Who is Buying?

cc, how many people over 25 do you know that have had to leave their apartment due to sickness?

Job loss can certainly hurt, but anyone with a decent sense of financial planning has savings for a year+.

Unexpected pregnancy is a good one. I'd love to see the percentages of moves that were effected by a baby surprise.

Great out-of-town job offers? Like I said, if you really don't intend on staying here longterm, buying shouldn't really be on the table. There are enough jobs here that even if you're career-first, you should be able to find something at least comparable. Otherwise, yes, definitely rent.

To be clear, I'm not saying there's absolutely no value in any of this - I just think the whole "flexibility" thing is overstated.

"and if the market tanks, which it mat well a renter has the flexibilty to buy at much lower prices, instead of biting on a property for which they overpaid"

Btw, bottoms, this is in no way inherent flexibility in renting. It's arguably value in renting RIGHT NOW, but what you're arguing for is market timing, not inherent advantages to renting, especially if your real ambition is ultimately to buy.

matson, interest rates--you mean like now? where rates are half what they were at the peak in 07, yet one can buy now in ny at prices 25 or 30% below peak, and as much as 60% below peak in some parts of the country?

check rates market today--they are collapsing--malthus' chickens are coming home to roost as i write--you will see continually lower rates--and a likely hard second dip in real estate prices

now, cheaper, renting makes sense----i bot and sold numerous ny properties, rented only 2002 & 2003, from 1989-2007---love to own when sensible

>cc, how many people under 25 do you know that have had to leave their apartment due to sickness, divorce, job loss or unexpected pregnancy?

I think you forget you are talking to the man of extreme misery, sadness, and all things negative. I have no doubt columbiacounty knows these people.

>cc, how many people under 25 do you know that have had to leave their apartment due to a great job offer from out of town?

Well, you got him there, columbiacounty knows no one who had this good fortune.

and i will be a cash buyer anyway

when we cease emulating the japanese, who never have emerged from the low interest rate environment they have had since 1990!! scary

Wbuttocks!

"check rates market today--they are collapsing--malthus' chickens are coming home to roost as i write--you will see continually lower rates--and a likely hard second dip in real estate prices"

Wow, quite a prediction. You're the only person I've seen on here who is predicting even LOWER rates and a significant second leg down. Most are predicting the latter but with increased rates. What are you projecting here? 3%? 2%? Lower? Please share.

"i bot and sold numerous ny properties"

You're a bot? This explains so much actually...

"love to own when sensible"

So all that "huge value in flexibility" you were just advocating for kind of goes out the window if you find an attractive purchase price then, huh?

bj--youre such a dope--long and leveraged, trading up from 1990-2007, had huge, superior value to the flexibility of renting, all values in renting--now, very different story--you just can't see shlt through your cheery glasses

seems you have very little cash or you would be quite aware that current interest rates are already scary low--today--nothing to predict--we are here--malthus' chickens are roosting

yr bill 14 bps; 2 yr tnote 33 bps; 5 yr tnote 1.43%; 10 yr note 2.86

welcome to japan, fool---this will not end well, esp for ny, where we depend on capital markets

Wtushy is a cash buyer! Yeah Wtushy!

Again, you're arguing for market timing. Not inherent values in the flexibility of renting. Stop being a ninny.

"seems you have very little cash or you would be quite aware that current interest rates are already scary low--today--nothing to predict--we are here"

Garsh, more of your hilariously transparent and desperate schadenfreude. I'm more than comfortable and have more than enough liquidity to last me quite a while should "something" happen, as you so eloquently put it. Aside from that, I refinanced early this year when rates were where they are now.

But you said "collapsing" and we will see "continually lower rates." Lower means lower, no? So either you're completely backtracking or you're talking out of your wbottom. But this is what happens when you type without thinking (as is your wont).

Wbottom: Fair enough. But remove the all cash buyers like yourself from the equation I was speaking of (most people aren't all cash, so for sake of argument, let's say it 25% - 40% down with the rest financed).

So you think mortgage rates are going lower? The price of real estate, yeah, I get that, but mortgage rates too? This I don't grasp.

Mytwocents: "I had enough cash to purchase all in cash but financed for tax reasons."

So what did you do with all that cash?

matsonjones, you have asked the "$750/sf and 4.75%" vs. "$500/sf and 9%" question a couple of times now. Have you actually done the math on that? I have, and unless my math is wrong, "$500/sf and 9%" wins.

Sunday - would love to see your math (not being sarcastic - seriously).... would you share?

