Sideline Buyers - How Have Your Circumstances Changed?

why wouldn't some of you with cash who are worried about dropping values hedge that by buying a building with rentals (in brooklyn probably)? i don't own a building, own a condo, but that would be my next purchase altho i don't think i'd live in it, i'd just rent it out. we were able to put money in our new place from selling the old place at a huge profit, so i don't care so much what today's value is because we used that money anyway. also, when i price out comparable rentals they are so much higher monthly for the same thing (amenities and size), that we don't get even with falling prices, how renting puts you ahead. with our tax break, we have a very low monthly, and it's about to get lower when we re-finance. locking in to a 30 year fixed at these rates is pretty cool.

Nah. Barney Frank won't find out about the salary increases for at least a year. If Wall St. is smart, they should wait until Congress is too busy investigating the Bush Administration. Then, in the middle of the night, raise salaries.

I was just curious is anyone who posted is in any way buying into the rally/recovery stuff and feeling more inclined to buy.

As for me, the macro dynamics in the NYC market have not changed an iota, so I am still on the sidelines.

I'm with you, faustus. Upward fluctuations in the stock market may be great for momentum traders, they don't mean we're not still shedding jobs and looking at lower salaries/bonuses and employment for quite a while.

2007 prices in NYC required perfect economic circumstances to be sustained. Things are still far from perfect. We see no danger in waiting.

This real estate plunge is in the early phase right now. It will be at least a year before it bottoms out.

I'm on the sidelines and as I've waited I've seen my net worth decline quite a bit (heavily weighted in the financials), and have similar concerns to others about what my income will look like longer-term. Bonus was down a bit this year, will likely be down more next year. Additionally, I have a property in LI I am trying to sell and the value has decreased quite rapidly. As I've been on the sidelines (about 10 months now) not one of the many properties I've looked at in Manhattan has closed and most of them have cut prices further. And I'm seeing more and more in my range come on the market and more and more cut prices. With the pent up inventory I agree with bronxboy and JKB.. no reason to rush and we have a long way to go!

For all of us on the sidelines, what's your number? What price per square foot would you pay for the right property? For me it's $650 but has to be move in and or have renovations priced into that.

I was looking downtown, Gramercy, Village, Union Square, so I was ok with $800 psf...and found nothing. Of course, those apartments I looked at are all still on the market. By the time I venture back in, and rents keep coming down, $800psf better be for something fabulous!

I'm in the same area. I'm starting to see the $800 psfs. That may not be the list price but if you seriously talk to them many would take that.

I renewed my lease...I can wait! Good luck with your hint...

sorry, hunt :-)

Thought I'd revive this thread in light of what some are saying is a recent uptick in activity. What are you other sideliners thinking? Do you believe that the "uptick" is legitimate, overstated, has legs, is a dead-cat bounce? Curious to hear your thoughts.

Personally, I haven't participated in this uptick, nor do I intend to imminently. Reasons remain:

- Lack of visibility on income
- Fundamentals still out of whack (rent vs. buy)
- I don't need to buy
- I don't view NY real estate as a particularly good investment, as compared to just about any other asset class
- To the extent there has been an uptick, I don't really understand why
- Inventory quite high still

On the positive side:
- Job security looks a bit improved
- My net worth has benefited from the equity markets. From peak market conditions, net worth down approx 10%

A little bit of spring fever probably but there's also some fundamental things at work here, imo.
Mainly, I think there is a general feeling by many that, in fact, the world will actually not end. Systemic risk is behind us, especially compared to Q4 08 or Q1 09. That said, I think people are being overly optomistic but as has been said above, the equity markets will probably lead this. Let's not forget that Manhattan lagged the national downturn and although Calif, So Fla, Vegas may be bottoming by some reports, I don't see any real rush to hop into the market now.

I'm an owner (early 06 so still ahead - hopefully) and potential buyer. I'm seeing great deals in the marketplace now but many of these deals will probably still be there once fall and winter come.

Pretty simple from my perspective -- I don't know where the bottom is (although I believe we are far from it), but when we get there we will not see a V. So no reason to buy a depreciating asset especially when rents are leading the decline. Rent another year, save more cash for downpayment, reduce the risk of loss and more likely than not you get something better in 12 months than you have today. Stock market stability helps but it is but one factor in the overall situation. I actually know more people who have lost their jobs in the last month than in the previous six. Obviously this is anecdotal but it suggests that we are not through the pain on the employment front and such insecurity will keep people on the sidelines.

