What Will It Take For Co-ops To Sell Again?

Since I am not familiar with Dallas, let us give a hair cut to my ignorance. $6mm and $120k taxes. $30k insurance and upkeep. $150k NOI. 3 cap.

https://www.zillow.com/homedetails/5100-Brookview-Dr-Dallas-TX-75220/26759527_zpid/

George, that's a great ROI over your 3-4 year hold period. With 3% cap rates and 6.x% mortgage rates, don't you think you're gonna end up with a crap ROI over the next decade? I understand the desire to monetize your ARM, but how many years do you have left on it? I worry you're gonna turn a great investment into a mediocre one because you want to hang onto the breadcrumbs.

>> At the price I'm in at, it's more like an 8

Who cares what price you're in at. You've made the money, you're now at 3. Take the money already! ;)

Thx, 300.

McMansions take far more than $30k for maintenance. They are poorly constructed and tend to fall apart after 20 years. Also capex is high because tastes change and it's hard to fix a 11,000 sf place. This is the virtue of a big 1960s NY coop - divide that maintenance bill by 300.

Agree that $30k for maintenance and insurance is low. I was just trying to get to the highest rate which was appx 3 cap. Since I don't know the price is and tax assessment is, there are a lot guesses to make the cap rate higher.

My larget point is that once you go for 3x+ median price property in a large town/city > say 100k population (not a small suburb where the range in house prices in lower and liquidity in rental market is low), cap rates are much lower than median priced property.

> I worry you're gonna turn a great investment into a mediocre one because you want to hang onto the breadcrumbs.

> Who cares what price you're in at. You've made the money, you're now at 3. Take the money already! ;)

This advice is interesting. The average owner Joe always like to use the price he is in at to compute his personal profit/loss, never thinking about missed investment opportunity for increased wealth from his owned home.

> I asked the board for similar advice when we were selling our first coop in 2019. Everybody told me to to take the hit and move on. We did and sustained a 25% loss of capital without looking back. We are now five years later and it was the right thing to do. The market for what we were offering today is flat to where it was five years ago.

Selling at 2019 is definite the smart decision. If you put the money from the selling your coop in 2019 into your favorite mutual fund (Vanguard Balanced Index ), it is about 8.47% annual return for the past five years, about 50% total return.

@Woodsidenyc - Yes, that is exactly what we did, and I credit this forum for that decision.

The short term macro probably says to sell now, but I don't want to pay cap gains tax, I'm generating good cash flow, and I'm so levered that just a tiny price appreciation means I beat the expected returns of many other asset classes. I modelled it all out of course.

The other wildcard is that I can add 1000 sf as of right. If that costs $1000/ft or $1m, it probably adds anywhere from $1.5-3m to the property. I still have the low mortgage for a few more years, and I figure rates will end around 4% when I'd cash-out refi to undertake such a project. So that's why I'm not selling.

One other factor, to my point earlier about market flexibility, is that I could in theory sell and have cash in 10 days. It would require dropping the price a lot to attract a cash investor, but things just move a lot faster outside NYC. Contracts are standard, lawyers aren't typically used, land titles are straightforward, and the HOA requires nothing but the buyer's mailing addresses. A rental in NYC requires more paperwork (most of it pointless) than a purchase and sale elsewhere.

Trying to keep up.

NOI on a coop would be what you think you could get in rent minus maintenance + property tax, right?

https://www.investopedia.com/terms/n/noi.asp

And the cap rate would be the NOI divided by the coop's price.

https://www.investopedia.com/terms/c/capitalizationrate.asp

The NYTimes Buy vs Rent calculator keeps giving a buy signal over 10 years although admittedly with only a 4.5% investment return rate (bonds + S&P), 3% increase in value of the property but also 3% inflation rate.

Sorry not at all good at math, investment or real estate

@MTH - small changes in inputs will drastically change the output.

Consider that NYC RE pricing has been growing slower than inflation. So try 3% inflation (reasonable) with 1-2% RE appreciation (heck try 0 given the last 10-15 years).

And then investment return of 4.5% is artificially low considering both historical S&P annual returns and current 5% rates. So why not try.. 6-7%.

Don't you think buyers should look at New York City properties individually regarding performance? Cobble Hill has performed significantly different than say, the upper East side for instance. If you purchased in Greenpoint or Cobble Hill 10 years ago, on some properties you've doubled+ your money. I recently posted a loft in flat iron that did pretty well over the last 7 years.

