bubble was best for rental lifestyle

Inonada, great points - also take into account that there should actually be a PREMIUM to rent compared to buying for a number of reasons 1) most renters should not be able to afford a down payment big enough to buy the same apartment they are in and 2) renting gives one flexibility that one loses when they give their lives away to a mortgage payment......sadly in NYC owning costs about 100% more than renting the same apartment - prices need to go down about 75% to get back to normal.....renting is the way to go now and has been for the past number of years unless you could manage to flip your place....and rents are plummeting, what does that mean for prices that were already 100% overpriced????

I agree that renting should be more expensive than buying to make up for the risk of ownership, though you have to account for a sustainable rate of inflation that will be present in the rent but not so much in ownership monthlies. Hard to say what that premium should be, but it certainly wasn't there in the past few years, and it's likely to over-swing in the other direction eventually given human nature. Putting that aside, do you prefer renting? I.e., has the bubble been a boon to you or an annoyance?

also inonada, you have to take into account increases in tax/maint which seems to have been all but forgotten about on this board, yet in some cases costs almost as much as renting such apartment!!! What is the point of owning a 2bd if you have to pay 3k/month or even 2k/month in tax/maint?!

I too like renting. My rent could double and I might prefer to pay it over paying $1.5 million for a nice two bedroom, for all of the same reasons you mentioned, inonada. Forget about even moving around the city, what if I decide one day to pick up and move to the West Coast, or Europe? If in two or three years the value of my place is down from where I bought (esp if it is below my mortgage balance), and I can't rent it out for a positive carry, I could be STUCK IN NEW YORK!! I like it here and all, but I would kill myself if I was stuck here with a depreciating 2bedroom apartment I stupidly paid $1.5 million for. New Yorkers have historically been renters, by nature. It is only recently that the buying craze washed over this city, as the Scuppies decide they want to raise their kids in the big Apple.

great points dmag

also, owners seem to discount this - what is tax/maint? Essentially RENT! Why pay 1.5MM just so you can pay 3k/month in tax/Maint? Makes ZERO sense!

I can see it already. "Escape from New York: Home Edition", starring a geriatric Kurt Russell as dmag2020. "Help, I've fallen from the weight of my $1.5M mortgage and I can't get up and out of here to the promised land of the OC!"

Renting is for 30 under - the times when u have cheapo ikea furniture, u dont mind leaving behind or breaking each time u move, the times when u spend most of your time out clubbing and eating out.

At some point many do want to make a place their own and stop living like nomads.... In other words - ppl do grow up eventually.

Also lets face it - there are millions in the world who would envy you being "STUCK IN NEW YORK"

Bottom line renting aint the "solution" for everyone

Renting has turned out to be a real blessing. I've been in my building for over 10 years, and took a larger unit when I got married 3 years ago. It might not be ideal, but it's allowed me/us to ride out this bubble, which was bound to burst at some point. We still have more than enough space, and until we find something that's perfect for us, we're in no rush to get out. As this downturn continues to take shape, we can sit back and watch how neighborhoods are affected. My in-laws didn't rent in The Century back in the 70's because that was a bad neighborhood. Are you kidding? Hard to imagine going back to those conditions, but who knows? We've also been able to save for a down-payment that will now be substantially less than what we had planned for. Sure, there's a sense of permanence that comes with home ownership; but we've never felt that we were missing the party. People who thought we were nuts to throw money away on rent now think we were brilliant. I don't know about that, but I'd rather be in my shoes right now than some of theirs.

4 words: Rent a nicer place.

(last comment was @ projects_suck

Btw, should consider what is a renter doing with the extra "savings" he/she gets:

renter A- If fully invested in the stock mkt - how do you think Average Joe Stock Investor did?

renter B- sit on their cache or bought gold

if you are renter A, sorry you got burned, if you are renter B - congrats you are the smart one

Interesting post, Spartacus.

projects_suck, I have to agree with dmag2020. Not everyone who rents does so in the projects; those $25K rentals in 15CPW are probably appointed with something other than IKEA. They're probably not 20-something clubbers either. Just a wild guess....

