price of same apartment over time

312 West 77th Street #4F

10/01/2004
Previous Sale recorded for $499,000

04/28/2008
Previous Sale recorded for $630,000

01/26/2010
Price decreased by 7% to $625,000

302 West 79th Street #6D

02/01/2005
Previous Sale recorded for $399,000

01/21/2010
Price decreased by 2% to $392,000

148 West 23rd Street #7E - I used to really like that area, but it's deteriorated.
312 West 77th Street #4F - Listed at $699 in Sept, recently reduced. Probably still overpriced for a small walk-up with $1270 maint. Looks like the person who sold it for $499 also owned 3F
302 West 79th Street #6D - I saw this one, the bedroom is too small to fit a queen sized bed and if you install an A/C in the only window in the living, you lose the natural light.

Good review of the properties. I'll just note that my point is not whether or note the apartments are worth their prices, but rather the fact that they are now trading at off-peak prices - in some cases off peak by a number of years.

73 Worth Street #5B
09/30/2005 Previous Sale recorded for $2,887,250
01/21/2010 Sale recorded for $2,585,000

73 Worth Street #4B
08/30/2005 Previous Sale recorded for $2,905,250
06/12/2009 Sale recorded for $2,690,000

Note that the higher floor sold more recently for less money.

Unit 3B was on the market to rent in July 2009 for $12K/month. While 5B should arguably rent for slightly more, it probably would have been less 4+ years ago, so we'll let that wash out and use an average monthly rent of $12K for 5B. Paying that rent for the time period between 5B transactions (4 years, 4 months) would cost $624K. This renter could have then bought 5B in cash last week for $2,585,000. Total cost to have lived in 5B from 09/30/2005 until now and be a mortgage free owner as of 2/1/10 is $3.2 million.

The 9/30/05 buyer of 5B paid $2,887,250. We'll give them the benefit of the doubt and say they did 20% down and financed the rest. Down payment was $577,450. Their monthly payment including interest/taxes/maintenance would be $18,102 assuming they were able to get a jumbo mortgage in 2005 at 6.5%. $940K in payments during the time period in question. If you look up the amortization table, at this point our buyer would have to drop $2.18 million to pay off their mortgage and be at the exact same place as the renter in our example above as of 2/1/10.

The individuals in both of our examples will have lived in the unit since 9/30/05 and are mortgage free owners as of 2/1/10. The difference is the person who rented and just now bought paid a total of $3.2 million whereas our 2005 buyer paid a total of $3.7 million. Our 2005 buyer had the privilege of paying $500K more (at least) to end up in the exact same place.

I'll give a tip of the hat to the mortgage deduction here. Remember you can only deduct up to the first million dollars of home purchase debt. So at our assumed 6.5% rate, the most you could deduct is $65K annually. We'll assume that our buyer is in the top income tax bracket, so the actual savings is $23K per year. Over our 4 years and 4 months, the savings would be $98K. That's a far cry from the $500K damage done, not to mention the fact that you'd probably spend some amount of that towards upkeep which would have been covered by your landlord had you been a renter.

secondandc -- of course your theoretical story makes the later buyer come out ahead if you're comparing someone who bought with an 80% mortgage in 2006 to someone who paid 10% less in cash in 2010. Let's do apples to apples, though -- two all-cash buyers. The 2005 buyer spent $2,887,250 to buy the place in cash in that year. Since that time he's been paying an average of, say, $3300 per month in taxes and common charges. So all in since 2005 (I'm pretending he bought exactly 5 years ago to simplify the math): $198,000 (cc) + $2,887,250 = $3,085,250. That's over a hundred thousand less than your later buyer guy, even though prices have fallen. And it's not accounting for any tax benefits from the property taxes (which given the price of this property were probably AMT's away anyway).

This does not, of course, account for what the later buyer's purchase money was doing during those interim five years. Under normal market conditions he may well have come out well ahead if you add in those gains. But given that the stock market is now basically precisely where it was in early 2005, I wouldn't assume that his purchase money grew by leaps and bounds during that period either.

So I'd call it a draw.

201 East 21st Street #7R

08/05/2005
Previous Sale recorded for $775,000

02/18/2010
Re-listed by Prudential Elliman for $749,000