Tales from the Rental Market

"My financing assumptions are 50% down financed on 30YR at 2.5%,"

Where can you get 2.5% for 30 years without paying discounting points with a perfect credit score?

The lowest interest rate I can find is 2.75% for a lower mortgage and about 2.875% for jumbo.

Also, in my experience the large apt “premium” tends to come for good reasons unrelated to simply amassing more sq ft. Larger apts tend to have better elevation, light, views, ceiling height, etc. There are a variety of underlying reasons for this, and if you value such features then you should consider it as much. If not, look for the low-floor combos, because the market will charge you for the features regardless (channeling 30yrs).

From my POV, many of your expenses are out of line -- but specifically, your misc. spending on kids is too high but your childcare spending is too low. You won't get the quality of nanny that you would like if you are offering $20/hr. * 25 hrs a week for two kids.

@Inonada, here is the math I did:
We currently pay $60/ft for our 2BR in Midtown East. The common charges for this unit look to be about $22/ft. I looked at a couple UES 3BR and saw the common charges ran $30-36/ft. So the incremental difference in common charges is ~$12/ft. $12 ft higher common charges on a $60/ft baseline is 20% increase. Then you have the ~25% increase for UES Prem/3BR premium. This compounds to a +50% premium on a $/ft basis. This is the same % increase I saw in two UES rentals I looked at last night for this purpose.. they are asking ~$88 a foot or roughly 50% higher than what I pay today. Then of course, add in the +25% of higher space... maybe I just have a really good deal on a 2BR (but I had thought I could negotiate it down 10% 6 months ago.. maybe not today).

Here is how I thought about the misc spending on kids (I don't know, my kids are not there yet): $5K for afterschool activities, $5K for summer activities (I think camps are $700/week x 8 weeks), $5K for tutoring (this is how much Kumon cost, which surprised me), $3K for other stuff (clothes/toys). For Kid #2 I cut clothes/toys by half as the original stuff should get reused. These were all guesses... I don't buy the kids clothes but I do know we buy on sale at GAP etc. when a top is $15-20 which seems not indulgent. I forget when I put the math above, but I did have an extra $5K kids activities line in there, which I think is redundant I took out.

@Mouse, I hope your budget is tongue-in-cheek, it reminds me of this article that did the rounds a couple years ago - https://www.financialsamurai.com/scraping-by-on-500000-a-year-high-income-earners-struggling/

The idea that you can save 2 years of living cost every year, while also spending loosely on housing, education, transportation is completely unrealistic.

If this was realistic, you would just work for 10 years, end up with 20 years of savings, and then if you get 5% interest/return retire and live off the money after 10 years of work. The only people doing anything remotely close to this are FIRE extremists, foregoing children, seamless, and living in Manhattan while they live in the sticks dining on PB&J and ramen.

Normally you hear people talking more about having at least 6 months of savings set aside (which is a bit low to me), but if you want to have 2 years total liquid set aside that's a fine target.. you just aren't going to save 2 yrs every 1 yr.

That said on the line-items, your nanny&transport (if you own car) are too low.
But in addition to private school & nanny you are going to spend $1000/week on kids activities&clothes.. that seems sky high.

Your food budget is interesting, the idea that your kids are young enough to need a sitter but old enough that you are leaving them to go out dining 6x/month (on top of 10x/month delivery) seems high.. that's a great social life even for a childless couple.

I would agree with the sentiment that within a certain income/lifestyle segment, $1M is the income needed to raise a family in Manhattan, or $500K in fashionable Brooklyn. That said, this number should allow you to own your apartment.

Lastly, your budget with all this spending, still implies $100-150K/year savings which is hard to qualify as treading water.

What a great article from financialsamurai. The only thing I don't quite agree with, is the discussion upfront of how *easy* it is to earn 500k as a household. My point above is that (despite us running into such people in Manhattan every day) it is actually incredibly *hard* - the career needs to go just right for two people, and I think this is extremely hard to achieve. Manhattan is a special place that makes us forget how hard this really is, that most people have worked incredibly hard to get there, and most others are not so lucky (as well as talented and determined).

Great budgeting analysis in that article, and I like that student loans were included. This is the reality, people. It takes money to make money (unless you got a gift from family or school, a huge privilege). I think of it as an expense to get to net revenue. I don't like to think of it is an "investment", because investment has already been made and profits are showing up in income, not in a separate investment account. Even though debt paydown is helping you grow your net worth, it only applies to select group of people that start from a negative number (rather than zero like most), and it does not grow your savings account / years of expenses saved.

@Mouse I think ionada makes a really important point regarding factors outside of square footage and location. My partner and I thought carefully about about this, and determined that we wanted maximum space for lowest price, high % financed, and a convenient commute. We were willing to compromise on almost everything else. We did not care as much for high floor, most amenities or in-unit washer dryer. We are moving to a place with 60% more space paying only 40% more per month in a slightly less desired area, but still close to work, no gym/pool in building, and much lower floor.
For starters, since you seem to want to put down 50%, you can probably find a pretty good deal in a high % down coop building, since this is a feature that is very undesirable to the average buyer.

@Krolik - sounds like a good move.

Agreed, there's certainly a bias here towards high down payment but.. with low rates, if you have a high credit score, why over-allocate more of your net worth to RE that could stay in stocks/bonds and a cash cushion otherwise?

Likewise these numbers get thrown around but its obviously very hard to make that much money.
Only those that choose to live in the most expensive areas of the most expensive borough of the most expensive city find themselves so surrounded by it that it's normal, taken for granted and "struggling" to budget a lifestyle on it.

I'm increasingly convinced I should leave my high-amenity condo (or rent it out) and live somewhere closer to work without the bells&whistles for my city place.

The gym/pool/lounge/rooftop/courtyard/movie theatre/piano room/etc amenities condos push Now I view them as just more things to maintain which means more $$ over time and more things for board&residents to fight over. Certainly in our building they are over-utilized by the same 5-10% of the building that the rest subsidizes the lifestyles of. I find myself in the weird position of being rich enough to own a weekend home, but too poor to furnish it with the absurd furniture our condo residents demand (and break/stain/wear out within 2 years) in the common areas. I guess it's different when it's OPM (Other People's Money) :-) ?

@steve123 I personally looked at putting down as little as possible for that reason! Not just because of overallocation to RE, but also because of the absurdly low returns / cap rate.
But since Mouse is focused on putting 50% down anyway, he might as well take advantage of the deals in 30%+ down buildings.

Some of building amenities make very little sense to me. Take piano room. Who is going to make sure the piano is in tune? Plus only a small number of people will use it. And those that play a lot will have their own piano anyway.

