Manhattan Real Estate Haters

Perhaps those of you who say prices are going up should disclose the same info! Clearly those of you who think prices will continue to rise are brokers/people who have everything tied up in real estate/want to sell soon and need the $$/people who just bought and want to justify their purchase. ALL DATA SHOWS PRICES ARE HEADING SOUTH.

and plerase post your SSN and bank log-in details too.

Fine, give alternate investments that should do better. Where do you have your money if real estate is so horrible? I currently have 40% cash, 40% RE, 10% 401k, 10% stocks. My point is these haters mostly likely do'nt have the problem of "where should I invest?" They are living paycheck to paycheck anyway.

all data does NOT show prices are going south in NYC; actually most all data shows a slow 3-5% increase quarter to quarter. If people would stop screaming on both sides and look at data from relatively agnostic sources such as Miller-Samuel http://www.millersamuel.com/
you would see that.

But, I guess that doesnt make for fun, controversial or long chains of posts. . .

My point is, a lot of renters (but not all) will lie or not disclose their information because they don't have the assets to have problems deciding what to do with their money. They don't even think about asset allocation or cash flow or anything. They have nowhere near the downpayment to consider buying so reader beware.

Someone step up. I want to see an intelligent renter post some %'s and logical reasoning on what they intend to do as an alternative. Give the ppl deciding some real advice instead of "wait and buy 50% lower" which is meaningless and usless.

It's unfortunate that people who bought in Manhattan at the height of the market are going to lose money...but you need to face reality. Manhattan/Brooklyn is not a glass bubble. The entire country is struggling..it will definitely affect New York. BTW...I own...I bought in '2000..nothing great a one bedroom for $250k but I'm not gloating..I want New York economy to be strong.

I intend to buy but I have just returned to New York and am paying $2700 for a one bedroom...I'd be a fool not to buy!!

The New York Times had an article last week about a drop in pricing for mid and low end apartments. The only apartments (they say) that will continue to do well are the high end apartments. I don't know where high end pricing starts.

the article that you refer to was somewhat supported by this more accurate Miller Samuel chart, http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1174270558fRROq&Record=7
which btw shows that the "middle" of the market is about $795K -- not the average but the median of all sizes

Prices arent going down anytime soon in most market segments, and not drastically in ANY segments

Yeah and I don't care if real estate goes down. Bought in 1996 for $800,000/20% down, about 7% interest. Now it's worth $2,500,000+. So if it goes down to $1,700,000, I've still earned %900,000 over ten years, on theinitial investment of 20% down of $160,000. So that's like 500% in 10 years, or about 20% per year annum, ASSUMUBG A THIRTY PER CENT + DROP IN THE MARKET.

You guys just keep on renting!

Original poster here. In all fairness this was not meant to be a bash the renter thread. I honestly want an intelligent renter to give real asset percentages and what he/she intends to do as an alternative to renting. I say asset percentages (for #2 who doesn't understand) so we can understnad the financial situation and the decision making process of a viable rent, don't buy plan.

#12..you say you bought for $800k and now it's worth $2.5k...THAT MEANS NOTHING. You sell tomorrow where are you going to move. You are dreaming. I own but it doesn't mean anything.

I am a renter not buy choice. I have the financial ability to buy a one bedroom but I cannot seem to find the "perfect" apartment. Everyone here is correct; but it's not that simple to pay $700k and not find the apartment you want. That's why I continue to rent. Crazy I know but I think there are a lot of us out there.

i also rent.....im in a stabilized apartment and pay a good deal for a studio in murray hill....i have substantial assets...conservative investment in moderate stocks and cds......i want to buy BUT at this point, the cost benefit is not there...since I dont see a HUGE appreciation in the next few years....AND, I get a better return right now on moderate stocks/cds.....vs having to lose investment income on downpayment and maintenance...for some with good rental deals, this is not the market to buy in......if you are paying a lot in rent, i would of course say >>>BUY......i wish i didnt have this great deal on rent 10 years ago....that would have pushed me to buy...so in some ways it was a hindrance to have this great rent....and for those of you who have made hundreds of thousands and millions in the stock market, BE HAPPY ABOUT IT and dont put down renters who are obviously not in the same boat as you......lastly, dont forget the tax implications of selling and need to have o buy another apartment...dont get me wrong, i am jealous that you guys are making this ##...who wouldnt ...Just saying, be happy about it without putting others down when they express views...

bravo

33 years old, rent a 1 BR in midtown for ~2000 a month. I am looking to buy, but with a focus on value as I worked damn hard for what I have and know the value of a dollar.
- 200k combined income
- 600k cash mostly in treasuries/munis
- 200k in 401k
- 300k in european real estate
- no debt.. zero, nada to anyone
- worked hard, no rich parents no hand-outs

I'm waiting to see the trend and expect prices back to 2005/2006 levels.

edit to #18: I meant 2005/2004 levels. and BTW I was not in NY during those years

#18 I would rent foreveer if you are happy $2K a month is ridiculously low. I am and owner and have been forever, but holy crap .. . $2K!

2k a month is a lot in kansas

im on 39th and park and pay 1000 for a studio loft! But I want a 1 bedroom....im waiting...

