Just the facts bulls, just the facts.

So, at what point was prices at the lowest? 1997? At what point, would the buyer have the most leverage?

I don't think its the issue of when the buyer has the most leverage....its the issue when the optimal time to buy is vis a vis expected returns. Mid 1990s were lower than 1997 but the gains were probably lower on an annualized basis. Point is, don't pick the bottom because real estate doesn't make V recoveries even as stock markets and the economy do.

I was buying real estate as part of a development group in the 1990's. I agree the market just bumped along in the mid-90's, but there were tremendous opportunities 93-95, as during this period there was tremendous dislocation. While I agree with Rhino that real estate does not generally make a V recovery, I would be careful about thinking this cycle will mimic the last one. Life is not that simple. Buyer's have the most leverage when a seller is desperate so look for one of those. Also if you find a property you like, but price is too high stay with it. A non-desperate seller can turn into a desperate one and you want to be there when he/she does. Be persistent.

Has any real estate cycle been a V?

I would not call it a cycle and I hope it's a unique event, but 9/11 pushed prices down. They then shot up in Jan. 02, as if somebody yelled "all clear."

Yeah see I wouldn't call that a cycle. Somebody did - Greenspan.

I just think its very tough for us to rise quickly out of this because rates are already low (unlike 2002), supply is so great and demand is so damaged..vis a vis financial incomes, and broken beliefs that real estate here only rises.

It depends on what and why you were buying. There were clearly "bigger bargains" around in 1992-1993 than in 1997, but you couldn't pick what you wanted and then force a "bargain", you had to buy they type of properties which were distressed the most and buy those. By 1997, there was much less by way of desperation sales and therefore "bargains", even if the return on the overall market on an annual basis was higher on an annual basis.

1997 was a better time, because all things were on sale...as you say in 1992 not all were distressed/accepting of reality. The way I see it is 1997 to 2004 returns were better than 1992 to 2004 returns, and with less uncertainty (as the bottoming process was evident, as was economic strength).

I think you missed my point: in 1992 you could find stuff that was REALLY distressed and make a killing. By 1997 that was mostly over. I'm talking about buying studios in doormen buildings in Manhattan for $10,000 to $15,000, buying penthouses in buildings with high maintenance for $1 to get it off some bank's books. That type of stuff.

Oh ok, I see what you mean. Looking forward to this cycles version of that in the condo variety.

In 1992 you had the condo variety as well, most notably the old Taft Hotel (150 West 51st St). Take a look at some of the closings back then.

Rhino86 I guess you do not have personal experience of the RE market in the 90's.
I was following the market from 1994 and started seeing properties for sale in 1997 making my first offer then. by 1998 people were already saying that they were nervous about a market top - 1997 to 1998 was a period where apts started really selling and prices shot up the space of a year. Coming off many years of bumping along the bottom, the upswing was dramatic and surprising and seen as a trend that had to correct because people were so used to the prior years. You had to be there.

So Rhino is stating wrong conclusions about things he is clueless about, again. Interesting . . .

go back to queens.

Typical Rhino - he makes a wrong conclusion, looks dumb, then makes up an argument that I never said to then make it seem like I was wrong.

LICC, what was your argument? Mine was that in 2004 price/rent ratios were higher than at any time from 1980 to 2003; therefore, the correction we have experienced in Manhattan real estate only represents a retrace to prior highs in that ratio. You deny this is true and offer nothing to counter.

Do you notice many agree with me on this board, and many shit on you?

rhino--try to ignore this moron--i appreciate your analysis--as someone whose lived in ny and has owned (and not owned since mid-07!!)nyre--i can attest that your stats are accurate--trader talk: there are many here who are "long and wrong" who are "talkin position"--this is a known, difficult psychological pitfall in trading--one sees all in ways that suport logic (illogic) behind an underwater position--one is "blinded by a loser"---whatever

That was a different wrong conclusion you had. I clearly showed how dumb that argument was by showing that rents and prices in 1999 and 2000 gave similar ratios to today. You can keep repeating to yourself that you were right, but that just makes you look more ridiculous.

