Cold Feet re: Apartment Purchase

Hey lobster, I'm right there with you. We're seriously considering making an offer on an apartment but I have the same fear. I think the reason for me is because there is just so much new construction and empty apartments sitting around that I feel like there's still plenty of room for prices to drop. I'm hoping to hit a magic number in the $/sqft department and not willing to jump if I don't get it.

Buy now or be priced out forever!

Or - more seriously: how much would a comparable market-rate rental cost you? nybits.com. Out-of-pocket comparison, forget the "tax benefit." If you don't at least break even, beware.

@lobster uh are trying to bid up the price more? Really figure out the max and stick to it. And compare to rentals in the area as steve suggested.

I meant the "sellers/brokers" trying to get the price higher.

Mack123, my husband is thinking exactly like you are. He's afraid that the second we sign a contract that prices will drop 20%. I think I'm just afraid to spend so much money. People throw around numbers like $500,000 is nothing for an apartment in NYC, but to me coming from a less than upper middle class background, hundreds of thousands of dollars are alot of money.

dont make the same mistake i did this past summer....i let fear prevent me from buying an apt that i liked and priced accordingly...

It is interesting that you are having fear -- the first time I bough in 97 -- I paid $250K for a one br in a good location -- I told myself -- "You are such an ass -- paying 1/4 of a million for 800 sq ft!". Needless to day -- I made money (sold for $625+) when I sold in in 2005. btw, the aprtment is on the market at what it was bought for so the 2005 buyers will lose the transaction monies...) I also upgraded. I had no fear -- I was thrilled -- estate requiring a gut job -- but knew it was ideal. I sold it at the end of 07 for a large profit, again. NOW -- I have been renting - 2+ years. I would not consider buying. Your fear is not irrational if you cannot afford to ride out a cycle or lose the investment. Stevejhx is right. The pricing for rent is SO MUCH more practical. At least in NYC still. Do NOT get suckered into bidding up in this market. Do not call the broker back -- let them come to you. Let them panic. Not you. Buyers market if you want to go through with it.

I was about to make an offer this week and considering the time of the year and the current conditions, I decided to wait until jan or feb to make it. I think prices will become more flexible by then. I feel that there was an uptick last spring and summer but that the market is much more quiet now. I don't see prices going anywhere but down. I prefer the regret of not buying in a buyer's market than the remorse of buying a falling asset. There will always be properties for sale and at the glacial pace of RE I know I am not missing the boat.

yes,.....dont go up in price....i used that strategy in the summer and they came back to me 2x and then met my low ball...which i then backed out of.......

Your feelings are 'normal' in a bear or bull market. Most buyers experience this. Also common is the feeling, once the contract is signed, of "omg, what have we done?"

You know your finances and goals. If the apartment purchase is consistent with your budget and time line, then fear not. If it drops 20% tomorrow but you plan to stay for 10 years, why do you really care what it is going to do tomorrow? The most important thing is that the cost you are looking at fits comfortably within your long-term financial planning.

In terms of time, if your time horizon is just 5 years, I would be very nervous buying today. If it is a lot longer, I'd be more comfortable. Only you can figure out where you fit into today's market conditions.

Just wait until next summer if you dont feel it is right yet. Rent prices keep going down anyway and you can get some great rent prices for the time being

i almost vomited when my offer was accepted.. then the market collapsed.
i LOVE my apartment and my new life, and the market will come back. If you are in it for the long run and you love it, go for it.
now that i think of it i almosted vomited in 1999 when i bought an 850 sqft for 225k !!!
perfectly normal feeling (i think)

congrats lobster! hope it all works out to your liking.

If it drops 20% tomorrow, and you plan to stay for 10 years, your monthly mortgage payment will be 25% higher than if you waited. That's a lot of cash to throw away.

how can people give blind advice to "not bid up" when we don't know the price points lobster is dealing with? bidding up could still result in a decent deal. even if it doesn't, everyone's comfort level and circumstances are different...

"dont make the same mistake i did this past summer....i let fear prevent me from buying an apt that i liked and priced accordingly..."