I don't think anyone has mentioned that the general rule for affordability has a $1 million earner paying $25k rent. 44% of NYC pays more than that proportion.

I think for NYC at that income level, one needs to adjust for higher taxes (10 percent) and probably 25 percent for unsure nature of longevity of income depending on the profession (extra saving in good years) . Still get you to $15k per month range in rent.

If you work for sell side finance, at that income, cash component is probably 70-80 percent. People apply the above percentage to that cash component. They may spend $500k pre tax equivalents. Still gets them to $12k per month in rent.

This is very true. Especially for women, earnings peak a lot sooner than people tend to think! So it is not prudent to assume that one's income will just continue to go up until retirement.
https://www.cnbc.com/2021/04/20/how-womens-peak-earning-years-could-be-impacted-by-the-pandemic.html

@300- absolutely one has to adjust for income variability in their budgets. It does worry me how far we have gotten (almost a generation) from the last true drawdown year where industry wide you saw bonuses cut 50-100%, locked up stock compensation lose 50-100% of value, salary frozen a year or two and big layoffs.

I was expecting 2020 to be that generational event and then we had an insane recovery intrayear.

Even 2008 wasn’t a major event for some as a few bailed out banks actually paid pretty normal and some funds performed&paid. Maybe we have to go back to dot com & LTCM/Russian debt crisis?

@Krolik - I had a similar conversation with my wife the other day that hey you know, we might not make this much money in 5-10 years, there is such a thing as post-peak income. Pump employers for every dollar while you can, but don’t spend them all cuz you never know.

@30- the idea of 44% paying above $25k rent at the $1M income level is wild, but also reminds me of this blog post - https://theirrelevantinvestor.com/2021/05/21/houses-have-gotten-bigger-and-nicer/
It’s not just an “affordability” crisis, its a.. greatly elevated expectations crisis, plus some above inflation price growth.

I grew up in the exurbs where houses cost under $300k and I still had to share a bedroom with my brother even when my Dad by that point had an income of 50% of our house value. Similar for my wife. People stretching to buy (or rent) in Manhattan thinking they need a bedroom for each kid (especially if young / of same gender) are maybe setting their kids up with even more insanely high expectations.

Imagine graduating at 18 to go to college after having your own studio apartment in manhattan all your life? College is going to be a rude awakening.. well that is, unless you pony up for the Ritz level dorms which are also built on many selective school campuses to cater to just such offsprings….

And then when they graduate with the art major at 22 and want to have their own place in the city without roommates and.. hey dad can I borrow some money?

Another old adage I heard on Wall Street was trying to live within your base salary, which was very hard before 2008 but base salaries have increased significantly since 2009. So some one looking for rental expense guideline may just use their base salary to be fully spent on rent and all other expenses except perhaps for vacation/gifts from bonus.

Steve123, Good link and point about high expectations relative to the previous generation for what you need in a house/apt to live in.

@300_mercer I think budgeting based on base salary is still a thing. It is how all mortgage lenders that I spoke to look at it.

@steve123 my two iphones are waaaaay nicer than the single flip phone I (or my parents) had 20 years ago. It's called progress, lol.

I don't think Mouse's kids ever need to come in touch with reality though. With all the tutoring and private schooling they'll go to "target" and join the ranks of banking analysts making six figures straight out of college. If no private school education, he was contemplating handing them out $1M each when they graduate.

I personally like the base salary guideline. Private school is a choice a family has to make for themselves. Some people would rather send their kids to private school than leaving them inheritance.

@Krolik - I subscribe to the theory that the longer your interaction with reality is delayed, the harsher the inevitable interaction. My neighbor got the $X million from dad on graduation gift, at the pace he is going he’ll OD and/or go broke by 30.

@Krolik "If no private school education, he was contemplating handing them out $1M each when they graduate." I was highlighting the math of what a K-12 private school education costs, and the hypothetical of giving a child that education or a check for the tuition cost at a date they are mature enough to use it.

@300_mercer and others "I personally like the base salary guideline." My understanding is that base salaries cap out at $250K for even the multi-million dollar earners in finance. So I don't think base salary is prudent for those scenarios (in the sense that they would never then rent the $10K/monthly apartments they could otherwise afford and do rent). However, I also like the idea of budgeting based on something you think is 'locked in' versus not.

@steve123 "Imagine graduating at 18 to go to college after having your own studio apartment in manhattan all your life?" I agree with that mentality. Someone mentioned trying to get real estate "in the most expensive neighorhood of the most expensive borough of the most expensive city". It's a huge social bubble for these kids. Growing up in bubbles is problematic. P.S. I started the process thinking UES would be cheaper... I thought everyone wanted to live elsewhere!

@steve123 "I was expecting 2020 to be that generational event and then we had an insane recovery intrayear." Me too. I'm shocked looking at asking rents here, still in the pandemic.

https://www.financialsamurai.com/scraping-by-on-500000-a-year-high-income-earners-struggling/

Great article. $500K and "struggling". Is this a parody or reality? I think the numbers in this article are fudged, but reality is probably close to home. I imagine the family must be saving more (how to live without saving, yet spend $18K on vacations?). The vacation budget, two cars, $5K on gas and including charity here strike me as disingenous. I imagine this can get trimmed pretty quickly. But the overall savings rate would be low (to me). And I think that would be a more honest conclusion of the article, that is a $500K income earner saved appropriately, they would not be "rich" in the sense of having the $1.5MM home, two BMWs, donating $20K to charity, etc.

I'm not sure what the right savings rate should be. I do believe in trying to save a years worth of expenses every year. E.G. 50% of after-tax income. I think doing that requires the luxury of a high income or a FIRE approach.

Mouse, Base salaries in finance at MD level are $400k range and in some cases reaching $500k. SVP/Director are $300k range. Even Associates/1 year VPs are making $150-200k as base and I do not expect them to be sending 2 kids to private schools without additional sources such as inheritance etc. You have two people working. So even with $250k base per person, you get $500k which is enough to rent a $12k apartment if you so choose.

There’s the reality of savings rates, and then there is what people actually do.

A savings rate of 50% of after-tax is, in my head, very prudent and bordering on excessive. Let’s say you earn X after-tax in your first year, work for 35 years, retire for 35 years, and then die. Let’s also say your earnings, investments, and spending grow by 4% a year (2% inflation, 2% real, say). Half of year 1 will be spent on itself (0.5X) and the other half will be spent on year 36 (2.0X). Half of year 2 will be spent on itself (0.52X) and the other half on year 37 (2.04X). This continues until you spend half of year 35 on year 35 (2.0X) and the other half on year 70 (8.0X).