Keith

Keith - agreed
Neighborhood and borough as well as price range and coop vs condo performance have varied tremendously post GFC.

I dug up the old thread from when I was in Yentle's shoes in 2019.
@Yentle: The key to moving our particular apartment was following the advice of our agents and the seasoned posters on this forum. https://streeteasy.com/talk/discussion/45365-odds-of-selling

I'm not seeing any more optimism for run-of-the-mill coops today than in 2019.

In an ordinary market, investors would enter and provide liquidity that would help clear the market and set prices. It's really hard to know what the price is, which leads me to my prior prediction that nominal prices will stagnate while real prices fall till the market starts clearing again.

Woodside>> This advice is interesting. The average owner Joe always like to use the price he is in at to compute his personal profit/loss, never thinking about missed investment opportunity for increased wealth from his owned home.

Isn’t this just common sense? If you’re dealing with an asset that doesn’t have liquidity, holding onto it versus selling isn’t really tantamount to buying vs not. But if it’s liquid, it kinda is the same thing. I don’t think a primary home is really liquid (you can’t just sell it whenever), but an investment property is pretty liquid in the scope of “sell sometime in the next N months”. Unless you’re holding onto $100B of it like the BREIT fund, in which case you can’t really liquidate in N months without severely moving the market.

Of course, transaction costs and tax considerations can skew the analogy as George notes in his personal case. I recall a conversation circa 2007 with some random person who was connected to Manhattan folks whose business was investment properties. He said these people knew the 2007 prices they were paying were too high, but they really didn’t want to miss out on their window for a 1031 exchange for properties they had sold and consequently pay taxes on gains they had been accruing for decades. At the time, to me it seemed like a situation where the investors were signing up for poor returns for the next decade-plus, just to avoid taxes. I don’t know what happened with these investors specifically, but given how Manhattan prices have shaken out, I imagine they would have been better off paying the tax and putting the proceeds in a more productive asset class.

George, thanks for sharing your thoughts.

Where do you think residential investment properties are headed nationally? I was browsing BREIT’s materials recently. They seem to tout their residential holdings a lot. But when I look at the numbers, the future prospects don’t seem all that great to me. At the end of 2020, their blended cost of financing was 3.1% and their NAV was using an exit cap rate of 5.2% for residential properties. For context, the 10yr rate was 1%. At the end of 2023, their blended cost of financing was 6.2% but the exit cap rate had barely budged to 5.5%. For context, the 10yr rate was 4%.

The outlook for their financing costs doesn’t seem much better than 6.2%. SOFR is expected to come down, helping their floating rates. But more of their ZIRP-era fixed rates will expire too, so it will likely be a wash. So an unbiased estimate for financing rate would be 6.2% in the decade ahead. Now, I am guessing the 5.5% exit cap rate is simply reflective of market pricing at the moment, not them playing games. It’s just where the market is.

But this all begs the question. If financing for this sort of thing is likely to be at 6.2% going forward, will cap rates at 5.5% really hold? To me, it feels like Manhattan 2007 all over again. Maybe financing rates will drop to 4%, yielding modest returns on the whole endeavor. But if that’s your outlook, why not make a killing with concentrated trades on bond rates?

Tracking Manhattan studios some few have come down by ~5% but what keeps me from buying nest for the future (apart from opportunity costs) is maintenance.

'“In my 40-year window on the market, I’ve not seen the volatility and upward pressure on maintenance in my career,” says Jonathan Miller, president and CEO of appraisal firm Miller Samuel. “From the pandemic year on, the upward trajectory seems to be consistent.”'

"Monthly fees at NYC condo and co-ops have risen nearly three times faster than the rate of inflation. Monthly charges for condos reached $3.20 per square foot in buildings sold in the third quarter of 2023, while co-op maintenance fees reached $2.44 per square foot, according to data from Miller Samuel. That’s a far cry from 15 years ago, when both metrics were less than $1.50 per square foot, and condo common charges didn’t exceed the $3 margin until 2021."

a few

and

buying a nest

@inonada - good point and coops can be even more illiquid if your board doesn't like your selling price I guess you're out of luck

@Kieth re Paris 60's architecture are you thinking of Paris burbs? I can't picture much of it within the 20 arrondissements.

