Unbiased RE advice

Try posting your question(s) here. You may get some useful information here or if not here, someone point you in the right direction.

try urbandigs.com. noah often answers questions of this nature. he has a call out now to people looking to sell fsbo, asking for input on a number of things. send him an e-mail.

steveF, LICComment, petrfitz, tech_guy, happyowner, JuiceMan, ccdevi, and spunky.

whats the question, Ill take a stab here...Thanks aboutready! The FSBO is a survey....not an agenda to get a listing. Just want them to know that in advance. Thanks

I am in the 500k market with requirements of street view, studio or 1br in west village area (ideally elevator).

I have been seeing lots of stuff being posted for lower 500k and wanted to know if its a good idea right now to buy something.
It has been the sentiment that its not the right time to buy and holding off will be a good idea but for 500-600k range, the prices do not drop off that significantly.

I fear that if I keep holding on to the thought that prices are going to get cheaper, I may have missed some decent apartment. Maybe I am too fixated on the 2005 prices and wishing that it could go down that much. Say a unit sold for 2005 is worth 450k and now listed for 550k. I expect 500k to sell now.. but should i wait longer?

Advice?

There should a relationship between an apartment's sale price and the cost to rent a comparable apartment. The old rule is the sale price should be 15 to 16 times a year's rent. If a comparable apartment rents for $2,700 a month, than you're unit should sell for $486,000 to $518,400 in a healthy market. For sale prices got far above that in the boom. In a housing crisis, prices should sink below that -- who knows how far. But if you pay a normal market price and love your home and aren't forced to sell, you're still doing well.

I got this rule from a New York Times story and have talked about it with a couple real estate experts. But you don't have to believe the formula. It's based on the decision people have to make between renting and buying. Here's another way to look at it. What would the monthly cost of buying this place be after the tax deduction. How does that cost compare to renting and keeping your down payment in your pocket?

The idea is to try and find the real value of the apartment to a person, like yourself, that wants to live there. The real estate market will eventually find its way to that value.

You can't day-trade a home...

you should buy all cash and hustle the seller

borrow the cash from the uncle, then get financing, refi's are always better

The cost of owndership would be increase of $200-300 with my current situation which is not too much.
After tax deduction, it would be about the same since I deduct my current rental anyways.

My biggest worry is that prices falling in to 2005 prices and loss of 100k equity in the unit. Short term goal is to live out 4-5 years in this place and trade up depending on the market.

While 100k for 3 years is not a big jump but for this price range I fear as though it maybe too great. Also, the units I have been considering have been mid point in my range but were in high range. I wonder if I could go high range in my price point using the new lowered price. But that would be that I would have to sit and wait.

At current market, for low 500k I think that I am able to get about 5% discount, I wonder if that gap would widen

WAIT 2 yrs

"...studio or 1br in west village area (ideally elevator). I have been seeing lots of stuff being posted for lower 500k and wanted to know if its a good idea right now to buy something..."

You have to be very specific. One place might be a good buy right now with those attributes at that price point, and another might not be. If you want to throw out specific listings you're looking at, I'm quite sure we'll all have differing but equally enlightening (and best of all, FREE!) opinions to offer.

And steve, what, you didn't mention me above in your post #4?!? Doesn't my opinion count, even a teesie-weensie bit?

stick, if your goal is to live there only 4-5 years and then trade up, you might consider investing in equities while you rent, and waiting to buy your trade-up apartment. 4-5 years is an awfully short time to justify buying; the transaction costs alone make it an unattractive proposition.

Interestingly, an apartment fitting your objectives (prime WV, 1 br, elevator building) was just reduced to $510. However, never mind 2005, a same sized apartment on the top floor, newly renovated (the unit for sale now "needs TLC" although it doesn't seem to need a total gut) sold for $495 in 2006. There is still some room for decline...although whether it can negotiated from today's "ask" is unknown.

And Malraux, I would consider it a compliment Steve didn't have you on the post #4 list...as it seems to be a rundown of his personal "s**t list" (excluding Rufus, but he's on everyone's).

sticknw, I am in a very similar situation as yourself, a $450K, all cash buyer. I need a 1-bedroom, though I am increasingly finding it difficult to find one in the West Village that doesn't feel like a closet, which is why I might stick to Brooklyn Heights/Cobble Hill (where I currently rent). I may be in that unit as long as 10 years, but 5 might be more realistic, so I'm also trying to figure out what makes sense. Unlike you though, when I move, it won't be to a bigger/more expensive place, but rather a different state, where less money will wind up taking me much farther, so I'm not as concerned with making money as I am with just saving money. My current monthly costs for rent is $1500/month. If I am all cash and just looking at common charges, I should be able to save at least $500 per month, but of course that also means weighing what interest I would get on keeping that money in the bank and just continuing to rent. Decisions, decisions...

