halt from condo/coop hunting in this crazy market?

bump.

so you want to overpay just to get a low mortgage rate?

you need to do a rent vs own analysis and see if what you're doing makes sense.

when i bought in 2002, it was close to being the same own/rent. now it seems that there is a significant premium to owning.

No one can time the mkt perfectly, all the time. Having said that, your question can only be answered by you. Too many factors to consider. Age, income, employment situation, assets, family in the future? length of RE hold, etc, etc...

You can look at the mortgage rate trends, sales #s, and all the other data available. I'm sure if you're in the mkt looking, you must have done something right to be able to afford a purchase. It's not rocket science, just consider your situation and do what you're comfortable with.

Eample:
We have a LT view of RE whenever we buy. We bought during 2 peaks (in hindsight) but didn't care because we're not flippers. Worst buys: 1987 and 2007 (1031 exchange so we didn't have much time). Possibly 2 of the worst periods to buy. But we bought in good areas and in good buildings. We still own the '87 property (killed it in terms ROI at this point, but it went nowhere for over 10+ years) and the 2007 buy is now break even.

Good luck

@ab_11218

i do think the mortgage rate is an important factor too. enlighten me if i am wrong. i did some quick math with mortgage calculator, a 2% mortgage rate increase is equivalent to 15-20% total cost, i.e. principal + mortgage.

the mortgage rates are what's causing the prices to increase. if the mortgage rates were where the average is, 6-8%, you would not see these kinds of prices in place.

once rates go up, the prices have to readjust. people can only spend X on housing, with a 3.5% rate a $300K mortgage is $1347 per month, with a 7% it's $1996. to get the same monthly outlay at 7%, you need to have a mortgage of approx $202K. with that in mind, a property will lose 1/3 of it's value once the interest rate reajusts to what it should be.

@ab_11218

that's an excellent point i missed. this will alleviate my high anxiety level somewhat.

That is true in a vacuum AB, but usually mortgage rates rise with the economy, inflation ensues, and incomes will be higher. Real house prices might drop or stay flat, but likely to go up nominally when interest rates rise

as interest rates rise, the number of people looking for apartments at specific price points will dimish. as noone expects interest rates to rise from 3/5 to 7 in a day, neither will the prices deflate in a day. when you look at a 0 rate of return for a period of 10 yrs with a typical 3% inflation, that ends up being over 30% accumulated loss.

steve:

1. I know the clinton hill and fort greene markets well
2. what are you looking for and what is your budget

Steve:

I am an investor, not a broker

small 2 bed or larger 1 bed. 500k-700k, i guess mid-tier in those neighborhoods.

how large square footage-wise

700+ would be nice.

Steve:

1. if you dont mind post WW II former naval housing, you can buy a nice sponsor
2-bd for probably under $500,000 in the Clinton Hill coops on Clinton Avenue

2. call Roberta Axelrod at 212-206-6000: she manages all sale for sponsor Time
Equities, which has a steady supply of apts on the market, nicely renovated

thanks for the info, @rb345

ab_11218
about 2 hours ago
Posts: 1852
Member since: May 2009
ignore this person
report abuse the mortgage rates are what's causing the prices to increase. if the mortgage rates were where the average is, 6-8%, you would not see these kinds of prices in place.

once rates go up, the prices have to readjust. people can only spend X on housing, with a 3.5% rate a $300K mortgage is $1347 per month, with a 7% it's $1996. to get the same monthly outlay at 7%, you need to have a mortgage of approx $202K. with that in mind, a property will lose 1/3 of it's value once the interest rate reajusts to what it should be.

ab: when do you suggest Steve (or anyone else looking to buy in the near future)make a purchase?

One of our mortgages in '87 was almost 12%. The property has gone up nearly 700% since we bought .

Imho, one cannot simply look at a rate. You need to evaluate carefully the big picture. Of course we re-fi'd, pre-paid, etc... when rates were more favorable. Point is, a RE purchase has to be tailored to everyone's situation, as is with all investments.

Steve:

Would you consider a first floor duplex of around 850 feet
in a really goog location

Goog location is good, this way when the streetview vehicle drives by, you can get your neighbor's hacked wifi.

wait a second, so its a fact that as rates go up, prices have to adjust lower ? really ? lol

@marco_m, i would like to hear your argument.