Other big cities don't have anything like NY maintenance so once you've paid you're done, more or less. (What they do have is VAT but that's immediate and easy to get around: you can always trim discretionary spending.)

A few things, I guess .. with coops, there are no investors "to enter and provide liquidity" right?

And then as nada points out - different investors have different investment horizons, mandates, restrictions, costs of capital, cost basis, tax implications, etc.

So a given moments market clearing price may be rational for some actors but irrational for others.

This happens in asset outside of RE as well.

Where does a coop fit into this budget?

https://www.reddit.com/r/Salary/comments/1dwvv2r/how_998k_hhi_in_nyc_gets_spent/

$50K in vacations a year?!!! That's like five vacations -- how can people with those salaries get that much time off (my clients don't!)

Also, bad pay for the babysitters and cleaners...

@Ali - my initial response, but allegedly both in tech so actually believable lol. The 1:2.66 ratio of vacation spend to savings/investments is pretty wild. I mean even the vacation:housing ratio is 1:1.7 which is incredible.

I always enjoy these budgets because the % allocations are often surprising.

They kept housing and transport costs quite low for family size / income, and childcare costs are not unreasonable for NYC either... It just seems to be the rest of the spend that makes me go hmmm.

You can easily spend 50k Just to rent a beach house for the summer for a family 4.

Vacation money is spent as follows:

https://www.reddit.com/r/Salary/comments/1dwvv2r/comment/lbyj4bz

Approximate:

- one $10K trip with the four of us for a week; 3 of the last 5 years it's been disneyworld
- each of us get a week getaway and leave the other at home with kids. usually about ~$5K spent each
- multiple small trips to visit in-laws and my parents in mid-west. That's about $1500 each time
- a $20-$25K trip for a week near or around our anniversary...yes business class tickets and nicer hotels

Travel is just really expensive right now, I've given up trying to understand how we're spending so much, I just accept it. But I'm 60, I'm in travel mode, I want to do it all now and just chill in my later years. But a week in Park City for 4 of us is $12000 give or take a little. Basic condo, but walkable to lift etc. lift tickets $300 a pop, but we prepurchase in July to save. This year we'll go back to Switzerland, it's cheaper (if you can score good plane tickets). And a much better experience...

@nada - yeah saw the breakdown and was impressed they could take that many trips with 2 jobs and 2 kids, but then I saw FAANG and lold - uniquely high paying and low effort

@Keith - agreed
I make a more than pre-COVID, but it seems like every trip I've taken since 2023 has been the most expensive trip I've ever taken.

Also TSA still reporting record breaking airport travel numbers.

I price checked The Breakers a while ago and saw it was about 3x the price I paid in 2013 for same time of year now.

One theory I have is that housing & automotive markets are dead due to rates, so people are disposing of their income more on things like travel.

So despite the economic numbers cooling, talks of a slowdown, and mid/lower end retail reporting bad earnings.. I think the top 1/3 is still spending like never before... in some categories.

>> One theory I have is that housing & automotive markets are dead due to rates, so people are disposing of their income more on things like travel.

That makes sense to me.

Another theory I have is that the wealth effect on spending is just much stronger than typical. People have watched stock indices steadily grow 6x over the past 15 years. Maybe they didn’t participate in the full run, maybe they only joined partway. But nevertheless, it’s convinced them that sitting in a stock index will increase the value of the already-fattened portfolio another 4x over the next 15 years. Because 10%/yr is what stock indices do, no need to consider valuations or rates or anything else. There is mass belief in that mantra, much like the mantra of “Manhattan RE only goes up” 15 years ago.

The stock market wealth effect certainly feels different than the late 1990’s, when the mentality was very much shorter-term and less broad-based. It was more “I bet I can make 25% over the next year, and thereafter who knows….” That, IMO, yields a lot less wealth effect spending than “I’m sure my portfolio will grow 4x in 15 years”.

@nada - That is an interesting take and meshes with something I experienced recently. I do not pay attention to the stock market at all, but an individual who is likely in their final decade just made an incredibly generous offer that he admitted was prompted by his shock at the value of his stock holdings. He said they had appreciated significantly beyond his expectations such that he is upping his spending on travel a few notches, which includes hosting extend family on a bucket list travel adventure.

