end of home buyer's incentive

none

More than you think. 60-70% of the manhattan market sells for under a million.

To get the full credit as either a first-time or repeat home buyer, you have to be under $800,000 purchase price AND $125,000 (single) / $225,000 (married) income, and a first-time buyer. Both of those together probably eliminates a good chunk of the Manhattan market.

It's pretty hard to be a single person who qualifies for the credit unless you have significant down payment help or are buying in a transitional neighborhood.

There probably are a fair amount of married couples who could squeak in, and probably some unmarried partners where one could take the credit because of disparate incomes.

NYC10013, you have cited that statistic before but there is a huge gap between 800K and 1m.

Really? I must have failed third grade math. Unfortunately Jon Miller doesn't split out the market at the tax credit max purchase price so that's the best data out there. Go crazy and assume $800K-1M is HALF of the under $1M mkt - that leaves 30-35% of the Manhattan market as available for the tax credit - which is just a wee bit higher than zero which most of the brokers on this board seem to throw out. To say the expiration of the credit will have no impact on manhattan is naive, ignorant or BS (or all three).

I would actually like to see how many homes were purchased using the credit. Just because 30-35% of the market is in the price range, doesn't mean that they were eligible sales. The income restrictions play a huge role.

Bob, now your argument is that the avg buyer who would buy an $800K apt in Manhattan makes more than the avg buyer who would buy an $800K house in LA or Chicago or Atlanta? Seriously, that's just idiotic. And I said go crazy and assume HALF of the market under $1mm is $800K-1M - in reality it's probably 20-30%, which means 40-55% of the mkt is under $800K.

I forgot that the rules of the universe don't apply to manhattan bc (1) everyone who buys an apt makes too much to use the tax credit even though half of the market meets the price requirement, (2) increasing mortgage rates don't impact prices even though they impact monthly carrying costs, (3) foreclosures and short sales don't happen even though you can find them pretty easily on streeteasy, (4) the grass isn't green in central park even though it is. And people wonder why RE brokers are uneducated hustlers.

Believe it or not, Manhattan properties had been selling at a brisk pace for decades BEFORE the incentive.

I'm sure they will continue to do so well after.

OK. Is there a way to find out how many Manahattan apts were purchased using the credit?

So 35% of the market is under 800K. What % of that is in the 600K-799K range? Most people buying in the 600-799K range would be making more than 125K.

My point with above post is not that NYC is different in terms of people making more money in the same buying price range. It's that I think the majority of homes purchased across the country using the credit are less than 600K purchases and the lower you go, the greater the % of purchases that used the credit.

bob, what's your basis for saying that "most people" buying a 600K to 799K apartment would be making more than 125K (single) and 250K (married). Both incomes are pretty high (I know, they're a paltry pauper's compensation according to SE posters, but I'm talking about reality here) and are the kind of money that only a small percentage of people in the city make, so you're either saying that only a very small percentage of city dwellers can afford under-800K apartments (even as a couple) or that people tend to buy well below their means (meaning a couple making 249K buying under 800K instead of, say, 1.1 M). None of those conclusions make any sense.

Moreover, you don't "use" the credit to buy a home, you buy a home and receive the credit in your taxes, which is different, and you get it regardless if you meet the conditions.

Effect? None. I have yet to meet a buyer who said they cared about the credit in either Manhattan or Brooklyn.

By use, I mean they purchased a home because they would receive the credit and wouldn't purchase otherwise. That is the basis for the argument that the expiring credit will hurt manhattan sales.

Yes, most people buying a 600K-799K apt would be making more than 125K unless they have a large down payment. At least they should.

Fluter, neither have I.

Color me idiotic. I would think that you do have to earn more in Manhattan to buy a typical 800K place than in other cities. In Manhattan there are high state and city taxes as well as maintenance payments that are higher than a typical real estate tax alone, plus most buyers have to get by a board approval, which would weed out most people buying an 800K apartment with 125K income or even a couple with 225K.

This will affect the Studio and 1 BR market. I know there are some 2 BR's for less than 800K but for the most part any 2BR or larger did not qualify for the credit to begin with.

1. Roughly half of the credit goes to the buyer and half goes to the seller in the form of higher prices.
2. Someone upgrading from a lower value apartment will therefore get half the benefit regardless of of his/her household income.
3. Many parents help their kids with the down payment, therefore the kids making less are eligible for the credit and still be an expensive apartment.
4. Many family where part of the household income come from cash sources ends up with large down payments as well and therefore are eligible for the credit and still be an expensive apartment.
5. Most people don't understand or realize point #1 above and the fact that they might be getting $x from the government but potentially paying 3 or 4 times $x in higher prices in a market like NYC.
6. People will go to a store selling pencils for $0.01 thinking they are getting a deal, and end up buying $20 in other products. When people think they are getting a deal, they sometimes ignore the part where they're over paying for other areas. The sales people understand that.