Steve:

1. perhaps 50% or more of high end NYC real eatate sells for all cash
2. much of the rest has high down payments
3. meaning that NYC prices are less subjaalue of apaect to rising rate shock

4. in addition, in many NYC sub-markets and despite rising prices, the cash
on-cash rental value returns are well over 5 and even 6%, which suggests
that that equity values could absorb substantial interest rate rises
before declining

5. did you go to the 101 Lafayette apt 10-D open house yesterday
6. it seemed to get extremely high attendance

Any actual facts to support points one and two?

rb345 doesn't make points 1 or 2

since i started searching, almost all the open houses have had high attendance. multiple offer is norm now. that's why i started this thread of discussion.

Steve:

1. where have you looked
2. what have you looked at
3. have you unsuccessfully bid on anything

"One of our mortgages in '87 was almost 12%. The property has gone up nearly 700% since we bought."

You got it on the cheap because interest rates were so high. Put yourself in the shoes of someone buying now, with prices having climbed 700% since 1987.

"On the cheap"? Right before the crash of '87?

No, we bought the top and held through some tough years. But RE has never been a ST investment for us.

YMMV

"Right before the crash of '87?"

I had assumed that that was when RE was in the doldrums. My fault.

(Still, you made _seven hundred percent_.)

The Federal Reserve raises interest rates to suppress inflation and lowers interest rate to stimulate inflation. They have a target inflation rate. They often need successive interest rate movements to achieve their goal. When rates start to creep up and people do not know when it will stop, there is no guarantee that price will start dropping, as there will be two forces fighting. One is the higher cost. It will forbid some to enter the market. The other force is the anticipation of even higher rates. For those who still can afford, they will have a greater urgency to buy before the rate goes even higher. The rate will continue to go up until these two forces balanced out and inflation slows down. So to say that price will go down automatically once interest rate goes up is an overstatement.

vic64: Very well said! I couldn't agree more!

1. rates of appreciation depend on where you bought and when

2. I bought a studio in Forest Hills in 1985 that is up only about 125-150%
3. two downtown studios purchased in 1985-86 are up abut 500% each or slightly more

4. my 1-bd residence bought in manhattan in 1995 is up over 900%
5. a Manhattan investment 1-bd bought in 1999 is up about 1200%
6. a Forest Hills 1-bd bought for investment in 1994 is up about 2000-2500%

7. one reason for the different rates of appreciation: different current neighborhood demand
8. second reason: the 1995 and 1999 purchases were foreclosures
9. third, those apartments were bought in weaker markets

Imho, the best lessons of investing are from your worst trades. We've made good decisions and some extremely bad ones. But in the end, RE investing has worked out for us when we followed these rules:

Buy good properties, in good locations, at a decent price, & sit tight.

Of course everyone has a different strategy and that's ok... this is just what we do.

ive also been looking in similar area with budget of up to 1.7mm for classic 6 on PPW or similar on Eastern Parkway. Just bid on a place that was in contract whose buyers were rejected by the board. place was re-listed and i bid > 10% higher and just inside ask, have perfect credit, great references and over 1mm in income a year. They repeated ask and it eventually ended up going well through it. Every other place we have bid on is the same story. All cash, 15+ offers behind it etc. I just didnt love any of the places enough to be the guy to step up and have a few hundred grand cover on my purchase.

ive officially decided to take a knee because im tired of getting my bid shopped and spending my weekends in open houses with other frantic buyers. Im fine renting till something we loves comes along that i don't mind being the aggressive one on or finding something out of comp, which is difficult. Already have plenty of exposure to real estate, so more about finding the perfect place for me and when i do, i will be ok paying up for it.

I say BS!

The bears insist that we are still in a housing recession and prices are continuing to drop.
Your experience must be the result of inhaling a non-FDA approve toxin we call marijuana. Nothing but a fabrication of your own imagination.

I can make a lot of arguments for purchasing real estate, including scenarios where one isn't certain of long or short term appreciation. But if you're in the position of making an all-cash offer and bidding 10-15% over ask, *and* you have no extenuating circumstances forcing your hand (expanding family, changing career, etc.), then I can't see living in a place that doesn't excite you on any level. This is where this 'seller's market' stops for me .. when low inventory and high demand blur the line between decent dwellings and dumps.