And his experience just goes to show that if you have the skill set and confidence to analyze and buy individual stocks in the way that w67th did, lucky you. Apparently Apple has been his winner. It is also not lost on me how well NVidia has been doing for @stache. I don't have the skill set or the stomach for it, but I take my hat off to those of you who do!

Keith, I get that one can easily spend $50K on a beach rental, but that consumer could also spend market rates (what's that now, $250-$300?) to get a two-bedroom/two-bath cleaned, which would be $12K - $15K a year depending on whether you're going weekly and whether you're "not paying" your cleaners for weeks when you're off at the beach. (FWIW, most people at that income level actually do continue to pay their cleaners when the employers are out of town, and either have them do organizing/deep-cleaning tasks while they're gone or treat the money as vacation pay.)

Any way you slice it, I find the redditor's budget of $6K annually for "cleaning/insurance/utilities" -- we own, but our insurance alone is over $6K, for heaven's sake! -- to be insanely low.

The redditor mentioned that " We spend a lot on the things we love, but frugal on the things we don't"

This seems very true.

Compared with his income, he is very frugal on the apartment, food, shopping and cleaning/insurance.

He probably only hires the cleaning service once a month (so about $3K a year). In the remaining weeks, irobot can do the job. He may pay about $1.5K for the insurance (this is on the top of the co-op building's insurance, it seems reasonable from my personal experience of owning a co-op apartment in Queens), and then he has about $1.5K for the utility. Now all numbers add up to $6K in total, haha.

Yes, he spends about $140K on the kids in total (nursery and baby sitter combined) and $60K on vacation, this is where he spends on the things he loves.

He has about $233K saved ($90K from the post-tax Roth 401K and $133K from non-retirement investment account), about 44% of the post-tax income. Very impressive.

>> Where does a coop fit into this budget?

This person listed $85K for mortgage + HOA and said on the thread they lived in Manhattan, I think. So perhaps they already had bought a coop some years ago.

FP, given that the kids are in nursery school for N hours a day, maybe the nanny also does a degree of the cleaning?

Re the Redditor's budget, I like the Redditor's priorities and agree that the Redditor probably already owns.

Re pre-war coop sales, here is an interesting one: https://streeteasy.com/building/419-east-57-street-new_york/12a It closed for significantly above ask and required no board approval. Was a sponsor still involved in the building? Did a sponsor undertake a renovation that commanded a premium for the bed/bath count in a prewar in a dated neighborhood?

Sponsor owned apartment commands a premium simply because board approval is not required, and purchaser does not have to have their lives/finances put under a microscope

Then you are always that owner who the neighbors think is really selfish and probably couldn't pass the board on the merits.

I was just looking at the history of sales, and also looked up the identity of the sponsor. It looks like many of the sales in the building over the past 20 years have been Sponsor sales. This seems to be one of those pre-wars that went rental at some point and then was converted back to a coop in 1983, so the neighbors are undoubtedly fine with it all. In any event, it is a building that I watch, and, had I been more attuned to the nuances of NY real estate when we were buying, this is a building I would have likely preferred over our current building, but who knows what dysfunction is lurking in that coop family.

And this brings up a point that had faded in my memory, which makes me realize I am still far from understanding all the nuances of NY real estate. When we were looking, a friend told us to focus only on buildings that were "fully sold" and had been "fully sold" for a number of years so that all the kinks had been worked out and sponsor abuse was not an issue, so I actually probably would have been wary of 419 E 57th when we were buying due to the sponsor's continuing involvement.

multi trust me I have purchased my share of duds. It's not always party city around here. I would probably do better with index but I like the excitement of the gamble.

>> And his experience just goes to show that if you have the skill set and confidence to analyze and buy individual stocks in the way that w67th did, lucky you. Apparently Apple has been his winner.

I’m glad for your extended relative. Honestly, there’s a good measure of luck that comes with any investment that turns out great. But it’s just not rocket science to skew the odds slightly in your favor. Maybe it’s more the confidence to stick to your belief in the skewed odds even when the outcomes are going the other way?

In 2013 when I suggested Apple on this forum as an alternative to NYC RE, after which w67th went knee-deep, it was a no-brainer value-wise. It was a very viable concern with arguably plenty of room to grow, and $100 in stock bought you a portion of the company amounting to $40 cash and $10/yr in profits after corporate taxes. In an environment where interest on that $100 would be $0.