This schedule has you on a pace whereby you are spending 4x by the time you retire compared to what spent in your first year of work, and 16x the day you die. Inflation-adjusted, it’s 2x and 4x. Seems prudent, bordering on excessive, as that sort of spending acceleration in retirement is difficult to achieve. The older you get, the less you are able to spend on (unless Jean Georges starts serving puréed peas in nursing homes). And when you finally do get to spend big $$$ on giant medical costs, you’re on your way out and don’t even get to spend the full 35 years of retirement you had been saving up.

Obviously, there are variations to this person by person. If you don’t plan for spending acceleration in retirement, then saving a third might be perfectly prudent (haven’t run the calc, just ballparking). And at income levels where SS is fully in play ($100K, say), then 20% may get it done as SS is standing in for the other 13%.

Against the background of that reality, there is a question of “How much do you actually earn?” Variability is not much of a factor. If you earn X +/- X, then after just 8 years of saving half you should have 4X saved. When you are spending 0.5X a year, that’s more than enough to cover the income variability. The bigger question is whether you actually earn X. I think a lot of the angst here is about that. Earning X year after year for 35 years requires you to provide that much value year after year. Maybe you got paid 2X some year because the variability got lucky, and you don’t expect that to happens every year. Maybe you are being paid 2X, but really you are overpaid as your earning rate is only X. Maybe you are being paid 2X by doing work you cannot / do not want to sustain long-term. I get all this, but it’s not the same as earning X.

The reason I bring this up is that there is a distinction between the amount a prudent HH can spend if they _earn_ $1M/year vs. if they came across some “found money” for a few years at the rate of $1M/year. Can a $1M earner prudently spend $300K-$400K a year, with $15K in rent? Sure. Should a $1M found-moneyer do the same? No.

The last thing I’ll note is that some people are excessive savers by nature, some are prudent, some are imprudent. I’m excessive myself but know plenty of prudent & imprudent people.

An imprudent saver will rent the $15K apt when earning $600K (or even found money), the 40x level 30yrs refers to. A prudent saver might do it at 80x or $1.2M. And an excessive saver might do it at 160x or $2.4M. The issue is that there are a lot more $600K earners than there are $2.4M earners (~5x?). So odds are that the “competition” for the ~$15K apt that Mouse is theorizing about is an imprudent $600K earner, not the excessive $2.4M earner Mouse imagines.

This is exactly right about $500k plus annual income jobs in finance. I always treated any income by one person above $400k as windfall but that is just me. Of course you can have several years of windfall and they you can start to spend some of the accumulated windfall.
“The bigger question is whether you actually earn X. I think a lot of the angst here is about that.”

VPs now earning 250k base at most banks, after COVID bumps:
https://www.bloomberg.com/news/articles/2021-04-08/bofa-plans-to-boost-salaries-for-its-junior-investment-bankers
I do think there are some firms where base is capped at 250k for everyone.

Tech typically pays more in base, with smaller bonuses, except Amazon where base salary is capped at $185 in NYC, with very significant cash and stock bonuses bringing total comp to 500k+
(note: level 7 Amazon job is a similar level of seniority to investment banking front office VP/Director)
https://www.nailyourjobinterview.com/the-anatomy-of-an-amazon-level-7-job-offer/

Highly variable comp is an interesting decision for employers, since they have to pay higher average comp to compensate humans, which are as a group very risk averse, for the variability.

"So odds are that the “competition” for the ~$15K apt that Mouse is theorizing about is an imprudent $600K earner, not the excessive $2.4M earner Mouse imagines."

In my experience when you are towards the bottom half of any category (whether that is $1,800 studios in the East Village, $5,000 2 BRs in Chelsea, etc) the majority of potential tenants are looking to spend fairly close to the 40X amount because even at that number they're not getting the unit they really want. So that's where the competition is.

I would say that it is fairly unusual in my experience (NB this is not a value judgement, simply a statement of facts of what I've seen in the market over 40 years) to see someone saying they can't find an apartment at 0.35X of what they can afford by standard metrics rather than raise their budget to 0.5X to 0.6X

This is interesting perspective. Earlier, I had concluded that "other people just really want to be here more than I do". A separate, but tangential point is, "other people are willing to spend more of their income on their life expenses, than I am willing to". And the combination of those two points results in a real estate market that outpaces what I can comprehend spending.

So who is bidding up prices on larger units?
According to this article, there are 3.46M apartment units in the city with 1M units being 3 bed or larger. https://www.valuepenguin.com/new-york-city-renters-statistics

According to this 2017 tax data there are 3.2M HHs in NYC, only 326k HHs make more than 200k (half of them live in Manhattan).
https://www.baruch.cuny.edu/nycdata/income-taxes/hhold_income-numbers.htm

Firstly, don't know if the data are at the same point in time, should not be significant, but there are more housing units than households. Especially right now when some people moved out. Are there 260k+ pied-a-terres? Maybe college students from out of state are not included as residents? Also, there is a decent number of larger housing units, and less than 12% of population makes 200k+ Obviously there are probably some wealthy people who are not working but have significant assets, and maybe roommates renting a larger unit together are taking up some of the inventory? But then there are also many high earners in 2beds and smaller.

good deals per sq. ft. are to be had on low floors. Maintenance a little high, but good price. Not ridiculous %down requirement either. buyer might want to redecorate... or not.

https://www.bhsusa.com/manhattan/midtown-east/30-beekman-place-2a/coop/21044896#

@krolik - 30 Beekman Place 2A was Gloria Vanderbilt’s from 1997-2019, when she died. Estate sale that was written about in both NYP and NYT in the last week.

@krolik , amny rich people report very little income, such as small business

@MCR - the fame definitely helps sell real estate, because a friend of mine could not get in to see the place - broker responded that they had multiple offers and stopped showing after only 3 days on the market!

@Anton - or anyone with a large enough trust fund and no need to work. Another puzzling thing, there are some income-restricted, taxpayer-subsidized units posted for sale out there, that end up selling for much more than what someone with the sufficiently low income (per restriction) could afford.

Income vs assets. Someone with a relatively low income can inherit and pay cash for an apt in an income restricted building. And wb MCR! One big happy family again -

@krolik - If only all the lingering apartments in our neighborhood had famous owners . . ..
@stache - Thanks. I suspect I will be spending more time over here going forward: https://www.urbandigs.com/forum/index.php?threads/words-youre-tired-of-seeing-in-listings.421/
A spate of activity in listings I had been watching caused me to check back in to NY real estate sites, and I found some of my favorite posters making laugh out loud in the other forum.

We recently assisted somebody with a sale in a income restricted building in Chelsea. A very lot of cash from selling a company they created, currently relatively low income as they work on another startup.

