Getting Cold Feet

Interested on other's thoughts on direction over the next few years. I am not planning on selling for a number of years, but my income like everyone's could be greatly diminished if things go really downhill.

And what does Greece have to do with the value of Manahttan RE?

If the global stock markets tank (which they are doing right now), that effect wall street salaries and overall confidence. Also, increased regulation could have a big impact. I am not oppossed to regulation, but I am concerned about what that will do to wall street salaries and the demand for real estate.

You could have also said what does a US real estate meltdown have to do with the global stock market, but everything is intertwined these days.

if you could renew your rental without headaches, then wait. the key imho is financial regulation when it comes to nyc, unless you feel like the case against GS is just window dressing and nothing substantial will change.

Do you plan to live in it for at least 7-10 years?
Although none of us has a crystal ball, is your employment secure?

You have already answered the other important questions.

I got out of the game for 3 years both professionally and personally, but I am back and would purchase today when and if I find the right place. I would not base my decision on one event that may/may not have a direct effect on my purchase. I am also prepared to ride out short term market fluctuations. But I am very conscious of price and the fact that many sellers glass of koolaid is still half full (:

Keith Burkhardt
(Broker)

I agree with Keith generally.

I think we're generally on an upward trend economically, both nationally and in terms of Manhattan RE, but it does not mean that we're not going to experience some dips here and there. I don't think there's going to be a "big second dip" but I think global shocks like the Greece/Portugal situation will cause some short term dips in this country and could have some ultimate impact on our local RE, but probably not too much. Regarding what's going on in DC -- it probably will change some things but I wouldn't expect it to have much long term impact on local RE. Maybe in the short run on the very high end but even that I doubt.

Most of the economic news the past couple of months has been pretty good. The stock market may not look too swell for a little bit but lets see how things look after Friday's GDP numbers come out and next week's unemployment numbers.

"And what does Greece have to do with the value of Manahttan RE?"

Sounds like the ones that said, 'And what do ABX's have to do with Manhattan real estate' in 2007.

Okay, a bit different. But by now people should know these things are connected and sov debt worries and global markets are intertwined

Thanks for your feedback. I think I am going to go ahead. I am just going to curb oter spending substantially and try to rebuild my savings and pay down a good chunk of the mortgage. I know all the arguments for keeping "good debt" if you can make more on the other side. However, I would just feel better with a smaller monthly nut sooner rather than later.

i believe now is a great time to find pockets of bargains in manhattan...and mortgage rates are still low.....last summer was more ideal......imm moving forward at this point and will buy....but its a personal decision...and yes....the economy can tank again...thats why its key to find a 'bargain' if you can in todays market and a place you like

Ok, no sooner had I signed the contract and sent in the check and the markets start melting down. I am in the financial management industry and this makes me very nervous. I do not believe that the ERB has has the same ability to act like the FED/US govt. As much as we are a dysfunctional governement, it is one governement as oppossed to navigating around many dysfunctional governement. My lawyer is holding the contract and I have to decide tomorrow. Uggh.

If your lack of "peace of mind" is going to keep you from enjoying your new purchase because you are constantly worried, then what have you gained? Go with your gut feelings...that is why you have them in the first place.

nycbuyer1, you need to make sure that you look at the whole picture and be comfortable with it. for me, the 10 yr note dropping .4 means that the interest rate on the mortgage will be lower. the euro crisis will play out, but do you really think that RE is going drop off the cliff? are you going to stay in this place for a long time? how much would it cost to rent a similar unit in the immediate area?

by answering those few questions, you should be able to have your decision clear.

The problem is that although you know the price of what you are buying, you have no idea of the value. Hence, you're freaking put. If there were no price on any apartment in all of Manhattan, could you tell me at what price you'd be willing to buy?

If you ask me, if you're buying in this market a non-distressed property (which is no doubt the case in the West Village), you are paying on the order of 30% more than the "proper" price. I think things will eventually revert to "proper" pricing, and it's doubtful you'll avoid that eventuality given the fact that you need to hold the asset for a decade because of transaction costs. Given that horizon, the pain of that 30% loss will be acceptable: on a $1M place, you'll pay $30K extra a year compared to renting. The outcome has little dependence on what happens in the next couple of months.