Fast-forward to today, and that same $100 buys you $1.7 of cash on AAPL’s books and $2.8/yr of profit. In an environment where interest pays $5.3/yr. Maybe one could argue the growth prospects are lower, maybe not.

I certainly didn’t know in 2013 that AAPL would yield a 19x return the subsequent 11 years, and I certainly don’t know what the next 11 years will bring. But as an investor, to me the prospects looked much better in 2013 than they do now. That’s my opinion, well-formed or not. However, it kinda feels like the buyers these days are more enthused by past performance rather than forming any opinion of future expectations beyond blindly looking at past performance. People are willing to have 10x the money invested in AAPL today than they did in 2013.

In any case, good on your extended relative for having some fun with the money while he/she still can.

@inonada - I did not understand a word of your post. All I know is the he is cashing out and the extended family is looking forward to the trip!

I find it interesting that almost all these outdated apartments are full of people who enjoy living in them and don't want to leave.

@stache - I feel the same way about poker; it is no fun playing the safe way and being disciplined. All the fun in the game for me is the gambling. Were I a professional, it would be different, and I would consider it "work."

@30yrs - you need to meet my building residents. The majority are planted for life. I cannot see this continuing to the next generation, but time will tell. Even the young trust funders say they have purchased the slice of Manhattan real estate they believe will meet their needs indefinitely. Again, only time will tell.

P.S. to @30yrs - I can't say that I don't understand the mindset. I love our apartment and still fantasize about retirement strolling up and down the Midtown Greenway and hopping on the 2nd Ave subway to head downtown for dinner and a show at the Comedy Cellar for a fix of more vibrant parts of the city.

nada, nannies generally will do kid-related things (like putting away kid toys and prepping kid meals and organizing kid closets) but they generally aren't cleaning bathrooms or even doing the parents' laundry.

To the title of the thread: SE seach shows 318 UES doorman coops in contract. Active 629. 07/11/24 data. While the movement may be at lower prices and slower pace, they are still moving.

forcing old people into a cellar to laugh seems cruel

To @ 300_mercer: not in our building they aren’t. Maintenance is a big big insurmountable challenge of no interest to those residents who plan to stay life long (posh senior living) and so we cut and cut and cut and wait. I wonder too if multiple sales in one building create negativity around each other? We’re down to $1000 per square foot for a beautifully built space near the Park.

>>> This person listed $85K for mortgage + HOA and said on the thread they lived in Manhattan, I think. So perhaps they already had bought a coop some years ago.

These numbers are close to what we pay for a 2br in a similar area. We bought in 2021 and have a 3% interest rate.

They mention their apartment is 950 square feet further down the Reddit thread.

@Yentle - You are on the right track; as one of those who values posh senior living near the park, I am paying attention as no doubt the few others out there like me are. I believe you will get a buyer this way. Everything with our sale when we were in your shoes went exactly as our agents said it would. Our experience is a great case study of the expertise and tremendous value excellent real estate agents bring to the process.

Also Yentle, we're in the dog days of summer right now. I'm going to put my money on a sale before the year is up. We currently are working with a Park avenue seller, I have assisted their family with some other sales. In this particular case, he's in zero rush, so is currently staying the course. However, it is pretty slow going for this type of property, couple of showings a month.

Keith Burkhardt
TBG

With some of the relative price decline I have seen in UES coops vs NYC and places outside NYC where people have moved to (TX, FL up 30-50% in last 5 years with commensurate increase in taxes and upkeep costs), I am tempted to call close to the bottom. UES rentals West of Lex (even 3rd ave) are limited in availability.

>> @inonada - I did not understand a word of your post. All I know is the he is cashing out and the extended family is looking forward to the trip!

It’s all fun and games to take a glib attitude and play “I’m too dumb to understand” when you have means and support. I don’t really disagree or agree with your advice to Yentle to cut the price, but I am guessing the outcome would leave Yentle with ~$1M less money relative to Yentle’s expectation circa 2015 of where they’d be in 2025. Maybe $1M is chump change to Yentle, I don’t know, but from the consternation here it doesn’t seem like idle wonderment.

Your advice seems to be “Suck it up, take the loss!” My advice is “Consider what you’re buying”, to which your response is “It’s too hard” when it really isn’t.

Everyone should consider what they are buying now, and nobody should spend time dwelling on what they did in 2015.