Ha if you think price to rent ratios were the same in 1999 and 2000 as today you are just a moron. You had no data to substantiate that. You rattled off 'what you remember'... You are indescribably stupid if you think price to rent ratios were similar to today back then. You refuse to post a link (other than to rents, which are obviously only half the ratio).

I'll waste my time by posted a new source. They call a price to rent multiple a 'gross rent multiplier' but its the same.... New high in 2004, breaking above the 1986 peak.

http://www.realestatechannel.com/news-assets/GraphC.jpg

Bear got your tongue? The truth hurts, huh? Yeah, a lot of downside from here... That's got to hurt, especially 'holding' in an area like LICC. You can easily see 70% downside on your investment.

I would love to see a 70% drop in LIC. I have enough cash to snag 2 more 1,500 sq feet units and create the mother of all penthouses. Then again, if my neighbors won't sell it doesn't matter.....

known in trading as: "adding to a bad position"--part of the "blinded by a losr" syndrome

rhino, do you think people here are listening to your ridiculous assertions. Let's see, I sourced to Miller Samuel reports and the NY Times which cited to its survey sources, and you just look at a graph and babble on and on. Notice how you always try to change the subject? And how long have you been renting? . . .

back, back, back to queens.

I LOVE LICC!

"I clearly showed how dumb that argument was by showing that rents and prices in 1999 and 2000 gave similar ratios to today."

Let's see, a New York Times article about rents as reported by a real estate company, comparing them to median property prices as reported by Miller Samuel who have materially revised their inventory levels (by about +30%) for past periods without - MIRACLE OF MIRACLES! - changing the price data as well....

So, with absolutely no comparison of the apartments in question - AVERAGE sales prices to MEDIAN apartment prices for units that could be in entirely different parts of the city - LICC "clearly showed" how dumb everyone else is.

I fully agree.

AVERAGE sales prices = AVERAGE rents.

OOOPS!

Of course steve must assume the data is incorrect if that data shows that he is wrong. And of course he doesn't like information about the NYC market in general, but rather the oddball apartment here and there that he can cherry-pick to bolster his opinions.

That being said, I love you too steve.

http://www.reuters.com/article/newsOne/idUSTRE55971U20090611

I know you'll hate it but things do begin to look up:
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/11/AR2009061101098.html?hpid=moreheadlines

it must suck even worse to be a doomer and gloomer these days. waking up every day hearing GOOD news, seeing green shoots. Hmm hold onto the gloom its working for ya. Your landlord loves you paying him rent every month

"Of course steve must assume the data is incorrect if that data shows that he is wrong."

I'm not assuming anything. Look at Miller Samuel's latest real estate reports where they state past inventory numbers, then go back to those reports and look at the inventory numbers. Amazingly, the new figures are 30% higher than the old figures.

Case in point: go to their 1st Quarter 2009 report:

http://millersamuel.com/reports/pdf-reports/MMO1Q09.pdf

where it says that 1Q 2008's inventory was 7,778. Go to the 1Q 2008 report, where it says it was 6,194.

That's a whopping 25% increase in the inventory.

Reason: in 2008 they wanted to make the inventory look particularly so people would buy; in 2009 they wanted to make the inventory look high, so it didn't seem like inventory had risen so much.

Yet that same correction does NOT happen between 2007 and 2008 - the inventory figure is listed as 5,923.

But strangely - NO CHANGE IN THE MEDIAN DATA, NO CHANGE IN THE NUMBER OF SALES!

Is the possible? Yes. Is it probable? No. Does it put all the Miller Samuel data in question. Absolutely.

"And of course he doesn't like information about the NYC market in general, but rather the oddball apartment here and there that he can cherry-pick to bolster his opinions."

We're talking about the Manhattan market, not the NYC market. I have no problem with comparing data in Manhattan. I have a HUGE problem with comparing means to medians, and saying that either the mean or median rental apartment is identical to the mean or median apartment for sale, when there is no evidence that they are.

The only valid comparison is for the same apartment for sale and for rent, and there the data are clear: property must fall another 50% for owners' carrying costs to be equal. That is, for you to be able to buy an apartment and rent it out to an unrelated third party and break even.

