Rents down 15-20%, sale prices down 30+, seems finally time to buy

Thanks for chiming in, realtor.

Awesome steve, anymore baseless accusations? What is with the paranoia that anyone even hinting at the possibility of ever buying anytime soon must be a broker? What a terrible way to live.

Thanks for chiming in, commedian translator.

Since this appears to be the OP's first post, and she: 1. stated that the correction on the UWS is over, and 2: broadly bashed the rental market (despite the many brand new and ever cheaper rental options), I'd say Steve is probably right

They may both go down a bit more.

probably right?

100% definitely right.

give us all a break here.

Hey, where is Columbia County?

Anyone just wonder why this should be an immediate decision? What would be wrong with sitting by and waiting another year? Even if now is a good time to buy, if a year passed, could it really be a mistake to continue a rental for one more year?

tgf: OP is a broker. Her post is meaningless.

churchsplace- Just because something is off 30% doesn't mean it can't be off 60%. About a year ago I had an accepted offer on a short sale in Vegas. House originally sold for $500,000 - I offered $325K, it was accepted but it took 5 months to approve. During those 5 months the market continued to fall so I cancelled the contract. A backup buyer paid $325K all cash. Last month, the same house next door just closed for $200,000.
My thinking was similar to yours. Prices have come off big, I can afford these prices, etc etc - but had I caught that falling knife it would have been a terrible investment.
So take it from me, there has to be more compelling reasons to buy than -"sale prices down 30%"

"Since this appears to be the OP's first post, and she: 1. stated that the correction on the UWS is over, and 2: broadly bashed the rental market (despite the many brand new and ever cheaper rental options), I'd say Steve is probably right"

West34, 1) they said no such thing, and 2) didn't exactly "bash" the rental market. You guys are a bit tragic - let the person post more than one thing before you indulge your broker paranoia. Yeesh.

"Things seem to have gotten back to alignment on the Upper West Side" = market has corrected

"rental alternatives just aren't the same quality" = rentals suck

bjw -- if there is another way to interpret these, do tell.

You mean "comedian" translator? The one working for Goldman Saks?

why would it be time to buy if the things that caused the downturn (unemployment) have not reversed yet? time to rent for cheap as possible and ride out the rest of the storm

especially since churchsplace didn't seem to offer any details as to what kind of place he/she was considering... what kind of "plunge" are we talking about?
also, terms like "alignment" sound distinctively like broker-speak to me.
on the other hand, how refreshing that a broker would acknowledge a 30% + decline in sale prices.

Don't find the post interesting but too funny how you bears just jump on it. Why do you have this constant need to bash people?

And while you're at it, explain to me how in the world your typical UWS coop (what the OP said to buy) -- unrenovated space with 80 year old moldings under 27 coats of lead paint, worn out floors, a disgusting 1970s kitchen, hissing radiators, and drafty windows is "better quality"? I suppose she's referring to the buildings steel skeleton and cement block inner walls?

I agree rents are down but sellers still have a long way to go to face realty...studios are still over $400k...there are exceptions but the prices are very high.

carnegie..it's called "anxiety attacks". Poor lost souls.

""Things seem to have gotten back to alignment on the Upper West Side" = market has corrected

"rental alternatives just aren't the same quality" = rentals suck"

1) Nowhere does it say that the market correction has ended. It's a very clear personal assessment.
2) You're pretty liberal with your interpretations, no? I agree, people tend to bash rental stock a bit too much sometimes, but in many cases I've found this to be true. I still don't know how you automatically infer that this all = brokerspeak. There are regular people actually interested in buying apts on this board, you know.

my post from 3 months ago that seems quite relevant to the 1st post and in agreement with some others here...

I've seen people here and in other discussions refer to "deals" or"good deals" in nyc or any real estate. I'd like to propose a very specific definition of a "deal" that should serve to eliminate many of the most unpersuasive and ineffective arguments I think folks make about real estate.

A "good deal" means paying a price for a home/condo/coop, such that the gain the owner experiences from the time between when he/she buys the unit to when he/she sells it, is greater than the return available from renting and investing the downpayment in some alternative. All taxes, tax deductions, fees, renovations etc. etc. must also be included in evaluating both scenarios. Said simply, did you sell the place for more than you paid and earn a rate of return higher than other alternative investments over that time frame.