You should be buying the place thinking "yeah, I'm over-paying, but it's worth it to me" or "worst-case, I'll be able to carry this place by renting it out worst-case". The problem with the latter is that it's not the case, an only you can decide whether the former is acceptable to you.

In short, you seem to look at this activity as speculation. Word o advice: save the speculation for assets other than those that are highly leveraged, illiquid, with high transaction costs, and by all fundamental accounts overpriced and still in bubble-territory pricing.

nycbuyer, I had a similar situation around the time of the Bear Stearns bankruptcy. I was all ready to buy and had a contract ready to go. I started to get concerned about the financial industry and the impact on nyc real estate values and to hold off (a decision that, in retrospect I'm of course pleased with, but it could have turned out to be a bad move if real estate kept appreciating and larger financial problems never materialized).

The idea that you should just ignore external events unless they're "directly related" to your job strikes me as unpersuasive. If you have good reason to think the value of your purchase could drop significantly, that seems like a consideration that counts in favor of holding off (which, of course, might be outweighed by other considerations, but I don't understand why one would ignore the macro economic environment in making an important financial decision). Especially if the risks are going to make you feel uncomfortable once you've bought the apartment.

Of course, there's no way to know yet (i) exactly what impact financial regulation will have, (ii) how bad things are going to get in Europe or (iii) what impact Europe will have on US economic growth. But, it seems like you have justified concerns that there are significant risks that things are going to get worse (I agree that the risks are significant, btw, and think those risks far outweigh the risk of missing out on price appreciation in the intermediate term.) So, I guess the question is whether whatever benefits you perceive yourself to be getting out of buying a place (psychological, financial, etc.) are worth taking on these risks.

Just to be clear, I think you can prudently afford this place. By that, I mean you can afford to take the relative financial hit of 30% compared to renting over the next 10 years, and you have plenty in terms of margin for safety.

nycbuyer1, if Greece is your only concern, I would say, go for it. However, what do you think about the rest of the PIIGS? I think current domestic issues have greater negative impact, but clearly you don't believe that's as a big of a concern since you made the decision to buy now already. Foreign problems will only make domestic problems worse or slow the recovery.

We won a bid on a apartment this week, a very affordable apt we are purchasing for an elderly parent. My husband and I have talked about losing up to 50% of the value of the apt, and we are still moving forward with it. We are uberbears and are 100% accepting of losing money on this, but first and foremost this is a home and we have a limited window of opportunity to move in the parent and qualify for the second home. This is what I would say - if you are okay with losing money on it, go forward with it. If you will stay up nights worrying about the loss - don't do it. No one can predict the future or your income situation but owning real estate should not cause you stress anymore then buying a new car should. Use it, enjoy it, don't worry about it.

inkblue: totally different scenario if you're buying for a parent. It's not just dollars & cents but also the issue of moving an elderly person.

I'm going to channel W67:
You've been handed a reprieve for doing the dumb and drinking the lemming juice. Rip up that contract, baby.

AR:
Times are uncertain, with the high probability of the euro disappearing and growing defaults of sov. bonds. If you have a chance to back out, do so.

Me:
Eh, life can be short. If this is your dream apt and you can afford it going forward, not lose sleep over -75% value, do it. Otherwise, abort.

It must be nice to not have to care/worry about losing 50%.

"By that, I mean you can afford to take the relative financial hit of 30% compared to renting over the next 10 years"

Didn't you already prove this not to be true?

Huh? I don't understand what you're saying, JM.

Sunday: you just need to find yourself a socialist motherland :)

As far as housing an elderly parent, your window of time shortens. If they/you are lucky, they will live the rest of their lives in their own home, rather than a nursing home. People are generally happier once they are older to be established in one place and not have to move around. The other nice thing about moving them to a new place once is that you have a chance to throw out all the extraneous stuff and not have to do it under more depressing circumstances.

There are many variations of this joke, but I think the message might apply here.

http://y2u.co.uk/Jokes_Funny/Clean_Joke_0045_God_Flood.htm

Anyone like to come up with God's reply to the recent home buyers, when they blame him for the bad luck despite working so for their down payment?

nycbuyer1, I think you're in great financial shape to buy this apartment. Do you love it as a place to live, long-term?