"look particularly" = "look particularly low"

Bad editing day!

since i've saved a couple of hundred thousand dollars over the last five years by renting rather than owning, i'll happily send in my rent check. petrfitz, there's little doom and gloom in my personal life. but there's a shitload in the lives of the unemployed, etc. i'm glad you find it so easy to ignore their plight.

You're right about foreclosures: "Filings fall 6% from April yet still stand 18% above May 2008."

steve: The only valid comparison is for the same apartment for sale and for rent, and there the data are clear: property must fall another 50% for owners' carrying costs to be equal.

That is a joke. We went through this in detail on another thread and clearly showed how wrong your statement is. Every random building we looked at showed that ownership costs are nowhere near 50% above rents.
steve, for your own sake, cease these arguments that make you look so bad.

"since i've saved a couple of hundred thousand dollars over the last five years by renting rather than owning, i'll happily send in my rent check. petrfitz, there's little doom and gloom in my personal life. but there's a shitload in the lives of the unemployed, etc. i'm glad you find it so easy to ignore their plight."

This statement just shows HOW DUMB AboutReady is and how anyone should completely ignore this person.
We can argue that in many areas, prices in Manhattan haven't even dropped below 2004 prices. To say she saved "hundred thousand dollars" is a complete lie and a moronic statement (sorry, i usually dont' like to call people out but this one sort of irks me). Assume she's been renting for 5 years in a 2 bedroom apartment in Manhattan for 3,500 per month. In the course of 5 years that's 210K in rent!!!!
I can assure you that in many areas, prices are still up from 2004 levels.

"petrfitz, there's little doom and gloom in my personal life."

Petrifitz, i totally agree with you.
Even with signs of light, these same doom and groomers come out and paint it with black venom.

Stevejhx, try headlines. Too many lines in a post and people glaze over and think you are a pretend know-it-all.

about ready if you bought 5 years ago you will be up over 200% in your investment STILL. So bye your logic not only are you down bye missing the growth in RE since 2003, you are also down by wasting your money on rent. So actually instead of being "up a few hundred thousand" by renting over the last 5 years and missing the huge upside you are actually "down over a million" - several hundred missed on RE, several hundred spent in rent.

Genius!

I'll do the numbers later. What I was looking at and could afford, a million dollar cookie cutter two bed condo with ten percent down would have been a lousy investment decision.

And aboutready just did another insulting thing - accusing others of being insensitive to those unemployed when it had nothing to do with the conversation.

About Ready here are your numbers based on a actual property that I bought 5 years ago.

Purchased 2004 - $420K.

Appraised June 2009 - $1,050,000

Net gain - $630K

Your Rent $3500 x 12 x 5 = $210K

Missed Tax incentives - @ $150K

your total o missed opportunity:

$630K
$210K
$150K

$990K

Good job genius!

Nice made up numbers petrfitz. How about some real world examples?

"about ready if you bought 5 years ago you will be up over 200% in your investment STILL"

Completely baseless statement - it would be the rare property that sees a 200% increase in value from 2004. The whole "twice as expensive to buy" myth is often exaggerated, but so is the "renting is throwing your money away" myth.

"Nice made up numbers petrfitz. How about some real world examples?"

Not to mention, he forgot to include opportunity cost in his "missed opportunity" calculations.

"there's little doom and gloom in my personal life. but there's a shitload in the lives of the unemployed, etc. i'm glad you find it so easy to ignore their plight"

the only way the unemployed are going to get employed again is if the econmony turns around, so i'm not sure why such the hate when people are optimistic and start highlighting hints of recovery. i'm also not sure how contantly highlighting doom-and-gloom articles makes one more sympathetic to the unemployed?

this is funny. I'm sure my family would have preferred that property to our renovated 1200 sf unit that we rented for $2750.

I would love to see real improvement. Watch the shilling video clip on bloomberg. Read the beige book.

LICC: "Every random building we looked at showed that ownership costs are nowhere near 50% above rents."

LICC: "And of course [Steve] doesn't like information about the NYC market in general, but rather the oddball apartment here and there that he can cherry-pick to bolster his opinions."