Of course, that same fear served a lot of people VERY well.

if you love it and it's priced well for this market (and not some cookie-cutter apt in a new dev or bldg with high turnover) then I don't see much reason for the cold feet. If you buy well and plan to stay in it for some time, it will be your home, not just an "investment"

I think Kylewest is exactly right. Those fears are perfectly normal in any market. Just make sure you really like the apartment! When I signed my contract, I was convinced I made a mistake for about a week or so. Once I moved in, I loved it and never looked back. Even when the markets made me underwater for a year or so, I didn't care because I loved the apartment. If I was lukewarm about the place to begin with, I'm sure my reaction would have been different.

> If you buy well and plan to stay in it for some time, it will be your home, not just an "investment"

Correction, it will ONLY be your home.

Owner-occupied real estate is not an investment.

> Those fears are perfectly normal in any market

Of course, in some markets, they're more accurate.

> Even when the markets made me underwater for a year or so, I didn't care because I loved the
> apartment.

What if that were 20 years? And basically 0 return for beyond that?

Thanks to everyone for their great comments. UWSMom, thanks for your support. I have a feeling that your kids have a warm and devoted mom. I wish that I could look at this purchase strictly in terms of whether it is a better value today to own or to rent. I've lived in rental apartments for 17 years so I know all the good and bad that coming with renting. My concern was to find an apartment that we can easily afford and if it's not this apartment, we'll wait for something else. I tend to be very conservative about money and spending this amount of money is freaking me out a little. But it's good to hear different perspectives about purchasing/renting an apartment and I would recommend SE to anyone.

good luck, lobster.

Lobster... hold your bid. Start looking at other comps and other units to bid on to alleviate the anxiety. THE GREATEST NYC RE bubble popped in 2008, it's been one year, every seller is thinking that bonuses in 3-10' is gonna POP the bubble back. Ain't gonna happen.....a weak spring, weaker summer will be the one two to keep the NYC RE down and out. IMHO.

And if that doesn't convince you what is the premium to rental to own?

LOBSTER;BEWARE concensus-committee thinking,as is rampant here.Most bloggers probably I believe,never ventured-and never realized a gain.

How much do you like this apartment, lobster, and how much $ are you willing to lose? Are you going to be able to swallow 50% in paper losses, and still be able to sleep well at night?

As for me, I sleep very well as an owner. I can't rent this space, and so I don't think about market value constantly. If you are not able to do the same, keep renting.

Did you see 26D at 111W67 - been on the market for rent at 6800 for months, on the market for 3.5m.

Lobster: what would it cost to rent the apt you bid on, and what is it going to cost you to carry monthly (net & gross)?

Oh another thing... if you are gonna pull a millqt, put yourself out of financial misery and buy the damn place.... seriously what's another $100K when you get "ownership" experience.... that includes seeing a total equity wipeout... but hey ya gotta be in it to WIN It!

despite such posts, i also believe w67 is a warm and devoted parent ;)

yo uwsmom, love the kiddums!

I don't understand what is so hard about reading the NYC RE mkt?

6.8k, but it's crazy - and it HASN'T rented at that price either.

"Most bloggers probably I believe,never ventured-and never realized a gain"

And look pretty darn smart for doing so now..... do you think if they bought and lost 25% leveraged they'd suddenly be more credible?

nyc10023, I feel the same as you do. I don't think that I would worry about market value constantly since I'm not planning on selling the apartment absent very unusual circumstances such as job loss or serious health concerns. If I sell the apartment in 20 years, I can't predict market conditions at that time. But I agree that for most people, renting is the better financial option in today's market.

nyc10023.. $6.8K, soon to be $6K, soon to be $5K... soon to be REO, soon to be Short sale soon to be sold on the steps of 60 Centre street... soon soon soon....

jrw293... soon to be unemployed RE borker.

So why do you want this particular apt, lobster? Forget about whether it's fairly priced or not - price aside, what distinguishes this apt from all the others that you've looked at (rental & sale)?

Lobster--

Buyer's panic is completely normal. But, sometimes it can indicate a deep and real concern with the prospective purchase. Is there something about the apartment or building that concerns you? Do you feel you're overreaching financially to make this deal work?

