Owners No More

not to slam renting, because it can make a great deal of sense.. but "have"?

I can understand the appeal of renting -- having been a renter myself for 14 years of my life -- but I can't imagine going back to that lifestyle.

Lifestyle? What? My "lifestyle" changed not a bit when I regressed from owning to renting. Actually it improved (depending on how one views things) because we purchased a country home as well.

NYCMatt,
I understand your remarks. The uncertainty of not knowing my lease might be renewed each year and at what price was a huge negative. Granted currently the price risk has been in favor of renters for the last apx 18 months, but long term rents go up..

Renting feels incredibly freeing. You write a check every month, and for 2 years I wasn't pre-occupied with the value of my property because I didn't own. Rental stock in our category still sucks, so I'm not tempted to rent - OTOH, enough agents around here know that I would definitely sell for a profit.

“I’ve only been here a month,” Ms. Abad said, “and I’ve already decided I don’t want to be a renter in a year.”

“But he can’t shake the feeling of being a captive in an aesthetically displeasing holding cell.”

just a guess, i assume renters will side with renters and owners with owning..

We're a little more discerning than that, RSider.

Personally, I'm Jekyll & Hyde:
pro-renting - it's easy, stress-free, no commitment, if things go to the pits, pack up, leave.
pro-owning - with a family, it's much more comfortable, I can't rent the same space I own.

rs, i've done both. and owned far longer than rented. so no.

do you really think i'm at risk of not having my lease renewed? or not being able to afford an increased rent?

there is something incredibly delicious amount underspending. not, of course, reducing one's lifestyle horrendously just to be cheap. but proactively deciding that enough is enough, and one doesn't need to buy into a bubble just because ownership is the american dream.

JM, yes some will be unhappy. i was at first as well. some adjust.

i did find it interesting that a lot of people in the article (about half) are in the RE industry and now rent instead of owning...but complaining about renting. the only guy who made much sense is the one in the purple shirt...and he is incredibly good-looking.

sniper, thanks for visiting. your contributions were great, and your wit is missed.

thx. i popped back in because I AM IN THAT ARTICLE.

Nice!

i know, i read it when NWT posted it on the other thread. that's why i got the "wit" in you purple shirt reference (not saying, of course, that every word wasn't true).

good work.

thanks. even though the writer didn't quote me on it, i did mention the role SE played in helping me sell and I sent her the "Open Book" thread for some background on my situation.

in the comments section on the Times site people are killing the lady with the noisy kids and the guy whining about his viking stove.
kinda funny.

"there is something incredibly delicious amount underspending"

I think there is something incredibly delicious about owning properties outright. Can't wait to read this thread 10 years from now while you are still trumping the benefits of renting and I'm sitting on three properties debt free. At what point do you enter that in your calculation? What year?

interesting.
I own. Glad I do , but would never have bought if the rent argument worked out as superior at the time. Things are not so absolute.

I've done both. Depending on the company managing the building, renting can be a higher level of services. My frustrating experiences in certain coops would never happen in a white glove rental building.

good for you jm. it would be easier, i'll confess, if the gov't wasn't so interested in promoting your world view and would let the normal people earn a decent return on savings. but i'm assuming that one way or another that will return.

btw, you do realize that i own, albeit upstate? and i pay less than 10% of my take home pay on the rental? i think i can do quite well over time. i'm quite good at math. really. and i've made quite a bit (percentage wise a veritable shit load) on the sales i've already made. sorry, sweets, i'll take the less than 10% of take home over home ownership any day. but, then again, i like to travel.

Toot Toot!

so not funny

Let us stop the bickering ok?

why? and i mean this. why? i find your positions offensive. and you also pollute my thread. the rule is you give a brief overview, the link, and post a bit that draws people in.

and then people, if interested, respond.

but it isn't so much that i find your positions offensive, i can deal with anyone and welcome anyone's opinions. you're deceptive. you want the best of all worlds. opinion without culpability.

OJ. If 3 paid off is good isn't 6 paid off better? And 9 paid off the best? Flmao. What do you think I intend to do in 3 yrs time, yep be a mini- you with 6 properties at a cap rate that'll allow me to retire with my oyster yacht in 10 yrs versus slogging it for 20 yrs cause I bought at $1500 psf!!!!!!!!