@inonada - Yentle is not considering a purchase; as Rinette points out, the purchase decision was years ago and is spilt milk at this point. Yentle is trying to sell and is not in control in the same way someone who is considering purchase is.

And with that said, 300mercer's comment is interesting. If he thinks prices for Yentle's segment are likely to rise in the foreseeable future, that is worth considering and exactly the input Yentle is looking for.

Yentle might want to consider what a prospective buyer currently confronts with “Consider what you’re buying” in planning a path forward.

How? What does that look like?

I thought telling Yentle to price the apartment to align with the fundamental analysis the krolik followed when she was purchasing as I did earlier in the thread was doing exactly that.

Yeah, that’s true.

The problem is that price amounts to Yentle selling for 0.5x the purchase price. I don’t imagine that was Yentle’s outlook going in. It was probably more like “I’ll probably sell in 10 years at 1.5x the purchase price”. So 0.5x might just be too bitter a pill to swallow.

I don’t dispute that such a pill may be better than “just pray while losing 10% of apt value every year in maintenance and forgone interest while it sits empty”. But for Yentle, unlike with you as you famously put it, it may not be equivalent to a shoe purchase where any non-zero price at sale is viewed as gravy.

Agreed, but that does not change the landscape Yentle is facing. I don't think anyone has been blase about that; all have been very matter-of-fact, myself included. One thing I have not considered, however, is that maybe Yentle does not "have" to move. If the apartment is Yentle's primary residence and is still viable as such, then Yentle does have more control than I was assuming.

@FP some nannies will do cleaning and cooking. Depends on what was agreed, but such nannies would typically charge more. Which it appears this nanny does, based on the disclosed budget.

I would have figured as much.

This nanny is paid $27.50/hr. What is the typical rate, if that is considered “more”?

Here is a happier data point: https://streeteasy.com/building/14-sutton-place-south-new_york/9b

I looks like this apartment with a profile similar to Yentle's (but worse location than Yentle's IMO) found "the one" within a year. I don't get why this one moved, but again, all it takes is one who values the apartment at the level the seller does for a transaction to occur.

We don’t know how many hours the nanny works…. considering nursery school.

But for 2 kids + household duties $27.5 would make sense

Nannies in manhattan typically are $20-30 per hour. In the boroughs i have seen less than $20 ($15-20 typically) because nanny typically doesn’t have to travel as far (she would live nearby). These are live out nanny prices. Live in nannies are less per hour. Additional duties and more than one kid = higher rate. In manhattan $20 per hour likely means a less experienced (in america) nanny that might not speak good english (which would work for me as i want a trilingual kid, but maybe not for FP). Lots of recent migrants right now are interested in this kind of work..

@mcr We had a similar situation at 100 UNPlaza, 46d. A large firm had it for for 6 months with no luck, very few showings no offers. We took it over, made a few tweaks, brought in very nice staging. But at the end of the day it was just finding that one needle in a haystack, cash buyer who wanted to call this particular apartment home. We also recommended keeping the apartment on the market through the holidays, when a few others pulled theirs. This is when this particular buyer manifested.

Keith
TBG

Thanks, Krolik.

FYI, this particular nanny works 45 hours per week: https://www.reddit.com/r/Salary/comments/1dwvv2r/comment/lcgjtpt

We pay our housekeeper $40/hr (as an employee and on the books like this nanny), so $27.5/hr just didn’t seem particularly high to me.

@keith - Don't sell yourselves short. Staging and keeping it on the market over the holidays are what caused me to notice the first coop we bought in NY. It was a similar situation where a new agent had taken the property over from another agent have it some time on the market. The property had flown entirely below the radar unstaged, and I happened to be in NY over Labor Day in 2013 to look at the property in person. Unstaged it was apparent the apartment needed a gut reno that just caused me skip it, but staged showed me how nice the apartment could ultimately be if we were just willing to put in the work.

In any event, I imagine it must be satisfying as an agent to move an apartment that another agent had been unable to move, regardless of whether the reason for the transaction was a new strategy or just dumb luck.

@nada Does your housekeeper work 40+ hours per week?
Nannies work a lot of hours per day and at one location, so the total take home pay is more, and less travel. Some of those nanny hours are basically paid breaks. My baby naps 3-4 hours per day, which is paid time for the nanny. Sometimes she’ll do some chores at that time, but a lot of that time is for herself, which is not something most housekeeps have.