It seems like the issues you have with buying will not be solved until you can pay cash or have equivalent reserves. I don't think (and it's just an opinion) that you're going to be ready to pull the trigger in two years if you're not ready now, as it will probably still be a choppy ride. Would you be significantly more comfortable renting for 10-15 years while building up enough savings to pay cash? If you cancel this purchase for the reasons you mention, I think you should give serious weight to that.

Well done 10023. Yep agree aboutready. Sucks to get 'old' old. Dealing with it now, how many times can you lose a set of keys? Uggggggggggggg.

Back to op, NYC re mkt ain't going anywhere, but Greece might be shipped off and floated into Aegean. Take 30% dp, over pay for nice rental, lock in 1 yr with 2 1 year option sleep easy... And see where bank regs, euro and dble dipping us economy takes us. Dollar strong our export craps, 99 wk fed unemployment bennies stops....

Don't worry, it's calling off a wedding. One day of embarrassment versus years of suffering

I've said it from day 1. You can't go wrong by backpacking thru Europe for 2 yrs or sailing to tahiti for 2 yrs? Financially you ain't missing nothing.

nycbuyer1:

1. buyer's anxiety is commom. The 1st seven apartments I bought, all of which were bought from Coop sponsors with 3-7 day statuttory rights of rescissions, I woke up in the middle of the migth terrified
that I had made a mistake and/pv overpaid. And on of them was a 300 ft elevator studio on west 83td 1/2
block in from Central Park bought in 1985 for $36,000 with a $136 maintenance.

2/ the employment market in the US is horrid: April Labor Dept reports 20% topline unemoployment rate
among 18-25 year olds, suggesting a U-6 unemployed and involuntarily emploued P/T of around 34-35%.
Other reports indicate only 1/6th of "youngewr Americans are able to live comfortable off their earn=
onmgs; that 20% of males 25-54 are unemployed; and that 80% of 1200 unemployed people surveyed by
Rutgers Unov. last August and again in March remained unemployed, with 13% of the toal sample employed
at new full-time jobs, only 10% of which paid as much as theor former jobs.

3.inter-bank liquidity and propensity to lend is back at early 2009 levelsm and the commercial papers
and repo markets are again beginning to seize up.

4. so I am extremely concenred that we are jeaded towards a total breakdown of the economy worse than
the 1930's

sory abbout th tiepoes

If you are young...i would suggest waiting...if you are older and have the $$.....and dont want to wait 2 to 5 more yrs to buy a place since you want to start enjoying your life before its over...then go for it.....im near 50 and have been in a rent stabilized apt for years...thats why i never purchased...i just purchased 2 weeks ago ...why...it was a good deal...in a location i liked.....(only negative was higher than average mtce...which does concern me).....and more importantly....i could have potentially spent the next 10 yrs waiting for that perfect price(plus i have elderly parents that now can visit and stay with me since its a more comfortable apt...that was also a main concern)...by that time i would be 60 and potentially out of a job and then not able to buy(abd climbing a ladder in my rs place to get to bed LOL).....so as scary as it is for some people to purchase(including me)...i thought it was now or never for me.....BUT again..everyone is in a differant situation......and if you are younger...i would suggest waiting...

Worry about Greek debt as a reason not to buy is like worrying back in 01 about the World Trade Center. It's pointless and non-productive. Besides worry is just interest on a debt that never comes due--Mamet

Most of the minimal growth in the US economy in the last year has come from exports, tourism, layoffs
and the wealth effect of the rising stock market. The collapse of Europe and the Euro will reduce US
exports in the near term, as will the rising dollar and relatively higher cost of oil, and any cutbacks
in capital investment by China.

Add to that the deterrent effect which debt worries and interest rate/currency volatility have on
investment and expansion, a renewed contraction in credit availability, and the reality that prudence
dictates that most consumers and business freeze or cut-back on planned growth, and at least in the
short-term things dont look good for the US economy or job growth,

And dont leave out Britain ... with a 13% of GDP deficit, uncontrolled ObamaCare health costs, and a
government that nows spends over 50% of GDP and is at best extremely reluctante to elminate or reduce
entitlements,and involvent US states like Illinois, which stopped payingts its bills months ago and
has a budget deficiet equal to 50% of tax revenue, and you cant but be concerned.