Hahahahahhahahahahaajajajajajajajajajaajajjaiaajaahahahahahahaahhaahhahahaha

people are destitute, people don't have shelter, people don't have health care.

people don't have enough to eat.

hey sniper,

just curious, exactly what "improvements" are you making to your house in NJ? And why on earth would you spend money on a rental house?

sniper: I've always been fascinated by why people open up their lives to the NYT and subject themselves to being portrayed in a less than flattering manner, not to mention being judged by total strangers. One of my colleagues did this, but I don't know him well enough to ask. What were your motivations, and what did you get out of it?

unfortunately most houses these days don't come with an updated sex dungeon.
we had to drop about $10K into updating the one here. well-worth every penny.

"it would be easier, i'll confess, if the gov't wasn't so interested in promoting your world view and would let the normal people earn a decent return on savings."

One thing has nothing to do with the other. Let's not twist facts, some hard working people can make good decisions, build equity, and own property (and when done right is WAY better than renting). Why is it that your response to everything is that people can't make a decent savings rate, people are poor, people don’t have enough to eat, etc, etc. You seem to have a serious case of Catholic guilt or are blindly liberal, I can't figure out which.

"OJ. If 3 paid off is good isn't 6 paid off better? And 9 paid off the best?"

Yes.

"yep be a mini- you"

I have a mini-me!

Onthemove - that is a fair question. i spoke to the reporter for 20-30 minutes but she only went with a couple quotes - which is fine. when you apply your statement to some of the others in the article, you are dead on. as i mentioned above some of them are being destroyed in the comments section for some of the things that they said that may or may not have been taken out of context.

i fit the profile for the article - people who decided to sell then rent in this economy/real estate market. i thought that maybe some of the things i had to say could help/enlighten some others in my situation or thinking about heading that direction. that is the same reason why i posted my "Open Book" posting on here. i am pretty down to earth and didn't say anything that i thought would open me up to the judgement of others. but to answer your question "what did i get out of it?" the simple answer is drugs.

people are destitute, people don't have shelter, people don't have health care.
people don't have enough to eat.

100% a limousine liberal myth.
everyone has emergency healthcare, and then the rest of the time they need to have some responsibility. The man can't always pay for you

There's no one who is starving in America this land of obese. And no one who is without shelter wants shelter. No one. Not in NY or NJ or elsewhere.

LOL sniper. You're on a roll today.

Here we are again and I will attempt to define. We got owners who want to sell or own more, renters who are content to rent 4 ever (why your on this site confounds me), and renters who want to own (some 4 the first time and some again) but, argue over the precise moment to enter the market. I've been on the sniper thread since back in the day. I have commended sniper for his timely escape from a decending market. So now we got it all from, buy now or BPOFE to just wait 3 more years and collect your fabulous prizes. my analysis: AGHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!

sniper: Sex and drugs, eh? Where does the rock & roll come in?

Thanks for playing.

The only interesting thing about this article is that after 10+ years there is a growing grass roots appreciation for the fact that owning isn't always upside.

ar - So, as you "pay less than 10% of my take home pay on the rental"...and assuming your PCV rental is only $3,000 per month, then your after-tax monthly take home is north of $30k, so let's say $35k, which equals $420k after-tax, and around $750k pre-tax...if that is the case, how impressed are your husband's Partner co-worker's, knowing what he makes, when they come over for a dinner party in your PCV rental?

and don't waste any key-strokes, I will tell myself to "piss-off"

If you are going to rent long term at free market , there's going to be some point over a 10 or 15 year period where the rental market is booming and your are going to get hit with 10% or 15% (or more) annual increases in rent. For lot of people this will come as shock both emotionally and financially, and may force them to move from their homes. I don't think this is being taken into account here.

There should also be a point over 10 or 15 years that the math favors buying, unlike any of the last 8-10.

Yes, how soon we forget the usual pattern in Manhattan rents.

sniper, looking good in those tight jeans, great bulge, whew!

Seriously sniper, did you jump off the bed to get in those jeans?

which unit is sniper's... too lazy to read... but not lazy to post

Uh, sniper is the guy in Tenafly, pictured with wife and kids.