I just ran three searches of apartments for sale on Streeteasy. Here is what came up:

price Manhattan only all of NYC
from $0 to $30m 11,883 24,613
from $0 to $1m 6,141 17,739
$0 $0.8m 4,847 15,441

All these points are valid but the bottom line is whether or not the purchases would happen without the credit. I don't think it makes any difference.

the table did not come out well once it has been posted. here is the data in aonthre way.

There are 24,613 apts listed in NYC on SE for $0 to $30m; 11,883 for the same price range in Manhattan.
For $0-$1m there are 17,739 and 6,141 listings in NYC and Manhattan, respectively. For $0-$800k there are 15,441 and 4,847 apartments.

It's all about the timing of the purchase.

bob, the question isn't whether the tax credit will borrow sales from the future, because there's little doubt that it does. The question was whether the tax credit applies to Manhattan. I think it does for the reasons posted.

start the clock on the announcement of an extension of the credit...or an announcement of phasing it out slowly rather than all at once...also don't discount the possibility nys will join calif and other states who have started their own state tax credits for new purchases

I don't doubt that there are some scenarios(as you posted) that the credit would apply. I just don't think where it did/does apply makes up a significant % of sales and I don't think manhattan buyers really take the credit into consideration when buying.

Maybe I am missing something but as to the initial question, I don't think the expiration will have any impact on manhattan sales/prices. There are many other things that will have an impact but in my opinion, this is not one of them.

I don't know anyone, haven't heard of anyone caring about it.

"Believe it or not, Manhattan properties had been selling at a brisk pace for decades BEFORE the incentive."

Yes, it was called a BUBBLE.
Thats how these things work.
;-)

Tha

"I'm sure they will continue to do so well after."
He sounds as sure as the folks who said prices would never tank... that worked well.

I agree with Moxieland. Given all the signs pointing to a housing double-dip, I think the government is going to be very cautious when withdrawing its intervention in the market. All of it: end of homebuyer's tax credit, end of the MBS buying program, increase on the Fed rate down the road. All the extraordinary measures will we withdrawn bit by bit and with a very high possibility of back-tracking on the part of the government if they feel the effects are too drastically negative. IMHO they'll think that many more billions spent in artificially propping the housing market is preferable to all of it coming down another 15% and then everybody thinking that the banks are obviously insolvent again and we're back to square one with no second TARP in sight.

"Maybe I am missing something but as to the initial question, I don't think the expiration will have any impact on manhattan sales/prices. There are many other things that will have an impact but in my opinion, this is not one of them."

I can't say for sure one way or the other but anecdotal responses from brokers (including some on this board) seemed to indicate that there was a lot more movement in the studio and small one bedroom spaces over the summer than in other submarkets. Speculation was that this was the credit effect.

I suspect the tax credit has a small effect in propping up NYC prices at the lower end, and a more noticeable effect elsewhere in the country. I suspect the government will phase it out, rather than suddenly pull the plug.

And, ultimately, the NYC RE bubble will continue to deflate in a slow and orderly fashion, rather than drop off a cliff like many of us would like to see.

Just to chime in - I haven't posted here for a LONG time (I still lurk, occasionally), but from what I know of the people who are taking the tax credit: a lot of my friends who are in their mid to late 20s buy with some combination of a down payment from the 'rents and high annual incomes. They did it right as they get out of grad/professional school so that their fiscal tax year incomes appear to be "half" of a full year's income but were able to show a co-op board reasonable reserves and a strong income. To keep the banks happy, they use their pay stubs as proof of relatively strong income and show that they "just" got out of school, and they generally have a very high down payment going in.

They're not buying million dollar apartments; they're buying $500k-$750k apartments and scraping off the tax credit as a bonus. I would say the timing of the credit expiration probably accelerated a few purchases but would not have influenced their decision to buy altogether. I don't think anybody is looking at an "$8k discount" from the government as a deciding factor when spending upwards of $750k.

Just my two cents.

Could you please tell me when the tax credit expires and if it will be extended yet again?

from government website:

The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

anybody's guess as to whether or not it will be extended beyond this.

I understand the credit is not just for first time buyers and will work for anyone who meets the criterias. The credit is suppose to end April 30.

Assuming a $125,000 single person salary, 5% rate, 20% down ($160,000), $3500 in annual real estate taxes and $481 annual homeowner insurance, a purchaser, having no other significant monthly debt, on an "aggressive" calculation would be able to afford 738,544.13. This does not take into account condo/coop fees. While not a perfect calculator see here http://cgi.money.cnn.com/tools/houseafford/houseafford.html.

I would think that amassing $160K on a $125K salary (despite the comments that parents "routinely" provide downpayments) is difficult and, therefore, find it hard to believe that the top-end of the credit is being serviced in NYC.

"Assuming a $125,000 single person salary, 5% rate, 20% down ($160,000), $3500 in annual real estate taxes and $481 annual homeowner insurance, a purchaser, having no other significant monthly debt, on an "aggressive" calculation would be able to afford 738,544.13. "

You MUST be joking.

At that point, the monthly payment would be $3300/month would be spending more than 50% in mortgage payments alone.

That is insane, and hardly fits any model of "affordability".

I agree it's crazy, but it's what the calculator spits out. Even at their "conservative" estimate seems ridiculous.