I went through a similar thing last year, with an accepted offer and rounds of negotiations. I had a niggling concern about certain unfavorable aspects of the apartment that slowly blossomed into full-blown panic as the process progressed. Ultimately the deal fell through because we couldn't come to a meeting of the minds with the seller, and now I am thanking my lucky stars--the value of the apartment has since plummeted.

I should have probably listened to my gut from the get-go.

you got a squid also... it's time to walk.

lobster: how did the decision you made 21 years ago but were nervous work out for you?

If you are going to stay in this apartment for the same amount of time, I can just about guarantee you it will work out as well.

it's possible that starfish is lurking as well...

Thanks Squid. In my case, I really don't think that it's the apartment or the building that's the problem. I think that the problem is that apartments all cost so much money and it's the large amount of money that frightens me. Somehow when you pay a few thousand dollars a month in rent and are obligated only to rent on a yearly basis, the quantity of money owed is more manageable.
NYC10023, we've seen many apartments and while many apartments in my price range are simlar, this apartment worked well for us. I like the apartmens layout. I like the building location. I even like the fact that I'll need to renovate since I can design the place in my taste and not have to pay for someone else's taste. Thanks again for your help.

and it would be strange if you DIDN'T get nervous with such a large financial decision.

It's a big decision and a lot of money. I had crazy buyers remorse when i bought my place 5years ago. As it turns out, I love it and it has doubled in value based upon TODAY's market. I have no interest in selling, despite the threat of falling prices. It depends upon where you are in your life and what you are most comfortable with. Not everything can be reduced to a spreadsheet. Good luck, Lobster. I hope whatever decision you make is for the best.

I see your logic w67, I just don't see the market moving yet to sensible low levels, so wtf. Also, nobody ever talks about this, but if a buyer is living off financial income, and interests rates are zero basically (unless you take insane long term bond risk), so generating money to pay rents takes a lot of cash. I don't know -- I wouldn't buy right now unless it was some distressed type thing, I think.

FLMAO.. .see Lobster, villager is very "Happy" not because he "owns" his place, but bc even in this shitty mkt he/she is still up 100% on an asset basis and 1000% on a leveraged equity basis. The flip of Villager is you buy now and are down 100% in equity in 2 yrs!

jimmy, there an oyster 50 footer. Saw it 2 yrs ago for $3000K, got sold... felt bad.... on mkt a year ago for $179K, then $159K then $130K now it's ask your price..... so the question is not what is the CF of $2MM in the bank, but what is the price of the 3bdrm CPW in 1/2/3/5 years.... versus the "joy" of riding this baby down!

Thanks villager for the sensible advice. I completely agree with your point of view. And thanks 30 yrs_RE for probably the best advice that I've been given in a long time.

wrong W67. I am "happy" because I am in my home. I have no plans to sell now or in 2 years

67th (you are , by the way, awfully low key today), I see your logic, but I don't see it manifested in spades in the market ....yet. What's your explanation of why the market hasn't moved more. why so many months into this the supposed disaster case buildings are not in fact holding fire sales, why your average seller seems to think things are down a bit but not a lot....etc. I want the frigging apocalypse and I want it know. [By the way John Hussman of hussman funds in today's newsletter shows a graph showing how a second wave of mortgage resets is getting going....but I don't know how much that impacts nyc].

Jimmy. U shld see m when Im hopped up.

30 yrs r u saying that if I bought my $2.5mm 2 bdrm in 1965 B'way in 2007 id be happy now? Or in 30 yrs? I don't know how other ppl operate but I look at 'what could have been scenarios' as much as 'water under bridge.' sceanrios. So I waited 2 yrs now I could have a. Full 3 bdrm plus $800k in change. Are you telling me I'll be 'happy' in 30 yrs having bought at peak?

RE is very illiquid, but when it moves it moves. That's what i am amazed at, the shitz only got down to go. NOT UP.

Lobster I hope you and your husband much happiness, but I don't think you'll find financial happiness buying in the mkt. But hey maybe you'll hit the jackpot or one of your kids will play in the majors.

w67th - a year from now, when your LL sells the apartment out from under you, or raises the rent past what you think is right, and your wife then says, why didn't we buy? And sure, you'll get the CPW apt. for cheap - keep on dreaming. Real estate to live in is more than just cap rates.