I have been sitting on the sidelines but I am considering entering the fray. This is for mostly personal reasons. I am pregant and would like to be settled in a larger sapce (my rental is WAY too small and I don't wan to move twice. I have a longterm plan since my lease does not end until the end of the year. I am going to wait unitl June and then start placing very lowball bids anticipating where I feel the market will go. If none are accepted I will reevaluate in the fall.

Great thread. I've been looking for almost 3 years but live in NYU housing (1BR). The housing is "for life" until you retire, at which point they move you to a studio. It is a great deal but rents just jumped and like other renters there's no tax break or incentive to make renovations. On top of that, I think most will agree that at some point in one's life, one would like to own. I stopped looking for awhile feeling like it was never going to happen, but the last few months' events has changed that, and we are now looking again. I actually see a possibility that we will buy in the coming months. The question being, when is the bottom going to happen, and how low can it go? No one really knows.
I had a seller's broker tell me that "its a great time to buy as a first timer; you get an $8K tax credit!" Well, not if you make over $150K combined! And if you don't make that, how can anyone afford to buy something over 600K?

as far as saying rich people are greedy. i'd just like to say 1st off this is a capitalistic country. we run on CAPITAL. there are plenty of "rich" people who are honest, ethical, legitimate, and charitable who paid for schooling, devoted their time and energy sacraficed to get where they are today-the "American Dream" Doctors, Lawyers, Accountants Bankers, Entrepreneurs, business owners. The collapse in the real estate mkt did not happen because "rich professionals got greedy. When the rich were buying they were keeping the economy and market going by putting down large cash down payments and stimulating construction and contractors etc. The problems we face today are due to the Clinton administration in the early 1990's who wanted to make housing affordable for everyone and pressed lenders, fannie and freddie to ease up on the requirements. the banks and freddie and fannie started lending to people who were not qualified to buy the mc mansions did not have the income nor the credit to substantiate such a purchase, and these are now the people who cannot afford their homes and are going into foreclosure, causing the mkt to still plummet because the rich people who are still qualified to buy cannot get a loan because the criteria are so stringent. The worse thing we can do right now is turn this capitalistic/free country over to the gov't to run and separate the classes blaming "rich" people for our problems. without rich people in a capitalistic society, everyone is poor except the Gov't.

We're empty-nesters wanting to sell UWS classic 7 and buy loft in Wburg. Starting to get nibbles on the 7 - people moving from out of town. But should we buy? Nice to think of living off liquid income by renting, but can't imagine living in old age in a rental. Seems insecure, somehow. So if we'll buy eventually - should we lowball now and see what we get?

Yes movinup. The Hamptons real estate market is cratering because we made too many loans to poor people. Get a grip.

Trinity, it is a quandary. I can't get UrbanDigs' chart out of my head. The one that says we're still near the top of a big bubble, so unloading now and renting for a while seems to make most sense.

Someone from HUD was on C-Span the other day, acknowledging that not everyone can/should own. The last several administrations, not just Clinton's, turned out to be wrong.

unless you're trading down significantly, i.e. taking a lot of money out of the game and putting it into the bank, i'm not sure why you would go through the expense/hassle/uncertainty of selling and re-buying. on the other hand, selling (if you can at a price that makes sense to you) and renting for a few years with the bulk of your money stashed away safely, doesn't mean that you can't buy again later.

Thanks, that's kind of what I was thinking financially -- but rental kitchens can be so depressing. that's the downside. And real lofts seem never to be for rent, that I can find.

having spent some time looking around at rentals, i was surprised by the quality and breadth of what's available (although no lofts but we aren't looking for that). while prices have come down, for something nice they're still quite high but its all relative to what you can sell for. and...a lot of the higher priced places that we have seen are still sitting there. i don't think landlords/owners think this way but of course every month empty equals 8% loss so empty for three months is equal to 25% discount.

movinup, or anyone who really wants to understand the genesis of the current economic crisis, you should watch CNBC's House of Cards to get the full breadth of it. It basically pinpoints the start of the crisis at 9/12/01. It wasn't caused by the home ownership, but of course greed all around (people wanting things they can't afford, corrupt lending practices) enabled it.

trinity parent, what's your price range? the following looks nice (I know nothing about Williamsburg other than we looked there in the mid-90s and I loved the neighborhood, so I don't know if this building is great or sucks).

http://www.corcoran.com/property/listing.aspx?Region=NYC&listingid=1430243

Doesn't seem like a bad place to unpack for a year or so while you look to buy.

