Just the facts bulls, just the facts.

HEY, PERFITZ IS BACK!

Dude, you never responded about the bankrtuptcy of Lake Las Vegas, your "great investment".

Prude move, huh...

...and when you are figuring out my hypothetical monthly costs for owning the past 5 years, LICC, don't forget to add maintenance and taxes as well, another "benefit" of owning (oh, the joys of sunk costs!). Thx.

in the last 20 minutes, the genius from queens has misspoken re: psychic benefits, tax deductability of interest on second homes, and the obvious need to move in less than 30 years.

AMT doesn't affect the mortgage interest deduction. But thanks for the ignorant comment.

I don't know what your place is like, but if you would have bought a place for under $500k in 2004, you would likely be better off than you are now.

"

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!"

Ok, I'm missing something: how do you include the tax benefits "missed", include the rent paid, and NOT subtract the mortgage/mtc paid? Or was this unit bought cash in a zero mtc/zero CC/RET bldg and the opportunity cost of the $420K is also zero?

Appraised June 2009 - $1,050,000 = worth $900,000

Numbskull, I agree you can still get the mortgage interest deduction, but if your adjusted income is over a certain amount (after the deduction), you will still get hit by the AMT, so it doesn't really help you. In any event, I believe Obama is trying to get rid of the deduction for "rich" folks earning over $200K/year.

Here, I did the monthly calculation for you on a hypothetical purchase at $600K:

Mortgage Amount: $535,500.00
Down Payment : $59,500.00
Mortgage Payment: $3,385.00 per month
Total Monthly Payment: $4,138.00 (with maintenance & taxes)

Since $500/month is principal, I would be paying $3,638 per month in sunk costs if I had bought an equivalent apt for $600K (with 10% down) versus what I actually paid ($2,100). So it would have been $1,538/month cheaper to rent [not counting principal payments]. In addition, I would have been without the $60K down payment for the duration, which could have been profitably invested. Also, I would be out a substantial amount for the closing costs. And I would have virtually no chance of selling it today without losing my downpayment.

But you're right, I would have been better off buying - LMAO!!!

"In addition, I would have been without the $60K down payment for the duration, which could have been profitably invested."

Really? Where? Methinks you would have lost 40-50% over the last 12 months. Maybe more if you chased.

...even if I had only paid $500K, here are the figures:

Mortgage Amount: $450,000.00
Down Payment : $50,000.00
Mortgage Payment: $2,844.00 per month
Total Monthly Payment: $3,597.00 (with maintenance & taxes)
Principal Payment: $400 per month

Thus, $3,197 in sunk costs per month buying versus $2,100 per month renting. Again, LICC, you are proven DEAD WRONG.

"Really? Where? Methinks you would have lost 40-50% over the last 12 months. Maybe more if you chased."

JM - perhaps YOU would have lost 40 or 50 percent over the past 12 months. I, on the other hand, am up over 20 percent in the stock market over that period. Why? Because I know how to invest (or maybe I am simply lucky). In any event, even if you lack investing expertise, you could always put the money in a CD or in govt bonds.

How were you up 20%? What were you invested in?

JM - it would take a novel length entry to explain what I've done over the past 12 months to get that result. Suffice it to say, I engaged in certain risk arbitrage plays that worked out, I bought a significant amount of Wells Fargo in late February (which has doubled since then), and my largest holding (by far), a natural gas company, is up almost 50% this year.

Wow, good stuff. Congrats. I stuffed my cash in a shoe box and prayed my apartment didn't burn down.

JM - thanks - it's better to be lucky than good, I guess. I rely on Buffett's advice: Be greedy when people are fearful and be fearful when people are greedy. It seems to work every time.

You really are slow. If you live in NY and make a good income, you will itemize due to local taxes. You are hit with AMT regardless. But you can still take the mortgage deduction, so if you own you will pay less in taxes. If you do not ignore the tax deduction, which you seem to want to do, the costs are now more in line. And . . .

You live in a shoebox. Studios are 600sf. For $500k in 2004, you could have bought a bigger place, a real one-bedroom.

> AMT doesn't affect the mortgage interest deduction

Not true when you factor in qualified / non-qualified interest deductions (and they're not all qualified).

"If you do not ignore the tax deduction, which you seem to want to do, the costs are now more in line. And . . ."