"30 yrs r u saying that if I bought my $2.5mm 2 bdrm in 1965 B'way in 2007 id be happy now? Or in 30 yrs? I don't know how other ppl operate but I look at 'what could have been scenarios' as much as 'water under bridge.' sceanrios. So I waited 2 yrs now I could have a. Full 3 bdrm plus $800k in change. Are you telling me I'll be 'happy' in 30 yrs having bought at peak?"

Perhaps the biggest straw man I've seen on this board to date. You couldn't have bought your 2 br in 1965 Bway in 1965 (because it wasn't built till 1996) , but even if you paid ***300% OVER MARKET AT THAT TIME*** for a unit which was at that time the equivalent, you'd still be WAY, WAY, WAY WAY in the black today.

Let's take a look at sales which actually took place in 1965. I challenge you to find one where if you took the sale and paid 300% of it at the time (in other words, prices could fall 67% and be at what the sale was actually at) where the property isn't worth 300% over that today (i.e. 900% of the actual 1965 price).

In addition, even within your own example you're trying to pull a fast one acting as if properties which sold for $2.5 million can be had for $800K today, or even if we see a significant decrease from where we are now (i.e. the market going down 68% from 2007).

Lastly, yes what I'm saying is that what makes people "happy" in the end is what they actually bought for and actually sold for, and that if they bought not at the rock bottom, and the price dropped significantly at some point below what they paid, that they really couldn't give a shit if in the end they sold for 10 times what they paid. So, go look at the historical graphs and cherry pick the times when buying RE in Manhattan and holding it for 21 years ended up in ANY lost (even adjusted for inflation) and we'll see what years those were and what occurred in those 21 years.

“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” - Bernard Baruch

ooops... I see you're saying it only went down $800K not that it is now worth only $800K. sorry.

Although I will say that you look like you trying to say that you bought a 2 BR recently in 1965 B'way and saved $800K from it's $2.5 million 2007 price. We both know that this isn't the case. Why don't you tell us how much you actually paid and how much it's worth now and prove that I'm right.

Ooops, another mistake, you're saying you can buy a full 3 bedroom in 1965 B'way for $800K less than the peak price of $2.5 million which you claim to be the 2007 value of the unit you own there. I call BS on both.

just for some facts:

the only 2 BR sale I see in 2007 is:

20H 1577SF Ask $2,995,000 Sold $2,875,000 10/11/2007

and the recent 3 BR sale is:

16B 2157SF Ask $3,895,000 Sold $3,300,000 08/18/2009

NB there were smaller 2 BR sales in 2007, but no where near the price of $2.5 million so they are irrelevant.

Lobster - I wonder if your gut is fighting with your heart. I think there are great deals to be had now on places that need work as they compete with fresh mega $$ renos. But if you are not 100% sure of yourself you could be headed down a path of pain and grief. Now is not the season to be rolling the dice.

Even though I had few doubts about the place I bought recently I was looking for some affirmation from the crew at SE. Maybe that's where your head is at. Nothing wrong with it. I'm even more convinced after a couple of months in my new place that I made the right decision.

A good price - lack of competition - good inventory - low interest rates - a market that is looking more normal than not - stability - schooling... etc, etc., all pointed to buy for me. I can assure you there are people buying in this market that will have no regrets. On the other hand there are others who may regret not buying now. I'm not convinced that waiting will put you in a better position. And in my opinion it really depends on what and where you are buying. Good luck to you.

further flogging of the dead horse:

"Are you telling me I'll be 'happy' in 30 yrs having bought at peak? "

Are you trying to say that if lobster guys today she will have bought at "peak". I guess that would say you think prices haven't fallen at all, because otherwise her purchase today wouldn't have been "at peak".

I fear no LL when cash flow is King, queen and tranny. . Call bullshit all you want 30 yrs. The fact remains anyone who bought at $1500 psf abd above is gonna have to 'love' their homes for 30 yrs, but who the fuck wants to be nailex to a box for 30 yrs? NYC re is massively deleveraging. I sidestepped a min $1mm loss easily, and classic 6/7/8/9 are dropping like a John's penis upon realizing a hooker is a tranny ( unless that floats your boat).