We rent. It seemed very odd at first, but it's kind of liberating. My husband's law firm has many offices, I like the freedom to relocate if and when the opportunity arises. Also, pretty sure don't want to retire here, so flexibility is good.

I've seen this apt in Williamsburg for sale aboutready. It's been on the market forever. The seller is asking $1.3million. Great place but the price is stupid! Needs 40% to 50% off.

trinityparent, a kitchen you can live with. Look at what Tom Colicchio's cooking in. Once you're set up you'll be fine. Besides the liberation of getting out from under seven rooms of stuff.

Sledge, i'm putting it forward as a medium-term rental option. Not saying it's worth $6500, but in a few months you ought to be able to get it for less, and if you want to rent a loft with a nice kitchen, it might not be a bad option. But, I don't know the market for rentals out there, still might be horribly overpriced as a rental (or will be soon).

Yeah, I've been ogling it too, when thinking of buying. The rent's too steep for us -- but maybe we can haggle it down. Or rent-to-buy if we love it?

Interestingly, Corcoran gives the sf as 1950, while the same apartment listed by another realtor gives it as 1650. http://www.streeteasy.com/nyc/rental/457197-condo-85-north-3rd-street-williamsburg-brooklyn

and no floorplan. the corcoran listing says sale by agent, so...

this one has the floorplan, is a loft but in that more modern way.

http://www.corcoran.com/property/listing.aspx?Region=NYC&listingid=1542997

Hey khd, I'm in a very similar situation to yours, we should exchange information. My wife teaches at NYU and we've been living in NYU housing for a few years, in a big 1br we've converted into 2br. There's zero chance they'll upgrade us to a real 2br, and we would eventually like to have a real 2br/convertible to 3. So we're thinking of buying at some point in 2010 or whenever this bottoms out. I don't know if you've checked out the Roosevelt Island condos NYU is offering for people who want to leave faculty housing? Anyway, let's profit from each other's searches.

trinity parent, I don't know the size of your gain on your classic 7, but you are going to lose 15% of it to Uncle Sam and 12% of it to Uncles Paterson and Bloomberg.

in the sidelines for years, the crash did affect me (not money wise) but it lower my commitment to nyc and to usa in general. i'm researching states/countries to scape from unfunded pensions, the cost of bailing wall street and in the case of other countries the cost of unfunded entitlements. sure i'm the only youngster that feels this way, but we are all liquid, no RE at all, we have nothing to lose by moving to a more prosperous place.

scape is escape!

admin, what's the tax deal with expatriating permanently? Seem to have read somewhere that there's a $600K-ish tax hit when you bail.

My son lives in Bali - lots of American/Brit/Aussie expats there - working for a nonprofit. He says you can be very comfortable there on $10k a year. If you can feel comfortable where the sun comes up and goes down at the same time all year and it's 80 degrees every day.

flatironj, we've figured that in. we bought in '91 so have probably done okay, if we don't start hyperventilating thinking about being advised last summer to wait and put it on the market in January.

Mmm the Gretch building - the apartments are beautiful... and they swear aren't noisy being about 100 ft from the trains going over the bridge. Bigger and more $$ than we plan, but we'll know if we ever close a deal on the 7. As for Roosevelt Island, to me it has all the disadvantages of the city and none of the advantages. But I'm happy to share searches... BTW that loft in the Mill Building (listed at $6500) is reduced to $5900, still too much for me.

No, trinity, what I meant was that a huge expense of your selling will be the payment of taxes. I once sold a very expensive apartment and paid huge taxes and have regretted it ever since. I can't hyperventilate about it as I did it on my own advice.

"admin, what's the tax deal with expatriating permanently? Seem to have read somewhere that there's a $600K-ish tax hit when you bail."

there's no need to do it permanently, just of finding a place with great quality of living and lower cost will do for us. we will come to visit :-)

We calculated the net, gulped, and got over it. Either we'll pay the taxes now or, unless all future generations live in the apartment, someone will pay them. That's why we can't afford $6000 rent.

according to our accountant (and he better be right about this) long term stock losses (of which we have many) can offset long term gains on your apartment.

capital losses offset capital gains regardless of source.