And if YOU do not ignore maintenance, taxes, closing costs and opportunity cost, as you seem to want to do...

"You live in a shoebox. Studios are 600sf."

Look, [insert appropriate negative epithet], I choose to live where I want. You call it a shoebox. Whatever, it's what I could afford when I moved here. I like my place, like the building, my neighbors, the location, hell even the evil landlord. I could afford a much larger place today (if I felt like moving), but I can't be bothered to move, I will just wait until prices bottom out and then get a big place for a dirt cheap price. It will happen in the next 2-3 years. In the meantime, I will continue saving additional thousands per year by living in my "shoebox" and will continue investing this money profitably. I guess you don't have this option, as all your disposable income goes to pay off your mortgage, right? In the meantime, you will watch your prized asset depreciate. We'll see who comes out better financially in the end.

If you like it, great. I'm not judging your place, but your $500k comparison is not apples to apples. A comparable place to yours would have been significantly cheaper than $500k in 2004.

You included maintenance and taxes in your analysis, so how am I ignoring them? I never ignored them when I ran a comparison. Opportunity costs are offset by price appreciation of your property. Count your closing costs, but you have to count a proportional portion over the life of ownership. You also need to count rent increases and broker fees for rentals.

Not sure how much weight complaints about the size of a manhattan apartment are coming from someone who doesn't live there.

Its like someone from kansas bragging that his double wide is bigger than a manhattan apartment... it just reeks of jealousy.

"A comparable place to yours would have been significantly cheaper than $500k in 2004."

I doubt it - you haven't seen my apt, so you can't make this sweeping assumption simply by going by the square footage.

"Opportunity costs are offset by price appreciation of your propert."

I guess you assume that there has been price appreciation between 2004 and today? I don't think this is the case. Everything I hear is that prices are back to 2004 levels (if not lower). Obviously, they are falling continuously as we speak.

"You also need to count rent increases and broker fees for rentals."

I told you what the AVERAGE rent I paid was over the period ($2100), so that takes into account rent increases since I moved in (which have not been significant, since my apt is rent stabilized). Broker fee was less than 1 month's rent, so this pales in comparison to closing costs incurred in buying (which, if you amortize them, probably are equivalent to paying a broker fee every year on your condo).

I haven't even mentioned how time consuming it is to look for an apt to buy, how many hours are spent at open houses, negotiating price, etc. That also is opportunity cost. Finding my rental took all of 1.5 days. Not to mention the flexibility in getting OUT - much easier and cheaper to get out of a lease than selling an apt.

The thing is when you get down to it...How can any of us expect to explain something to a person who bought the top in Long Island City? Not a prime Manhattan neighborhood. Long Island City.

There is price appreciation on something you bought in 2004 or later....if you give it 40 years.

Price appreciation on a 2007 apartment purchase is like price appreciation on a 1999 stock market purchase.... I guess we'll find out how long that takes in time. It may take an incredible amount of time to average up that big an early loss into something like a 5% annualized return.

"Price appreciation on a 2007 apartment purchase is like price appreciation on a 1999 stock market purchase...."

Not just 1999 stock market, 1999 NASDAQ - you're talking super bubble territory. NASDAQ topped out at 5,132.52, today it is at 1862.37. Do the math folks...

Agreed. Unlike the general market, we never even rehit the nasdaq peak in the 2008. runup

...NASDAQ bottomed out almost exactly 3 years after it peaked, at 1,253.22. Manhattan RE bottoming process will take longer than 3 years, however the results (i.e., magnitude of decline) will be similar. Nobody will believe such a decline is possible - until it happens. Oil went from $150 to $30 - this is what happens after a bubble pops.

...thus, from top of bubble to bottoming out:

NASDAQ declined 75%

Oil decline 80%

Manhattan RE will decline...[insert guess]

One thing is for sure - it will be BRUTAL. I say that not with pleasure, but simply as a prediction I expect to come true. For those who bought during the bubble years, it will take all of their financial resources to hold on to their apts. I wish them good luck, however I would NOT want to be one of them.

> Oil went from $150 to $30 - this is what happens after a bubble pops.

And what doesn't happen is a bubble back in the same asset class.

Recovery doesn't mean return to bubble prices.