One other thing, I'm not talking abou buying at bottom and selling at peak. I'm just saying the greatest NYC re bubble popped one year ago. Ya think we are even close to marking to mkt yet???????

>And in my opinion it really depends on what and where you are buying.

spinnaker1, well put. You could've waited ten years for a place like yours to come around again, and for what? An extra room, maybe? If you'd have been happy with some generic place, then maybe better to wait.

The best SE post was some yutz saying "what were people thinking of, buying in 1992? They could've waited a few years for it to *really* bottom."

Murray888888888888. Go fuck yourself. Let's just say a lot lot lot lot of LLs wish they were tenants at this point. Don't listen to w67, just look at ALL th foreclosures now and into the future. Tons of resets in 1 yr.

You're sounding too desperate right now - and, in 1-2 years, you will be f***ked

30yrs - W67th doesn't own - and still thinks he'll be able to buy a classic 7 on CPW for 30% less than today. LOL

murray, it's not just the price, it's the uncertainty. if you can look at all that is happening, and honestly believe that there is no potential for another catastrophic event in the next couple of years, grand. if you can't believe that, with rents still declining, why would you buy? i feel that very few people have any employment certainty. it would take a lot of savings, and i mean a lot, for me to feel comfortable being tied down to something that costs twice my monthly rent.

having said that, lobster, best of luck. only you know your economic situation, long-term goals and plans, and comfort/risk levels.

AR - uncertainty exists - we live now - if you found your dream place - and for you I think that is about 2,000 sf for $1,500,000 - please, you'd jump on it. All your economic theories are just that - just admit it - you're looking for the great deal and when you find it you will jump. You just want the space- pre-war,post-war, loft - it's the space.

murray, you're wrong. absolutely. unless it's pcv, i won't buy before 2012. my grasp of current economic conditions isn't bad, and what i see isn't good, nor stable.

risk existed in 2006-07 also. i called bubble and decided not to buy something i could afford. i've avoided a $400k paper loss as a result. and i'm much happier than i would have been paying double for housing.

if you'd bought in 2004 you'd have been way ahead- you didn't call bubble- you sold early and didn't buy right

Murray88888. Look all around you. C7 are droppig like a rock. I own a coop on 67 th. I own commercial re in NYC. My family owns commercial and been in biz for 20 yrs, last 5/6 years made absofuckinglutley NO sense. We just popped this a yr ago and your advice to lobster is 'enjoy'!!!!! Yippeeeee!!!!

30 yrs Bingo. I think 11H went for?????????

I didn't realize w67 was just a trust fund baby. Could you put your daddy on the phone please?

Spinmaker- alot of what you write rang true with me and what NWT highlighted (and was previously noted by villager) is very accurate that it does depend on where you in your life. Maybe I made a mistake looking for affirmation today on the SE site because I'm in my forties and likely much older than the typical first time NYC apartment purchaser. My circumstances are probably much different than younger buyers who may not be looking or requiring the stability that I need now in terms of having a more permanent home. I've lived in rental apartments for almost 20 years and don't want to deal with the negatives of renting anymore such as not having a washer/dryer in my apartment and living next door to a group of people in their 20's who party all night. That may be guiding my thinking more than a purely financial analysis. I apologize to everyone for airing my personal concerns and I thank everyone for their guidance and comments.

w67th- didn't you see nyc10023's post re: classic 7's- (outside of West end and CPW) rare as hen's teeth - keep dreaming -

just because- as you've said yourself in the past - you can't afford to buy now - your income level is not up there- (or your money is tied up, or something else) so just talk everyone else down

his daddy can't give him the necessary money

lobster - actually, there are a lot of very expensive apartments in NY that don't have washer/dryers in the apartment. But having stability, a place you make your own, to your own taste, with changes that suit only yourself - that is what makes owning different than renting.

AR - you bought the upstate place-2004 maybe not underwater, but certainly not ahead. Are you seriously saying that if you'd bought in NY in 2004 you'd have lost money? Come on - be honest - you'd have been ahead

$2mm more so I can paint!!!!! Yiippppeee. Great advice Murray, which brokerage do you work for?