Yes, 40 hours split between another household and ours.

I think another dynamic to consider is tenure of the employee.

Typically each year an employee would expect at least a 5% raise (plus for nannies $1- 2 per hour is added when you add a second kid, and if you have 3 kids all the paid breaks I mentioned are eliminated, so nannies would only take this on for exceptionally high pay at the top or above the range i provided). All the raises and extras would add up over time, but nannies are typically only with a family for a couple of years until kids are in school. Vs housekeepers that often stay with a family super long term, and all the raises add up.

Also, since housekeeper jobs are more long term, those in long term employment relationships are probably less affected by the recent migrant influx which might have depressed pay a bit.

Facebook mommy groups are full of people looking for nanny jobs right now. Not sure if this was the case before it became relevant to me. Every job post has dozens of responses within a day.

multi you are too young to be senior!

40 is a lot of housekeeper hours! Imagine this person has above average qualifications and has been with the two families for a long time.

Our housekeeper has been with us for only 3 years but with the other family much longer. Her pay isn’t a reflection of long-term annual raises (although there have been short-term ones). We just hired her at a higher rate. I would characterize her housekeeping skills as superior to our prior housekeeper, but more importantly she is a consummate professional in her work and demeanor. So while I imagine we pay her more than the typical housekeeper is paid, she is worth every penny, and her pay reflects her skills and work product.

Jack Donaghy negotiating with his Nanny:

https://youtu.be/a7-eoiY4bOo?si=3ecNS_ok9uNiop6L

It is totally worth it in my book to pay top dollar for the staff in your home taking care of the most precious and important things in your life, if you can afford it. (One needs to make a lot of money to afford paying 80k of post tax dollars to a nanny).

I am just reporting on what i am observing in the nanny market. Though i will add i am extremely annoyed at how most of this market is under the table, and also how frustrating and difficult it is to find people willing to work legally. Also how annoying and difficult all the paperwork is. It’s like the govt hates working women (/working parents). I do not understand why nanny (or daycare) expenses are not deductible, since this is a necessity in order for a parent to work.

Omg that nanny negotiation clip is gold :)

https://dol.ny.gov/occupational-wages-0

Based on this website the median childcare worker hourly wage in the city is $18.34. (They also say there are on 14k such workers in the city!)

The nanny negotiation clip is indeed gold!

>> how frustrating and difficult it is to find people willing to work legally

We didn’t have much trouble finding a housekeeper willing to work legally going through a placement agency. Everyone we interviewed was able to work legally, and when we asked “Do you prefer to be paid on the books or off?”, more than half gave the “right” answer. It’s one thing if you’re an undocumented worker, but I’d rather not have an outright tax cheat have unfettered access day-in and day-out to the sensitive docs I may have sitting in a drawer.

I wish people would start new threads when they start conversations off topic?! Is that just me?

Threads have a way of diverging from the original topic. Such is the nature of conversations, and if you’d like it steered back to the original topic, you need to participate.

We got on this topic with steve123 musing about how a coop such as yours would fit into the budget of a family whose HHI is $1M. That HH has a nanny that allows them to work so they can generate the $1M HHI. Care to opine on the situation of who your target buyer is, and how you expect them to afford to pay you the amount you’ve been asking for the apt?

@Yentle - Welcome to Streeteasy Discussions. FWIW, I was getting annoyed with the nanny wage digression . . . until I watched the clip.

People abandon raising their kids to nannies and then wonder why they have the value systems they do

I've just become numb to the digression of threads on Streeteasy : ) maybe AI will save us? Automatically start a new thread when it gets too far off topic!

Honestly, I can't complain about the digressions, in large part because I start many of them. Not guilty on this thread, but plenty guilty on many others. :)

" I do not understand why nanny (or daycare) expenses are not deductible, since this is a necessity in order for a parent to work"

Because there are a significant number of people in the government (from both parties) who loudly or silently believe that women should be raising the kids, and not outsourcing the job to others.

>>> Care to opine on the situation of who your target buyer is, and how you expect them to afford to pay you the amount you’ve been asking for the apt?

I would love to know Yentle’s thoughts on this!

@30 It takes a village.

One problem with the stay at home mom/parent thinking is that kids grow up and once they are in public school they need you a lot less. But it is really hard to reenter the workforce after a 5y break. Also, staying at home 24/7 and giving up a career can be extremely boring. People crave variety.