Renter by choice here..fairly substantial assets (3MM+) - no RE exposure except for passive stuff (funds, etc.) Switched over to renter from owner back in 2005 for two reasons - got about 90% appreciation over 5 yrs and I wanted to lock that in, and felt this growth was not sustainable. My outlook is that it's highly probable that we'll see a 10-15% correction in about 12-18 months and then I may get back in. Right now what I rent vs what I would have to own is about a 30% discount so I'm in no rush.

you are in the 2.9% of americans that have hit the 1000000 mark with no real estate....TRUE MILLIONAIRES

#23 here, I did have RE, but I got out. My own personal opinion is that it's fine to have RE in your portfolio, but should not necessarily be included as part of your net worth when it's also your primary residence, basically because it's not realized gains, and not very liquid as well. At the very least, if you count it as part of your net worth, there should be some discount applied to it because of these factors.

#18, don't be so pleased with yourself, having a 1M ain't much to brag about in this town

#21, we're not talking about kansas here...

to #26. I was only bragging about having zero debt. I am well aware of the mega-bucks people earn in this town :)

We could have zero debt but make twice as much renting than having cash savings.
Zero debt makes no sense for us at this time.

Yeah and I don’t care if real estate goes down. Bought in 1996 for $800,000/20% down, about 7% interest. Now it’s worth $2,500,000+. So if it goes down to $1,700,000, I’ve still earned 900,000 over ten years, on theinitial investment of 20 down of $160,000. So that’s like 500% in 10 years, or about 20% per year annum, ASSUMUBG A THIRTY PER CENT + DROP IN THE MARKET.

You guys just keep on renting!"

# 12 obviously doesn't know what he's talking about. If he put 20% down @ 7% interest rate in 1996 that means that his monthly morgage payment is about $4,200 per month, add to that about $1,800 (cc or maint.), which would make it $6,000per month; multiply it by 12 months and 10 years = $720,000, this is what he already paid out of his pocket. But that's not all, by now he would probably have paid out only about 40-50K of his initial mortgage principal of $640,000, that would leave him with $600,000 mortgage to be paid for as of now. Let's say he will sell this apartment for $1,700,000, his actual gross profit would be: $1,700,000. - $600,000 - $720,000 = $380,000. Now, how much money did he spent on renovation (improvement), let's say $50K - what he's left with is $330,000, but that's not all, in order to sell his apartment for $1,700,000, he will have to pay 6% broker's fee = $102,000, which will bring his actual net profit to $228,000, or even less, considering increase in maintenance, etc. Conclusion: no matter, whether you rent or own, you still lose approximately the same amount of money per/annum. At the current real estate prices in Manhattan, and consequently huge mortgages, the owners lose much more money than the renters. So do your math.

ummm the mistake in your calculation is that if he had rented the same apartment for say a VERY generous 50% discount of 3k a month, that would equal 3*12*10 = $360,000 of opportunity cost of renting, netting him at your calculation a net gain of $588000 over the renter. How did your cds/stocks do in that timeframe?

oh not to mention he still has his equity...

So #30, what you're saying is his apartment paid for him to live in manhattan for 10 years and still netted him $200000 after that. Meanwhile a renter renting that apartment probably spent close to $400000.

#30 made the same mistake as danimal here:
http://www.curbed.com/archives/2007/03/20/tuesday_am_linkage.php

I might add that the loose calculation was done with a very generous rent discount and price cut. It also does not take into account rental price increases, remaining equity, tax benefits, etc. which could might push the net benefit closer to 1M. It just further emphasizes that it may be true that in renting you are "saving money", but what are you doing with that money?

I don't see the tax benefits (mortgage interest) as part of the equation. Am I missing something?

... You get more money back from the government every year for ten years. If you rent you cannot claim that deduction so you pay x dollars more in taxes. Multiple x by 10 years... that could be around $100000?

every person's situation is different - do the math yourself - http://www.housemath.us. in my situation I'm WAY ahead by continuing to rent.

And in my case I bought for $1,825,000 in May of 2004 and then put 100K into reno. I then sold in June of 2006 FSBO for $2,425,000, and made $500,000 actual AFTER TAX profit (I'm married). Closing costs were quite minimal. We had put about $825,000 down, and carried a $1MM mortgage. Our monthly cost (including maintenance was abut $8,500/monthly, and if we had rented an equivalent place, it would have been more like $12,000 month). So on a monthly basis we did better owning than renting (we would have had to pay to live somewhere regardless), and on our initial $825,000 investment we earned about 60% in two years. Plus ALL that interest was tax deductible!! Total score.

If I had rented, I doubt I would have come out anywhere NEARLY as far ahead....

How can you say that closing coss were minimal? Even with a co-op, which has lower closing costs for the buyer, there are closing costs. At minimum, you would have paid the 1% mansion tax as the buyer and the 1.8% transfer tax as the seller. Most co-ops have a flip tax to boot. And you would have had to pay an attorney both times. You didn't have $500K profit. Try again.

Not to mention, there were no taxes on a gain of this size if you owned the property from May 2004 until June 2006 and occupied the premise.

Comment #5: "slow" 3-5% price increase quarterly? Assuming about 3% annual inflation, 10 years later a $1M apartment will be anywhere between $2.45M (3% price increase assumed) and
$5.28M (5% price increase assumed) in TODAYS DOLLARS. Is there that much money on the table?

quarterly increase as in quarter over last quarter. and historically that has been the rate of inflation yes.

#40:

#39 here. The mansion tax was figured all-in along with other various closing costs into my pruchase price of $1,825,000. And I did forget about the 1.8% transfer tax (our lawyer did the job for free because we were buying a new place and he didn't want to double charge us). SO the ACTUAL AFTER TAX profit was only $456,350 - only a measly 55% return for two years, or about a 25% per annum compound return - Sorry!!