Hmm. Every random building "we" looked at - "we" didn't look at any - and "the oddball apartment here and there."

Methinks, LICC, you want to have your cake and eat it, too.

"Assume she's been renting for 5 years in a 2 bedroom apartment in Manhattan for 3,500 per month. In the course of 5 years that's 210K in rent!!!!
I can assure you that in many areas, prices are still up from 2004 levels."

If she continues to rent another 3 years that's another $126,000, tally that up and in 8 years she paid $336,000 in rent.

Random selection is not cherry picking steve. Come on, I thought you were better than that.

"I would love to see real improvement. Watch the shilling video clip on bloomberg. Read the beige book"

ok, but what does one's view of whether there is a real recovery occurring now or not have to do with empathizing with "the plight of the unemployed".

perhaps fitz's comments about how miserable the doom and gloomers are? and how unfounded it is? i didn't make my comment in a void here. despite what one sensitive flower wrote.

here goes. had no interest in finding a perfect match, just pulled one out. this unit was on the market for $1.3mm in 2006. I reduced the price to $1,000,000, assumed a 7% jumbo loan of $900,000, and came up with a monthly cost of $8100. we've been hit by the AMT every year, so there would have been little tax benefit. there is now a 2/2 in the building for $950k, it may be slightly smaller, but that doesn't seem to me to be a 200% appreciation scenario. I rented a newly renovated high-floor great light apartment with spacious rooms for $2750. Wow, maybe I need to take a course in personal finance strategies.

http://www.streeteasy.com/nyc/sale/30915-condo-303-east-49th-street-sutton-place-new-york

AMT doesn't reduce the mortgage interest deduction. Did you not know that?
Your rent stayed at $2750 for 5 years?
Your apartment is in the same area in a comparable building to this one?

Sorry to be bearer of bad...I mean AWFUL news, but the FACT is that the bulk of Option ARM resets has yet to occur. When those waves hit, look out below.

http://mortgagenewsclips.com/wp-content/uploads/2009/05/dr2.jpg

LIC, when I was looking to get an apartment comparable to the one I rented it was one million dollars. my rent is a bit higher, but nowhere near $8100, and it may very well go down.

and i'm fully aware of how the AMT works. i own a property, pay $2300 a month total (interest and taxes, not principal), and paid $8000 in AMT. multiply the $28000 or so paid in taxes and interest by our tax bracket, and you'll see just how much tax benefit there was.

So the $8100 includes the tax deduction? That doesn't sound right.

"Random selection is not cherry picking steve. Come on, I thought you were better than that."

Yup, LICC. You selected randomly, I cherry-picked. I see.

"So the $8100 includes the tax deduction?"

You confuse two (actually many) things, LICC:

1) If you include the "tax deduction," you must subtract the opportunity cost from the comparable rent.

Which you refuse to do, because it doesn't give you the answer you want.

2) If you are talking about renting to an unrelated third-party, the tax deduction is for EVERYTHING except mortgage principle. That is where you have YET to find ONE apartment both for sale and for rent where you could break even on a cash-flow basis from the get-go.

Those are the principal areas where your "theory" falls apart.

Add this to ""Random selection": comparing means to medians, data that are obviously faulty (Miller Samuel) and praising them as gospel, assuming that all apartments are created equal.

Yup, LICC - GRAND analysis!

Actually steve, in this particular case we are looking at the overall dollar difference over 5 years. Include a 3% annualized return on the $100,000 for the opportunity costs over the 5 years, it doesn't change the equation that much.

Your 2nd argument is as irrelevant now as it was when you first brought it up.

CarolSt, How much would you have lost as of today if you purchased a 2 BR in 2006? How about closing costs? Maintenance? Do you think that is more than $126,000? Do the math again in 12 months and see if you feel any better.

"Include a 3% annualized return on the $100,000"

I see. Risk-free rate for opportunity cost!

And amortize the transactions costs over that 5-year period, including the 6% broker's fee (on the full amount), mortgage tax (if applicable), flip tax (if applicable), stamp taxes, conveyance taxes, and it wipes out your "tax savings," doesn't it?

Uhm, yup, it does.

