25 East End Avenue accepted offer at 39% of 2007 price

It is a unique and lovely apartment. While I would not be looking at this time, I can see why if this is available in a neighborhood they love, and they have to move -- they want it in the long run.

why not the other apt in the building that is significantly lass expensive?

thanks for the quick reply! they looked at that one; the layout is a little odd, makes you feel like you in a train car, with all rooms off one hallway and no windows on the other side. it was also smaller than wht they were looking for. but it actually has more rooms facing the river. a lot of river frontage for that price.

great buy--great building!! say hello to charlie----

It's a gamble, but they're not looking for a commodity apartment. They'd probably get a better deal on *something* in another year, but most likely not an apartment that works for them as this one does.

Good layout, BTW. When they go to sell, the main bedroom could be easily split back into two. Meanwhile having two master baths is great. They'll get spoiled.

i find myself being a bit resentful over your parent's situation. from what i gather, they have taken advantage of a system designed to help very low income families to stay in manhattan in an effort to keep economic and social diversity in the city -which i am in favor of. however, the unintended consequence is that a good amount of our housing stock is artificially priced, which has the effect of artificially raising the price of non-regulated housing stock.

and now they are buying a $2.6 million apartment in one of the poshest buildings on EEA. how good it is for them.

if i were you, i would not make a point of telling this story to too many people.

I like taking advantage of the system where everyone pays artificially-higher income taxes to subsidize my mortgage-interest and RE-tax deductions. The RS apartment was great while it lasted, too. If it hadn't been such a shitbox I'd still be there.

A 2 BR RS apt on the top floor of 85 EEA is hardly a shitbox - it's a gift from god.

cwc, you assumed incorrectly. the listing agent and the sellers have every incentive to unaccept your offer should a higher one come in. Until you're in contract you have nothing.

not that you have anything to worry from me, this place is about 5x my upper price limit.

while a nice unit, Stats comments along with the 50% down might get lost since you've dropped this on a hol. your story is one best left as an unspoken thought. i dobut you need the help you are asking for.

Stories like this are the exact reason the two pronged test for luxury decontrol of a rent stabilized apartment (1. That you make more than $175K for 2 years and 2. That your rent is OVER $2K/month) is the worst legislation in NYC. It couldn't be more backwards. What this law says is that if you're rich and have a cheap apartment you get to keep it, but if you're rich and you have an expensive apartment you have to give it up.

It's such nonsense. Political pandering at it's worst. There is no way to hide from this one politicians. The only reason and again I say, the ONLY reason this rule is on the books is because of pandering. The law would make more sense if rich people got to keep their apartments if the rent was OVER $2K (it would still be a dumb law but it would make more sense than the ASININE law we have now).

The price limit should be done away with. If you make more than 3x the median income you don't need subsidized housing. You can afford to buy. What better time to get rid of this law than now. With all of this available for sale inventory these rich people should be kicked out of their units and forced to buy something, rent something, or retire to their second home in Florida.

NYC at its worst.

Jazzman, its NYS legislation, not NYC. And I have it on decent authority the law got written the way it did not because of pandering, but, believe it or not, because of an uncorrected typo. Also, once rich daddy and mommy leave the apartment, even if their rent was way below $2000 the landlord would renovate and destabilize the unit. Daddy and mommy's benefit came at the expense of the landlord not some deserving poor household.

Yes, and when the current owners bought 85EEA in 2005 for $75M+, the statutory tenants on the rent-roll were factored into the price. The regulatory environment wasn't sprung on them as some big surprise.

From a social stand point I have to say that Stat is correct. Congrats to your family on gaming the system and ultimatly winning. The Apartment at 2.3MM is a fair deal at todays market price. What happens in the future is prue speculation and the major hobby of almost every poster.
They must love you because they picked a place with an extra bedroom for you. Considering the cost...you must be a great daughter.
That is, if there is truth to this post.

I thought about this...
Something is fishy about this posting.
Look at the headline.
'25 East End Avenue accepted offer at 39% of 2007 price '
Does that look like a headline of a first time poster? Are there lots of parents that share finance and RE decision making with their college aged daughter? They have an accepted bid and 'now' you're going to canvas a web site you have never visited with such critical information which has yet to set in stone.
OK, I'm going to say it...BULL SHIT!
This some sort of disingenuous post...for what reason I have no idea.

Hold on a second here.

