Stupid renter eventually buys.
Owners would be living rent-free at that age.
Instead, she subjects herself to $60,000 a year in rent.
LOL, nice "retirement" sucker.

Joan Riegel, a 69-year-old educator, started looking to buy earlier this year, when the rent on her 1,000-square-foot Upper West Side rental climbed past $5,000 a month — an increase of 25 percent. This month she moved into a $675,000 co-op in the Gramercy Park area, trimming her monthly housing cost nearly in half, to about $2,600 a month including maintenance. While her new apartment is smaller, she said, “I’m going to have so much more money.”

http://www.nytimes.com/2012/08/19/realestate/rent-or-buy.html?_r=1

Correct, she is a ginormous fool. This is a case of "too little, too late" She should have bought something back in the 1970s or 1980s, like other people her age. She'd be sitting on millions and be living rent free. A true idiot renter who had made things even worse. At the least, she should have moved to a $1500 studio.

Dealboy, how old are you? What do you live in -- a 350 sq ft coop studio in Midtown East? When did you buy?

Are you saying this was a wise purchase on her part? Boy, you're a fool then.

I'm just amazed that Ms. Riegel could get the mortgage that she got. She's 69 (she doesn't *look* 69!) and is already retired, so she's living off Social Security and her own savings.

We don't know how much the maintenance on her 700-sf apartment is, but let's estimate it at $1000. Plugging all the above numbers into a mortgage calculator makes it look like she got a 30-year mortgage. Is is normal to issue a mortgage at such a good rate to someone who will theoretically be *one year short of a century* when it's scheduled to be paid off?

Alan, I got the opposite impression: this is her retirement home and she won't be moving for age-related reasons. What better place to retire than the city? The suburbs are designed for automobile drivers, so those are out, and presumably all her friends are in the city too. But I agree with Dealboy that she should have purchased much, much sooner, and this current purchase should have been a lot smaller. (700 SF for one person? Maybe she's considering having a relative move in with her.)

Still, I wonder how the loan officer got that one past the boss. She'll be 99 when her last payment is due!

Her transaction details are in the sidebar.
http://www.nytimes.com/interactive/2012/08/19/realestate/20120819-rent-or-buy.html?ref=realestate

Eventually she found a mortgage broker who ran her excellent credit rating and landed her a mortgage for 3.5 percent with 50 percent down.
COST TO RENT $5,395 a month, for a 1,000-square-foot one-bedroom with a balcony on the Upper West Side.
COST TO BUY $2,600 a month, including maintenance, for a 700-square-foot one-bedroom near Gramercy Park.
PRICE $675,000
DOWN PAYMENT $337,500

At least she got out of that idiotic $5000/mo rental, and has cut her costs by 50%. With a pension and SSI, she should be fine. She doesn't need the 50% downpayment which was earning 0% interest.

It appears she's single so as long as her her social security, pension and SSI covers the costs she's fine. Even if the mortgage is 30 years what's the big deal. She passes away before the mortgage ends and the estate sells the apt, settles with bank and her heirs get the rest. She meanwhile will live comfortably till the end or if she has to move, she sells the apartment and uses the proceeds toward a nursing home.

She's living off her pension and SSI.
That may put her at the $100k income mark.
So, parking $250k in some apt is not a big deal.
It's better than renting for $5000/mo.
To her credit, she's cut her monthly bill in half.

I guess she is not a stupid broke renter b/c that $600k nestegg must have come from the proceeds of her mortgage free suburban house .

I don't see how this was a stupid move. She wants to live in NYC, renting was costing her more. She obviously has the money to do this. She met the financial requirements to not only get a mortgage but one at an excellent rate. She could conceivably live another 20 years, Maybe more, and if she needs to move into assisted living if she's no longer to live on her own, she'll sell the place.

With more Americans renting than buying these days, expect rents to go up more. The decision to rent can be a good one in the short term, but rarely in the long term.

By tying up her $337,000, she is saving about $30,000 a year in expenses. ($5000 vs. $2600) Yes, there are other costs to ownership, and it's a smaller place, but this is how people with money make their money work for them. A dumb renter would simply have no money, and have to stick with the $5000/month option.