Hope this line up ok when posted:

Home Price 1,000,000 666,666
25% down 250,000 166,666
Financed 750,000 500,000
Monthly Payment 3,912 4,023
Total Payment 1,408,446 1,448,317
Total Interest Paid 658,446 948,318

----------------------------------------------------------------------
25% down 250,000 166,666
Financed 750,000 500,000
Total Interest Paid (net of 30% refund) 460,912 663,823
10% transaction cost 100,000 66,667
Interest from 83K downpayment difference (3%) -43,000
----------------------------------------------------------------------
Total Cost 1,560,912 1,354,155

Difference 206,757
Interest Savings if refinance to 7% after 10 years 133,526
Interest Savings (net of 30% refund) 93,468

Total Difference: 206,757 plus 93,468 = 300,225

i dozed off. did you guys figure out who's buying? rich people and slackers backed by family dough? also, people who apparently don't realize that you can paint a rental. that tells us something, right?

Here is a simplified buy vs rent for you bears based on real purchase. Numbers adjusted proportionately. Real 2000 s

Sorry started a new thread.

Deep rooted cultural bias equates home ownership with stability and sucess. Recent history of our parents and our grandparents demonstrate home ownership as a mindless hedge for old age. what ever you put in you'll take out 10 fold. For most is not about cool critical thinking. It's wish fullfilment. It's demonstration of value and self worth.
Not for the hard asses on this board who live in the portion of the atmosphere well above petty human needs and emotions.
The fartasphere

Exactly. Then you have idiot boomer parents pushing home ownership on their kids at precisely the wrong time... this after the basically stole our appreciation from us.

Sunday: mostly tax-exempt bonds. It's one of the few tax games left. You can earn tax-exempt interest while at the same time paying tax-deductible interest on a mortgage. Assuming the issuers don't default, it's pure tax arbitrage. The rest is in a mix of equities and commodities.

For those that (apparently) thought my initial post was off-topic, I think I answered the question of who is buying. I'm not going to post my personal details, but I'm 28-32 and had no assistance from my parents or anybody else.

mytwocents you said you would rent out your apt when you dont want to live in it anymore - but if its a coop how will you rent it out?

mytwocents: "At a 48% marginal tax rate and with interest rates so low, it seemed like a better decision to buy than rent. Worst case scenario, I rent the place after I move out, get some tax-free rent, and sell at the depreciated value (essentially ensuring that I don't have a loss)."

Nobody has a marginal tax rate of 48%. Absolutely nobody. You do not add 35% federal plus 13% state & city. Rather, it's 13% + (1 - 13%) * 35% = 43% because you deduct the 13% state & local taxes you paid. Even then, that only kicks in for incomes above $1M. Below that, it's controlled by AMT at a total of 41%: 28% federal plus 13% state, with no deduction of the 13% per AMT rules.

I'm not following your worst-case strategy here, putting the coop issue aside. Let's say your place is $2.75M to make the math easy. You'll get to depreciate $100K a year, let's say (in reality you have to take out the land, but let's ignore). Your plan is to rent it out for $10K a month, say, with expenses of $3K. So you net $84K tax-free because of depreciation. Then after 4 years when you sell for no loss on a depreciated basis at $2.35M, you'll still be good.

There are a few problems there. First, you still have a big loss. You've netted $336K tax-free from rent, but you've lost $400K on the sale. Plus $250K in transaction costs. Essentially, you will have let someone borrow your $2.75M for free for 4 years (worth on the order of $300K in the bond market for the period you're talking about) while also being handed a loss of $314K. So you'd be out 10-25% of your money total, depending on whether you want to consider the cost of capital. Is this what you had in mind with "worst-case", or were you thinking you'd break even?

FWIW, I could see how someone can look at that magnitude of loss worst-case and say it ain't so bad; I'm just wondering if you'd seen it that way.

if you cant rent the coop for more than 2 yrs then whats the point of this math exercise? are the coop sublet rules flexible (or do nyers get around them) - i am looking at buying a property to live in and then to rent out in manhattan and i thought only condos can work - should i also be looking at coops?

Itsik- the coop rules allow for unlimited sublets after two years.

Inonada- You are forgetting to factor in the AMT exemption phase-out. I pay AMT and I'm in the phase-out zone, so my federal marginal rate is 35%. My (non-deductible) state and city marginal tax was something like 11.7% (I don't care to check at the moment). I sort of cheated on the last 1 % because that's FICA that I'm not avoiding it by the interest write off.