20% down with a $100,000 down payment assumes a $500,000 apartment. $30,000 in broker's fees alone.

In 5 years at 5% interest, your total interest payments are $96,152.12. Even granting you a 35% marginal tax rate, $33,653.24. Almost COMPLETELY wiped out by the real estate commission assuming the property holds its value.

So much for that argument. (It's hard not to use an epithet here.)

"Your 2nd argument is as irrelevant now as it was when you first brought it up."

I see. Though that is the equilibrium that economists use, and that's what your property tax is based on, it's irrelevant.

I see.

"Sorry to be bearer of bad...I mean AWFUL news, but the FACT is that the bulk of Option ARM resets has yet to occur. When those waves hit, look out below."

Traditionally, Manhattan has not been the epitome of subprime mortgages. Manhattan's real problem is with job loss, esp. in the financial industry.

Why would you amortize transaction costs only over a 5-year period?

What rate would you put on the opportunity costs over the last 5 years? If you want to assume stock investments, use the S&P 500 returns and you actually will be losing money.

steve, you always try to manipulate the assumptions in a disingenuous way and everyone can see it.

LICC: "Actually steve, in this particular case we are looking at the overall dollar difference over 5 years."

Then, LICC: "Why would you amortize transaction costs only over a 5-year period?"

Well, LICC, let me explain it to you this way:

5 years = 5 years.

If you're looking at the "dollar difference over five years," you amortize the transaction costs over 5 years. 6 then 6, 7 then 7, 8 then 8.

Is that hard? I think it is, for you:

"steve, you always try to manipulate the assumptions in a disingenuous way and everyone can see it."

Very disingenuous of me, isn't it?

It is very disingenous to try to throw the transaction costs into this analysis since those are one-time costs. Try to think beyond simple concepts please.

"It is very disingenous to try to throw the transaction costs."

Yes, LICC - according to you it is "disingenuous" to include any cost that doesn't give you the number you want.

Sorry, but if you pay a transaction cost you have to amortize it over the period you own the property for.

Wipes out your entire theory, doesn't it?

In this case, the time period would correlate to the amount of time aboutready is renting.

Wipes out your entire theory, doesn't it?

"It is very disingenous to try to throw the transaction costs into this analysis since those are one-time costs."

WTF are you talking about??? One-time costs don't count???!!!??? I'm sorry, but you are a COMPLETE MORON.

BS (appropriate name), it is wrong to attribute a one-time cost on a 10-40 year investment into a 5-year window. This requires some thinking, so try to keep up.

"In this case, the time period would correlate to the amount of time aboutready is renting."

I don't know the details of aboutready's case. If I did I could give you an answer, if a.r. wants to share.

In your example, your entire theory (5-year holding period) falls apart at today's interest rates. Were interest rates 10%, it would work. But not at these levels.

And that's just the brokerage fee. It gets worse when you factor in all the transaction costs.

There are times, LICC, that when you do the math it makes sense to buy. That is, when your total amortized carrying costs are below what your rent would be. But in other cases - such as today - it does not make sense to buy.

"it is wrong to attribute a one-time cost on a 10-40 year investment into a 5-year window."

It would be, LICC, except you yourself said that it was a 5-year time window. OF COURSE the math changes if it's a 10-year time period.

Eventually, you get to a breakeven point. Eventually - if you live long enough.

"BS (appropriate name), it is wrong to attribute a one-time cost on a 10-40 year investment into a 5-year window. This requires some thinking, so try to keep up."

Dear Genius - trust me, I'm way ahead of you. Most people (esp in Manhattan) don't own their apts for 10-40 years anyway, so your timeframe is BS. The point you refuse to accept is that, from an investment view, it was idiotic from 2003 onwards to purchase an overpriced Manhattan apt when you could have rented an equivalent apt for WAY LESS DURING THE ENTIRE PERIOD. Perhaps you think a miracle will occur and prices will stabilize near their current prices (which are BS anyway - real sales are going for way below ask) so you will be bailed out of your dumb purchase(s), however let me assure you that WILL NOT OCCUR. And furthermore, you have not addressed the chart linked above which CLEARLY DEMONSTRATES that price-to-rent ratios in Manhattan, EVEN TODAY, are way out of whack with historical norms. Expect 3 more years of price declines before things get back in balance, buddy. At that time I will be swooping in to get a bargain basement price from a moron like yourself who stupidly bought during a bubble.