>>>It’s one thing if you’re an undocumented worker, but I’d rather not have an outright tax cheat have unfettered access day-in and day-out to the sensitive docs I may have sitting in a drawer.

I completely agree with the sentiment, but think of reality for these workers. If nannies just wanted a certain amount after tax, i could just raise the legal w2 salary until i hit the total take-home weekly number, but that actually works very poorly. The under the table nannies and their families are all on medicaid or a similar state subsidized insurance. A higher legal wage (somewhere above 30k per year for a family of 2) would bump them off. The fully private self-pay insurance option is really expensive (like 1500 per month for a family), a chunky percentage of her income. So nannies don’t want any legal salary that is higher. Or they would want a salary that is a LOT higher, which is unaffordable to even more families.

As an individual, unlike a large corporation, i do not have any comparative advantage in buying an insurance for my nanny. Who buys your housekeeper’s health insurance?

Here is an UES building that seems to still have it going on: https://streeteasy.com/building/130-134-east-67-th-street

I have not looked up who the recent buyers are, but there is clearly still a market, albeit a small one, for these old world luxurious money pits.

>> Who buys your housekeeper’s health insurance?
When we hired her, we asked if she needed health insurance. She said she didn’t because her family already had coverage through her husband’s employment. Had she not, we would have paid for coverage (without decreasing her wage). If she ends up needing it in the future, we’d do the same.

Note that ahe didn’t respond to our offer to provide coverage with “Well, can you add it to my wage then?” no more than you would at your corporate job. This is what I mean by “consummate professional”. When you get into an arrangement where your legal-to-work nanny/housekeeper is scamming the system with your complicity because you can’t “afford” it, it’s kinda hard to expect much professionalism back from someone scraping by.

@nada so in nearly every case where I came across someone employing a nanny legally with a W2, the nanny’s husband’s job provides insurance.

For the record, I have a full time nanny and I pay her legally via a W-2. I do not offer her a health insurance either.

I do try to take a compassionate view and put myself into the shoes of household workers that don’t have that spouse insurance option. Most of them are just trying to survive, sometimes with very little support, local knowledge and language skills. They might be excellent housekeepers and nannies and they readily contribute their labor to the economy, which is a positive. I do fault the system which is set up in ways that put people into various impossible scenarios and create all the wrong incentives. Not being able to feed yourself due to not having a work permit is one example, but not being able to feed yourself due to the extreme high cost of high deductible health plan premiums is another one. Many of these people are families with (school age) children. Paying taxes is an important responsibility, but providing their underage children with both health coverage and food is a more important one.

Budget is tight on the demand side as well. Very few households have the lower earning parent making 200k+ which is i think what you need to make pre-tax to break even on hiring a nanny for 80k a year + health insurance. Which means there are very few families that would be interested in childcare at that price (they could just have the lower earning parent stay home as a better alternative).

Supply and demand seem to meet at 20-30 per hour, no health insurance offered, under the table most of the time.

The system is nuts, it actually discourages people from working or from working legally and paying taxes. It encourages underemployment (if you work full time for min wage, you are not eligible for medicaid but cannot afford healthcare premiums).

Krolic,
My mom "stayed at home" working part-time until I was 6 or 7 and then back to work full time. Never had a nanny.

Since I make my own hours I can take prolonged breaks during the day and I am reasonably often in proximity to nannies and their kids. A decent amount of nannies simply ignore their kids which is a kind of neglect. But even the "good"one's who engage the kids often meet in little cliques. You would probably be shocked at what they talk about in front of your kids.

@Krolik, for now we have decided to go the sublet route - the rental market is robust and it will cover our costs and buy us some time in hopes things will improve. I think our buyer is still the traditional older, affluent, cash buying pied a terre person/couple - and I think that pool of people is somewhat scared off right now by the City’s politics and bad publicity. The cost of living in NYC is so extraordinarily high that I’m not sure what’s different about our place - except of course the maintenance. That seems to appeal to a older set who see it as refined assisted living…. And also to folks for whom money is no object and they just like lots of help with packages. We do have one younger couple who moved in through what I assume was an inheritance, as there was no sale, and they have a nanny. Younger people that inherit units have to take on the maintenance, but that by itself is still lower than renting comparable spaces….