This lady sold her place at the top of the bubble in 2006. You really think she is a sucker?

How about w67th here? He is a renter. He put his money to work in stocks. In the last 4 months alone, he's made enough to buy your apartment twice over. Is he a sucker too?

w67 - what should I do with 80K? (Didn't realize we could get free financial advice on the site).

Dealboy, you do realize that she was never paying $5000, right? She left because the LL tried jacking the rent 25%. She's in 30A in her new building, with monthlies of $1040. Apt 17A rented for $2800.

It's not mutually exclusive.

Renting is more expensive than owning.

So, had w67th been an owner,
he'd have even MORE money to invest in S,
and he'd have an extra million bucks in capital gains,
and he'd be living for free this whole time in retirement.

Since owning is cheaper than sucker renting,
it's is a case where you can have your cake and eat it to.
Unless you bought in 3 specific years out of the last 150 years.

"So, had w67th been an owner,
he'd have even MORE money to invest in S,
and he'd have an extra million bucks in capital gains,
and he'd be living for free this whole time in retirement."

How many million bucks in capital gains are you sitting on yourself?

inonada, I paid off my mortgage. I will now basically living for free for many decades. Before the mortgage was paid off, I was paying a fraction of market rental rate for many years. Plus, I'm up about 50% still. WIN.

Dealboy, you bought in 2003. You're not up 50%, you said an apt similar to yours was only listed at 45% higher. Let's say that price is inflated by only 5%, pushes you down to to 37%. Sell and deal with transaction costs, pushes you down to 27%. You have no mortgage, you paid it all off. Stocks are up 100% since 2003. Don't like stocks? Too risky? Bonds are up 100% since 2003. LOSE.

>> I will now basically living for free for many decades.

Your maintenance is $600 a month. That means you live in a 350-400 sq ft studio (Midtown East from what I've gathered). Is it really your plan to live there for many decades?

You have no mortgage. You know how to WIN. Why don't you take your $300K and put it towards more WINNING? Buy yourself a place for $1.2M, you've got the 25% downpayment. Stretch your legs a little. Won't cost you a dime, you'll be WINNING even bigger.

G-d W67thstreet...you just sound like the sweetest person ever!

The address on this 69 year-old's purchase record? 275 CPW #9F, last listed in 2010 as a 1400 sf 2BR/2BA for $5600.

I wonder why the article says she was living in a UWS 1BR, having moved from a CPW 2BR, but then she has the above address.

I'll send rechargeable batteries.

Don't Buy: These 7 Cities Are Renters' Markets

5. New York, New York

Breakeven horizon: 5.1 years
Price-to-rent ratio: 12.8
Median list price: $389,000
Median rent price: $2,600

Forgot the link,

http://finance.yahoo.com/news/don-t-buy--these-7-cities-are-renters--markets.html

I have literally recouped 100% of the cost of my apartment in the 9 years of paying below market cost to own than to rent (owning is much cheaper than renting). Even if the apartment was today valued at $0, I am still ahead. Wrap your mind around that. The fact that it's worth more than I paid is just gravy. And every single month that gap grows.

> Now is a great time to buy! Or my favorite, 'it's better than facebook!'

you beat me to it! how many millions would she have if she had bought puts on Facebook with that $500k? dealboy, do the math and let us know how smart is to buy or be priced forever. :-)

BTW i'm shocked people don't comment on the couple that rented a 1BD (having a kid!? WTF??) in the UWS and totally overpaid for a 2 BD in Harlem (and not in a good location btw). we couldn't avoid laughing at them with hubby when the morons rationalized overpaying (they paid $760k, the developer listed it at $699k) by saying "a landlord listed a 2BD in front of our tiny 1BD in the UWS for $7k"... still laughing!

how can middle class college graduates be so financially illiterate??? don't they teach math to radiologists? $5k carrying costs for a 2BD in Harlem above 125th? really!?!? 3% down, FHA limit hit till the last cent ($729,750 just before it reset down to $625k, only $30k down). these morons are already underwater.

i could only imagine dealboy doing something THIS STUPID! :-)

"the couple that rented a 1BD (having a kid!? WTF??)"