Lmao 30yrs. I'm the only one in the family who hasn't taken a dime from my dad past college. My older brother stinks of death cause that's what his lazy ass wants for my dad. I'm for the most part a self made person, but not compared to an orphan abandoned on a church step.

But back to our re bubble. Do you fnking have a clue as to how much bad bad paper there is out there?17% under/unemployed, commercial mortgages about to crap, 2nd wave of resets/defaults (now prime baby prime), and taxes out the wazoo to pay for healthcare( perfect!!!! Fnking timing for NYC re, don't you agree?). And tell me why lobster shldn't be crapping in her thongs tonite?

Because if you bought in 1987 and paid 200% of market, where would you be today?

Do you think things are going to be that much worse than the stuff which fell 80% to 90% in value from 1987 to 1992?

As to 67's point about the NYC real estate bubble having popped only one short year ago. It took years for the Miami bubble to unwind. I know they are not comparable markets but the unwind of a bubble is comparable. Every year over the past few years, pundits have gone on TV and in other media sources saying the Miami market was rock bottom. Last year there were several fund guys saying the were putting together funds because the were buying bulk apts in Miami for the unheard of price of 30 cents on the dollar and that this was the absolute bottom. They all dissed the guys that bought bulk at 50 cents on the dollar. Cramer had a real estate show and said everyone should go buy an apt in Miami.

A year later, a company bought prime bulk apts in tony Bal Harbour for 16 cents on the dollar. Last week Goldman Sachs wrote down a $170 million loss on a $200 mm apt complex. They sold the 158 apts for 20mm -- 10 cents on the dollar. And there will be more because that is how a bubble unwinds - a long, slow leak.

http://www.dailybusinessreview.com/news.html?news_id=58467

Everyone thinks it can't happen here because of the conservative coops. But keep looking at the change in the NY skyline over the past 5 Years. It screams Miami. Maybe NY won't hit 10 cents on the dollar. But there is a lot of distance between the current 75 cents on the dollar and 10. The occasional 50% price choppers we see on these threads will snowball over the next few years.

Lobster: how is your stomach for loss? Will you look back and think you were a fool to have the examples of many other cities that had major RE bubbles and never researched the lessons of those cities to apply them to your own fair city?

Thank you apt23. You kick azz.

30yrs. Yes I see a long drawn out slog to a bottom that'll make 1991 look mild in comparison. Is it just me or was everyone and their girlfriend LLs this past 7 yrs????

30yrs as to your question of 300% in 1980 re purchase. Do you know what $10k in berkshire would e gotten you?

Scenario:

Lobster is looking to buy a classic 6 which is a good layout, good size, in a good building, in poor condition. She can buy it now for $1.2 million put down 360,000 and take out a mortgage for $840,000 at 5.5% fixed for 30 years. The monthly maintenance is $1,400. She will spend $200,000 on the renovation. Her mortgage payment will be $4,769.43 a month.

Total cash in is $560,000. Monthly outlay (pre-tax) is $6,169.43.

She decides to wait.

We never know when the bottom is until we are a bit up the other side. So she waits 3 years. Price goes down to $900,000. She has the same $560,000 cash available, but now on the up[swing and contractors at a premium, the renovation will be $260,000 so she puts down 300,000 and takes out a mortgage for $600,000. And the economy has gone thru a lot of shit and interest rates are now 8.5% for 30 year fixed. Her mortgage payment will be $4,613.48 a month. Thru good fiscal management of the Coop, the maintenance is still only $1400.

Her total cash in is the same $560,000. Her total monthly outlay is now $6,013.48.

33 Years from now, either way she owns the apartment free and clear, and it's worth the exact same amount.

Now go add up all the $155.95 a month differences (who knows what it will be after tax) and tell me how terrible it was that she bought now instead of 3 years from now?

Or do we think that not only will the world end financially, but interest rates won't go up?

67: the tell of the bubble wasn't how many ex girlfriends became LLs. It was how many failed actors became brokers.

You want to cherry pick? Fine:

$10,000 Berkshire Hathway 1992 is $100,000 today.

$10,000 Studio in 5 Tudor City place in 1992 is $240,000 today.

