what would it take?

I am looking for prices to return to an acceptable level vs renting. Rent ratios approaching 15x will begin to pique my interest. With both rent and buy numbers declining and inventory growing faster than i have ever seen it, I think the wise money will continue to wait this out. 12 - 24 months (maybe)

FYI: At the end of 2008, I had looked at a few apartments to rent. I saw lots of newdev condos that the owners had purchased as investments. They had never been lived in and have been sitting empty for months as the owners paid full carrying costs with no income. At the time, the asking rents were about $50/foot of annual rent. I didn't pull the trigger because I thought that it was still expensive. I recently checked back with a couple of the apartments that I liked and the asking rents had fallen to the mid $30's/foot. Assuming a $35/foot rental price and an 18x multiple, that brings the sales price to around $630/foot. Even if you add in a premium for the intangibles of owning vs renting, you would still end up with sales prices in the upper $600's/foot, maybe even $700/foot-tops for an extraordinary circumstance. Welcome to the new reality of RE in NYC. Who knows...if things continue the way they've been going, rents might even continue to fall and you know what that would mean for sales prices...

In other words, even at $1000/foot to buy, it is still an over-28x multiple to renting. The decline in sales prices hasn't kept up with the decline in rents, so sales prices are still relatively expensive.

interesting. thanks guys! what about just wanting to be a homeowner? like in suburbia, its almost always cheaper to rent but people buy anyhow. does anyone here just want to buy but is waiting till they can afford?

'waiting till they can afford' is the wrong issue, AgentRachel. You never become affluent by overpaying for an important asset, especially not in a fast-declining market. That is the gist of what the previous posters said in response to your question.

wowwwwwwwww it's great

Real Estate Search-Real Estate Search

Right now it would take a major improvement in the economy. I believe my husband's job is secure, but I wouldn't take any bets on it, and buying to me right now would be voluntarily taking that bet.

Even after things improve generally, the RE market absent a bubble takes a while to get going again. Zero rush.

"does anyone here just want to buy but is waiting till they can afford?"

I think that is the way it used to be.I believe at this point there are a lot of people who can now afford what they could not 2-5 years ago. The question now is why pull the trigger? If I wait another year, I will be able to afford a better place and I will have more cash in the mean time. If I am thinking long term, that is worth another year of renting.

to be honest i want nice sized 2 bedrooms in good neighborhoods to go back under 1 million.

jason,
This IS going to happen. Way below 1M. 650-850 is my prediction. There are times everyone leaves. Like in times of great unemployment. Watch and wait, there is no turn around in sight.
This market is going down like a .....'fill in favorite euphamism'.

As someone not presently living in the city or its burbs, I can tell you I have no interest in renting. I want what I want in the apartment, not what the landlord wants. I couldn't care less about the rent/own ratio (at least directly).

I'm waiting for prices (on stuff I'm looking at, lg 1BR/jr4) to come down at least another 20%. That's selling prices, not asking prices. I expect that won't occur until next year and am not seriously even looking right now.

I'm ready to buy now...cash! But I want the sellers to get realistic. Real estate is decreasing in value each day that goes by. I haven't really found that sellers are acknowledging this in their pricing. So we wait for the realities to get even harsher. I know in NYC a million dollars doesn't sound like much, but in the real world it is! The discerning buyer is expecting more for their money now. If you don't have the best layout, in the best building, in the best neighborhood, your prices should reflect that. At the right price it will sell. Just because someone overpaid to get a piece of NYC in 2000-2008 so they were not "priced out forever", doesn't entitle them to pass their financial blunder onto the next buyer who is not so pressured into making snap costly decisions. Wake up sellers! We are here. We are ready but our reality demands that we be more realistic.

