See you in a year

I'm with you! We'll be renting and saving our cash. Why put ourselves in a financial bind for no good reason?

A year of cold hard reckoning for many sellers out there. More coming fodder for the IYCDMMWC and Chasing the market down threads.

fishermb,
I reached the same conclusion and have decided to rent for another year as well. That and the fact that rents have really started dropping precipitously. Prices in prime Brooklyn will need to reach $400-$500psf to get on par with rental prices.

i can't help myself...

renting has always been relatively expensive in NYC but until recently was always seen as being less expensive than ownership. it is only in our bubble induced mania that we have come to believe that ownership is the better financial decision.

it used to be that most people rented and those that had the means bought. ownership meant that you had made it, and could afford to not worry about the financial cost.

i can't help myself...

renting has always been relatively expensive in NYC but until recently was always seen as being less expensive than ownership. it is only in our bubble induced mania that we have come to believe that ownership is the better financial decision.

it used to be that most people rented and those that had the means bought. ownership meant that you had made it, and could afford to not worry about the financial cost.

apparently, i felt so strongly that i hit the button twice!

Approaching the same conclusion. Will make a couple of more low bids but denial is pretty strong.

Sign a 2-year lease - i guarantee you'll save another 25% by forcing yourself to sit on your hands for an extra year.

I will probably join your ranks with another year of renting. In 2010 3 bedrooms will be available for well under a million.

As a condo owner without a doubt prices have to get pressured. Expectations about even a flat year are way out the window (was holding on to that hope maybe in august).

Just out of curiosity though for those that have been attending open houses - have you gotten the impression that any places for sale are forced sale - meaning the owner is in a financial bind either by job loss or in over their head on the mortgage structure. Obviously thats gonna be the straw that breaks the back - just not sure when those are going to start to appear if at all yet. Any perceptions on this based on open house conversations are appreciated.

mike, I've seen a few empty apartments, which can indicate that someone has had to relocate and needs to sell. I've had a couple of brokers admit that their clients needed to sell, and were amenable to lower offers.

The Bloomberg article referenced earlier on Jumbos indicates that these loans were given to people with extremely high FICO scores. Underwriting, it is claimed, wasn't the issue. What I believe WAS the issue was that the debt to income ratios were changed significantly over the last 10 years or so. People were allowed to take out mortgages that didn't allow them any room for error, or for savings. I'll never forget a Corcoran broker telling a group of people (whom she apparently knew in some other context) at an open house that they needed to stretch. When one of her audience said he felt fairly stretched already, she responded that he needed to "stretch further." It may be a slower financial death/reckoning, but it will undoubtedly affect many Manhattan purchasers who were not extremely flush and felt compelled nonetheless to take a stab at home ownershsip in the 2005-08 time period.

I'm looking at 2011 at the earliest, unless something really reaches out and grabs me.

I don't think it's generally in the seller's best interest to make such an announcement!

That said, I haven't heard any comments about financial difficulties.

My lease comes up in September and I expect to renew for a year. I have arranged a 90-day out agreement with my landlord, though, in case I want to leave early. All in all, though, I expect it will be late 2010 before prices reach attractive levels.

In the mean time I will continue to do open-houses. I enjoy them. An open-house followed by brunch. A nice Sunday's entertainment.

And it may not be that slow if one loses his/her job. A fair number of people will run out of severance pay as time marches on.

Topper, if you walk from apartment to apartment, it's also good exercise. Let's you burn off some calories before the Bloody Mary.

Absolutely!

I'm most interested in townhouses so I also get to do the stairs.

And I continue to learn things and refine what I actually do want.

mike: In response to your 'forced sale' question...I've been looking at 1 bedrooms only, priced between $400K and $600K in Brooklyn Heights, Cobble Hill and Boerum Hill.

Most sellers have tended to be couple's with a small toddler or expecting a child soon and need to upgrade, but I'd imagine they will deal with what they have for a while.

A few sellers were 'hoping to upgrade' but only if they could get asking price, which seems way too hopeful ($550K for a medium sized studio in Brooklyn? I don't think so...).

A few of them have been empty apartments, but even then, the brokers did not encourage offers, just the standard "call me if you have any questions."

In one case, the seller (who was also the developer) built a 7-unit building. After over a year on the market, 2 of the units had not sold, despite being lowered about 25% in price. The seller hired a broker after a while to try and clean up the mess. I happened to really like one of the units and the broker straight out told me that the seller was very eager to sell off the remaining 2 units and move on, and was listening to offers. I put in an all-cash offer of about 30% below ask, figuring that if that was really the seller's situation, it would at least get some sort of response. Their reply was "the seller said no."