Thanks all.

I was referring to this unit
http://www.streeteasy.com/nyc/sale/359379-coop-344-west-12th-st-4b-west-village-new-york
I wonder how much room it has for reduction.

sticknw, fishermb,

have you been participating (I don't mean posting) in this forum for long? If you haven't, I recommend you do, and educate yourself. If you have, you've probably realized that the number of bulls has been decreasing and the number of bears has been increasing, and that the predictions have been turning increasingly bearish by the hour. Just today we had yet another thread initiated by people who are seriously considering (or have in fact decided) to walk away for 100K plus deposits because they think prices are and will continue to go down. That should tell you something.

Trompiloco, true enough. But most of those folks seems to be in $1 mil + range. I am in $500k range.

This was how I was considering it. Many people who could buy $700k+ are now looking for smaller places. I thought low $500 would be more fought over then anything else.

Sticknw...Check out this one. Its been on the market for six months and its a fantastic building right on Abingdon Square. 295 West 11th Street #4K

Trompiloco: I've been reading the forums here for 6 months, granted I don't have enough time in the day to read every post though.

Is it that absurd to look at a $500K place and think that between negotiations/price cuts/being all cash, wind up paying $350K? In such a lower price range (is the person who walked away from $100K deposit buying a $350K co-op?), I would think there is only so much room to go down. Or am I too naive? In the next 6 months or so I will be moving in with my girlfriend one way or another, it just seems silly to move into a more expensive 1-bedroom (I currently share in a 3-bedroom) when my monthly expenses would be cheaper if I buy.

lizyank I did consider that place but only thing that I didn't like was the 25% down I believe.

What do guys think this is worth and will it go down any further?

Both of those apartments look beautiful, no question about it. I don't know the market in the 500k range that well. In general, I think there is a lot more distance to go down. I also think that when things stabilize there will still be plenty of time to buy--that is, things are not going to instantly shoot up. So I'd say relax.

I am a broker that has worked in the west village for over 15 years and raised two children there. Be patient and wait it out, at least another 6 months to a year then assess the situation. This market has a lot of potential to fall 15-20%. I can assure you after this economic crisis starts to correct itself buyers will not be rushing into the market and driving up prices. The lending markets are frozen, we are losing hundreds of thousands of jobs, inventories are building and people are scared. A 5 year hold is not enough time in my opinion to justify buying just yet, sounds like that cash is burning a hole in your pocket....

hey burkhardt,

i just checked out your website and i really appreciate what you're doing. i hope it works out for you. i am curious: do you think there are any good deals for purchase now?

Hey happyrenter

Me too because I really want to spend 4 months a year in Costa Rica! I have not really been focused on the sales market in Manhattan for the last 5 months, but from what I do see- no not yet.

What I think is this, fishermb: 350K for something that is listed 500K is pretty radical (about 30% reduction), so it may be difficult right now. However, I would bet my firstborn that most things that are currently listed 500K will be at 400K 6 ms to a year from now, if not sooner. At that point, after the whole of the market has gone through a year-long 20-30% correction, I think many sellers will be tempted to settle for 10% less than asking to avoid chasing the market further down. In other words, I don't think it is unreasonable to expect to buy what's currently listed at 500K for 350K, but it may be difficult right now. If you decide to try anyway, and go around lowballing by 30% don't be discouraged by refusals. Time is on your side.

Thanks Trompolico, thats encouraging to hear. I'm luckily in the position where I'm renting a room from a friend, so I'm not on a lease or will ever be in a position where I must move. I'll probably throw around some low-ball offers, because you never know when you find someone who has to sell, but I'm certainly fine with waiting out 6-12 months if it means potentially saving $100 K.

Very good advices. Surprisingly I didnt really read any bull comments.

fishermb, good luck on your search. I envy you on your cash reserve.

I guess I need to decide if pay the price for something i like versus waiting out for discount with chance of getting something i actually like and not just for price.

thanks all again

only a buffoon would be a bull under the current circumstances. Best of luck!

sticknw, that apartment looks TINY. you can do better. prices per square foot for studio and 1 bedroom resales have had less of an up and down range, and they are selling better than larger apts now largely because of conforming loan limits. however, in six months or so you should be able to find a one bedroom with a separate kitchen, and where you can walk in front of the bed instead of crawling over it. good luck.

if the question is whether the market will be pressured in the near term (say 6-12 months), or whether this is it and the bottom is in, its fairly clear that the market will be pressured even more in the near term!