I do agree with you in that renting doesn't make sense for everyone.

inonada,
wanna bet that the renters/posters on this thread (dmag, anon, spartacus, and you) are unlikely renters @15CPW, paying 25K/mo?

Not in 15 CPW, but not under 30 either. And we're somewhere between Renter A and Renter B. That whole mindset; that you're not "grown up" if you don't own a home, is exactly what got so many people in over their heads. Renting might not be the solution for everyone, but I'm not going to lose any sleep if some people think of us as immature nomads. Really...I can deal with that without therapy.

Projects, most people here are probably not renters in 15 CPW because it represents something like 0.01% of the rental market. That said, I know a renter (and an owner) in that building. Trust me, a seven-figure income and net worth precludes one from neither renting nor the joys of posting on SE -- just ask happyrenter.

I would pay much more than a mortgage payment to retain my freedom.....rents are a great deal

I dunno if I agree with that, anon3. If your payments are half the rent and there's no restriction on renting, you can move out, rent it, and pocket the difference.

I agree that there is zero wrong with renting. I bought twice, sold and invested the cap gains (a nice chunk Fed tax exempt) in 5 year Treasury notes. It was a very conservative move at the time and while I speculate/invest regularly , the home fund is totally off limits.

To my eyes, the beauty of this arrangement is that one has terrific financial flexibility, no market risk and if desired, can experience different neighborhoods in the city. I have a couple in mind which should the need arise, I'm looking forward to checking out.

Someday, the economics of renting vs purchase may change but until they do, renting in a very high risk environment can go a long in diminishing financial stress to a significant degree.

Same here inonada, I actually feel antsy after being in the same place/neighborhood longer than 2 years, and looking back, it really has been a lot of fun to have lived in financial district, midtown, brooklyn, even nassau county the past 10 years and experience the social fabric and people of each place. I almost bought a place here in Brooklyn 2 years ago but am really happy I did not because we are leaving the metro area this year and it's now a great feeling to have the option of just packing up and going.

The other gift that renting provides that I personally experienced was being able to avoid paying in the past two years for our roof leaking, electrical repairs, new oven, new fridge, trash pickup, heat and water bills, shoveling sidewalk, etc. on this brownstone. It was also a good lesson in all of the expensive things that can go wrong with a 150 year old house. Even after all of that, our rent money here would have only paid a mortgage on a place half the size we currently rent.

So in retrospect, buying a couple of years ago probably would have been the worst possible financial decision, for our particular circumstances, had we done it.

There are just so many great neighborhoods in the city, and the rest of the world(!) to experience and renting suits that lifestyle perfectly.

Glad it all worked out, ca12ny. Where are you going now in your grand tour of the world?

As a broker I can tell you many people do not stay in the city more than 7-15 years. And generally speaking in many cases the first 3-7 are spent as renters. Not like when Mom and Dad bought a house raised a family and in the majority of cases stayed 20-30 years. With that time horizon you can ride out most cycles. Those buying with a time horizon of less than 7 years need to pay very careful attention to the housing cycle.

I just read an article that 300k apartments are going back to rent stablized apartments...the bill is coming to a vote in april and since the democrats have the numbers it looks like this will change everything in manhattan.

Over the last 9 years, I have laid out about $2,350 per month for my large alcove studio south of 96th on the west side with a river view. Only I don't rent, that is how much I paid in total, and now I own outright. That's right, now I pay cc and taxes only for my condo. My occupancy costs currently are less than $850/mo. No I haven't changed neighborhoods, but I appreciate the savings a commitment can bring.

"enjoy the rental lifestyle" LOL

Amateur, glad to hear you are happy with your studio after 9 years. Given that you paid $1500 after occupancy costs, that comes out to $162K total over 9 years, which means you had a $120K mortgage at the then-typical rate of 7%, and assuming you put 20% down, you paid something like $150K for the place? And renting would have cost something like $1500 or $2000 on average during that timeframe? Sounds like a fine choice: the commitment brought you something, as well it should have.

