so tell me again - why would anyone buy in this market?

I'd buy now so that after the two-year coop sublet period ends (not an individual one, but the big collective Manhattan one) and the bottom really falls out of the market (it's always the same story at that point of the cycle), I can have ten more years of woe to focus my unhappiness on. It'll make everything else seem like it's going swimmingly. Bliss.

easy! because manhattan real estate only goes up!!! it's the foreigners silly!

"On top of the 50% decline we will see in NYC real estate prices..."

50%? More like 25%. Regardless, that a generality and there are always deals to be found and sold. for the suckers who bought through BIG BROKER in the last 2-3 years, they'll have to sit for years waiting for their equity to return.

To own it. Enjoy it. Raise families in it.

eah's response is actually the right answer. It's probably a great time if you have a very long time horizon now. I was recently looking at buying a 2 bedroom with my wife but we bailed as we expect to start a family soon and just don't know how long we'd be able to stay before heading to the burbs. We wanted to stay in the city as long as possible, i.e., a few more years, but not put our kids through school, etc. in the city. Thus, knowing we might have 3 years before we could potentially feel like we'd outgrow our space, we've bailed on trying to buy for now. Just too much short term risk!

eah's response is actually the right answer. It's probably a great time if you have a very long time horizon now. I was recently looking at buying a 2 bedroom with my wife but we bailed as we expect to start a family soon and just don't know how long we'd be able to stay before heading to the burbs. We wanted to stay in the city as long as possible, i.e., a few more years, but not put our kids through school, etc. in the city. Thus, knowing we might have 3 years before we could potentially feel like we'd outgrow our space, we've bailed on trying to buy for now. Just too much short term risk!

fmw, besides posting 15 times, you are a smart man.

Raising kids in prime Manhattan only leads to serious personality and/or psychological disorders down the line.

Oops. Sorry. Can't figure out how to delete them!

Actually - I think the only right answer to this question is that the only reason to buy in this market is if you want to lose all your money so your children won't get an inheritance! Maybe they were really evil kids....

No Anon3, that is not the case. If you have kids, you almost must buy, because high quality rental opportunities are few and far between, and the risks and uncertainties associated with rental instability isn't fair to impose on children.

But less seriously, raising kids in NYC may turn them evil! :)

"the risks and uncertainties associated with rental instability isn't fair to impose on children."

Actually, the vagaries of ownership are far riskier than renting. When calculating the opportunity cost of not investing the money used to buy real estate, a risk premium is assigned to ownership.

The only time it's better to buy owner-occupied real estate - which is a capitalized expense - is when, amortized, it is cheaper than renting.

Which it currently is not.

fmw did not post 15 times - that sometimes happens on this website.

Hi Steve-
Your approach to owning a home seems to take into account factors that differ from traditional and sensible American views of real estate. And I suppose you may not personally find the same benefits from stability, community, disciplined savings, good neighbors, etc. that most other working class, middle and upper class Westerners do. And that is fine, you are the independent-minded type, looking for flexibility and not wanting to settle down, more adventurous, swinging bachelor, etc., whatever your personal story is.

Separately, you seem to suggest that a person should rent and use the down payment and then the amortization on buying stocks, which has a high risk profile. That may be sensible for someone like yourself, more flexible with capital, but it is generally risky for most others and is hardly advisable on a broad base, unless there are temporary reasons for doing so and temporary reasons for renting such as a plan to move in a couple years.

Have a good weekend.

"seems to take into account factors that differ from traditional and sensible American views of real estate."

Actually, no. There is a near perfect correlation between rents and purchase price over time, with a constant ratio of 12x annual rent = purchasing price.

"that most other working class, middle and upper class Westerners do."

Also not true. They vary widely:

www.taxpolicycenter.org/briefing-book/content/data/homeownership-increase.xls

"you seem to suggest that a person should rent and use the down payment and then the amortization on buying stocks, which has a high risk profile."

No. I said that a person should not pay more for something than it's worth. What owner-occupied residential real estate is worth is what it would otherwise cost you to rent a place to live. Now it is twice as expensive, and that is anomalous.

"but it is generally risky for most others and is hardly advisable on a broad base"

No, actually, it's less risky because you have nothing invested in it.