AgentRachel, I think part of why just wanting to be a homeowner plays a much larger role in suburbia is that people often move out there planning to stay 20+ years and raise a family. Also, the absolute dollar amounts are less staggering. Suppose I wanted to move up to Scarsdale to raise a family for the next 20-25 years, and have a house where they could come home to during college, early adulthood, and beyond. In that case, it's easier to see paying, say, $1.2M for a 3000 sq. ft. 4 BR house even if I could rent something for, say, $1000-2000/month less, because there's an idea that you're creating a home and investing in somewhere you want to be the center of your family life for decades. Hard to feel that way about a 1400 sq. ft. convertible 3.

looking2return - Would you buy if you were forced to come into the city today, or would you rent? I have built and owned beautiful homes in my lifetime and have never rented. However, as a returning resident to NY the decision was easy; buy into a declining market or hold my breath and wait for the market to invite me in. My sponsor coop rental apartment is pristine, top floor and a wonderful place to call home. I may never leave.

spinnaker - That is a good question. I would rent but unlikely the type of thing I'd buy. More likely it would be smaller and/or in Queens or Brooklyn.

Newbie - I agree. Unfortunately for people ready to buy who know logically that they can do better if they wait, the RE market moves at a snail's pace compared to the equity markets (although these days RE is dropping rather quickly) and as many say on here "you have to bid/buy at today's market prices" not what we think/know they will be in 6 months or a year. It is a little frustrating but tough to get a seller to agree to "Hey, we both know this place will sit on the market and you will be lucky to sell it for 75% of what you are listing it for now. Let's just save you and me a lot of time and I will give you that 75% now! Whaddya say?"

Remember, this was the same Agent Rachel who said that 2 months ago was the time to buy and the market was getting hot.

What was also discussed is that she isn't even listed on her site's broker list. My take is, she's a secretary.

and this is patently false.

"interesting. thanks guys! what about just wanting to be a homeowner? like in suburbia, its almost always cheaper to rent but people buy anyhow."

It is not always cheaper to rent. It was cheaper to rent in the housing bubble, where people bought for speculation.

Just a few years back, it was cheaper to buy.

Perhaps you should finish the RE training course.

ouch. agent or no agent i think "when is everyone here actually planning to buy" is a good topic for discussion.

"interesting. thanks guys! what about just wanting to be a homeowner? like in suburbia, its almost always cheaper to rent but people buy anyhow."

Nonesense.

I own in Connecticut and rent a weekend place in New York. It's cheaper to own in Connecticut (rather than to rent) and much more expensive to own in New York (rather than to rent).

I look forward to New York purchase prices returning to more reasonable levels relative to rents - something south of 15 X and preferably around 12 X. The only way to justify current high price/rent ratios is if you're convinced that New York real estate prices will rise substantially more than inflation over the long term. I don't.

I'd love to be an owner in New York - but it's far too risky at these noosebleed price levels. Remember the S&P 500 in 2000? It ain't been pretty since then.

Hello Newman (AR)! How's that RE gig going for you? Just messing w/ you... I promise no more mention of Dildos! Scouts honor!

and as an answer to your question........ drum roll pls...... PRICE, PRICE, Price..... price... price.... price.... price and warm cookies.

I can buy tomorrow...I already sold, renting with a lease coming due (the new one will be flexible), but think the sellers have a ways to go before they catch up with how buyers see the market. More than happy to sit it out till I feel the price/value relationship makes sense. Buying is my preference, tehn I can make the apartment my own. Not looking for the "deal of the century" but see no reason to do what I think is "overpay" in this market. It's as much my home as it is an investment...

Good luck to sellers who think after 6 months with no offers they are asking the right price. I think we will see lots of sellers chasing down the market in the next 6 months or more.

price and warm cookies!!!

hey - i used that combination. the more warm cookies we get out there the more homes we will see trading hands. file this under "No She Didn't!?": i went to an open house in Jersey and the agent had Chips Ahoy cookies out! crumbly, hard Chips Ahoy.

LOL...I too used price and warm cookies. I somehow think that we understood price had something to do with it :-)!

My cookies were cold, but I was selling in easier days. Today, I'd definitely warm them.