Here's the question, though. Suppose the place rented for the same price, but the monthly cost of ownership was $6000 instead. Would your decision have been the same even though your commitment probably wouldn't have brought you anything financially, and maybe even cost you something? Or would you have preferred the flexibility of renting?

Not a loaded question -- just sincerely looking forward to hearing you thoughts.

projects_suck, you sound like a baby boomer, are you? gen x tend to be nomads in comparison to sedentary baby boomers

"I just read an article that 300k apartments are going back to rent stablized apartments...the bill is coming to a vote in april and since the democrats have the numbers it looks like this will change everything in manhattan."

hi julia, do you have the link? i would like to read that article

i don't have the link but it was on the front page of the NY Post.

inonada, my occupancy costs have risen a lot over 9 years due to an expiring tax abatement. I paid in the 170s cash. However, the financed cost of ownership today would likely be 3800/mo before tax. After tax benefits the cost would probably be 2800. Personally, I wouldn't buy today, unless I thought we were going to have hyperinflation in our future.

projects_sucks -- "renting is for those under 30" -- OR FOR THOSE OF US WHO OWNED AND CULLED HUGE PROFITS -- AND WILL REBUY WHEN IT MAKES SENSE.

You got to know when to hold em and know when to fold em.... you should have folded in 2007 Buddy Boy

thanks julia, here's the link:

http://www.nypost.com/seven/02142009/postopinion/opedcolumnists/lawmakers_plan_to_revive_rent_stabilizat_155142.htm?&page=1

good for u manhattanfox - enjoy

I was waiting for someone to make manhattanfox's point. Perhaps NOW it makes more sense than ever to rent, but MY GOD, we just came out of the biggst real estate boom that any of us will ever experience in our lifetime. Buying made perfect sense and many people made ridiculous profits on their re-sales. So the party appears to be over but lets not lose sight of the facts. If you missed out on that cycle I would not be posting advise on this board.

Fine point, stealth, though different people can be in different circumstances during that time where buying didn't make sense or wasn't an option. That being said, when do you think buying stopped making "perfect sense", assuming you were in buying for living in it long-term rather than speculation with a well-timed exit? (Nothing wrong with speculation, don't get me wrong: it just appears that many speculators missed their exit, so although many got it right, many didn't.)

"If you missed out on that cycle I would not be posting advise on this board."

Quite the contrary. If you recognized the unsustainability of the bubble and avoided it, post away!

If you bought early and profited, all the power to you. That demonstrates the ability to buy early in a bubble and sell at an opportune time. You deserve credit for recognizing a good time to sell, just as someone who avoided buying in the past 4 years recognized a bad time to buy. Both groups deserve credit for seeing what was coming. If they got lucky, great.

The brokers/sellers/owners who are posting now are the ones who didn't see this coming. Why in god's name would you ever listen to them? Take tech_guy for instance - the market peaked as the ink was drying on his contract. Why would ANYBODY listen to advice [note the spelling] from him or anyone like him?

From where I stand, buying stopped making sense last summer. At that point it was pretty clear to everyone that prices were in a downward spiral - so for those of us that need more space, we are standing on the sidelines trying to predict when the prices will bottom out. No one wants to overpay, especially now when cash is king. Anyone who bought during the last 18 months with the intention of doing a quick flip for a profit is TOTALLY f***ed.

"From where I stand, buying stopped making sense last summer".

I'm not sure how it made sense to buy even well before that.

The problem is that the point at which buying stopped making sense can only be judged in retrospect. By today's measures, it stopped making sense to buy in 2005.

Yikes, stealth, that's kinda cutting it close, don't you think? It stopped making sense just after the peak? I guess that must have been the case for someone (i.e., the marginal buyer), otherwise there wouldn't have been a transaction.

Putz, judging a decision solely by its outcome is a bit narrow, I think.

"Take tech_guy for instance - the market peaked as the ink was drying on his contract. Why would ANYBODY listen to advice [note the spelling] from him or anyone like him?"

I appreciate your concern, but the above is not at all true.