Cowardly? We've bought four times and sold three (and netted a tremendous amount of profit along the way). And the place upstate is cheaper to own than it would be to rent (no comparable rental exists). And i'll most likely buy again, at some point. But certainly not now, and most likely not here. Love the silly personal attack, though. What about your high road? The road not taken?

I don't follow the rent vs. buy threads generally. They repeat, repeat, repeat. I always thought, without much research, that Steve might be being a bit over the top in terms of his reaction to you. Not any longer.

"Oil went from $150 to $30 - this is what happens after a bubble pops."

If your going to compare housing to oil, then you should get ready for a V shaped recovery, as oil is currently more than double it's all time lows.

"For those who bought during the bubble years, it will take all of their financial resources to hold on to their apts."

Why would that be the case? If they bought with a fixed rate loan, then their monthly payments will remain the same regarldess of where the market goes. I've had relatives who owned RE during the last slump, and their house was no less affordable when its value went down comapred to when it went up.

and their health care costs, their gas and electricity costs, the costs to educate their children, food costs, these have all stayed constant. and likely their income is actually decreasing, in dollar terms. you're an idiot.

"We have proven steve wrong about it, and you just can't back that statement up with anything solid."

Who is this "we"? LICC, you're going all Royal on us.

In fact, you're starting to make as much sense as Rush Limbaugh. Let me remind you:

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.)

You compare medians to means, use one sentence in New York Times article as your basis for all rents between 1994 and 2000, rely on Miller Samuel's self-disproved figures, are TOTALLY proved incapable of adding, complain that people should include mortgage tax benefits but say this - my all-time favorite:

"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."

As WE say in Spanish, "El colmo de los colmos."

Why are people even arguing with you any more?

steve, you are losing it buddy. Miller Samuel has median and average prices, so why do you assume I am comparing medians to means? That is off the wall. The NY Times article had the most concrete sources available for rents for that time period, and if you remember back then, the numbers seem correct.
Counting the entire one-time transaction costs in a shortened window of time is misleading, no doubt about it.
Ignoring the tax benefit is ridiculous and makes your analysis meaningless.

"you're going all Royal on us." - I like that, good one steve.

Wait a second, BS lives in a rent stabilized apartment and he is trying to compare it to buying? Yes, if you have a sweet RS deal, I agree that it may be better to stay with it and take advantage of the system.
If you want to just look at the last 5 years when determining price appreciation of your home, then you can't use anything more than minimal appreciation when looking at opportunity cost. Stop being inconsistent with your analysis.

you are so dumb. of course people should use their individual situations to determine their rent/buy status. that is what we've been saying for YEARS. it may be more apparent in some cases,but in others the difference betwwen rs and market is not so huge. and you probably haven't though about the nuances, but the people who live there have.

ar, you really aren't sharp enough to keep up with everyone. The point is that he should not make sweeping judgments and opinions about rent/buy comparisons using his apartment as a basis for his generalizations, when his apartment is rent stabilized. Rent stabilized apartments are a whole different ballgame.

you LOVE sweeping, seeping generalizations about people and their situations. that's what you've been hawking here.

"Miller Samuel has median and average prices, so why do you assume I am comparing medians to means?"

Because I looked up the figures you were using.

"The NY Times article had the most concrete sources available for rents for that time period."

One sentence?

Actually, the city's department of housing publishes figures for the time period. Look for them.

"Counting the entire one-time transaction costs in a shortened window of time is misleading, no doubt about it."

You said 5 years, LICC, not me. Those costs are amortized over the time period you hold the apartment for. Your direct words were, "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."

Why not just admit that you were wrong, LICC?

"Ignoring the tax benefit is ridiculous and makes your analysis meaningless."

In certain formulas the tax benefit is implicit; in others, it's explicit. Where it's explicit it must be offset by the opportunity cost, subtracted from rent. Do you agree with that?

In the specific situation to which we were analyzing, aboutready's home, you cannot amortize the hypothetical transaction costs over 5 years because she is still renting. She said she will continue to rent for some indeterminate period of time. You can try to distort the analysis to your favor, but facts are facts.

If you want to offset by opportunity costs, you have to add in appreciation of the value of the property. You love to just pick and choose the factors that benefit your argument and ignore the ones that show you are wrong.

Opportunity cost has nothing to do with the holding period. Its a charge for the risk you take... You know like the risk of 30% loss that has been realized since October.