Mr. Skintight may be an SE person too, but don't know who.

no sniper is the guy with the bulge. sexy. what are you doing tonight?

"Here we are again and I will attempt to define. We got owners who want to sell or own more, renters who are content to rent 4 ever (why your on this site confounds me), and renters who want to own (some 4 the first time and some again) but, argue over the precise moment to enter the market. I've been on the sniper thread since back in the day. I have commended sniper for his timely escape from a decending market. So now we got it all from, buy now or BPOFE to just wait 3 more years and collect your fabulous prizes. my analysis: AGHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!"

Love the post, falco, and I think you nicely summarized a lot of what goes on here. I'm definitely in the camp of current owners who would like to buy more property at some point. Like you, I'm at a loss as to why diehard renters are on this site (it's like AA members coming out to the bar every night, just for the beer nuts). There's never a situation where it's always smarter to buy for everyone, or vice-versa. Look at your own needs, your finances, and go from there - it's much better, in my experience, than blindly following the crowd.

So the theory is that real estate in NYC only affects those who own or are looking to own? That would be news to several million people.

Not having renters here would result in this board looking more like an ownership fanclub. I think we had enough of that over the last decade.

malthus, sorry, that's not what I meant, and I certainly don't want to exclude anyone. This site has come a long way in terms of rentals, but I still find it curious that those who have no real intention of ever buying would find this message board all that useful. If your intention really is to rent only, do you really care about 95% of what's being discussed here? (that's an honest question, not a snarky rhetorical one)

Brokers are interested in this board whether they own or not. And because real estate became a bit of a spectator sport this decade, you have renters watching the carnage from the sidelines.

bjw, as a committed renter, i still have not ruled out the possibility of ownership. but your question is a bit silly. we have many people here who own, do not plan on moving, and are not currently thinking about whether the value of their home is declining. why are they here?

this is a fascinating historical event. a bubble for the ages. and in a few communities certain forces add a twist that make the local real estate market the most newsworthy topic being discussed. this has social, psychological, economic, etc. implications, far beyond the simple but individually significant decision of whether or not any one person wishes to join in the purchasing frenzy.

and i'm here because falco would miss me if i left.

aboutready, I don't question why someone like yourself, who indeed has not ruled out the possibility of ownership, is here. That makes total sense to me. The flip-side to my question is total fair game as well, but I think there's more than enough renovation threads kicking around here to make it worthwhile for owners who aren't planning on moving. Again, don't confuse my question with an attack on anyone - I'm just genuinely curious as to what draws people to this board.

Leave it up to JuiceMan to quote a quote from a real-estate broker!

the fact is that it makes no sense in owning in NYC right now. prices would have to be about 20 percent lower to buy for it to make sense again.

samadams, that's exactly the kind of silly, over-generalizing remarks that I'm talking about! In 1991, would you have said that it makes no sense renting? The decision is not quite that simple, sorry.

I wonder if steve still thinks that Manhattan and Miami are the same and that what happend in Wayne, NJ today will tell us what will happen in Manhattan two years from now?

"this has social, psychological, economic, etc. implications, far beyond the simple but individually significant decision of whether or not any one person wishes to join in the purchasing frenzy."

AR, this all really just boils down to a little common sense, no need overcomplicate.

so then lloyd says:

"I got a question, if you guys know so much about women (read this as real estate for the purposes of this thread) how come you're here at like a Gas & Sip on a Saturday night, completely alone, drinking beers, no women anywhere?"

and then joe says:

"By choice, man!"

We're all just here at the Gas & Sip completely alone, drinking beers by choice

bjw wtf are you talking about? Who said anything about 1991? Based on simple math and historical ratios prices should be about 20 percent lower then they are today 2009. Also not only would prices have to be 20 percent lower but rents would have to be the same. So if rents go down another 20 percent and so do prices it still would make no sense in buying.

JM, glad i didn't listen to your advice a few years ago.

when common sense said don't buy.

"I wonder if steve still thinks that Manhattan and Miami are the same and that what happend in Wayne, NJ today will tell us what will happen in Manhattan two years from now?"