Sorry to be so complex, but the point I'm trying to make is that what the unit is selling for now vs what it sold for 1 month ago, 1 yr ago, 5 yrs ago or 10 yrs ago is IRRELEVANT. All that matters is what the price does from the time you buy it til when you sell it. The past is IRRELEVANT. All buyers know this implicitly.

If you want to argue that something is a deal, you must explain why it will gain, in the FUTURE time period you intend to own it, more than the alternative of renting and investing your money elsewhere, such as the broad market. Conversely, if you want to argue something is not a good deal, you must explain why the gain in the FUTURE time period you intend to own it, will be lower than the alternative of renting and investing your money elsewhere, such as the broad market.

(As an aside, I believe the real estate finance literature shows that on average (emphasis here; on average), the rental and owner markets are in equilibrium in active real estate markets (most), meaning there is NO economic difference between renting and owning. ie. Buying real estate is purely a consumption decision, but that's a whole other conversation and will prompt howls from the Real Estate industry who want us to believe that a house is a 'good investment,' when its entirely unsubstantiated by the data/evidence. Again, i emphasize, on average. Some people clearly make real relative returns on a purchase and some lose, but they offset each other for the most part. My motto: If you like the house and can afford it, buy it, but dont delude yourself into thinking you're making some brilliant investment decision.)

Back to predicting the future...

Measures of housing affordability such as OER or Price to Income Ratios etc. etc. are interesting, but only in so far as they suggest what the price will do in the future. They seem helpful at times, from what Ive seen.

Its quite possible NYC remains vibrant and central to the world of business, culture, entertainment etc. etc., but that housing prices fall precipitously and remain depressed for years. Its also possible that NYC retains its status and prices fall, but ultimately rise again in a short period. "Believing" in NYC or understanding what happened in the 70's is almost entirely irrelevant to what happens to future prices.

Neither inflation nor deflation are "inevitable" but economic consequences of monetary and fiscal policies. Arguing for either one must be done on that basis alone. There are myriad indicators of inflation/deflation available now. The fact is we're currently experiencing deflation, particularly in housing. There is a raging debate among economists and policymakers about whether we will have long run inflation or even hyperinflation, because of the massive monetary expansion underway. However, most recognize deflation as at least a short to medium term consequence of the credit bubble bursting, as happened in Great Depression and described by Minsky. (As in, we're in A Minsky Moment.)

I would suggest focusing arguments about real estate prices around unemployment, wages, credit availablity and deflation/inflation, since those seem to me to be the most important factors influencing the trajectory of prices.

I'm of the opinion, per Goldman Sachs Jan 2009 study and Ivy Zelman's work, that NYC has between 30-50% further to fall. NYC has just started to experience its challenges relative to Las Vegas, Phoenix, Florida, California etc. Of course I recognize I could be wrong if my expectations of unemployment and the timeliness and effectiveness of govt monetary and fiscal policy are too pessimistic.

However, its easy to figure out if real estate prices are bottoming. Simply watch the rate of change in prices. (Tons of data available re. NYC) Prices are falling now, but will fall less rapidly and ultimately stop falling altogether before turning higher. All you have to do is wait til prices stop falling for a significant enough period with normal transaction volumes and you'll know that you're pretty likely close to the bottom. Of course addtl economic forces could change things after that, but thats the general idea.

Of course, its true that if you intend to own an apt for 30 yrs, buying now and riding out the declines may not seem so bad, but I'd sure rather get it 30-50% lower.

Our dysfunctional little family.

"Things seem to have gotten back to alignment on the Upper West Side, especially since there's a big difference in the quality of co-ops available and the rental alternatives just aren't the same quality. So for economics overlayed with life, for me it seems time to take the plunge over the next 3 months."

You think the 10% difference is enough to bring prices in line with rents?
Where did you take math?

The estimates I saw on the ratio showed things 50% to 100% out of whack. 10% is not going to bring that back into alignment.

and, yes, I do think its a broker. someone with enough stats to know sorta what's going on, but not enough to know better.