We can do this all day.

30: The $155 monthly payment over 30 years is $55,800. But if she invested the $560,000 and made 10% over the 3 years - a very conservative sum-- it amounts to the very same $56,000. Plus she could wait 3 years and have a little clarity about where the market stands after a history making bubble. If it comes down at all, she would be ahead.

I just checked my email because I can't sleep and then checked a few websites including this one. I'm a little puzzled as to why this discussion is going on at 1:00 am and again I am truly sorry that I started this discussion earlier today. It seems that many of the contributors can only see my purchase dilemma in terms of dollars and not in any other way. My intent in starting this discussion was to learn if buyers experience fear if they are close to a purchase. Obviously money plays into that fear, but it isn't only about which is the better economic decision- to rent or to buy? I certainly discovered today that money isn't everything in terms of purchasing an apartment. Sometimes I watch tv at night if I can't sleep and I would suggest that you all forget about this nonsense and try to relax.

Thank you again apt23.

30yrs. I like cherries, bing preferably. Let's just say as interest rates rises asset prices fall and the inevitable cycle repeats when you will be able to re- fi at lower rates with a much lower price basis. It's been done over and over again.

And as to your point about free and clear in 30 yrs, I KNOW of only one person in my life who had a mortgage burning party. 5 yrs later she got a heloc to fund her kids college. Let me just say NO ONE ever pays down their mortgage and in fact the tax advantages almost always made it better to keep a mortgage, but you see where using your 'home' as an ATM got us, no?

Here is where I have a problem. The economy in the last 10 yrs was based on MTV cribs and home depot Renovations and us passing homes and mortgages back and forth, so we have u at 17% ..... Where do we 'create' wealth going forward? What businesses and skill sets will command an above average salary? Cash flow supports asset prices NOT the other way around. Where rentals go home prices follow. I don't even sniff pricing power from LLs for the next 3 years.

lobster, I am a new buyer. I backed out of 3-5 apartments in past 2 years and I am buying now. Fear is still constant.
I am buying now because I really like the place. I am prepared to accept losses because its a home I like.

It's a lot of money but if you really like the place I dont think it will be an issue. Dont buy because its cheap.

Good nite lobster. Fear is a given, suffering is optional.

"30: The $155 monthly payment over 30 years is $55,800. But if she invested the $560,000 and made 10% over the 3 years - a very conservative sum-- it amounts to the very same $56,000. Plus she could wait 3 years and have a little clarity about where the market stands after a history making bubble. If it comes down at all, she would be ahead."

And, historically with almost a surety, at the 25 year mark she'll be paying at least $10,000 month more in rent than her monthly after tax carrying at that point. How about factoring in reasonable rent increases vs mtc increases over the life of the loan? There are 100 to 1 odds of being at least an order of magnitude and possibly closer to 2 over the life of the loan.

"And as to your point about free and clear in 30 yrs, I KNOW of only one person in my life who had a mortgage burning party. 5 yrs later she got a heloc to fund her kids college. Let me just say NO ONE ever pays down their mortgage and in fact the tax advantages almost always made it better to keep a mortgage, but you see where using your 'home' as an ATM got us, no?"

My guess is probably because you know mostly renters. I know TONS of people who've paid off their mortgages. It's only in the last couple of decades where the majority of people in the country didn't. And yes, using your home as an ATM is a big reason we got into this trouble, but that really proves my point rather than yours.

I really find it quite interesting that not only do a lot of people insist that prices MUST go only down, but won't even admit that with almost a certainty that whatever happens in the short term, in the LONG TERM prices will be at a higher value than today. I guess I see why some of the bulls on this board find the discussions so frustrating: I can see I've asked for multiple "proof of life" evidences of the position that long term it won't happen, and I've yet to see even an attempt at an answer. And what's truly ironic is that I'm a bear, and I've probably been a bear on the Manhattan RE market longer than just about anyone else in the market, and continue to be one. Just not a blind one.

murray, upstate i am still a bit ahead. probably not for long. but my mortgage is $250k. i have little problem with a loss of my equity. i have a problem with a loss that is greater than i can afford, and the inability to sell if i need to.

you haven't been paying attention. in 2004 i sold. i made money. and i don't care whether or not i would have made MORE money by buying again. the utility/risk ratio was way out of whack.

unemployment is a real concern in the law, even among partners. the business is changing. i do believe that we'll be fine, but i'm not certain enough of that to tie myself down to potentially overpriced real estate. my husband's work is very mobile. so tell me again why i'd pay 2 to 2 and 1/2 times more for something that could become an albatross? when i don't mind renting.