Posting some stats on inventory for those interested.

SE had 17.8K total listings at the end of July, and 78-ish above $25K/mo. A week into August, it’s 18.6K total and 90 above $25K/mo.

We shall see where it goes, but some early data in support of my rush back by Labor Day hypothesis. The last days of the returnee effect have come to a close, with a few final stragglers making their way through. If you are a renter and can wait, then wait. If you are an owner with a vacancy, do whatever you have to move it now. Just my $0.02.

Totally anecdotal and continued small sample sets. Was pinged by two brokers on $9.5K+ apartments that I passed on, asking if I was still interested.. 2 weeks after I saw them. This never happens.

Separately, I also have been told by another broker who has a 2BR and 3BR in the same building... 2BR is going for $60/ft and the 3BR is going for $90/ft with same finishings... because 3BR is larger (... which shouldn't impact $/ft) and is converted by people into a 4BR. Just a monster 3BR premium, that people happily pay!

@Inonada is it possible to pull that by neighborhood, e.g. just the UES or Lennox Hill neighborhood?

You can pull comparables reports for rentals on SE. it shows all available & no-longer-available listings going back N days, with N up to 365. The problem is it maxes out at 100 old listings, but if your search criteria is narrow enough it might work for your purposes.

I am not surprised by the pings, FWIW.

Talked with the managing agent of a rental building today. They have a $11.5k 3BR. I asked what the typical income profile was for the unit, and it was $500-750K. Thats bit lower income than I expected for that much rent, but consistent with prior comments on this thread.

Talked with the managing agent of a rental building today. They have a $11.5k 3BR. I asked what the typical income profile was for the unit, and it was $500-750K. Thats bit lower income than I expected for that much rent, but consistent with prior comments on this thread.

Landlords like Rock Rose, TF cornerstone and related want tenants to be earning 45x the monthly rent.

At least that's what it was when I was doing rentals, which was around 15 years ago...

@Keith - 40-45x are generally the numbers I heard being thrown around generally renting in the 2000s-2010s

@Mouse if you are looking for rent-income ratio anecdotes,
My last 3 rental applications in 2005/2008/2010 I was at 45/65/65x using base only or 48/70/80x with total comp, with a mix of big & small landlords.

I always just assumed 45x was something coming out of undergrad where a student is just trying to make rent. I didn't think the more affluent would still rent at that ratio (e.g. a $12K apartment), as they would be more focused on saving etc. I'm looking to rent at a 100x ratio, but being mindful my income is very lumpy and I am older/need to grow savings as fast as I can.

Maybe you should listen to John Catsimatidis.

That would imply a $90,000 income for a student trying to get into a $2,000 a month studio.

@Mouse - by the time you get to 100x, most people are moving into buying since tax incentives tip the scale in that direction.

Personally my last rent-income ratio was 135x before buying, and it felt absurdly flush.
However I only rented what I considered 'essential', smallest number of beds/baths needed in a low-frills doorman building near a good subway stop. 20+ year old finishings & none of the extras like in-unit W/D, pool, roof deck, gym, piano room, etc.

The main economies you are going to find is # of beds, neighborhood, and amenities of building.. generally in that order.

You seem really focussed on savings and worried about spending more on rent.
You could just stay where you are and bide your time building up savings instead of moving up to $12k UES rental, especially if you are talking about private school anyway?
Some of your posts read like someone comparing a BMW 7 series and Mercedes S class as the only two possible car options in the world and trying to talk yourself in the the price.

@Inonada - I think you are right that the big Labor Day rush is oversold in the media. Almost everyone I know at banks/funds have had their September RTO date move to October+. The few that haven't expect to hear something soon. No one is expecting to be back in office even hybrid on Labor Day anymore. A lot has changed in last 3 weeks.

I have clients at Morgan Stanley and Citi who are back in the office. Assuming it's a relatively small percentage of the overall workforce.

@steve123 we are staying put until we find the apartment value we want to pounce over. The value may not exist or our parameters may be too goldilocks to execute on. But's its been a learning process, and that is what I report back on (the subject thread after all). It overall is a high class problem, but I think that would be the case for anyone trying to stay in Manhattan with a family, whatever size of apartment!

@theburkhardgroup had dinner with someone from MS. Sounds like its 20% coming in for them. The clarion call of "if you go to a restaurant you can go into the office" seems to be more noise than reality. I don't think this is a switch that turns on for October either, especially with Delta. This feels like a 2022 event now. I had thought 2021 bonus cycle would be the hammer, but this doesn't seem to be the case (yet).

@inonada I used the Streeteasy website earlier today to look at UES inventory for 3BR in Lennox Hill area. Inventory available is up YOY, but back to 2018 levels. There is not an uncharacteristic amount of inventory on the market. It really bodes well for whenever COVID gets behind NYC... if demand can withstand a pandemic, it really speaks to the resiliency of NYC at current rent levels. It is much more resilient than I expected. I

"George,
I think I pointed this out a year or two ago, but I think actual infrastructure (like 150 year old water mains, a cantilevered highway which is a major artery into Manhattan, etc) are crumbling with no real plans and certainly no funds to fix them."

https://www.nydailynews.com/new-york/ny-bqe-repairs-mayor-de-blasio-highway-20210804-udha4ck25ng4vinck2rme7iwei-story.html

@30 - a lot of this stuff just feels like "managed decline"

I'm not sure how the BQE ever gets fixed before it just falls over.

On one side there isn't much money for big projects, and every year the costs skyrocket further.

Then you have all the usual "environmental study" BS from NIMBYs.

BK Heights residents fighting any work that temporarily disrupts their promenade, and probably banking on the lottery ticket option of increased local property value if the highway is razed entirely.

And finally the looney "just get rid of all the highways" crowd with no actual plan of how all the goods coming in via BQE and other arteries would come into city otherwise.
Unless they enjoy having tractor trailers divert onto local roads & interacting with bikers/pedestrians even more.
At least that base is mostly people in their 20s with no family/friends outside of the 5 boroughs for whom the idea of having highways to get into/out of city may be foreign.

@steve123, I guess what I was saying was that despite any delays to RTO, I think people are already committed on their return to NYC. E.g., I know of 3 families who are returning Sept 1 (one renting, two owning). I don’t know of any families that are in wait-and-see mode.

Mouse, the pandemic is a temporary effect (despite the long slog it’s been). Manhattan rents took a beating because of it: the 25% market-wide drop we saw in the winter was unprecedented. It takes a 33% from there to return to pre-pandemic levels, and I think there data will show that by the end of summer 2/3rds of that will have been made up. My guess is those gains are transitory and will fade, but who knows. Nevertheless, even if a 10% drop remains, that is a material response to the “permanent” effects of the pandemic reducing demand.