LICC, why use two sources for rents and purchase prices when there are numerous sources for the ratio. Its very sad that you can't admit to simple history. How many people need to tell you that single digit price to rent ratios existed here in the 1990s. And clearly they were not where they are now in 1999 or 2000.

I don't think you understand the way the AMT works. Thankfully i should no longer be hit with it this year, and was only hit with it last year due to a technicality, but it eliminates a great deal of any tax benefit for the upper middle class.

when i bought in 1996 my monthly cost(not including tax benefit, although even then hit by AMT, just less so) was $1700 for an apartment 200sf larger than the rental i was moving from, in a good neighborhood. my rent in Hell's Kitchen, for a nice but tiny 2 bedroom in a not-so-hot neighborhood, was $1575. Those were numbers that worked for me.

What was the price? Around $200k if not less? Oh wait LICC says price to rents were never under ten.

$105k, mortgage interest rate was over 8% i think, and took a risk (very good one, as it turned out) on a building with a relatively high underlying mortgage. coward that i am. 950sf 2b/1ba with extremely high ceilings.

Jesus so what was it about 6x gross rent? If interest rates creep back up to 8%, the situation here is going to be horrifying.

To rent the unit that I bought would have been $2000 monthly easily at that time, probably more. much nicer than the HK rental, bigger, and much better location.

So you are saying you bought it for 4x? Wow. Nicely done.

as i noted earlier, buying was often cheaper than renting after tax assuming you were in a high tax bracket. the problem was coming up with the down payment as well as (gasp) the psychic cost of being tied up or down. the joke is that people not only didn't buy apartments as investments but seriously considered the need to pay off the mortgage. somehow, the idea of being tied downto 30 years of payments seemed worse than the thought of paying rent.

I bought in '00. The unit had been on the market for a year. Interest rate 7.25%, mortgage 380k, maintenance 1500. At the time 2brs on the same block, same services were asking 4500.

"as i noted earlier, buying was often cheaper than renting after tax assuming you were in a high tax bracket. the problem was coming up with the down payment as well as (gasp) the psychic cost of being tied up or down."

Not every is poor like you and pretend to live a high life. There are plenty of people that can come up with a down payment to buy a 1 million dollar apartment. Try saving.

It sounds like it was much cheaper pre-tax as well! So 1996...when did the initial decline start, 1989? There's ever reason in the world (except interest rates, which could become one soon) for this to get really bad. The 80s peak was no where near the valuation of the recent peak.

looks like i have a new friend.

CarolSt, who the eff are you? Be gone.

Nyc10023, you are clearly lying. LICC says price to rent ratios were similar to today in 2000. Haha. What is sick is that with the recent pullback, rents are not that different than 2000 levels... prices are what, about triple? That apartment probably rents for $5500 now and is worth about $1.1mm.

carolst, cc owns a coop. idiot.

rhino, sadly if i'd only had another $20k i could have bought a convertible three on the UWS. as cc notes, the down payment wasn't that easy, even at low prices. luckily i insisted on buying a condo in Seattle right before my husband went to law school, got in for pennies with parental assistance. seattle's market recovered before NYC's, the rest, as they say, is my purchasing history.

not sure if this affected you but i clearly remember knowing someone (and i think everyone knew someone like this) who had literally gotten wiped out on their real estate post '87. that was the first time i ever heard the time under water--and the thought of being in that situation (remember people weren't walking away but staying, paying and suffering)created extreme caution.

Well its nothing to sneeze at.... Well sadly I had no resources to make a purchase in the 1999 time frame, or the stomach, on the way out of town for business school. Couldn't qualify for much apartment and feared dependence on the consistency of a rental tenant.

LICC: "In the specific situation to which we were analyzing, aboutready's home, you cannot amortize the hypothetical transaction costs over 5 years because she is still renting."

You're the one who said 5 years, not me!

And that's not what you said that I'm waiting for you to retract: "Counting the entire one-time transaction costs in a shortened window of time is misleading, no doubt about it."

That's wrong, isn't it?

"If you want to offset by opportunity costs, you have to add in appreciation of the value of the property."

Of course you do. Show me where I said you don't, because I never said it.

And when you do that, as soon as people believe that prices will fall, NO ONE WILL BUY.

Because catching falling knives hurts.

So - if you include price increases, you must include decreases. And that is what is happening, and the more leveraged you are, the worse the effect.