Who says people in apartments in Manhattan don't own for 10+ years? Look over long periods of time, get some actual data to back your claim, then get back to us. Of course people will be more likely stay in the same place if the market is stable or down.

If today's prices are similar to 2004 levels, then why was it idiotic to purchase in 2003? You are exposed as another narrow-minded renter.

Notice how the bears get nasty, crude and uncivilized when you disagree with them?

"Notice how the bears get nasty, crude and uncivilized when you disagree with them?"

Completely agree. They do have a tendency to turn aggressive and quite nasty.
I don't know what it is, maybe they've been renting for 5-10+ years and are tired of it.

LIC, just keep polishing that halo.

CarolSt, not tired of it at all. can now easily afford to buy, could buy much bigger, nicer place and spend lots more money. discussed it with the family, who wanted to buy a couple of years ago. decided why bother. plenty of things we can do with our money, rather than send large checks to the bank. including better investments.

steve's rent vs buy analysis:

This:

http://www.streeteasy.com/nyc/sale/233185-townhouse-230-west-10th-street-west-village-new-york

Compared to this:

http://www.nybits.com/apartmentlistings/d8dff24c3c8f401a4d2006922d72fb1f.html

WOW! It is more expensive to buy than to rent!

LICC - you just don't get it, do you? I would love to see anyone get a 2003 price in today's market - LOVE IT. Fact is, unless you find a complete rube, you won't. Obviously you don't understand what happens when a bubble pops - so get ready to stay in your apt for about 10 more years for you to break even on your purchase (so, yeah, I guess you'll have no choice but to stay for a lengthy period - I stand corrected). BTW, you can call me "nasty, crude and uncivilized" if you want, but what I really am is "exasperated" - exasperated at the fact that people like you JUST DON'T GET IT AT ALL. But you will learn the hard way, genius.

CarolSt - you think renting is "tiring" but owning is not? Try being the only person in a condo who can be bothered to pursue lawsuits against the developer with all your spare time, as a friend of mine is currently doing. Fact is, I mail a check to a landlord and you mail a check to a bank - big deal, what's the difference??? Oh, right, you enjoy the "psychic benefit" of "owning your own home". Well, guess what, I enjoy the "psychic benefit" of owning a bunch of great companies via the stock market. And such companies are increasing in value on a daily basis. Hmmm, kinda makes me cheerful, which is the OPPOSITE of what I would feel if I was stuck in an overpriced condo bought during a bubble which is depreciating on a daily basis. So keep feeling as smug as you wannabe...you are the one getting whored, not me.

steve, i gave the details earlier. decision made in 2004 to rent nice, large, renovated two bedroom for $2750 instead of purchasing cookie cutter 2 bedroom condo for $1,000,000 with 10% down and roughly 7% jumbo, total monthlies of $8100, highest marginal tax bracket (now, not then, I don't think) and AMT victim (then and now). No more than $700k of the mortgage interest deductible as we have another mortgage.

husband's firm currently has mandatory retirement at age 63, so we'll almost certainly be out of here in about 16 years, meaning it wouldn't have been possible to hold to payoff of the 30-year fixed. rent currently around $4000, but may very well decrease, as I am in PCV. and, yes, i now have come to the conclusion that my location is in no way inferior, other than dining, and it works for our commuting needs, so do not, in our situation, apply a discount for that.

CarolSt... when a single gay (got nothing but love for gay people... just adding color) RE broker outbids an I-banker/MD couple.... you could say w67thstreet... is.... the word isn't bitter? more like WTF? did I go to school for?

Then the next logical step would be to tell my precious children... who needs school.. look what it got your parents.... etc etc etc.... we a nation tossing RE back and forth.... while taking a little slice and spending it on salad shooters...