To put things in context, CPI from Jan 2019 to Jun 2021 increase 8%. When you put the two together, a 10% drop in nominal rents and an 8% increase in CPI means rents “should” be 20% higher than they are now, even during this rush back, if it were business as usual for Manhattan rents.

This discussion of incomes vs. rents reminds me of an aspect of buy vs. rent debates of a decade ago.

A key point of the debate was whether you’d be better off using your cash as down payment to buy or as investment in the stock market. (Sorry, Keith: most of us didn’t have infinite money like your clients to do both.)

A key tenet of the “rent” argument was that stock market yields “should” yield 8-10% annual returns over the next decade, meaning you’d be left with ~2.5x as much money. Reality has been ~15% and ~5x.

The counter-tenet of the “buy” argument was that the same economic environment that led to 8-10% annual stock increases would lead to 4-5% Increases in RE prices and rents. So ~1.6x as much. And the use of leverage / increasing rents would make it a wash w.r.t. the rent/stock strategy. Reality was ~1.1x, or ~1.0x if you correct for the fact that the housing stock has improved. So inflation-adjusted, ~0.8x.

What I always found puzzling about the “buy” argument was how incomes were going to be high enough to support this. The $2K entry-level walk up studio in 2010 was still $2K in 2020 pre-pandemic. So a $90K income would minimally (i.e., imprudently retirement-wise) qualify. In the 2020 the bulls had imagined, it’d rent at $3200 with $144K (!!!) income to minimally qualify. And the $10K utilitarian UES 3BR would be $16K, with the $450K minimally-qualifying income becoming $720K. Or in the prudent / 100x version of people like Mouse, $1M => $1.6M.

To Nada's point, many people have their country rental till the end of the summer. In addition, if you have to come back to office early next year, you may come back to the city now and still WFH. Then there is school re-opening in person.

Worth noting here that saving abundantly for retirement is a class privilege. I am not by any means broke, but if I limited my housing costs to 1/100th of my income I'd be commuting in from the Poconos.

To illustrate my points on rents, you can compare the number of NYC households in various income brackets via https://ibo.nyc.ny.us/fiscalhistory.html.

For example, in 2010 there were 224K households at $75K-$100K, 118K at $100K-$125K, and 70K at $125K-$150K. In 2018, it was 301K / 187K / 111K. That roughly maps to ~22% income gains in 8 years, or ~2.8% per year, which is consistent with inflation & productivity increases. What is totally unclear to me is how:

1) The 224K households at $75K-$100K were going to have income increases to make them $125K-$150K households, which "only" increased from 70K to 110K by 2018.

2) Why such households would be content to take all their hard-gained increases and shove it out the door for the same crufty entry-level walkup studio.

3) Why developers wouldn't develop new shiny apts to win their hard-gained increases (financeguy's favorite axe to grind, for those who remember him).

I guess the argument on #3 was something like, "In case you don't know, they're not making anymore land in Manhattan". I think I new that, and with the exception of BPC, Manhattan was never built on more land but rather taller structures / zoning.

@nada don't hate the messenger ; ) That is for the most part my client profile, they can buy and continue to save/invest.

I agree that if you will be wiped out after a home purchase, you should rent and continue to invest. I own a home to live in, I own stocks to grow my wealth and thanks to apple, Google, GS etc I am very comfortable.

That said many want to own a home, that is their priority. Especially when you get out of NYC, many folks don't understand or are afraid of stocks. I have a lot of friends that fit that profile. The first thing I did when my daughter was born was put $10k in Spx and set up a monthly investment plan to buy more. I did the same with my oldest daughter, got her investing and advised putting home ownership on the back burner. If I could only do one or the other, I'm buying stocks.

I come from a blue collar parents, never invested, rented most of their lives and spent their money on boats, gambling and various vacations. My grandfather on the other hand, an immigrant from Holland had been investing in stocks starting in the 1930's, mostly utilities, dividend payers and owned a home, guess you would call him 'the millionaire next door' type, lived well until his 99th birthday!

So just for the record, I don't think buying is better than renting and vice versa. There are some many things both financial and emotional that you have to take into consideration. Do what works best for you or to quote Arnold Palmer, "swing your swing".

This is the foundation of my biz model, we assist people that have decided to buy or sell and make it more affordable/transparent. We never use the terminology 'good investment', or buying is better than renting.

Keith Burkhardt
TBG

@front_porch: Understood, but the math of retirement has yet to undergo wokeness ;).

I recall a taxi driver from ~10-15 years back telling me how he & his wife had saved up a nice nest egg over 20-30 years (a few hundred thousand?) and were going to retire back in the home country. He couldn't understand the attitudes of many of his fellow drivers, who seemed to spend it as fast as they made it.

@keith: I don't think you ever waded into that debate from a decade ago. Different times, different outlooks, so I think a lot of it doesn't translate to today.

That said, it seems to me the either-or question does translate for many. Take Anonymouse household, for example. It'd take a $3M apt to meet their family's needs/wants over the upcoming years. They are at an age where they have young children and are "older/need to grow savings". Their HH income has grown to ~$1M over the years, and they are now trying to pack a budget to save ~$200K/year. Something tells me that while they probably have ~$1M lying around to use as a down payment for the ~$3M apt, they don't have another ~$1M lying around to (meaningfully) invest elsewhere. Additionally, the purchase of an apt would lead them to set aside an extra few hundred thousand of it to deal with the illiquidity of a purchase, relative to renting, in the face of uncertainty.

I suppose they could purchase a $1.5M apt 1200 sq ft apt, leaving half of the ~$1M for down payment and the other half for investment. But does that really seem like the right decade-ish commitment when your HH income is currently $1M/year and in all likelihood growing? Especially with 2 growing children.

Anonymouse, care to chime in?

If you are making $700k-$1m a year or something close over the last 5-10 years and only have $1m sitting around....you need a new financial advisor ; ) and budget!

Spx 2013 32%, 14 13%, 15 1.4% 16 12%, 17 21%, 18 -4%, 19 31.5%, 20 18%

Not to mention the monster returns the last 12 months on bank stocks GS 100%, I think?

@Keith this is where you are way off. While there are a lot of dual income HHs in Manhattan making $700k to $1M ($300k-$500k per worker), most people under 40 have not been able to make that much for prior 10 years. In general, making $500k per person is REALLY, REALLY HARD! Household income of $530k puts you in the 1%! By definition, considering that there are 130M HHs in the US, there are only 1.3M HHs in the 1%. And $1M income is that much harder to achieve. There are only $235k HHs in the entire US making 1M per year income. And to put that into perspective, there are ~750k HHs living in Manhattan.