I sold a large apartment in November 2007 -- I paid a lot of money in taxes but I am THRILLED to have taken out as much equity as I did... No regrets. And I get another $250K/$500K tax carve out on my next apartment, too...

admin, this WSJ tax article adds a nuance:

http://online.wsj.com/article/SB124104224634570415.html

'Will the IRS let you claim a writeoff for that loss? Nope. You can only claim a federal income tax loss on investment or business property. A loss on a personal residence is considered a nondeductible personal expense. Most states follow the same principle.'

Admin, I left the USA 6 years ago, and I am very happy about it. Nevertheless, I kinda regret selling my place in the city, as I go back pretty often and I like to have a plan B (politics where I live are very volatile...) Couldn't you just rent out your place? You could live comfortably in many countries just with that income...
I visited Vietnam last January and I absolutely loved it! It is a fascinating place, and extremely cheap. I would love to spend more time there.

wow thanks HarlemNWCP, didn't take that into account (a loss from home, even though it's gonna be kind of normal now).

mimi, i'm very happy for you!!! we are just starting to "shop around". costa rica wouldn't be bad at all for example, nor thailand. we are not in a hurry to escape, but see how bad things seem to get for the young in USA (deficit and entitlements wise, discretionary income going to zero ...). does it make sense to stay when you have nothing to lose and you are very mobile? mmm... that's the dilemma. each time i hear from the aarp or frank-dodd-pelosi, my feet tell me to get out of here (and i'm democrat! omg!!!).

Hi Trompiloco: we haven't checked out Roosevelt Island because we're not interested in the commute (currently we walk from WSV to the Medical Center). We are in the smallest of the 1 BRs but we have no kids. Both of us are tenure track/on the verge of tenure faculty and have requested an upgrade to 2BR, but that comes with a much higher price as well (and of course, nothing is available). So it seems that rather than renting for the rest of our lives, to take the plunge. As long as we plan on being here for the long haul, and we don't want to be reduced to a studio like the other NYU retirees, then we might as well buy. There's also the issue that NYU might build between the WSV towers (which would affect our wide open view).
I don't know your situation, but for us, 2 professors, no kids, it seems to make sense to buy a place we really like if the price is right. Problem is that the prices haven't been right for ages!

admin re taxes: your first u$s80.000 (income) is not taxable if you live overseas. This might change, though. By the way, frank-dodd-pelosi don't scare me as nearly as much as condi-rumsfeld-cheney...

One more thing Trompiloco: NYU faculty can get $5000 to pay for points on a loan. It's not a lot but makes a big difference in the long run. For 2 faculty, you can get $10,000.

khd, the "nothing is available" pretext is a joke. It's difficult to figure out what Sexton et al have in mind, but there are dozens and dozens of big apt. in WSV and the Silver Towers that have been vacant for years. We have one across the hallway from us and many friends of us are also surrounded by empty apts. Me and my wife have been here probably longer than you. Before we had our first child they promised us a 2br and, well, my son is 5 now. 10K for points also would do very little in NYC.

Before Roosevelt Island they had planned some kind of 'auction' where they would give you up to 10% of the purchase price of the apartment you were looking for, as a 0% interest loan payable upon your retirement from NYU, if you agreed to vacate faculty housing within 90 days. I don't know what happened with that, because we weren't anywhere ready to buy, so we didn't inquire. Later on they came up with the RI deal, which would be an incredibly good deal if those condos hadn't lost 30% of their real value since NYU purchased them, and if you don't plan to have kids, because the zoned school is subpar.

BTW, I thought the Medical Center was in 28th and 1st, so how can you walk there from WSV? Anyway, if you want to exchange ideas you can contact me at trompiloco@hotmail.com

Rumor is that the downtown campus got some endowment with the stipulation that they had to hire like 100+ faculty in a specific area (I can't remember what), so housing is being hoarded for that. So I hear.

One of my recently hired colleagues couldn't get a 1 BR anywhere so he had to get a 2 BR (very $$$). Another had to rent outside of NYU housing---a full priced studio in the Bowery. So there is definitely a housing shortage (or hoard). I know that if you are "very important" then NYU will find something, but it comes at a price.

The MC is actually at 33rd and 1st, and yes, we walk there and back every day. It takes 35 min each way. Great exercise!

condi-rumsfeld-cheney... LOL no kidding! seems like a class B terror movie