Job losses have yet to be executed and reach their peak.

UD is right. We haven't even seen the carnage that will be Merrill Lynch, and won't until sometime next year, and it will be the ugliest thing we've seen to date.

More carnage to come with bonuses in general, AIG has yet to be disassembled (or even unwound its trades), Barclays will have more cuts at Lehman as markets continue to deteriorate, and no way Chase is going to need so many retail bank ops staff here when Seattle - home of WaMu - is so much cheaper.

It will be worse if Bloomberg (for whom I'm losing respect) continues with his plan to increase taxes: Manhattan already pays 4x the property tax for apartments as single-family homes worth the same do. Not chump change either: $5,000 a year versus $20,000+ a year. A millionaire's tax would be worthless since there aren't that many anymore.

Ditto New York State.

No - the old paradigm will no longer work. Wall Street is not coming back any time soon. Indeed - why do we even need a Wall Street? Why can't banks operate from Charlotte and San Francisco.

Oh wait, they can.

All good comments. Thanks again. I guess I been looking for so long that I feel I am jumping the gun on the first sign of price drop.

If you see a place you like and you are going to live there 5 or more years, make an offer that makes sense to you, even a lowball offer. There is a lot of fear these days and you might get a good price despite the relatively high current asking prices. You just never know. If you have a good buyer's broker, you can ask them to tease out of the selling broker a sense of where the price would need to end up.

Presumably you are parking your money in other investments while you wait for prices to fall, and it's not clear to me that that's any safer than buying a home now that you can live in and that will offset the rent you are paying.

(I am not a broker or in any way connected with the RE market.)

sticknw All good comments. Thanks again. I guess I been looking for so long that I feel I am jumping the gun on the first sign of price drop.

sticknw...you and every other buyer out there.

Sticknw...Wow. I didn't know 295 West 11th had gone to a 25% down requirement. When I bought there (granted from the sponsor) I put 20% down but I think my buyers also did 20% and that was fairly recently. Its possible though that the requirements changed given the environment and the fact that they do they everything they can to keep the building stable and financially sound and with residents who are both without being a PITA board. I don't have anything to do with the building anymore but I would recommend it without question to anyone who wants to live in the West Village and can't spend seven figures.

I dont think the apartment will sell for asking price, maybe lower by a 1-2% but I could be wrong and just what I think it is worth today. I believe there are multiple offers out there and the contract is out (which I thought was shocking).

From talking to other brokers, it is hard to find someone with 700+ credit and no debt. But the people with low credit and debt tends to bid higher hoping to persuade the seller take a chance on them (with co-op)

Another question, what happens by the time bank does appraisal and due to the lowering comps, it values lower then bought?

lizyank, I agree, I love that building and used to live across the street from it. The park does get noisy during summer and homeless people on them at night. I did see 20% down last year (and early this year) but was surprised to see 25% down.

I actually like the layout on that 295 west 11th and how it is slightly above the treeline but I think 25%, for my cash holding, it is little too hard to swallow. If it fell to 400k then yes I would consider it. Keep dreaming I guess. :D

sticknw, I don't know when you lived accross the street but the homeless issue has really gotten better the last few years...bigger problem in park is annoying tourists who eat Magnolia cupcakes..noise and litter makes me almost nostalgic for when the homeless used the area as a bathroom and drug dealers manned the corner pay phone 24/7. I grew up around there and it just makes me laugh what's happened to the West Village (which we just called downtown or the west side), I tell people that's where I'm from and they look at me like I grew up in Beverly Hills or Park Avenue. Nothing could be further from the truth...it was a blue collar neighborhood when I was a kid.

> sticknw...you and every other buyer out there.

Yes, both of you.

> sticknw...you and every other buyer out there.

"Yes, both of you".

that makes no sense, i own already i want prices to move higher, YOU are a buyer.

Gotta call from a broker, few new listings at $700k but seller willing to go $600 now. Guessing it will go $550 by new year. He told me to wait it out.

lizyank, it wasnt too long ago maybe 3 years ago. I also was there around 2000, even then it wasnt what it is today. But still at night, I still get solicitations and mugging few times around greenwich st from transvestites. Oh good times.