In their defense, they had 700 square feet to work with in their old place. And the kid is only five.

They certainly overpaid for their Harlem place though. And the taxes are going to be a killer when the abatement runs out, which will ruin their potential selling price.

I think they should have looked for a 700-SF place with costs similar to their rental, but with a layout that works better for a growing child. They must be gambling on Harlem gentrifying by the time they're ready to sell.

There couldn't be a more misleading article. All they talk about is comparing the monthlies - nothing about how they are understated due to the tax abatement, the incomparability of moving to Harlem vs UWS and to new construction, and the fact they are risking their entire equity playing the FHA game and in a neighborhood that goes down the most in a downturn.

notadmin,

Where do you see they paid $760k? Article says they paid $699k.

"He and his wife are not only paying the same or less than if they had rented a similar property, he said,"

What's so bad about the deal? It said it costs less than renting. And when they move, college kids will pay the mortgage. When they're age 60, they'll own a $60k a year income producing property free and clear. There's your retirement right there. Sure beats pissing $5000 in rent for the next 50 years.

>FHA limit hit till the last cent ($729,750 just before it reset down to $625k, only $30k down). these morons are already underwater

Can you explain this comment? The article mentioned none of this.

I also see nothing about a tax abatement. Are we reading the same article?

Wonder if she and her husband owned the house they lived in before she started renting? Is she a first time buyer?

"I have literally recouped 100% of the cost of my apartment in the 9 years of paying below market cost to own than to rent (owning is much cheaper than renting). Even if the apartment was today valued at $0, I am still ahead. Wrap your mind around that."

OK, let me try. You paid $220K for your 350 sq ft Midtown East studio back in 2003. You've paid back that principal plus $50K in interest (5% over an average of 4.5 years). Your monthlies were $600, so $65K there. So a total of $335K. Works out to $3100 a month.

I'm having trouble wrapping my mind around how delusional you must be if you think it'd rent for above $3100. Care to explain?

Now for a lot of people, tiny studios in 3rd-tier locations are about as relevant to their housing needs as suburban Kansas. But let's take your example at face value, because if we did it with an "average" Manhatta apt, it'd be even more ridiculous.

"I also see nothing about a tax abatement. Are we reading the same article?"

Dealboy, towards the end of the article there's a link to a 4-part detailed writeup on each of the buyers. The Harlem couple and their kid are on page 2, and it mentions that their place has a tax abatement with 20 years left on it: http://www.nytimes.com/interactive/2012/08/19/realestate/20120819-rent-or-buy.html

"Is is normal to issue a mortgage at such a good rate to someone who will theoretically be *one year short of a century* when it's scheduled to be paid off? ... Still, I wonder how the loan officer got that one past the boss. She'll be 99 when her last payment is due!"

Because it's blatantly illegal to make lending decisions based on age.

...and besides, if the avg life expectancy is, say, 85 years old does that mean a 56 year old shouldn't qualify for a 30 yr mortgage? Or an 84 year old should be allowed to charge something on a credit card?

If the person dies, you just sell the property, and recoup the balance of the loan. That's why it's perfectly fine to issue a 30 year mortgage to an 80 year old.

The bigger issue is why she didn't take his last name. I just don't understand this. ;-)

Bigger issue is why you don't buy something bigger for yourself. You have a downpayment for a much-bigger place. Even if you think 350 sq ft is plenty of space for you for decades to come, it'll be free.

If not that, why don't you buy a place as an investment and have a renter fund your retirement.

You're all talk, dealboy. Just a lot of empty blabbering.

Or she could have just bought a 1,500 square foot HOUSE in a nice neighborhood in Western Pennsylvania for $125K. Taxes less than $400 a YEAR. And she'd still have a nest egg.

You can rent a one bedroom for $2600 in Manhattan. THe point is really that she moved to a smaller place, not that she owns versus renting.

No, the point is that in her retirement she blew her nest egg on an apartment that she won't be able to get out of easily in the event of just one financial blip.

So, let me get this straight... folks are calling this person an idiot for buying now, after prices declined 20%, and rents went up.

So what does this made the geniuses who bought in the last few years... BEFORE the decline and rents were lower?