Hmm. More JuiceMan black-and-white thinking. What happened in Miami is that prices are down around 50% from their peak and now they're leveling off. What happened in Manhattan is that prices are down around 30% from their peak, and they're still falling. I'll leave it to JuiceMan to define whether that is "the same."

I never said that what "happend" in Wayne, NJ today will tell us what will happen in Manhattan two years from now?" What I said was that if you correlate prices in Wayne, NJ to those of the UES, staggering the price changes by one or two years, there is nearly a perfect correlation between them. To extrapolate from that would be a logical error.

juiceman i would not compare manhattan to miami as a whole but certain sections of the nyc market are starting to look like Miami. Have you seen whats been going on in downtown Brooklyn?

samadams, I'm talking about your comment that it makes "no sense" to buy now. Do you mean for yourself or for anyone? And I brought up 1991 as a counterpoint to 2009. Point is, you do "simple math" and you'll get a simple answer, but I'd warn against applying that answer, unequivocally, to everyone.

bjw it makes sense for NOBODY to buy. There is a historical spread in the rent to own ratio that is off the charts one little tick up in rates and the cards in NYC will tumble back to reality.

what the hell is going on here? the only reason i bought a place, sold it for a healthy profit and decided to rent was to get in the NYT so people could see my "bulge." the plan finally works out after all these years (true - not as ambitious as the plan of of that crafty kenyan who bamboozled his way into the white house) and you guys are all dragging the conversation back to "buying, selling, renting." WTF - talk about my "bulge!!!!!"

Sam Adams where do you get 20%? I am not disagreeing per se, but if the market is at a cap rate of 4% (at best), and went down 20% it would be at 5%. 5% is still lower than the prevailing mortgage rate. Because price to rent suffers as a metric in comparing time periods with different interest rates, I use cap rate. A 5% cap rate in this economy with this supply and falling rents....I am not sure that is even attractive. My rental could be comped around $1.2mm (see 40 E 88th). It would usually have a maintenance around $1800 and the rent is $5000. At a 6% cap rate the price should be (gulp) around $650k. At a maintenance of $1300 and cap rate of 6% it should be....$750,000.

Rhino, while a 6% cap rate may seem conservative, relative to historical values, don't forget we are at record low interest rates. With fed funds at near ZERO, don't forget, there are investors that have capital to put to work. Earning 4% in this environment seems pretty juicy to me. Why do you think the stock market is levitating?

people are clueless

I'd rather own stocks at an average valuation than real estate at a pre-bubble historical high. 6% is not high historically. Not at all. It had never been below 5% before 2004 or so.

Clueless indeed. I wonder why all these banks loaded up on 6% aaa bonds and then got their hairy asses handed to them?????? Hmmmmmm hmmm hmmmmm oh yeah ya gotta get your principal BACK!!!!!!

How is 4% juicy vs. munis or vs. anything but treasuries? I dont think 70 bps over 10-year treasuries is juicy. Yes, truly clueless.

rhino I hope you're not calling me clueless. I bought my condo at lower than its 1988 newly offered price in 1998. I don't have a mortgage. My liquid investments are higher than pre-crash. I know where property cap rates have been historically. But short term treasuries are at .04%. Where exactly are you putting YOUR cash?

PMG, put your fucking resume away. 4% is not juicy by any measure, historical or relative at present. Stay on point. When I pitch you to manage your money, I will give you financial advice.

Miss you.............my heart would be broken

And W67, the trouble wasn't investors buying bonds that yield 6%. The trouble was they were buying crap that happened to be rated "AAA" I bought short term bonds in the past few years yielding less than 5% that I've never lost money on. And my returns on them have far exceeding the stock market.

PMG, justify 4% as juicy and stop bragging. Your statement is foolish. Coops are not short term bonds, thats the point stupid.

4 basis points! Rhino you are the clueless one if you think cap rates don't relate to interest rates, which relates to stock and bond investments.

4 percent cap rate sucks stupid. Who said 4 bps? Focus moron.

can't help notice how much sniper likes the 'bulge' aspect of the story.
Enjoy the 15 minutes of bulge fame...totally worth moving your family around so Mr. Happy could get some well deserved attention. Now, where are those sweat socks?