FYI I own one place and I rent another. Precisely for cost reasons.

Because it's a great place to live and people are always moving to NYC. I still think it's better to buy than rent.

julia, according to one person around here who will remain nameless, moving to NYC is identical to moving to California or to Orlando, Florida.

"moving to NYC is identical to moving to California or to Orlando, Florida."

Who said anything about moving?

But if you look at how many people have, more have to there than to here. And prices here shot up much further and faster than there.

And they're not losing a large chunk of their #1 industry.

But other than that....

"I still think it's better to buy than rent."

If it cost you 10 times as much to buy as it does to rent, which would you do?

746 sales in the past 30 days in Manhattan. What a horrible market.......

anon3

Why would you buy in this market ?

Doesn't everyone want to be RE millionaire ?

The easiest way at the moment is to start as a RE billionaire.....

(This is an old joke about the airline industry rehashed)

Raising kids in NYC = evil?? huh???

JuiceMan: Plenty of closings, but fewer contracts, I think. Let's watch the trend in closings as the backlog of pre-Bear (i.e. pre-March 17th) sales gets flushed out of the pipeline. I've been watching how closings on contracts signed after March 17th compare to their comps. So far, it doesn't look good for the sellers, but it's probably too early to draw any conclusions.

DaBulls said: "[T]he risks and uncertainties associated with rental instability isn't fair to impose on children."

We have three kids, and we rent. Overall, we think the "risks and uncertainties associated with rental instability" impose less stress on our children than overextending ourselves financially to buy. Each family differs in its circumstances and tolerance for various types of risk. A sweeping statement like the one above shows little insight or compassion for children, and a great deal of arrogance and ideological zeal.

Fair point for co-ops West81st, but almost half of these sales are condos which, most likely, went into contract after 3/17. Could also be new dev condos closing from contracts signed a year ago (which would support your point). Not trying to insinuate the market is on fire, just trying to better understand where things are going. Additionally, I've have heard arbitrary dates for the past 12 months on events that were going to tank the market so, forgive me for being a bit skeptical.

No argument there, JM. Stay tuned.

By the way, I hope my fellow bears will note that it's possible to have a civilized conversation with bulls.

West81, sorry about your financial situation. Obviously you would be a lot more comfortable owning the apartment you are in with your kids if you could afford it. I woult provide your family with more stability, an a real home for your children who are lacking.

Generally, despite what some here want you to believe, home ownership is an American goal. Renting as a sensible path for economic freedom is a horrible fallacy that robs renters of real opportunities to build wealth, be that in prime Manhattan or in solid family-oriented suburban areas.

Looking at primary residences, if one were to compare rental communities with owner-occupied communities, owner-occupied communities are safer and more community oriented, participatory and family friendly. The residents of owner-occupied communities will have more long-term financial freedom as well. In NYC, generally rental buildings contain lower quality occupants than owned co-ops where the collective group of owners is interested in their collective quality of life and their housing investment. Unfortunately, as a result of the rental mentality, rental property owners also put less investment into their rental properties, lower quality finishes, floors, low ceiling heights as someone suggested above. Marble may be a selling point in a high-end rental, but of course would not compare to a high end condo owner's renovations.

I really think that any investment in personal real estate is the only sensible path. And if you happen to be lucky enough to live in this great city, an investment in prime Manhattan is a unique opportunity.

west 81st. there will be deals galore going straight through to 2009-2010. Just be patient. There is simply no feasibly way prices will increase at any significant rate at this point. There is simply not enough liquidity to finance anything of the sort. The MBS market is dead, as is the real estate market. Brokers won't tell you this because they're living in a dream world.

Here's an excellent posting - -

http://www.urbandigs.com/2008/06/enough_commission_incentives_j.html

I think the part I find most important is that, by trying to keep list prices high and instead hike the incentives/discounts, it makes it harder for brokers to run effective screens for their clients. Makes a good argument for having list prices get more in line with reality, which it seems could help the whole market find its true equilibrium easier and faster.

so tell me again - why would anyone buy in this market?

good question ... because they need a home and want to live here for a while? maybe the answer is as simple as that?

Yes but why pay more than $1000 on a square footage basis?