!!!

lic--provide comparable detail to mine--bring it

"the man who doesn't understand the difference between managing a bond portfolio and executing a single bond trade"

What, pray tell, LICCdope, is the difference? Let us know, please.

Wait, let me guess: executing a single bond trade is executing a single bond trade, and managing a bond portfolio is executing at least two bond trades.

HAHAHAHA!

That from the man who said you couldn't "buy an index."

What a maroon!

Oh, CDs are riskless paper? Well, these days, it depends on the bank and I didn't realize you were referencing high finance instruments such as CDs. Pardonnez.

LICC, please take the bashing elsewhere. Thanks.

dwell, of course a primary residence isn't an income generator. I'm talking about what to do with that down payment while you wait to buy (which could potentially be never of course).

"juicy--sounds like youre in kyle's camp, where attempts to be prudent about real estate investment timing are dismissed as money grubbery"

I am most definitely in kyle's camp. In case you didn't notice, kyle is a long time poster who has helped hundreds of people through objective advice in real estate, remodeling, second home decisions, etc. You would have to be a complete idiot not to listen to this guy, even if you didn't always agree.

"youre marooned in a camp of maroons spewing maroonic irrelevance"

Don't get me started Wbottom. As far as I can tell you are just a "me-too" poster trying desperately to gain credibility. Problem is, you have attached yourself to the person with the least amount of credibility on this site. Good luck being irrelevant.

bjw, I'm in that boat too.
Sorry, I thought there was a discussion of lost investment opportunity due to sinking big chunk o' cash into non-income producing primary residence.

ar, others asked you for details about your country house? I missed that.

Who has no credibility, Juicy?

http://streeteasy.com/nyc/talk/discussion/11682-where-are-all-the-people-that-said-the-world-was-ending

woops my bad--it was printer, not dwell, who sought to use cd's as the proxy for leveraged real estate equity--this would be fine if real estate were actually riskless--we are beyond sorting that out, no?

and in fact, if one is not so foolish as to have a >250k cd position at any given bank, cd's as fdic guaranteed paper are as riskless as tbills, and if tbills aint payin off, get the glock out

go ahead, start, juicy
to say it's money grubbery to try to intelligently invest in real estate seems unique around here, a place where sweating realestate valuation and investment is largely the theme

love the bubble crap: your home is not an investment

happy camper

try again - where did I ever use cd's as proxy for leveraged real estate equity? Never done any such thing.

steve, you are the least credible person here. You have become a laughingstock. You post things so ridiculous that sometimes I wonder that you really do realize how dumb they are and you just want to come here and be annoying.

To explain to you the difference between managing a portfolio and executing a trade would take forever, given your lack of comprehension. Just buy a book on portfolio management and get back to me.

"your home is not an investment"

I have said this a million times. The home you live in is not an investment. Is this new to you?

"to say it's money grubbery to try to intelligently invest in real estate seems unique around here, a place where sweating realestate valuation and investment is largely the theme"

I'm all for running the numbers, just use the right numbers. Pretty simple huh?

hahahahaaaaa... just started two companies, one earns 7.5% on a secured basis... the other unlimited... yep, I can see how if your only option is to earn 15bps, "painting it your way" makes up for a LOT LOT LOT of financial ninniness... hahahahhahahahhaaaaaaaaa

"To explain to you the difference between managing a portfolio and executing a trade would take forever"

Okay, then, LICCdope - how do you execute a bond trade? How do you identify a counterparty? Who does the clearing?

What a maroon.

Coming to Juicy's aid, he has always said that a home is not an investment. However, he refuses to recognize that it is actually an expense, which means that although he claims to believe that it's not an investment, he acts as though it is.

If a home is not an investment and it is not an expense, Juicy should explain for us all exactly what he thinks it is.

Just like LICCdope should explain why he moved to Long Island City. Before there was even a Duane Reade.

HAHAHAHA!

"your home is not an investment"

say it a billion times--IT'S BUBBLE BABBLE DRIVEL

to be other than extremely careful with what, for most people, is their only investment with serious leverage, and involves largest equity stake they have in anything, with attendant illiquidity and huge transaction cost both in and out; is nuts---and i mean careful with one's dollars--yeah, make sure you like the architecture and the garden, but watch your dollars--

it's home, yeah, but it represents most people's biggest piece of financial exposure--can make or break a families entire financial trajectory

Because it is to be viewed as an expense, and expenses must be kept to a minimum.

The very definition of investment is money applied to make more money; owner-occupied residential real estate does not make anybody any money. Just gives them one more expense.

