why it's common sense to not buy a home right now

yes. and incomes are stagnant or going down. As well as savings. underwriting standards are tightening. why buy when housing Prices as a lot further to fall.

house price may not fall in manhattan, but ordinary people need not compete with those rich guys with tons of dirty money

The article ignores the main issue of employement, a lack of income growth, and unusually low inflation. The moment economy picks up a bit, the unemployement will improve and housing market will rebound. The turns happens faster than any one can expect. However, given Euro situaltion, it is hard to see that happening.

That said, we bought recently mainly due to unusually low 5 year arm rates which made it cheaper to buy than rent a similar place.

I understand the rent cost vs. owning cost calculation, 300 mercer. I am temtped to do the same thing myself.

What stops me is the idea that further value declines would eat away my equity. For me, it takes a long time to save the down payment. If value declines and I have to sell, then from the $60k I put in, for instance I will only get $40k back, perhaps. Maybe less.

I don't want to lose $20k like that! Twenty thousand bucks is a lot of money to me. Especially when it's MY money and not the bank's.

Now if the bank were willing to take the $20k hit instead, and wipe that much off the loan balance, why I would go out and buy right away, now that owning costs are sometimes comparable to renting costs, as you say.

But the bank won't do that. They insist on getting every penny back that they put in.

So I have to wonder -- should I be any different? Especially $20k is a lot bigger piece of my asset pool than it is of the bank's. ;-)

"But the bank won't do that. They insist on getting every penny back that they put in"

yes they do, it's called writing off noncollectable debt. even i know that.

Renters and buyers alike are subject to the voltality of the market. The rental market is subject, however, to greater and swifter changes because there will always be a greater proportion of individuals, particularly, in NY, that are young/starting out/without the downpayment and/or fearful of the commitment entailed with home ownership. With this constant demand for rentals, the prices rarely have significant downward movements. Everytime a rental lease ends, an increase is assumed. Imagine years of renting and no ownership at the end. Over a longer time horizon of 5+ years, the rental money that one pays to a landlord, even without an assumed rental increase, will have otherwise gone to one's equity. During that timeframe, the volatility in prices will have likely ended up in an owner's favor. The stability of Manhattan prices exemplify this, even in fringe neighborhoods. Bottom line is when looking to buy, spend within one's means. Review cash savings (as will your bank and board, if a coop), project cash flows...and if you have the downpayment - and then some - and the plan to stay in the city, why would it ever make sense to rent? Don't delude yourself into thinking there is less risk with renting.

"Over a longer time horizon of 5+ years"

Like those that bot in 06 and 07'

>Over a longer time horizon of 5+ years, the rental money that one pays to a landlord, even without an assumed rental increase, will have otherwise gone to one's equity.

Gottabrain, I hate misinformation. Be it from inododo who leads people to believe that renting can be had for a song and with little effort, or you and your crap.

First of all, have you looked at an amortization schedule of a 30 year mortgage? How much equity is accumulated during the first 5 years? I'll give you a hint ... it's not 5/30ths. So that massive interest expense ...

Second, what about the portion of the rent that goes to maintenance and taxes?

Third, didn't we just have a rather fair decline in rental prices? And if you back out the maintenance and taxes from the rent, the change is much more pronounced.

Fourth, what about the commitment of home ownership that you mention. Does that factor in? What about families that increase in size? Decrease in size?

Fifth, what does this mean: the volatility in prices will have likely ended up in an owner's favor. The stability of Manhattan prices exemplify this, even in fringe neighborhoods.

And finally, do your pronouncements mean that you are a buyer no matter the price? What if current prices factor in all of your cockameme points, with an added premium?

oh wow.

wow.

wow.

didn't you mean

oh bow.

wow.

wow.
?

no.

oh, then did you mean
woof.

woof.

woof.
?

I have no mortgage and am living at a fraction of market cost. Each year that passes, I can take a bigger hit on my selling price. At some point, I can sell fort $0, and still be ahead. In fact, I might have already reached that point.

HB, lol

Gottabrain:
Not meaning to negate any of your points, but I personally know several people renting in Manhattan who today are paying approximately what they paid in rent 5 years ago, because they were savvy enough (maybe reading SE?) to negotiate lease renewals downward, sometimes significantly, in 2009.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html?ref=realestate

gaongaon, kudos to your friends who managed the stable rental prices. I'm both an owner and a landlord so I understand both sides.

To all angry readers, while I don't take advantage of my renters, at least, the ones who pay on time, I know that renting is easy money because there's always a flood of people who need/want to rent. I've a portfolio of real estate because I live within my means. That's my point. Live within your means and renting/buying, you're good. It's just that with buying, you actually own something. I bought when no one thought real estate was worth anything. Sound familiar?

hb, if you think I spew crap, as you put it, it's no wonder why you came sniffing around...

Hey gottabrain, your writing style indicates to me not much more than a high school education.

"Watching the U.S. home market struggle to rebound is like listening to children in the back of a car. No, we're not there yet."
http://finance.yahoo.com/news/real-estate--why-home-prices-won-t-bottom-out.html