Even in finance, with most brutal hours and fastest comp growth, one needs to work ~7* years to reach $500k per year compensation level. That is assuming no career setbacks, no time out to have a kid, no grad school (and in many fields you need to do grad school before even starting out). Especially in corporates one needs to be really senior to hit this compensation level. There are many companies where only a few top people make this much. Software engineers, if really good, can approach and surpass $300k with 10 years experience, but usually not before that. At McKinsey, one needs at least Associate Partner title to hit that level, and that requires 3-5 years of post-undergrad experience (at a much lower pay), two years of B-school with no comp at all + potentially large tuition bills/loans, followed by 4-5 years experience in more junior roles that pay really well, but not close to $500k... etc And we are talking about highest paid professions here. If one member of the HH is a school teacher, it will take them a lot longer to get to $700-$1M income (or never).

In addition, many of these folks have or had six figure student loans that they need to pay off, and like Mouse already mentioned, the comp is not stable, especially in finance, there are down years. Finally, after taxes, a W-2 worker in NYC with no mortgage and other deductions will only get to keep half of that amount, and of that, will spend quite a bit on living in Manhattan close to the office, suits to wear to work, etc. Also, folks that have and make less tend to keep more of their money in cash, or use it to pay down student debt, rather than invest in the stock market.

It's all relative, I'm talking about clients that are established in their careers. I have the privilege of actually reading the financial statements of a variety of different types of buyers, I'm well versed in what they earn and save.

I'm simply referencing what mouse has stated as his current income, and based on the last 10 years of stock market gaines making an assumption he should have more than 1 million dollars in investments.

If you were a renter and had 500k in the market 10 years ago, were able to contribute approximately 50k per year into a simple index strategy (spx), that would put your portfolio at about $3M.

Sure, if you're 27 or 28 you're not going to have this kind of wealth based on working. Though you may have access to it through family or trusts, but that's another story.

Krolik,
A few months back Steven Roth of Coronado misstated the membership of that group by an order of magnitude.
https://www.urbandigs.com/forum/index.php?threads/city-v-suburbs.144/page-4#post-2884

Vornado (stupid autocorrect).

@steve123

I don't think there is the appropriate realization of the potential harm being done to NYC with the adoption of "congestion on purpose" and the coopting of NYDOT by Transportation Alternatives and the general anti-vehicle movement. My fear is that by the time enough people wake up to the consequences (for example we have already passed Los Angeles as the most congested city in the US this year) the will absolutely be no viable short term fixes available.

It's interesting how both pedestrian and cyclist casualties and fatalities continue to increase yet the answer is more of the same in the name of safety while the policies are failing, just blaming the failure on "evil cars" and not even a thought of the wrong "solutions" being implemented. I keep looking for valid numbers showing the
"Everyone should go everywhere by bicycle" crowd has a valid argument but can't.

@30 - agreed
Even in my 16 years in the city, the amount of traffic has increased a ton.. largely driven off the VC funded ride hailing services. Post 2016ish, the amount of 20 somethings I know who were taking uber/lyft/etc and the yuppie carpool app vans to work instead of ever taking subways/buses was something I couldn't get my head around. I remember expensing the occasional taxi to/from work at odd hours back when I was that age, but the idea of it being my normal commute is completely foreign.

Congestion pricing maybe fixes some of this.
My problem is a lot of the proposals seem to be based more on spite and punishing/making it more inconvenient for car owners more than actually more convenient for everyone else.

I own a car, but didn't for first 12+ years here.
Nonetheless, I would suggest we remove free residential parking and replace with some sort of municipal sticker system like on the NJ side of Hudson. You have a lot of people using the city streets for free car storage. There's millennials in my building renting a $6k/mo apartment and street parking a leased $90k vehicle used only on weekends. It's bananas.

The city is leaving a lot of money on the table.
It could be $50/mo or $500/year or something. Doesn't have to be the current $0, and doesn't have to be garage equivalent of $500/mo. Those spots have value.
Once you do this, you can then reduce double parking by having actual designated loading zones on every block. Businesses will probably see benefit too as customers can actually find parking nearby that isn't occupied by the same cars all week.

On the Brooklyn side you have parking rules which are too loose and also unenforced. Lot of stop sign intersections and mandatory set back from intersection for parking is not as far as Manhattan so you have cars parked up to the line so you can't see pedestrians entering the cross walk. I know this and expect it and look for it, but a lot of drivers are idiots. Further I find Brooklyn to be way crazier driving since you can have areas with light enough traffic that cars actually get up to serious speed..

The "everyone can bike to work" crew crack me up. There's maybe 6 months/year where it's not far too hot or cold to do that. Most of us do not have bike storage, a locker room to change, let alone somewhere to shower after sweating on a bike ride to work. Not to mention the young, old, injured, drunk, etc who can't be on a bike.
Bike infrastructure in the city is wrong headed in terms of things like over-proliferation of poorly protected mixed-use bike lanes rather than having fewer, safer, protected bike lanes.

Finally in the absence of the actual solution: building more subway lines, we need real dedicated bus lanes so buses become useful. I feel the focus on bike lanes has taken away from this solution that can actually move more people, more safely.

Biggest blocker really is community boards whose meetings are filled with the usual cranks who come to whine at annual condo/coop meetings.

That is - like a lot of our politics, its become "who can we hurt" rather than "who can we help".

The goal should be making life easier to get around without a car in NYC. This benefits all.

If the methods have a side effect of making it more inconvenient to own a car in NYC, so be it, but that shouldn't be the goal...

Agree on everything except congestion pricing, which I think will succeed mostly in stopping people from hopping into Manhattan for dinner/shopping and further push retail to rely on tourists.

And for the record while I do own a car I have always garaged it for the almost 40 years I've lived in Manhattan.

As far as bus lines, as far as I can tell NYC is actually going the wrong way. Where I grew up I had walk 1/2 mile to get on the last stop on the Q75 bus, take it to the other last stop to get on the last stop on the E/F train. Today I couldn't do that because there is no more Q75. The top options for using public transit to get to my office on Google maps start off with "Drive a car..."

@30 Hilarious regarding Vornado person. This explains so much.

@keith: as @krolik points out, they’re not handing out $1M incomes fresh out of the womb when you start working. Perhaps it was different for a punk-rocker-turned-working-stiff in the 80’s, but not anymore. My point was more about the choice for someone who has been working ~10 years somewhere in the 30-40 yo range. Their 10-year savings trajectory might look more like nothing at first, increasing to $200K by the end, tracking income which can be bumpy. So they might only have stowed away $1M the entire time.