The debt problems of Europe are again threatening a collapse of the European and Americam banking
systems, because many banks jeep part or most of their regulatory capital in sovereign debt. which will
lost a tremendous % of its nominal value in the event of a sovereign default.

We have in fact already experienced that effwct in the US on a widespread basis. Many smaller since
closed US banks had between 50 and 200% of their regulatory capital in Fannie Mae and Freddie Mac pre-ferred stock which became worthless when the US Government seized those sinkholes.

Other than customizing, what is the attraction of buying? If you could "buy" a good monthly payment relative to rent, then that would be tempting...but you can't.

'And what does Greece have to do with the value of Manahttan RE?'
Well Mr. President...
We are talking about the West Village and I would say that choice of lubrication is more than a little relavent. Although grease was once the lubricant of choice, new technologies have created a large number of safer and healthy alternatives.
Gee prez...Thow protests too much...was that you trying to tap my foot?

where've you been rhino?

aqualube.... the next greece of choice...

nycbuyer1- also to consider - if you didn't buy, would you rent? By buying, you are investing in your home and will dip into the principle you have. If you had to pay $2,000/month (at least) to rent, there would be no tax break and no investment. Mortgage rates are low. I have been looking in Brooklyn & it seems like the prices are slowly starting to go up.

I'm trying to cut back. Its not good for my blood pressure...although every checkup the doc just says wow. W67 how long is all this going to take? Are we going to get something like 1992 in the next 10 years... Lately I am thinking we're just going to get 10 years of gradual rent inflation and mortgage rate increases with stagnant purchase pricing... that slowly develops into a buying opportunity that never wows like 1992-1994...but is conscionable like 1998.

Thanks everyone for your feeback.

I am not so much worried about short term price fluctuations or making a lot of money on the apartment. I plan to stay for a long time (at least 10 years), unless something really unexpected happens. My concern is the economy going to shit, NY budgets blowing up even more and causing the quality of life to decline siginicantly, my business declining due to above mentioned issues and then having a cashflow problem. Two years of liquid non-retirement savings seems like a lot until you have to start dipping into it.

On the buying side, I am getting hammered with taxes. I have tried to run a rent versus buy scenario. However, the apartment I am renting is smaller - 1 BR with loft with 2 bath at the archive. The apartment I am buying is a two bedroom. I suppose I could look at comps for a 2 br. On an after tax basis, I end up paying about $1,000 more per month which seems like a fair amount for a place that is 500 square feet bigger and has outdoor space.

I guess it boils down to having to part with such a big chunk of cash that I have worked hard and sacrificed to save for years.

You are sadly looking at a rare point in time that your 10 year appreciation outlook isnt worth the transaction costs and the near term downside.

That sucks. You don't suck. The fact that you are probably right just sucks. Ok, I will have to think about staying put longer.

I would also seriously consider the possibility that mortgage interest deductions get phased out over the next 5-10 years for high earners and/or big mortgages.

Before the whole bubble, you didn't have to wait terribly long for say a 15x annual rent buying opportunity that would allow one to respect oneself, mathematically speaking. This could be like the stock market of the late 1960s....it took till the early 80s to make new highs.

Good they should phase them out....as well as stop holding interest rate does. All that shit does is enhance the value for owners. We need market interest rates. What good does it do for us to distort asset values.

Thank you for all of your comments, I have similar situation: 29 king street, http://streeteasy.com/nyc/sale/516857-condo-29-king-street-soho-new-york.

They are putting so much pressure on me to sign the contract before I finish the due diligence including an architect and an engineer. The brokers say there are 10 people interested in the space. They have allowed me twice into the space, and they need me to sign contract. What do I do? i am getting concerned about the entire situation. Can you tell me. is this a good investment over 5 - 10 years? it needs a lot of work to make it sellable in the long run. I will put both bedrooms upstairs, but still need to find out if it is all legal. The red line subway line passes by it. There is no doorman, sort of a hippie building with a roof that you need to climb up a floor of stairs and the roof is not child proof. I have a 3 year old boy and an independent mother. Can you please help me make my decision either way?