Good you're keeping up. You are correct. I said 4 bps. That is what risk-free cash is earning right now. That explains the falling dollar. Assets priced in dollars may appear to be appreciating because that is the design of the federal reserve. Their work is softening the collapse of real estate. That explains the stubbornly low cap rates. If you are confident you can earn 4% on an investment that is also an inflation hedge, you are doing too badly.

aren't doing too badly

Thanks chief. Go buy real estate because 4 is juicy and the risk is comparable to treasuries.

"juiceman i would not compare manhattan to miami as a whole but certain sections of the nyc market are starting to look like Miami. Have you seen whats been going on in downtown Brooklyn?"

Could be a valid point samadams, but not one that steve made.

"JM, glad i didn't listen to your advice a few years ago.

when common sense said don't buy."

I’m happy you made the right decision for yourself AR but you seem to think that because it was right for you it is right for others. I find your views on the subject incredibly myopic.

“What happened in Manhattan is that prices are down around 30% from their peak, and they're still falling.”

Poor steve, still latching on to theories when time continues to prove him wrong. All we needed to do was wait steve out. What's Wayne, NJ doing today steve? Got any mean data?

Real estate is not an inflation hedge. The mortgage rate impact is stronger than rent inflation. And employment and therefore rent is a lagging element of inflation. Again 4 sucks. Sucks to history. Sucks to munis. Stocks are priced to a better cash flow yield and are a better inflation hedge. Further such a low cap rate kicks in negative leverage.

rhino, give it a rest. I'm not investing in manhattan real estate right now. But I can understand why it is priced where it is.

Here is a comparison between Miami and NY: Valuation exceeded affordability by an unprecedented amount. Buyers stretched well beyond their means to achieve a lifestyle promoted by developers who overbuilt because credit was flowing like champagne and their risk was limited because it was pawned off on financial institutions. Until valuation finally crashed into oversupply and unemployment.

Here is the difference: In Miami, pundits and the big money guys have been calling the bottom every three months since the beginning of 2007. And everytime they did, there would be a small bump up before another steep decline. The bottom is still not in in Miami because every month a commercial institution can't meet the debt payment and another block of apts. is crippled. Isn't this a possibility for NY? Who here on this thread can assure everyone that the developers with huge amounts of inventory in NYC can meet their debt obligations. We shall all see.

And, AR's comment on socio-economic tells is not oversimplified. If you are not concerned about a major psychological shift in the consumer -- including the apt buyer-- then you are delusional. Downsizing is the new mentality.

You said four is juicy. Admit it was an ignorant statement. Then you recited your history like a tool.

> Poor steve, still latching on to theories when time continues to prove him wrong

Pot, kettle, much?

JM, a couple of years ago would not have been an ideal time for anyone to have bought. there are many who will be fine with their decision, and many who would even do it again given the circumstances of their lives. but it wasn't wise, and those who claimed that a major price correction was highly unlikely were providing shitty advice. i find it humorous that you are calling me myopic.

"OJ. If 3 paid off is good isn't 6 paid off better? And 9 paid off the best?"

Actually, wouldn't best have been selling those properties before they tanked 25 (leveraged). Having it in cash would have certainly paid off better. A mortgage is good for some forced savings, but that doesn't necessarily make it a good investment.

I've been on the rent and own side. I agree there are positives on the buy side (especially the long term certainty of knowing where you'll live), especially in Manhattan, I love the advantages of renting.

Forget the obvious financial benefit of not taking a 20-30% leveraged loss, and the lower costs over the last few years.

I just love the freedom it buys. In Manhattan, where few folks get their dream house young, and always seem to be trading up, I love the flexibility it gives. If I could have bloomberg's townhouse, thats one thing, but I love having options, and not being stuck. I also love not having to tie up a lot of cash.

And, I love the service. Yes, crappy buildings are crappy buildings. But in high end rentals, the service is awesome. I love not having to fix things, and getting a new fridge when the old one goes (free) and a staff that knows that you're out if you don't get what you want.

Personally, in a town where energy is the thing, I think there is a huge benefit to not being in the suburban model of being locked into one place...