To quote: "You love to just pick and choose the factors that benefit your argument and ignore the ones that show you are wrong."

Rents are a little cheaper now than in '00. That apt would have gone for maybe 900k at peak. Now, 700k. I'd say 550k is not unreasonable if rents hold steady and interest rates approach 7%.

LICC consistently ignores the examples we've posted of rent vs. buy on the UWS.

Wages have been fairly steady since '00 for professionals in the NYC area. The only thing that has changed has been the accumulation of wealth in the form of unprecedented banking bonus '00 to '08. Assuming that one cashed in all vested stock/options, there are a fair # of people who banked (or should have banked) 5-10m in the last 8 years. That has fueled the rental & sales market in Manhattan to a huge degree. I remember meeting someone who splurged on a "loft" rental in Soho (late 90s). We were guessing at his rent, and were horrified to think that he might be spending close to 5k/month renting this loft, when his base was 120k at best. Bonus maybe 120k. Now, we see people spending 5k without a thought on a 250k income.

If it was $900k at peak its probably already $600-650k.... And if interest rates rise to 7% I'd think peak prices would be more than cut in half. Really its impossible to know how many buyers are out there at different price levels... We will find out I guess. There is fundamental justification for anything from -50% to -65%.

I haven't kept up with the sales in my old bldg all that much. We sold spring of '03 for 615k (put in 40k of work). Purchase price 480k. The most attractive part of the bldg was that they owned all of the commercial space, which has a large tenant that's doing very well, in a prime area. Now that 80/20 income restrictions are gone, maintenance will be reduced to a pittance in less than 10yrs.

"Wages have been fairly steady since '00 for professionals in the NYC area."

Actually base salaries went up a great deal from 99 to 07, at least for people like I-bankers and lawyers - they probably doubled during that period. Now they are being cut - that's if you are lucky enough to still have a job. I will make about 1/2 this year of what I made in 07 (including bonus). I would think that probably standard for those making six figures.

...not to mention all of the unrealized capital gains that have vanished into thin air, which made people think they were wealthier than they actually were at the time (2004-2007).

BS: they didn't double - I'm talking about '00 after the base for 1st years in BL went up to 125kish. 1st years did not go up to 250k in '07. Ditto bulge bracket et al. - base at GS did not go from 120kish for VPs to 250k last time I checked.

I think some of the activity in 6es and 7es on the UWS are driven by people who were prudent and are sitting on 5m+ in liquid. They're still employed, banked all that bonus $, and are now thinking - hey, that 6 is trading at 1.5, that's only 1/3rd of my net worth, why not?

Be interesting to see what happens when that (small) demand is mopped up.

nyc - yes, I believe you are correct, however if you go back to 97-98, I believe base salaries at law firms were 90K for 1st years. So they almost doubled in 10 years (to 165K). I don't know about I-bankers, I just assumed something similar happened.

BS, i'm pretty sure it was around $80k for bl in 1994. Attorneys really didn't have the earning acceleration enabling them to purchase, quite often. Some DINKs and singles bought, but many attorneys were priced out as the partnership track went from 8 to often 10 years or more.

What examples? You are all throwing out random vague numbers and comparisons. Did 10023 say how much the apartment cost? And most of the time when you cherry pick a comparison, when we (that was for steve) look into it, we see that the places really aren't comparable.

steve, what I said about the transaction costs is absolutely correct. If we are looking at only the 5 year period to current, which is the hypothetical aboutready raised, not me, then you can't add in the transaction costs into that shortened time frame when she is planning to continue renting for an indefinite time.

carolst exits...lic enters.

BSexposer - the reason I went for the '00 to '07 time frame is to roughly isolate the period during which interest rates fell. Prices doubled on the UWS, if not tripled between '94 and '00. You can attribute part of that to the increased compensation of bankers & lawyers and some to the slow recovery of Manhattan RE market. There were also a few particularly distressed buildings that were in bad financial shape.

Don't obfusticate, LICC. My rental and my first purchased apt were a 30 second walk from each other. Similar vintage, similar quality, similar services. It was cheaper to buy that apt in '00 (after tax benefits), the last year in the last 9-year period that it would have been cheaper to do so.

Once we got into our heads the desire to have a larger space (3br+), that was when we got frustrated by the lack of good long-term rental inventory on the UWS. In '05, we rented a 3br for less than the cost of owning (sold our 3br), but jumped back into the market due to the frustrations of finding a good rental.