Does anyone here rent from Two Trees? Wondering how people feel about them as a landlord and what their history with raising rents is like.

Rare to see a BK orientation on this board. We, too, are looking to buy in Brooklyn and see the same dynamic others have described. Sellers are hanging on, but the thread must be getting thinner and thinner. There are more and more empty places out there just sitting and sitting and sitting refusing to drop their ask. Maybe those sellers can sit on their places forever, but then they're just stubborn, if not stupid.

I think the effects of job losses in NYC haven't really been felt yet. Between severance packages and people living off savings (or being propped up by their parents), there's probably a six-to-10-month grace period from the October disaster until economic reality hits in a way that's really felt.

My mental calculation goes something like this:

1) October = meltdown;

2) November - June or so = layoffs and spending cutbacks as companies' heads stop spinning and they actually re-assess and respond to the new economic reality (tight credit, lower consumer spending, little chance to churn out profits from frothy financial deals);

3) mid-to-late 2009 = after inventory breaks 11,000 and closed sales start showing up in public records at lower and lower prices, sellers finally wake up to the value of a bird in hand in a declining market and get more realistic;

4) fall 2009 - winter 2010 = reality REALLY sets in, and sellers realize that property was never worth what it cost in 2007 and that those prices were fantasyland, not some reasonable measure of 'true' value;

5) a 15-20% off-peak ask becomes the baseline for even attempting to make a sale (unless you have a really special place to sell) and 20-30% off-peak (or even lower) sales become the norm.

It's terrible that a complete economic mess is the coolant for a ridiculously overheated real estate market, but there it is. Like you say, fishermb, $550K for a studio in Brooklyn Heights is just a bad joke. There's no good justification for that fantasy except 'People will pay it."

Well, not anymore. We rent too, and we'll continue to do so until we're not paying a 50% premium to buy.

JKB
Right on the money

Saw this just after I posted. It's a great example of where things are:

www.streeteasy.com/nyc/sale/326504-coop-19-grace-court-brooklyn-heights-brooklyn

Asking $799,000 for a 1 BR last July (insane!). Closed for $505,000 two weeks ago. Yes, that's a BIG discount from the original ask (37%). But IMHO, it still sold for too much. I guess someone just couldn't wait.

JKB
"4) fall 2009 - winter 2010 = reality REALLY sets in, and sellers realize that property was never worth what it cost in 2007 and that those prices were fantasyland, not some reasonable measure of 'true' value":
...or it might go like this:
you get sucked into the riptide of the downturn and be forced to live on what you now see as your apartment purchase money. Hence, no apartment for you.
And all that gleeful anticipation of everyone's demise will be for nothing.
Do you guys all see the sellers (owners!) as undeserving idle class that has to taught a lesson? This is getting scary.

we made the same decision last november and signed a lease in December. Will re-evaluate at the end of this year, but my suspicion is that buying is a late 2010 or early 2011 event for us.

I've seen a few "forced" sales, mostly empty apartments due to death or relocation. Most still haven't sold months later, so maybe not as forced as I thought.

Fishermb... First off I think you are making the right decision. It's going to take another year or so before sellers finally depart from their "dream prices." If they don't even come with a counter offer to your all-cash offer... they are RETARDED--let's all just wait for theses sellers/developers to sane up a bit :)

Actually belltolls, there's no glee in what I said (as my final paragraph suggested). It's just my view of how things are. No need to get so defensive. You're absolutely right that things could go differently, I could get screwed and then ... I guess you could dance on my real-estate grave (as you seem so eager to do).

I never accused sellers of being undeserving, except to the extent that no price is 'deserved,' it just is. I do think - objectively speaking - it's highly unlikely that most sellers will get 2007 prices anytime soon and they're foolish to think they will. IMO, they can take the smaller hit now, or wait it out for a much worse hit later. Many sellers will sell for substantially less than current prices and still make a nice profit. Good for them. I'm not bitter about people doing well.

But you seem to be guilty of exactly what you accuse me of -- crowing at other people's demise. There are thousands of people in this city who deserve to own good living spaces. The past six years have locked them out (me included). If prices return to earth, I'll get to buy a nice place without mortgaging my life to it. Good for me.

If you think that the only people who 'deserve' to own are those who can pay insanely outsized prices for real estate, I'd suggest that's scarier than anything I said.