have the renters finally stopped saying that the market is sure to go down?

You're just trying to start another argument thread... why don't you shut the hell up and this subject die.

Surely you know what happens once the last doubters are silent. It's the new new new economy ;)

The bottom line is that with the dollar being as weak as it is, and continued historical weakness, combined with record oil prices, foreigners from Europe and Russia will continue to buy cheap NYC real-estate. Add back in that the US market is on fire, mergers and lbo's galore, the bonus pool will skyrocket once again. Now add inventory depleation and low interest rates to the mix.

Any questions?

Yeah - I have a question, CDRVF.
Who appointed you as the expert or asked for your opinion?

Stop

Take away anonymity and the idiot still lurk around like as ass.

A friend lives in the West Village has a one bedroom and last year said he could have sold it for $750k now he's being told to list at $675...of course he paid $130k so he's not complaining but prices are coming down.

Julia, how did your friend 'know' that he could have sold it for $750k - did he put it on the market or speak with an agent back then?

He might be right, just that as someone who had been looking during the past year, I found that many sellers had unusually high expectations for the values of their apts, expecting to get 20% over the previous year.

I recently bought a place and comps in my building/neighborhood have gone up.

The foreign money is keeping the prices up right now since compared to London, Paris and just about anywhere else in Europe/Asia - New York is a STEAL. My prediction is that the only thing that will sink this market is the next terrorist hit. Which if you believe today's headlines - is not far off. Sooner or later we are going to have some "exploding backpacks" or suicide bombers walking into NY restaurants. THAT will affect the market. We live in a sad world!

Though after the last terrorist hit in 2001... prices have run up "against the odds" and tremendously.

Yes I agree, but the WTC tragedy was viewed as an isolated event and time seemed to heal the market disruption. Suicide bombers/bombs could strike at any time and continuously - this might have people running for the burbs. Especially those with families.

I agree the part of could of sold it for 750 is a fantasy. What guarantee? did the seller have that he could of sold it for 750. A phantom buyer or just unrealistic expectations. If anything the west village has gone up very significantly compared to last years prices.

2babes, are you suggesting the current "threat" of suicide bombers > planes hitting an NYC landmark? And that people are running to the burbs due to this "threat"?

Funny thing about the WTC attacks - lots of people left NYC only to be replaced by new people. So I predict that - all else being equal (strong economy, safe streets) another terror attack would create a brief dip in the local RE market at most.

The WTC attacks ghoulishly revived the NYC real estate market. It shone a light on the progress the City made since the 80s (this is America's big city), that coupled with the market dip post 9/11 and the endless array of t.v. shows depicting the coolness of living here and the introduction of the euro and subsequent fall of the dollar and record Street profits has led us here.

If the US dollar gains any ground against foreign currencies, that will cool off the foregin investors real quick. Is that going to happen anytime soon? I don't know, I am not an economist.

Don't see the dollar moving positively against any major foreign currencies anytime soon. Hell, we're almost even with the CAD. I add that there has been foreign investment in this town since the dawn of man. I truly feel that this current upswing is driven more domestically than by foreign buyers. Perhaps on the high end foreign investment takes hold. Real test will be when the next mayor takes office. We get an anti business tax&spend democrat guy in here (a la Dinkins) and it will hurt the local r.e. market. Another true test will be if the novices can stomach the next down turn or whether they'll bail. We shall see.

Things that may or may not happen that will trigger a price decline:

1. Continued/accelerated decline of USD, leading to hyperinflation. Prices may not go down, but they won't keep up.
2. USD going up following actions by central banks, bye bye foreign investors.
3. Significant terror attacks.
4. Oversupply of new inventory. (Look up! It's a bird, no it's a plane, no it's an unsold condo)
5. A really bad year on wall street.
6. Mortgage rates climbing, financing requirements tightening.
7. Bankruptcy and foreclosure rates going up because of loose financing over past 5 years.

Of course, things can happen that'll trigger price increases, it's just harder to imagine them in an environment where rents are often less than a third of mortgage payment on an interest only loan.

We'll see.

zizizi. rents are often less than a third of mortgage payment on an interest only loan? where? a luxury one bedroom rents for about $3500. that same luxury apt sells for around 1 million (maybe less). 20% down and you got yourself an 800k mortgage. at todays interest rates that equates to about $5200 in mortgage payments per month (on a 30 year fixed. not interest. its less on an interest loan). maintenance and taxes on new constructions are around $700 a month (i know, i looked). add insurance. you're looking at around 6k per month. take into consideration the tax benefit. BINGO!!!

Not to mention the crazy 10% a year rental increases...

#20:

20% down = $200k that you're not investing. That's another $20k/year. Add that to the equation and you're already at 237% of rent. If you intend to sell in 15 years, you have to also amortize closing/brokerage costs and I believe you'll get exactly to the 300% level.

Another (simpler) way to look at this - if you pay cash and rent the place out what return are you going to get? not great, is it?

zizzi

you are, however, investing a huge amount of borrowed money, far more than the 200K you are 'saving' and it assumes that you will get a 10% per year return; compared to 1M at 6% the difference is huge, PLUS tha tax advantage, PLUS the fact that you don't need to move, PLUS the psychological security, etc etc.

no brainer.

Yes Julia, studios and 1 bedrooms have softened. Tell everyone something we dont already know, however your comment on who said she said he said is total baloney. Any broker will tell you that you can sell for anything to get a listing and another broker might give you a totally different answer. Half the brokers in this town have no better than a high school education and I would take advice from them about as much as I would take advice from the high school dropout stock broker probably managing your money.

login, assuming you don't intend to default, I can't see the difference between investing borrowed money and investing you own, except for financing costs.

Regarding the psychological "security", you have to be a real basket case to think that sitting on a large chunk of risk is more secure than not sitting on it, particularly when what you're purchasing here is often shares in a debt-laden corporate, not physical property.

But I have a perpetual 4%/year increase cap on my rent, maybe if you're getting hit with those insane market rate hikes for a couple of years you think differently.

zizizi, what 'large chunk of risk' are you referring to - are you saying that investing in RE is more secure than investing in stocks & corproate bonds?

#20--The "luxury" 1 BRs I looked at started at around $3800 and went clear up to $4500. No I'm not a bitter renter. I sold out and am renting for a year in a "not exactly" luxury building.

zizizi
i have a fixed rate loan; no increases other than maintenance

the difference is the amount of money you are in vesting; leveraging 800K of someone elses money makes more than 200K of your own

cdrvf---What do you do for a living?

what many fail to see is that alot of the new condo inventory is being bought in bulk from foreign investors, take a look at the rental inventory in many of the new highrises more half of the units are sub-lets , unless they have about 40% in equity invested they are going to be in a cash negative situation basing this on what they paid and what the rental market can sustain..

foreigners will do well when the dollar appreciates