The pool of available 2br rentals is much larger on the UWS, so I would challenge anyone who had a desire to own based on financial considerations alone.

"If we are looking at only the 5 year period to current, which is the hypothetical aboutready raised, not me, then you can't add in the transaction costs into that shortened time frame when she is planning to continue renting for an indefinite time."

LICC - you never cease to amaze me. Do you or do you not amortize transaction costs over the holding time of the property?

In the US, the average time a property is held is 7 years. Let's, then, assume a.r. rents for 7 years versus buys and lives for 7 years. Amortize the cost over that?

What, precisely, is the breakeven point, LICC?

If you think about it, Wall St experienced an extended 25-year boom from 1982 to 2007, basically with only a minor interruption in the early 90s. During that period, everybody from I-bankers, hedge funders, lawyers, accountants, consultants, etc., got insanely compensated. This is completely unprecedented and probably won't happen again in our lifetimes. IMO Wall St is about to enter a long period of stasis (in terms of compensation), similar to how things were during the 50s through the 70s. Manhattan RE will suffer the brunt of that decline / stagnation in compensation. So, looking at the long term picture, those who bought during the 2000s will likely either lose money or tread water (if they hold long enough), but at least people buying in the future (after prices bottom out and real economic recovery begins) will experience a decent return on their investment.

BS: true. Industries wax and wane and some NEVER come back (witness auto industry). I don't know what the elite suburbs of Detroit are, but I bet that in the 50s and 60s, that price points there rivalled price points in Bronxville & Westchester Co. Now, not so much.

NYC is interesting in that WS/finance has gone up, down, up down a few times and that is 100% reflected in RE prices. Just look at 740 Park Avenue.

LICC - you STILL have not acknowledged the obvious fact that price-to-rent ratios in Manhattan are still way off of historical norms, as demonstrated by the link below. Do you really deny this fact? Do you not believe that such ratios will return to historical norms, in light of the current economic downturn? If so, why? Please explain yourself.

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

steve, yes you can include amortized transaction cost, but as usual you are distorting it to overstate. Where did you get that 7-year number? I don't believe in a market downturn that people are still going to flip their homes as often as when the market is going up. How long has ar said she has been renting, and she said she will continue for an indefinite time. Once we determine the right holding period, you can amortize the costs and then apply a proportional amount to the 5 year period to be accurate.

BS, when we look at the actual numbers for the Manhattan market for 1999, 2000 and now, they are not way off. No one has produced any data or information to contradict or dispute the numbers that I have shown.
You still haven't said how much your apartment cost when you bought.

LICC, seek help. I posted this graph that BSexposer just re-posted. I have posted another one as well. There are several people above sharing their purchases of the 1990s. What is your interest in denying historical fact? You are a fucking buffoon.

interesting...could be just like bruce banner and the hulk...here comes carolst?

Bruce was a scientist. I love the fact that not only were 1999 ratios not the same as today, they may have been around half. If we concede that rents are about the same today as 2000, then constructively, LICC is saying apartment prices are the same today as 2000. This assertion is so incredibly stupid on the face of LICC.

OK, LICC, it appears you simply refuse to accept reality. Just for the sake of getting a laugh, please tell everyone where you believe prices will be in mid-2011 in Manhattan. Will they be higher, lower or about the same as they are now? Will the average purchaser from the 1st half of 2009 be able to flip his or her purchase 2 years from now and make a profit or not? I would love to hear your views on these questions. Also, would it be wiser today [on average in Manhattan, from strictly a financial point of view] to rent for the next 2 years or to buy today?

BTW, I think you have me confused with someone else. I have never owned an apt in Manhattan during the 7 years I've lived here.

Those graphs do not show the rent and price numbers for the time periods. The information I looked at do show the numbers, and they show that rhino, as usual, is talking out of his butt.

What examples are you talking about? Lay out the precise details and we can look at it.

BS, you are right, it was nyc10023.

The graph shows the ratio you fucking idiot.

duck and weave, duck and weave.

LICC, the 7 years is a government statistic. Go to:

http://homebuying.about.com/od/sellingahouse/qt/0207WhyMove.htm

"American home owners sell and move, on average, every five to seven years."

I'll give you the seven.