I'll be thrilled to buy when I think the prices are right but now, with the prices trending downward, doesn't seem like that time to me. The economy is in scary shape & it seems the prices have a l-o-n-g way to fall so I'm content to wait.

There will be plenty of time to jump into the market when the time comes. Pay no attention to those who think timing the bottom is an overtly risky and complicated endeavor.

A quote from the Times article posted on another thread today speaks to this: "Mr. Miller says sales activity needs to stabilize first. “You’re approaching bottom when you start to see sales activity stop declining and level off,” he said. “Pricing begins to push up when you have an extended period, like a year, when sales activity doesn’t decline anymore.”

Look at all these buyers waiting for the right time...now I'm lol...hey drdrd are you going to hold the door for aboutready so she can bid first on the property you both like so much when the time is right? man what a traffic jam this is going to be....go ahead fire away.

I think the definition of "afford" has changed. When prices were rising and good rentals were scarce/expensive, affordability for many buyers was defined by a combination of the most apartment they could possibly buy with the most aggressive financing they could possibly get, without regard to the possible consequences of excessive leverage.

Now, every input to that equation has collapsed. Buyers have much smaller asset bases to draw upon for a down payment. Banks are underwriting much more strictly and requiring much more equity. Perhaps most important for those who still have cash and access to credit, the psychology of affordability has inverted. Very few people are willing to stake their financial health on the appreciation of their real estate holdings. Even most people who strongly prefer to own have come to define "affordability" as being able to buy and then survive any plausible disaster.

If we could "afford" the home we want by that stringent standard, sure - we would buy. But don't hold your breath.

steve, if prices go back up, I'll just continue to rent. that's a risk i'm more than willing to take. drdrd, you can hold the door for me when prices for decent properties are consistently around $600 psf.

West - great point. very true.

West91st, I agree. I would absolutely love to own. I almost always have. But I'd much prefer to rent and have cash than own and have a mortgage right now. If we had to, we could move to a much less expensive city in a second, where our savings would allow us to live comfortably for quite some time. That's one form of financial freedom, and right now I'm all for it.

Sorry West, I moved you 10 blocks north.

400-500 sq ft will help me off the sidelines.

When home prices were rising like crazy, buyers were willing to pay a premium versus renting to capture the appreciation of their investment. In today's economy however, there is a premium to having cash-on-hand and not having your capital tied up in an illiquid asset like real estate. So therefore, home prices would have to come down even more in order to entice renters to buy.

For me it would take prices coming down to more affordable levels and start seeing decent apartments priced reasonably on sqft basis.

Also brokers need to start doing their job - I'm tired of being treated garbage just because my budget is $500k when they majority of these brokers couldn't afford the apartment themselves. They really need to work on representing buyers-- sending links to apartments etc with no inside knowledge and don't meet any of my requirements is not going to get a sale. I'm a pre-qualified actively looking buyer - you think they'd be all over that So I'm back on the sidelines. Guess they're not hungry enough yet to actually put some effort and professionalism into their job.

I agree that sellers are generally not facing reality yet. Some of them don't need to sell so they are happy to wait out forever for their price. Those eager to sell will make deals. I just negotiated almost 30% off a place for a buyer, after a lot of patience and persistence. Thanks again for all the feedback. BTW, I am not an assistant or whatever 10022 claims. I actually work with a top broker at Brown Harris Stevens.

hey---get us some details on the 30% or...? could you be lying?

AgentRachel, if you can't tell us the truth about square footage, why can you tell us the truth about your "Excellent negotiating skills?"
You're ridiculous

"BTW, I am not an assistant or whatever 10022 claims. I actually work with a top broker at Brown Harris Stevens."

LOL...wait...hold up here...so when you're talking about booking multi-million dollar sales you were just filing the f'ing paperwork? But look on the bright side at least, at least we know your questions aren't from a mental handicap.

I'll second upperwestrenter "You're ridiculous"