My place cost slightly less than a million, so the worst-case scenario you outlined isn't as bad as your example. However, in response to the point you were making, yes- my realistic worst case scenario involves me losing money on the property, but not enough that I would expect my net worth to decrease during the time that I owned the property.

Ah yes, the dreaded AMT dead zone. Gotta love our idiotic tax structures that have you paying 7% higher marginal rates than those make more than you. Not quite as bad as the $50K dead zone where marginal state rates shoot up from 8% to over 20% before settling back down at 9%.

Thanks for explaining your view on worst-case further.

Everyone is discussing about the Manhattan RE market tanking. How is it currently? Do you feel that prices are softer? So what is the final decision, buy now or wait?

Itsik- the coop rules allow for unlimited sublets after two years.

What do you mean? COOPs only allow for two year sublets for every five/ten years correct?
What if I am faced with a cash flow problem that wont be resolved in two years time, can I sublet the apt without their approval?

gay divorce attorneys

A co-op that allows unlimited subletting is a "co-op with condo rules".

In a co-op with a more standard policy, if you have to retrench for more than two years, then you need to sell. No sense keeping a place you can no longer handle.

This is supposed to be the most dynamic city in the world. Living in the place I'm supposed to die in just doesn't gel with that for me...

Don't get me wrong, I like the idea of buying in many ways. I was convinced it in of itself was a goal growing up.

But I look back on the last 10 years, and I'm glad I had the flexibility I had, and I ended up in a better place for it.

sure, its not for everybody, but options - even out of money ones - have value...

"Living in the place I'm supposed to die in just doesn't gel with that for me..."

this may be the most insightful i've read here. wonder if this is the real reason i keep not pulling the trigger for the last 6 years. i don't think i WANT my forever home. hhmmmm.

ok, it may the like the underlying subconscious reason, but we haven't bought because it's always been cheaper for us to rent the space we liked.

"Deep rooted cultural bias equates home ownership with stability and sucess. Recent history of our parents and our grandparents"

but if it's just as recent as parents and grandparents, than it isn't really a deep rooted, but just a really well advertised cultural bias, right? the American Dream (tm) used to just mean social mobility, didn't it? at some point "they" changed it to include a whole list of other stuff, specific material criteria that defined living the American Dream (tm). didn't most co-ops only convert from rentals in the last 30 years or so?

> The supply of wealthy boomers to subsidize their kids is running out with each apartment closing.

indeed, bet most of them already jumped wiht the wrong timing, during the bubble, as a failed investment opportunity

"this may be the most insightful i've read here. wonder if this is the real reason i keep not pulling the trigger for the last 6 years. i don't think i WANT my forever home. hhmmmm."

why thanks.

Forever’s really not that long. When they digitize your brain and send it to the cloud you won’t need much of an apt.

Isn’t it really a pain threshold thing? A lot of the posters to this thread are so concerned about trying to determine exactly how much they will save buy not buying. I’d say to them that they will never buy. When they find that apt for $500/sq, they’ll find another excuse not to buy, (if it’s now $500, and I’m freaking out so I’ll wait for $300).

"A lot of the posters to this thread are so concerned about trying to determine exactly how much they will save buy not buying."

but they WILL save by not buying and instead renting a similar space. i've got the wanderlust and married someone equally lacking in attention span for their surroundings, but that doesn't mean all the times we haven't bought weren't smart decisions. they were, and when i think how close we came a few times and ultimately how those particular purchases would have proved problematic it makes me thank god i like to hang around chatty old people who love to share their accumulated wisdom with anyone willing to listen. but us being gypsies doesn't change the fact that buying is still too expensive and will only become cheaper. says this often tipsy housewife/unemployed artsy fartsy person, who is in no way qualified to advise on such matters.

Ok so one of the three threats has been put aside (at least until September when Greece will have to vote on more cuts after not meeting funding prereqs). Now on to the debt ceiling...

Seems I jumped the gun ... the devil was in the details. And still no closer to a debt deal here.

Malthus: much depends on one's specific life situation. Some like to cast it as naggy-wife-nesting-syndrome. Call it what you will, it's nice not to have to move for X years (until the eldest goes off to college). I didn't find that the rental market offered me what I was looking for, so I locked in something that will be fine pre-empyting-nest. It cost me (yes, insert your favorite argument about all the things I could invest in instead of dumping $ down the drain) but as a consumable, I like it, it's fine. I don't see it as a forever home because we're going to scale down as soon as the kids start leaving the nest. Or maybe make a drastic move. If you're already in the empty-nest-or-no-nest-or-still-finding-where-you-want-to-be phase, then not sure it makes sense in this market to buy.

And now?