30yrs, so what if you'll make money in the long term? why buy during times of extreme uncertainty? i can see it if prices have reverted to mean, but we've just taken a small dip toward normalcy. where's the urgency?

I'm with 30 years in this calculation. It is unlikely a typical buyer with a need for a conforming $730,000 loan will do much better. Whatever potential extra leg down over the next 3-4 year is counterbalanced by the likelihood of higher rates. If you know you're going to be in New York for at least another 10+ years and need a loan, you might as well buy now.
To the hypothetical scenario above, you need to add the rent paid while waiting for the prices to slowly deflate. This buyer could easily spend $120,000 renting that classic 6 for 3 more years.

Maly -- won't the higher interest rates cause prices to go down, therefore offsetting the cost impact of higher rates.

I ask again -- if the market is in the process of such a downturn as many say here, when are we going to see some real fire sales of unsold developments? Because isn't that what has been going on in Miami for quite a while (at least in downtown Miami). And in Miami, some of the more desired buildings in South Beach are still selling at very high prices.

What we are going through right now is called a temporary period of absorption. It is a mirage that is designed to trap smart money in what is otherwise the beginning of a massive bear market cycle. The bailout and subsequent equity market rally is what has led to this. The feelings of trepidation that you are having are true not because you are acting emotional but rather because you really know what is going to happen. Actually it sounds like you have seen this chapter before, maybe not experienced first hand but perhaps a family member in the 1980s? This country is on life support, without it, we would already be down another 20% and NYC would be foreclosure and short sale central. Please consider your investment wisely. You have worked hard for your money and it is never easy to be 20% down on a home. The people who will be 40% down will just walk away - but you my friend will only be 20% down and will be going through the emotional roller coaster that so many New Yorker's are going through.

I don't NYC will follow the same pattern as Miami or Las Vegas. Although we have had a massive construction boom, it was never as large relative to the size of the population. I can see a repeat of 1988-1995, a 2-year crash followed by a 3-year slow hiss. Locally there might be real problems, like in Downtown Brooklyn, Williamsburg and LIC, and the higher end is going to take a large hit. The larger hit also reflects much higher price increases.
I would consider myself pretty bearish, in the sense that I believe prices are going down. In certain situations, and for subsets of the market, it can make sense to buy now. If you need a jumbo conforming loan, in the sub $1,000,000 market, it's not a bad time to buy. If you want to buy a gorgeous wreck, it's not a bad time either.
If you are unsure of your time horizon, have a sweet rental deal, have lots of cash, I think it's better to wait a couple of years, unless you find the deal of the century.

You heard it here first!!! In this market, buy only if you get a deal of the century. Lobster, did you change out of the dirty thongs and are you in contract for a deal of the century?

30yrs, I don't disagree but you put a lot weight on in 30 yrs you will be proven right. If you take the fact the average American moves every 7 years, you are talking about 3 std deviation families. One other thing about paid off mortgages, the reason 'your' generation (not being an azz) has no mortgages is because you guys bought when home prices were not SO out of whack with rental rates and bought when mortgages were 18%.

I forgot the one other person who has no mortgage on their co-op, ME. I also don't carry q mortgage on my commercial units. Go figure, but I am looking to lever up 50%, in anticipation of the shit storm to pass in the next 3 years. Not 2010, that'll be lemming dos 1.0.

Yeh! What lr000021 said. That about sums up my view on this mini pause on our way DOWN!!!!!!

lobster, I am an experienced buyer married to a first-timer, and we certainly felt chills before we bought our first joint place this summer. Owning is a commitment, and a big one. I can tell you from working in the industry that most buyers have a round of nervousness before they "commit."

That said, we've been loving our new place, and I hope that you enjoy yours for many years.

ali r.
{downtown broker}