But you do make a good point on the investment climate over the past decade relative to the prior one. Socking away & investing over the past decade, starting at nothing and increasing to $200K/year, would indeed have left you with $2.5-3M after 10 years. The prior decade, not so much: you’d only be looking at the $1M you put into it.

So, I guess that part does not translate well either across the decade.

@keith>> If you were a renter and had 500k in the market 10 years ago, were able to contribute approximately 50k per year into a simple index strategy (spx), that would put your portfolio at about $3M.

True. It also means you probably had been working more something like 10+ years to save up that first $500K (see earlier comment about increasing income/savings and lack of stock market returns 2000-2010). After another decade of work, that puts you at 45-50 yo.

I think the alternate path, more typical for the lifecycle of a 35-40 yo, would have been to buy a home. So use the $500K as a down payment to buy a (say) $2M an apt to house the family for the upcoming decade+. That would have taken out not only the $500K from SPX, but also the $50K annual contributions between principal payments, upkeep, and increasing the size of the rainy-day fund associated with ownership. At the end of the decade, you’d be at $1M equity in a $2.2M home. Good enough, but not quite flush like the $3M version that makes their way to Keith.

@keith>> If you were a renter and had 500k in the market 10 years ago, were able to contribute approximately 50k per year into a simple index strategy (spx), that would put your portfolio at about $3M.

True. It also means you probably had been working more something like 10+ years to save up that first $500K (see earlier comment about increasing income/savings and lack of stock market returns 2000-2010). After another decade of work, that puts you at 45-50 yo.

I think the alternate path, more typical for the lifecycle of a 35-40 yo, would have been to buy a home. So use the $500K as a down payment to buy a (say) $2M an apt to house the family for the upcoming decade+. That would have taken out not only the $500K from SPX, but also the $50K annual contributions between principal payments, upkeep, and increasing the size of the rainy-day fund associated with ownership. At the end of the decade, you’d be at $1M equity in a $2.2M home. Good enough, but not quite flush like the $3M version that makes their way to Keith.

@30yrs: hilarious quote from Roth. I’m glad TRD called him out on that. Oh no, wait, that was you!

In any case, the number of HHS in NYC whose income is $750K+ is 40K. A great resource for such info:

https://www.ibo.nyc.ny.us/RevenueSpending/2018pitdata.xlsx

Keith, I kinda wonder if you haven’t been Roth-ified somewhat. This poor guy Roth, every other person he sees makes $1M. So no wonder he thinks they grow on trees. I wonder if the same thing happens to you, given your niche & who is likely to show up at your door (both buyers & sellers) and their characteristics that may seem more common than is actually the case in the population.

Just to be clear I think I pointed out I was using that example to a very specific buyer profile, here in Manhattan. I certainly don't think everybody makes $1 million and I never said that. And I certainly don't think it's easy. I was addressing the profile of mouse based on his comments regarding his income.

And if you look at the chain of deals we do we certainly have plenty of clients that don't fit that profile.

That is why I think it's so important to always live within your means because your savings is always relative to what your income/expenses are.

So if you're making 250k a year, you should be living in a home that will still allow you to invest whether you own that home or rent it. I don't think there's anything outrageous about that comment? And I think it's sort of in line with what you believe @nada.

Although I can't seem to win here : ) even when I'm telling you my own personal philosophy of prioritizing investment in stocks over real estate ownership, I'm getting crap! Lol.

Again let me start with my own personal profile, since I'm a real estate broker that posts his transactions I think most people can get some idea of my income.

Over the last 10 years I've been making between $250 to 600k per year, I've easily been able to save a minimum of 50k of that, the last few years significantly more. As my income rose my expenses did not rise much because I continued living as I did making 250k. And I'll just say my investments have done significantly better than the s&P 500 over the last 10 years, due to some lucky purchases in part.

Now yes I do currently live in Florida, however before I moved to Florida I lived in Washington Heights and paid $1,400 a month for a large two bedroom in a pre-war building on edgecombe avenue. I was always very mindful of my monthly fixed expenses, and I chased cheap real estate where I could find it. I have total investments of about $2 million, and I own a home with no mortgage.

If a City college dropout like myself can do it I think anyone can. That's my mindset.

Keith

@Keith One thing to point out is you are a business owner. That means you taxes might look completely different to those of a W2 earner.

Also, many salaried jobs that pay $250k (and put you on a trajectory to make $500k eventually) often require one to live next to the office. The recommendation to spend less on housing and live within one’s means is a good one but not always practical.

@Keith One thing to point out is you are a business owner. That means you taxes might look completely different to those of a W2 earner.

Also, many salaried jobs that pay $250k (and put you on a trajectory to make $500k eventually) often require one to live next to the office. The recommendation to spend less on housing and live within one’s means is a good one but not always practical.

I like the kiss philosophy. All I'm saying is if you manage your budget you can own a home and continue to invest in stocks. Almost regardless of your income, that's all I'm saying.

Home ownership doesn't preclude you from investing in the stock market.

Keith,
How come you never bought anything in NYC?

My ex-wife owned a brownstone in Chelsea and I lived there for 13 years. I owned a couple of houses in the Catskills, one that I actually built myself, I was delusional enough to think I could live off the land.

But mostly it was because I lived a fairly inconsistent lifestyle that involved a lot of traveling, and not a lot of money making. Playing music from 1993 until about 2004, (I moved to NYC in 1981, played music most of that decade). It involved 6 months of touring every year. After that spent most of my time in Central America surfing, made just enough money in real estate to support that lifestyle, which was my personal choice. Thought if I wasn't going to be wealthy, I'd be happy. Also in the mid '80s we spent our winters in Southern California.

I started the Burkhardt group and reinvented myself in 2007, I fell in love with someone who wanted a more stable lifestyle and I was happy to try to provide it to her.... Then a baby came into the picture.

And that's the rest of the story...

Keith

I should say that's just some of the story... If you are wondering how I made a living in the 80s, I was a bread Baker, I owned a small store in Woodstock (where we spent the weekends), a small moving company, and we owned a vegetarian catering company along with a small vegetarian Cafe on 7th Street and avenue A, called the Banyan tree....

Why did I move to Florida? I got very ill (some here know the story). Long story short I'm now better than ever, however that woman I fell in love with who didn't want babies, decided she wanted one. When Zoey was diagnosed with type 1 diabetes, we realized it was just incredibly easier to live here. She's absolutely healthy and happy, but managing type 1 is a 24/7 job.

This is like a get to know your real estate broker segment.

Keith

@Keith -- You made it work like Philip Glass did, but a generation later. I recently finished his memoir "Words without Music", and it was fascinating to see what he, and many other musicians, painters, dancers, etc. were doing to make ends meet. Also a great portrait of the arts in NYC at the time.

