I have been an owner in Manhattan for the last 15 years and am in the process of selling a large loft downtown in which I have 50% equity (ie Mortgage is 50% of value). I will be sitting on a decent pile of cash after it closes.

I never considered renting as I have successfully sold 4 apartments over the years, but now I fear some strange winds are blowing that may kill the RE market for sometime. Inflation, recession, taxes, all have put the fear of God into me and I question the intelligence of sinking another $1M into RE. I have a young family, and have no plans in leaving the city, but havent stayed put for more than 3-4 years in any one place.

The quality of rentals downtown is generally crappy, and living next to 20 somethings sharing a $10K a month (about what I would spend) apartment is not appealing.The thought of renting and leaving my fate in some landlord's hands is also a downer.

It's not a classic buy vs. rent calculator equation, so would love to get some views. When you consider tax deductions, conservative investment growth (interest bearing bonds / etc.)the math plays out pretty close with the exception of the overall loss of liquidity.

Snark really not helpful here. Honets thoughts appreciated!

I'd think about what your exposure to real estate would be as a percent of over-all assets. There are no sure things. If it's less than 33% you're probably over-reacting. If it's closer to 10% then it's definite over-reaction. Get the gist?

I am in RE heavy. Like 70% of my assets are in my home. We have "overlived" for years (it is a family tradition;)

Well, what do you hope to accomplish by selling?

Prices for homes similar to yours will have gone up just as yours did.

If you are hoping to take out cash, you will have to downgrade in size or location.

How long do you think you will stay in the next place? If it's 5-10 years, then this weird economy should be behind us. If you're only staying for 3-4 years, you don't know where we will be by then. I think higher quality properties will be up, lower quality properties will be about where they are now.

If you rent, you will be tossing out $100K per year. Will that eat into your profit substantially?

Are you sure you want to sell?

Other options would be to downsize on the next purchase.

the smartest people are uncertain... the dumbest, know it alls..

there are hundreds of people in your boat hence this..

Is a Warming Rental Market in Manhattan a Sign of a Better Economy?
http://www.huffingtonpost.com/pauline-millard/is-a-warming-rental-marke_b_822687.html

don't forget to add that to your equation (flip side)..

i dunno, i say stay put. what does your spousal unit say? why move the kids to a new hood, new school for just 3-4 yrs - unless school geography moot as they are in private. or if you are compelled to sell then concur with Rsider, downsize on next.

Why are you selling? What constraints do you have on neighborhood?

On the crappy rental stock, you should look beyond rental buildings at those sorts of price points as they typically have very little of the relevant inventory and price it to sit for the high-end customer that doesn't know any better. Although there has been an uptick at lower pricepoints in the past year, the higher end remains quite week. There were always few people willing to "toss out" six figures on rent, and the numbers seem to have dwindled and not come back. That's what I think is causing the uptick downmarket: people who would have otherwise been looking to spend more.

hunker down, everybody else is.

Seriously: I am much more optimistic about this market than many, and I think trading up now, or selling in "mature" Tribeca and moving to a less-mature neighborhood, are both good plays.

However, since you appear psychologically set against both of those, why move? It appears that of your four alternatives (trading up now, selling and renting downtown now, selling and renting in another neighborhood now, or staying put) that staying put is the best option for you.

ali r.
DG Neary Realty

It's hard to lay off the snark if you're bragging about "overliving". I'd suggest downsizing & socking money away because you're right, these are odd times & I think there could be a good bit of ugliness ahead.

Sorry Ali
But a broker who is not optimistic? It's bad for the career.

Thanks for all of the constructive comments - really appreciated. The reason for the move is less financial than "apartment fatigue" which has to do with a building problem (and the aforementioned spousal direction).

With regard to overliving I was referring to the fact that we live pretty tight with the exception of real estate, in which we have always put 40%+ down, putting our assets into RE, as opposed to the market.

Comments give me hope that there may be some rentals with adults and not the 25 year old version of myself!

Thanks!

Its always a touch decision, but you are right to be leary of what is going on. NYS has a public employee pension issue, a high tax base , high cost of living and is overly reliant on the financial industry. There has been a clear migration away from the North East towards the South and Sout West as people who don't have the money seek lower cost alternatives. While I love NYC, I also remember what it was like in the 1980's and early 1990's. That was a period when owners in marginal areas couldn't give away real estate and it stayed that way for quite sometime.

What concerns me about NYC is what is going to be the future engine of economic growth? NYC is overly reliant on the financial services industry which in turn helps fuel the real estate industry, resturants, legal, etc.. NYC is not an ideal location for other industries . If you are a young doctor, medical professional or new business is NYC going to be your first choice? Why come to NYC? For the high tax rate? The high cost of living? Add on tons of regulation and what looks like an unsolvable public employee problem and you don't exactly hanve the indredients for future economic growth.

FWIW, I went through the same process about a year ago. Sold my apartment and have been renting in Manhattan for the past year, always keeping an eye on purchase prices and trends to decide when to jump back in. So far, I'm very happy I have been sitting on the sidelines (especially seeing how the portion of my sales proceeds I put in the equity markets have been performing). As an aside, I am also really enjoying the freedom of calling the super or the landlord when there is a problem rather than having to deal with it myself.

I think there is a decent chance of another economic dip that would put downward pressure on prices, and very little chance that there will be a sudden uptick that will make prices run away from me. In otherwards, I think the downside of buying now outweighs the upside.

All of that assumes, of course, that you don't rent more than you can afford, and that you are preserving cash for the moment at which you decide to re-enter.