Wbottom, you're really just twisting kylewest's words. Nowhere does he say you should be frivolous with your money. The stuff you're arguing is painfully obvious stuff - it doesn't stop people from making poor decisions, but the advice is kind of trivial at this point. kyle's post was to address steve's formulaic viewpoint that if a property cost you $1 more over the ownership lifespan than it would to rent, that you should just go ahead and rent.

"Just gives them one more expense."

Not one more, but an alternative expense. You have to live somewhere.

Buying RE that you live in is a great long term plan.
You can manage and closely predict you housing cost over long periods of time.
Buying it at the right price (at the right time) and the right product is the trick.
That goes for selling and trading as well.
It is part of you asset class but a liability.
That's why I logged on.
Location timing price product
I'm watching like a hawk (would you believe, like a pigeon?)

"kyle's post was to address steve's formulaic viewpoint that if a property cost you $1 more over the ownership lifespan than it would to rent, that you should just go ahead and rent."

I said no such thing. I said look at home prices any way that they have traditionally been looked at:

1) Cap rate
2) Price-to-rent
3) PITI
4) PTI
5) P/E ratio
6) Imputed rent

or any others that have been discussed here & elsewhere, and see how today's figures compare to the historical norm.

No matter how you look at today's prices, they are overpriced. And I don't believe the "Manhattan is special" argument any more than I believe the "Fire Island is special" argument, or the "New Economy" of the dot.com bust.

a home is part investment, part consumption item (expense)

what juicy lauds of kyles advice is more of the consumption part of the equation: decor, amenities, all the non-bones parts that require renovation and replacement on a cyclical basis--live with a family and a fresh renovation is consumed within ten years--without, style change renders it consumed in 15 years

the bones part is clearly an investment that can make or lose money, depending on how values change and how the investment has been arranged financially

i agree with steve in the sense that, over the longest of hauls, ownership should break even vs renting and inflation, such that all one is doing is the consuming part--but the arb between renting owning and inflation takes wild swings--and that's where owning can be a good, bad or flat investment

"I said no such thing."

But you did: "bjw, there should NOT be a premium to own over rent"

I agree a lot of what's out there and where it's trading is overpriced. But there is value in owning over renting - as you admitted yourself.

a home is part investment, part consumption item (expense)

yes, absolutely. something I've said many times. which is why I always find it strange that people expect a return on the whole thing - when I renovated my place, I didn't expect tile or appliances to appreciate.

Perhaps, bjw, you consider your $1 example to be a "premium" - I do not. I discuss above the circumstances under which I might pay a modest premium to own over renting, but nothing material, to be sure.

And here I disagree with WB - never should owner-occupied residential real estate be considered an investment, because it has never behaved like one historically. Economists consider it to be a capitalized expense, and I agree. That said, there are times it makes more sense to prepay an expense than to make an investment (see "modest premium," above), but that does not make it behave like an investment, just be more attractive than one.

I don't believe the "Manhattan is special" argument any more than I believe the "Fire Island is special" argument.

Come on...fire island? not special? Steve...you were young once.

Thank you bjw2103 for pointing out Wbottom's odd cut/paste of a few words I wrote to distort what I was saying.

I think at some point it is necessary to call out what seems to be causing much of this thread to be people just talking past one another. We are not all the same. All buyers (and posters on streeteasy) are not the same and cut of the same cloth--particularly in terms of financial wherewithall. People of different means behave differently. One must acknowledge this in developing models of how people will spend and how they make their purchasing decisions--including RE.

Wealthier people do things differently than people who are less well off.

Clumping them all into one formula is just silly.

And anyone pedantically lecturing as if s/he understands all segments of the RE-buying public--especially in a place with the kind of wealth that is concentrated in Manhattan--is also silly.

"Perhaps, bjw, you consider your $1 example to be a "premium" - I do not. I discuss above the circumstances under which I might pay a modest premium to own over renting, but nothing material, to be sure."

You speak in such vague terms when you're in a bit of a tight spot explaining yourself, huh? $1, however slight, is indeed a premium. Clearly you assign some value to ownership over renting. The question is how much? Is there a formula for that? Or are you willing to allow that it might be different for different people, as kyle alluded to in his last point, and that maybe it doesn't make sense to blindly criticize others for not using your exact number?

Wealthier people do things differently than people who are less well off.

do you mean more carefully and spend thrift?
or
Balls to the wall, money falling from their pockets, spending like sailors on shore leave?

kyle means that people of "means" don't engage in a:

"view of life as a money grubbing venture and nothing more--a daily exercise in formulas to be applied to extract every last cent from each day"

as though the wealthy don't engage in the grubbing that taking care with buying real estate, or buying anything involves involves

well said, kyle

What was this thread about?

This thread is about a RE market that is so boring that this is the best thread we have to post on.

its got nowhere to go but down