CarolSt... you are a f'ucking dipshit w/ a 5th grade education that cares about nothing and noone except what gets into your pocket and couldn't carry on a conversation w/ me or any of the other "bears" on this board if you 3% depended on it. GO SUCK on your career choice.

ar, so instead of giving money to the bank, and actually owning property, you are giving money to a landlord. And I doubt a $2750 two-bedroom rental was equivalent in quality to a $1mil apartment in 2004. Good one-bedrooms rented for more than that in 2004.

Owning property that has value is not just a "psychic" (I assume you meant psychological) benefit. It is a tangible benefit. When you pay off your mortgage you own a valuable piece of property, which you bought leveraged. When you pay your rents (which increase over the long-term) after years and years, you still own nothing.

You don't think dealing with a lousy landlord can be "tiring"?

Where do some people get this stuff from?

ar, you are taking a tax deduction on a mortgage on a non-primary residence?

"When you pay off your mortgage " so...what happens if you need to sell before that? and what happens if when you need to sell, your property is worth 30% less than you paid for it? what do you own then, genius?

LIC, you are wrong. I looked, and at many apartments. The condos that I saw were NOT as nice as this apartment. And i'd much rather give my landlord, even TS, a check for half the amount i would send to a bank. that's just stupid. i'm in the position where i could put down a large amount of cash and buy quickly if that ever appeared advantageous. i have never said that buying is always foolish, even when the rent/buy numbers don't work. i personally respect, generally, the decisions of others (unless they are fucktards), but i don't see how you could possibly convincingly argue that my decision didn't make economic sense. particularly as i got an apartment superior to the one i would have been able to buy.

There's no restriction against deducting mortgage interest on a second home, unless they've changed the law recently and my accountant at one of the top four firms doesn't know it (would'nt surprise me, actually). Hell, you can deduct the mortgage interest on a boat as long as it has a bathroom and a kitchen. You just can't deduct interest on more than $1,000,000 worth of mortgages.

LIC, you are wrong. I looked, and at many apartments. The condos that I saw were NOT as nice as this apartment. And i'd much rather give my landlord, even TS, a check for half the amount i would send to a bank. that's just stupid. i'm in the position where i could put down a large amount of cash and buy quickly if that ever appeared advantageous. i have never said that buying is always foolish, even when the rent/buy numbers don't work. i personally respect, generally, the decisions of others (unless they are fucktards), but i don't see how you could possibly convincingly argue that my decision didn't make economic sense. particularly as i got an apartment superior to the one i would have been able to buy.

There's no restriction against deducting mortgage interest on a second home, unless they've changed the law recently and my accountant at one of the top four firms doesn't know it (would'nt surprise me, actually). Hell, you can deduct the mortgage interest on a boat as long as it has a bathroom and a kitchen. You just can't deduct interest on more than $1,000,000 worth of mortgages.

I missed that you are in PCV. Comparable PCV apartments weren't $1mil in 2004.

I didn't say there was a restriction on the deduction. But you are railing against owning when you own a residence.

cc, finish your thoughtless hypothetical. Why do you "need to sell"? Where are you going? Where will you live after you sell?

from the irs:

" home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home). The loan may be a mortgage to buy your home, a second mortgage, a line of credit, or a home equity loan."

its a hypothetical you moron.

i don't need to sell....people need to sell all the time: their life circumstances change, new child, marriage, job loss or relocation, etc. they need to move somewhere else for some or all of the above reasons.

Good one, JuiceMan, but no. I'm looking at things like this:

http://www.streeteasy.com/nyc/sale/391354-condo-99-jane-street-west-village-new-york

Down Payment $2,900,000
Mortgage Amount $11,600,000
Mortgage Payment $65,864
Total Monthly Payment $72,745

when they want about 1/3 the price to rent it:

http://www.streeteasy.com/nyc/rental/482121-condo-99-jane-street-west-village-new-york

No tax benefit there, either, LICC.

Or this one:

http://www.streeteasy.com/nyc/sale/392127-condo-101-west-24th-street-chelsea-new-york

That you can rent at 2/3 the price, which once the real estate taxes kick in will be twice the price to own as to rent.

Yet another misunderstanding: "ar, so instead of giving money to the bank, and actually owning property, you are giving money to a landlord."