One hundred times the risk-free cash rate may be considered "juicy". I don't think that is an ignorant statement. I asked you, rhino, if you had US dollar cash today, where would you invest it? That is the conundrum playing out in the stocks, bond, commodity and property markets. My answer would be stocks and short-term corporates. Some people are buying manhattan homes--yes, even today. At today's prices I believe manhattan homes should be viewed as a consumption item, not as a good investment, for all of the reasons you mention. That doesn't mean I'm going to sell my condo and rent, just because I think manhattan homes may likely lose value.

"JM, a couple of years ago would not have been an ideal time for anyone to have bought."

Well it probably wasn't an ideal time to buy stocks, or for retailers to sign new leases, or for manufacturers to invest in new capacity, or for renters to lock into long term leases, or or or or or or or.......

"and those who claimed that a major price correction was highly unlikely were providing shitty advice"

Then it is equally shitty advice to claim the world is collapsing and everyone would be moving out of Manhattan by June (what happened to all of those people anyway?)

"i find it humorous that you are calling me myopic."

I'm glad I humor you, just trying to get you to see that forest out there and it has nothing to do with hating poor people.

"Poor steve, still latching on to theories when time continues to prove him wrong"

Did I cite any "theories" that I missed?

"Prices are down about 25% from their peak in the spring of last year, according to Corcoran. But the median price of a three-bedroom was $2.25 million, a drop of 40.7% vs. a year ago, the brokerage firm said

http://www.nydailynews.com/money/2009/10/02/2009-10-02_manhattan_real_estate_sales_stabilizing.html

What did I get wrong, Juicy?

JM, don't worry about me, my vision is quite good. and this doesn't seem to be a "hating poor people" thread.

yes, many people would have been well-advised to exercise caution because it was blatantly apparent that the masses were engaging in bubble behavior. and it seems as though the powers that be would like to keep the bubbles afloat, so i'll continue to be cautious. why anyone would scorn caution in this environment is beyond me.

here is nyc's Miami except instead of being on the beachside its project side
http://www.crainsnewyork.com/article/20091011/SMALLBIZ/310119988

> "and those who claimed that a major price correction was highly unlikely were providing shitty
> advice"
> Then it is equally shitty advice to claim the world is collapsing and everyone would be moving out
> of Manhattan by June (what happened to all of those people anyway?)

As long as we agree.. that was majorly shitty advice... and the existence of one doesn't excuse the other. Of course, the latter is also hyperbole that is obviously not serious (EVERYONE leaving manhattan? really?) and the former was said over and over again by many, and defended.

> What did I get wrong, Juicy?

Yeah, I'm missing what SteveF supposedly did wrong here. His estimate was definitely on the high side, and I don't think we're hitting it, but he was fundamentally fairly right on with his RE theories (I won't bring up stock now). ;-)

"Well it probably wasn't an ideal time to buy stocks, or for retailers to sign new leases, or for manufacturers to invest in new capacity, or for renters to lock into long term leases, or or or or or or or....... "

Of course, we're confusing cause and effect here. These things, true, for sure.

But those things were brought about by the RE bubble. RE was fundamentally bad before it crashed, retail and such were not.

So, while they didn't work out well, these weren't huge logical investment mistakes, like RE was.

> Yeah, I'm missing what SteveF supposedly did wrong here

Ha, sorry, other steve.

"Prices are down about 25% from their peak in the spring of last year"

"What did I get wrong, Juicy?"

You were off by 25% yet you still claim to be right? LMAO

"why anyone would scorn caution in this environment is beyond me."

Who scorning caution? Seems to me that the only thing being scorned here is a little optimism.

show me some significant job creation (in the US), juice, and i'll find my rose-colored glasses.

"But those things were brought about by the RE bubble. RE was fundamentally bad before it crashed, retail and such were not."

I don't get that logic nyc, what we had was an economic bubble fueled by real estate (among other things). If RE was fundamentally bad before it crashed than so were all of the business decisions based on never ending economic growth. Retail and manufacturing business plans were based on unsustainable growth trajectories so, according to your and AR's logic, it was a bad time to buy retail stocks and you were foolish for doing so.

All this hindsight brilliance is admirable.