If you read the original post, she said she lived in her parent's rent stabilized apartment all her life. Let's assume that means at least 20 years. To me, that doesn't sound like they were "taking advantage" of the system, it sounds like they wisely stayed put and saved money towards their child's education and a down payment for their new home.

Sure they're lucky to have grown wealthy and are able to buy a nice apartment at a discount, and it's human nature to be envious, but citing them as an argument against rent control sounds a bit extreme. You could even argue the system worked ... now their apartment is being destabilized and they're using the money they saved to buy an apartment of their own.

We've all heard of sneakier rent-control arrangements than this. I think Stats is just a little jealous.

Hey--didnt mean to spark a rent stabilization injustice discussion, but I'm not ashamed of my situation since a law is a law and while you can be angry that a law exists, you can't be angry at people for taking advantage of an existing law. I also found the rent stabilization discussion interesting, as its a reality that I've lived with my entire life without really being cognizant of it until recently when my parents realized their time was up.

Romary--I really was searching for a reaction on the value of the apartment, not trying to rub my rent stablization story in other people's faces. Spending that amount of money in a market like this is anxiety provoking for anybody, so I really did need the guidance I was seeking, and not seeking it under the guise of something else.

And while this may be a further thought that is best left unspoken and risky to disclose, I figured I'd bring it up as fodder for discussion since we were on the topic of nyc rental tenant laws and their injustices:

While my parents will be getting kicked out of the apartment cause their income exceeds the limit, it turns out the law says that you can pass the rent stabilized lease of the apt onto anyone who has been living in the apt for more that two years. This includes your non-minor children, whose income in most cases is far below this limit. I have a friend in the building whose parents were going to be destablized who just inherited the lease. They moved to another building on EE, and now she lives at 85EE alone. My parents are in the midst of the legal process that this involves, but its really pretty by the book. So long as you can establish that the person has called this her primary residence for the last two years, then they can inherit it. They even allow dispensation for schooling such that you can be living somewhere else so long as it is for schooling and still count the other residence as your primary one.

Anyway, I hope this further information is again taken as thought/discussion provoking and not as me trying to brag or whatever. I realize that we have "taken advantage" of the laws, but I still feel like the guilt rests with the legistlatures who should have made better laws not with the people who act according to them.

Thanks again for all the responses!

Hey, I didnt read the last two posts before writing this. Its really not disingenuous.Naive, perhaps. But I still am glad at the interesting response provoked, and the perspective on my own situation this yields, and I'm not too worried that revealing this information will undo the deal.

I really am a Williams College student who has never posted on this website before. Never posting does not mean never visting or reading the other posts before. And being a college student does not mean not being with it enough to figure out what type of posting heading will generate interest or how to calculate how much percentage reduction an offer is, or whtever it is about my title that makes it seem fishy.

I do find it funny though that I'm being accused of as being someone that I'm not. Not sure whether to take that as a compliment or insult!

another argument I thought of why it was actually unwise for my parents to have remain rent stablized as long as they did (my entire 21 year life) was that were they to have purchased an apt like the one they are about to during that span, it would have appreciated in value more than what the rent stabilization saved them. Feeling like they had a really good deal with a rent stabilized apt made them miss out on the buying opportunities in nyc real estate of the last 20 yrs.

Someone who can afford over $2 million for an apt. has no business living in a RS apt. Gaming the system at its best.

Falcogold1 - interesting about the typo - the legislation is so wrong-headed that I might just believe that.
Clearly when this unit at 85 EEA becomes vacant it will go market rate. One way it hurts us all by keeping these rich people in subsidized housing is with property tax revenue. This landlord would gladly pay $10,000/year more in property taxes for 20 years to have this one unit vacant. Imagine the additional tax revenue we could have? If you don't believe me fine, then you should have no problem with the passage of a new law that says for a one time property tax payment of $200,000 landlords can destabilize one unit.

The masses are subsidizing a rich man's housing - there's no argument against this fact.

Nothing wrong with this set of rent stabilization rules except for the oddity that your parents can lose their home of 20+ years just because the rent rises to a high level.

In particular, the landlord has no more claim to the increase in value than do your parents. Market rents have gone up faster than stabilized rents because the city has gotten more popular and richer faster than builders have built new housing. Neither your parents nor their landlord are likely to have had much to do with this process and neither has anything to be proud of, or ashamed of, in taking whatever part of this gift -- financed by those of us who are neither landlords nor RS tenants -- the law or their negotiating power grants them.