@keith - Thanks for sharing. I have enjoyed watching the progress over the past 10 years and always appreciate getting more of the back story. I feel like NYC is particularly rich for unconventional individuals. I’ve met lots of finance and law individuals who “have” to be in NY for professional reasons and loathe it, but I’ve never met a creative type anywhere who hates NYC.

Thanks MCR, I've always appreciated your support. I certainly don't come from a traditional business background! And when I started the Burkhardt Group 12 years ago, quite honestly I was broke(happy but broke!) I was just trying to pay the bills on my own terms, and get back to a place where I enjoyed what I was doing.

Thanks to Streeteasy, I found my niche market and have never been happier! And I never imagined this level of success, like I said I was just trying to keep the lights on.

Here's another funny story for you and true. I wasn't particularly loving my life as a real estate broker, office politics and all that business. I was watching Seinfeld one evening, the episode where George does the opposite and everything works out. I sort of joked out loud, what if I did the opposite with real estate, essentially the opposite of everything I was told was necessary to be successful... The rest is history as they say. Lol.

Keith
TBG

@Aaron2 thanks for the tip on the Philip Glass book, a big fan especially of his collaboration with Bowie! I think he lived in NoHo or had a studio there, I often saw him around Great Jones Street.

Keith, there are differences between what you think people should have been doing, what I think they should have been doing, and what they were doing. Circa 2010, it was quite common for home buyers to think of their home as their primary investment. It was quite common for first-time home buyers to put the vast majority of their net worth into purchasing a home. You might think it wrong, but that’s how people behave. There’s a reason coops have a 1 year post-closing liquidity requirement or whatever, which amounts to a small fraction of the down payment.

After a decade of seeing a 5x gain in stocks, people may have become flush & woke in their perceptions of putting their money into stocks vs RE. Funny how a 5x run does that…

A typical balanced portfolio includes some to stock, some to cash, some to bond, and some to real estate.

Unless you have no intention to use the money within the next 10 years, it is very risky to allocate more than 50% to stocks

@inonada The bond’s interest rate is only 1%. Is there any utility of bonds for a balanced portfolio? Do you think it is a good idea to replace the allocation to the bond with cash?

Keith>> So if you're making 250k a year, you should be living in a home that will still allow you to invest whether you own that home or rent it. I don't think there's anything outrageous about that comment? And I think it's sort of in line with what you believe @nada.

There’s nothing outrageous in that. Not really what I believe in / how I run my financial life. I don’t have any set rules / guidelines / etc. about where money should go other than whatever is presenting the best value.

Maybe it’s the stock market, but it could be the RE market too. If I were making $250K, but for whatever reason some home that costs $6M to build is selling for $1.5M because of the whims of the market, I’d stretch every last dollar to buy it. It’s also the case with renting. If people have gone insane in Nowhere renting $3M McMansions for $30K, I’d be renting the real $25M mansions in NYC for $40K (as discussed in this thread in December).

I also have a want-nothing / spend-little attitude. I think you & I share that. Even my ridiculous apt barely makes a dent. Part of the reason for that is because I’ve always spent a small fraction of my income and been very clear-eyed about investing the bulk where it can grow rapidly. So that just leaves a large, growing pile of money to be redirected as value dictates, whether on spending (a little) or investing (most of it).

A lot of people want stuff, I just never have. I was perfectly happy living out my 20’s as a grad student on $22K. Never once thought “Once I make some money, I’m gonna buy X!” A motivation for some, but never for me. So in many ways like your carefree music-playing / surfing life, except my version of music/surfing just happened to pay very well afterwards. So I never had the “Crap, I need to figure out how to put food on the table” moment: the food was always there, and aplenty.

In any case, that’s how I do it. Others do it a different way, that’s OK by me. Just here to discuss & learn from others who have different life paths & viewpoints.

I certainly learn from you nada and always pay close attention to your posts. Like MCR likes to point out, your brain is running on a different gear. And I really had to bite my tongue when we met, because I wanted to pick your brains on everything from blockchain up!

You have a very Zen, dare I say Buddhist quality. Sitting in your beautiful home, on top of the world I could totally sense you're non- attachment to it all. To have so much, or at least the ability to have so much, and want for nothing.

But just to be clear, and I may be misunderstanding some of what you're implying (and to be honest I often have to read read what you've written a few times to grasp it). I have no idea what's right for anyone other than myself.

Generally, nothing wrong with living within your means in most situations. But there are very important exceptions.

When one goes to college/grad school in the US, and absent rich parents or full ride scholarship, one has no income and is living not within one's means for a period of time, hoping for a payback later. Similarly, one might have to dress in nice suits, live close to work, work 100 hours a week, in order to build a career in a competitive field. Alternatively, when I was a "starving artist" in my 20s, I had to travel a ton out of pocket, and had almost no savings because everything was being reinvested into my career. Similarly, young working parents (without family help) might have to hire a lot of help and spend a bit more than an ideal amount, in order to keep career going and get through a tough period.

Strictly living within one's means could result in underinvestment in one's education or career. I think it happens a lot among folks coming from a less privileged background. They often cannot imagine the payback they can have on that education, and in the near terms the loans seem too daunting.

Keith, my wife was asking me last night if I ever felt like an impostor, as in we don’t belong here. I’m fine with it, but I guess she sometimes feels like that. I hope for her sake the next “best value” place is more down to earth.

I suppose having a spouse who doesn’t want for much helps too. In my experience watching others, the “want” side wins. Not saying there’s anything wrong with that, or wanting things in general, just that’s the way it seems to be.

Well you answered something that subtly crossed my mind as I sat sipping my winnings : )

Any chance that nada wished he owned this place so he'll not have to give it up after a few years?

I can relate though. 15 years ago I was living in the back of my truck, happily I might add. We do a lot of pinching ourselves around here. Anyway these days it seems pretty normal to have people living in there Vans or trucks!

Maybe I should have started a YouTube channel?

Ha. Nice story Keith. I admire people who can be happy even if they have less. NYC real estate is expensive and most people have to make some compromises relative their desires while renting or buying.

>nada ; How do you usually find your rental apartments? Streeteasy, NYT, particular brokers/brokerages?

Keith, I suppose I can just buy it / an equivalent if I want to end my itinerant life. But I don’t mind the uncertainty. Sometimes it feels like I’ve kept flunking up & up in adulthood, stumbling my way onto ever-nicer apts without ever “settling in”.

Your story is so interesting, and one of the reasons I like this forum so much: you get to meet people with very different walks in life. I hadn’t realized you were such a newbie broker when we started here on SE.