Tell us, then, with amortized transaction costs, how long it takes you to break even when you buy a home versus rent.

wow, the only thing better than buying in 2004 would have been to buy in 2006. wonder how I missed that stellar opportunity.

somebody, anybody, find me an apartment that is fully renovated, granite/marble, maple kitchen, high floor, lots of light, high ceilings with post and beams, elevator building, two decent sized bedrooms, master bath, that i should have bought when i was paying rent of $2750 in 2004, or around $4000 now. i'll move tomorrow.

LICC: you do the calcs.

2000: Purchase of 2br, 2ba co-op, UWS, 480k (900sqft), mtce - 1500 (1/3 deduct). Interest rate, 7.25%. Comparable rental - 4500.

2003: Sale of above unit, 620k, after putting in 45k work (new kitch, one new bath, Cali closets).

2003: Purchase of 1700 sqft, 3 units at 860k + 270k (reno costs) to yield a 3b,3ba apt. Didn't look at comparable rentals.

2005: Sale of above unit, 1.6m. Rented 3b,3ba unit (better location, but only 1400sqft, worse condition) - 7k.
Better condition units, same size apt was going for 8500 (I balked at price).

I'm not going into my current place for privacy reasons.

That first apt, was selling for 900k (exact same line) in 2006.

Are people ganging up on LICC? Where's his BFF, JuiceMan?

Do the math, LICC - at today's interest rates transaction costs completely wipe out the "tax benefit" of ownership for the average homeowner who owns for up to 7 years. Even ten.

And of course if you don't pay 35% of your income in tax - which very few people do - that "benefit" - is worth even less.

So - now that that's done and proved that you theory is nonsense, are you ready to accept that what we need to do it compare market rents with owners' carrying costs?

Or do you want me to post some figures?

Nay, I shall!

$1,000,000 property, $800,000 30-year 80/20 mortgage, 5.25% interest, total interest paid in 5 years: $202,253.68.

$202,253.68 * .35 = $71,000 in tax savings.

Real estate commission on $1,000,000 property: $60,000.

Flip tax
Mortgage tax
Mansions tax
Stamp tax
Property tax
AMT
Maintenance (as in fixing broken things)

I could go on.

And remember, the maximum mortgage you can get a tax deduction for is $1 million, so we're right at the cusp here.

You need to live in a place for at LEAST 10 years for the "tax benefit" to take effect.

Nanny-nanny-boo-boo.

That chart is great info. Thanks for linking. I guess it was worth coming back to this ridiculous debate every now and again.

The median price in 2000 for an UWS co-op was $670k. Whatever below median coop you bought for $480k is not an apples to apples comparision to rents at that time. You all try to use invalid comparisons to support your arguments and you are doing nothing but fooling yourselves.

i was comparing the cost to rent MY apartment at that time with the cost of ownership of the SAME apartment. ownership was cheaper. i think 10023 was doing a similar analysis. apples to apples.

LIC: I give up on you. You wanted specific examples, I gave you specific examples. I paid market for all my properties. The median square footage of an UWS co-op was also not 900 sqft, and the median maintenance price/sqft was also NOT $1.50. I got discounts based on those 2 factors, but that 670k "median" co-op was also a 2br,2ba (convertible 3) co-op with better maintenance and would have rented for more than the $4500.

AR: he's deliberately obtuse. I don't even know why I put my personal data out there.

i do it because it's fun. until it isn't.

LIC needs carolst to come back and provide assistance. since he refuses to reason, it might as well be a disjointed rant.

"Are people ganging up on LICC? Where's his BFF, JuiceMan?"

Right here steve (wow you miss me so much!). No need for me to be involved, I'm sure LICC is doing just fine.

I would like to highlight one point. Throughout this thread LICC has been called a fucking idiot, moron, and just about everything else and has still maintained a civil response. Say what you want about his opinions, but he at least has class. This is more I can say for most of the douchebags on this thread.

Let's get together soon. I've been meaning to email, but RL has kept me busy.

In 2000, non-doorman 2-bedroom apartments in the UWS averaged $3700 rent.

If you are an apples-to-apples guy, then you will know that the median means nothing, esp. when comparing the medians of 2 different types of housing stock.

All of my apts were doorman postwar buildings.

email away. but we leave for a month in a week or so, so let's get together in late July or August if you're around.

is being called a coward better than being called a moron?