Further discussions of RS should move to the RS thread, "Rent Stabilization is the Savior of NYC Landlords."

There is no subsidy in RS housing. RS just splits the consumer surplus differently than a different set of rules might. (And increases the surplus available for splitting).

As for the taxes, they are no more or less unfair than the taxes on coops -- which are taxed as if they were rentals and thus get the full tax reduction resulting from RS! -- or single family houses in the boros, which are taxed at wildly lower rates than coops, condos, or large rentals.

The only way RS hurts "the rest of us" is the same way it benefits the rest of us: it makes tenants more stable, less likely to move as family size changes, especially in rising markets (when homeowners can move freely). That makes neighborhoods more stable, but also sometimes leaves empty nesters living in family sized houses longer than they might (although plenty of owner-empty nesters don't downsize either...).

Of course, as bubble pricing on owner-occupied housing comes back to reality, this effect will diminish.

CWC's parents have no more "gamed" the system than they would have if they had bought a coop 25 years ago -- and they are a good deal less rich (and have extracted a good deal less money from their successors in the apartment) than if they had done that.

They got a good deal, like most people their age, during the bubble. By buying now, they will make up for it, as they lose the bulk of their investment to the next waves of price drops.

when you talk of "next wave of price drops" is that, in your opinion, to take place in the next five years or next year (I realize no one has a crystal ball and this stuff is all speculative, but still, what's the most informed bet..). They can't wait five years, but they can wait a year, but then will prob lose this apt since sellers are moving to 170 EEnd so will not hold onto it.

And while we're in the business of feeling bad for rich people, I suppose we should feel bad for the sellers who prob never recoup what they paid on peter marino co-op 170EE when it was being built two-three years ago. My dad was tempted back then but couldn't afford those prices for space he wanted.

*condo not co-op my bad

Prices are dropping now. They have a long way down to go. Will they drop fast or dribble downwards or both? I have no theory to predict that. My guess would be faster rather than slower, with punctuated periods of sharp drop and steady levels, but I wouldn't be surprised to be wrong.

Most likely, they'll drop at least to the equilibrium point, which is where an investor buying a comparable apt and renting it out at market rent could expect to make a reasonable return on the downpayment (assuming no capital gain or loss). Reasonable is in the eye of the beholder and depends a lot on perceived risk, but definitely should be higher than the prevailing jumbo mortgage rate, since the risk is greater than the risk assumed by those lenders.

Roughly speaking, if you are paying more than about 8-10x annual rental value, you should think of the excess as pure consumption, not investment -- absent the sort of luck you can't count on, that money is gone, used to purchase an experience that you want, not invested with the hope of future returns. It may be money well spent, but don't kid yourself: it is spent.

Right, it's just a question of how they want to live. The market rent on the 2/2 at 85EEA will be, say, $7K next year. Versus the ~$15K the 25EEA place will cost them. Some would be OK with that much of a premium for much-better space, others wouldn't.

cwc - I don't blame your parents at all for using the rent stabilized rules to their advantage - they'd be crazy not to. Unless of course they could have afforded to purchase a unit then, as they have learned the hard way, rent stabilization is fools gold. They would have been much better off financially if they had bought a place. Why people fail to realize that 30 year mortgages stay fixed for 30 years then they go away never to be seen again. I think you'd be crazy to not take over this apartment from your parents. Everyone does it, which is further proof that luxury decontrol laws are asinine.

I think the argument that rent stabilization is good for communities because it make people stay in their apartments longer is absolute foolishness. Sure they stay longer, but often they stay in apartments that are too big or too small for them. Sure they stay longer, but they stay in apartments where the landlord has no financial incentive to improve the building, the unit, nor the neighborhood. What's good for a community is home ownership. Home owners stay a longer, they have interests in fixing up their units, their buildings, and their neighborhoods. Any system that discourages home ownership is a failure from the jump.
And financeguy - I stick by my statement that the masses subsidize the rich who have stabilized apartments. Either the middle class have to pay more in taxes because the tax revenue is lower than it should be or for the poor (who obviously don't pay taxes) their annual rent increases are bigger than they otherwise would be. Imagine how many landlords would forgo any rent increases on nearly all of their units if they were allowed to destabilize all of their units that had rich people in them?