Sandrita: why are you buying now? How much is it going to cost/month vs. what you have now and what you can rent? Work always costs more than what you think, esp. if you have no experience in the area. I would run like the wind.

And your boy will be 5 pretty soon. While 29 King is zoned for 3/41, it is close to the border of the zone. If you are going to invest $ in a good school zone, please don't buy close to the edges of the zone.

Also, how are both bedrooms going to fit in that space upstairs? Floorplan doesn't seem to show enough space for 2 bedrooms.

It is a strange situation that I am in, it is a 'complete family investment" and we are forming an llc. I do not have that kind of money at all. Hence, we will be buying all cash. That is what I mean, I have NOT given enough time to go to inspect the space or given real floor plans for the space. my son is 3.5, so excellent public school is a priority and then light.

what do you think about this price, building, neighborhood, investment + the fact that there is NO doorman. Also the common roof is funky and not child proof?

i really need your expert advise on this unit versus other ones in the market such as 178 Franklin, 456 West 19th street, 89 Waverly place (there are 2 units for sale) or anything else you might know in the market.

I have been doing research myself and finally i decide to work with a broker and I feel as abandoned as ever, hence I have all of this questions.

I rent at 299 west 12th street, a studio, we have out-growned the studio, although we love the hood + the building.

also, given my work, I need to travel often, sometimes for weeks at the time or 3 months. Obviously this will change once my son goes to school next year. But I would like to rent it during those weeks or months that we will NOT be in town. Obviously, the economy at the moment does not allow for any flamboyant expenditures.

Like a $1.6M apartment?

Rhino, it'll take awhile. But it'll happen one way or another. Keep an eye on blood pressure and be around long enough to tell the lemmings 'i told you so'.

Yeah kicking it back like 5th grade style!

My wife wants to paint the rental. I should probably put on your squatting belt and start moving the bookcases. Its annoying to have only have accumulated enough money to buy as of 2006 and to likely logicially be stuck as a renter until 2016. Best I see out there for what I rent is trading at 17x annual rent or more.

Sandrita, it is far better to do nothing than to do something you do not understand. Proceed (or not) at a pace that allows you to feel comfortable. If lose the apartment over it, so be it. It's better than the alternative.

nycbuyer1, what did you end up doing? Did the stock market soar just as you canceled your contract? Or did it give you enough confidence to go through with it?

The stock market soaring is a temporary reprieve before another downward plunge. We're seeing all the signs of another real estate slump. If you're looking to stay put for 10-15 years then it shouldn't be an issue to you but for short term, I think the writing is on the wall.

10-15 yr timeframes are imaginary.

I'm thinking more like 2 to 3 more years. Once the bottom falls out of 1bdrm mkt, 3 bdrm mkt is gonna take a spanking. Trust me chill, I expect you to hold strong to the bitter end.

Tip a guinnness to you rhino.

I'll play w67. Give the wifey a paint job. Go all-organic, zero-VOC paint. Lose the war, win the battle.

The_President
12 days ago
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And what does Greece have to do with the value of Manahttan RE?

The President sounds like our very own Obama.

Cold feet are a delicacy

Sandrita DO NOT BUY THIS
makes no sense, dubious about the possibilities and not cheap either.

>>Trust me chill, I expect you to hold strong to the bitter end.

I found myself driving past open houses... that weren't on the way home.

29 King Street 2I - same line as 3I- and! better views SOLD FOR $960.000 3 weeks ago.
DO NOT PAY 1.5 asking price and war price broker is doing.

Take a look:

Sellers
Freer, Bridget
29 King Street
Apt. 3-I
New York NY 10014

Needham, Edward M
29 King Street
Apt. 3-I
New York NY 10014

Buyers
Goldstone, Jonathan Francis
C/O Sam Eber
29 King Street, Unit 3I
New York NY 10014

Seino, Ari
C/O Sam Eber
29 King Street, Unit 3I
New York NY 10014

Property Type
Condo
Size
988 ft²
Price per ft²
$1,367

Now they call it 1,200 while the lofted area was there when purchased by the seller now.