When you buy a property, you ARE your own landlord, so in these cases you're effectively paying yourself twice what it would cost you to rent - your expenses for a place to live are twice as high, more even when you add in the transaction costs.

There are times when it is advantageous to buy. Just not now. Tax benefit or no.

"When you pay off your mortgage you own a valuable piece of property, which you bought leveraged."

Yes, exactly - LEVERAGE. It feels great during a bubble when prices keep going up beyond reason, but it's HELL when the bubble pops (as you are about to discover). Let me explain ONCE AND FOR ALL to you, it is STUPID to buy an asset, esp w/ leverage, when asset prices are INFLATED BY A BUBBLE. Unless you are lucky enough to sell out before the bubble pops, THERE IS ONLY ONE OUTCOME POSSIBLE AND IT IS NOT GOOD.

"When you pay your rents (which increase over the long-term) after years and years, you still own nothing."

Ummm...WRONG. All the money I saved by renting (many thousands) has been profitably invested in assets that have much better short and long term prospects than Manhattan RE. Sorry, but you are simply DEAD WRONG.

"You don't think dealing with a lousy landlord can be "tiring"?"

I wouldn't know, as I don't have one - mine is actually quite responsive and easy to deal with. Nice try, though.

BTW, please don't attempt to correct my language - I am way more educated and well-read than you. Thanks.

LIC, you are wrong. The renovated market rate apartments here are LOVELY, much nicer than the cookie-cutters I was looking at.

as i have often pointed out, i consider the second home a total money sink, a discretionary expense akin to paying for private school or travel. it also cost less than a studio, so the risk was fairly small, and i most likely will never sell it, just leave it to our daughter.

For three of your reasons, you really don't NEED to sell, or if you do you are able to buy a new place, and if the market overall is down, the new place you are buying is also cheaper. If you are buying up, you can turn out to be in an even better position. If you have a job loss, where are you going to live after you sell? Like I said, just because you are a coward doesn't mean everyone else is.

a coward?

if the opposite of being stupid, is begin a coward--i'm all for it. which three reasons mean you don't need to sell?

So you actually meant to say a "psychic" benefit? In what book did you read that one?

You can go all-caps all you want, it doesn't change the fact that all you do is throw unverifiable assumptions and incorrect conclusions around. I think you don't get it - that you have been throwing money away on rent for all these years. This whole "I am paying half of what I would to own" is a lie that renters tell themselves to feel better. We have proven steve wrong about it, and you just can't back that statement up with anything solid.

cc, you're kidding right? You gave one general reason and four specific ones, so which three do you think I am talking about? Isn't it obvious?

tell us more about interest deductions.

"So you actually meant to say a "psychic" benefit? In what book did you read that one?"

Why don't you Google the expression, genius - you will get about 2 million hits.

"I think you don't get it - that you have been throwing money away on rent for all these years."

Really? Why don't you tell everyone what percentage of your interest payments are recouped by you that you send to your bank? Yeah, yeah, tax deduction, I know - but wait, if you make over a certain amount per year in income, you get crushed by the AMT, which destroys the tax benefit. So I guess you've been "throwing away" those interest payments, huh?

"This whole "I am paying half of what I would to own" is a lie that renters tell themselves to feel better."

A lie? That's funny, over the past 5 years I've paid on average $2100/month on a nice 600 sq foot 1-bdrm apt in a desirable area (near Union Square). What would my average monthly interest payment have been had I bought an equivalent apt in 2003? or 2005? or 2007? More or less than $2100? Please tell everybody, Einstein. And please tell everyone what my closing costs would have been - sunk cost, gone forever, never to be invested (by me, at least). And, furthermore, please tell everyone whether I would have any chance today of getting my 10% deposit back if I decided to sell in this market. Then summarize for us all why it would have been smarter to buy rather than rent in 2003, 2005, 2007... Please, go on, I can't wait for your brilliance.

"So Rhino is stating wrong conclusions about things he is clueless about, again. Interesting . . ."

Is LIC one of those pull toys that just says the same thing over and over? I swear he's said this 1000x, and it never actually comes with an actual refutation of anything. No facts, logic, or anything resembling intelligent thought.