Want to see how overpriced that apartment really is?

Great idea! PLease streeteasy... Thanks!

They'll tell you how incompetent government is, and that you're skewing your sample and fixing your numbers.

um steve, the Windsor apartment has an extra half-bathroom. Nice try though.

$9k/mo. for an add'l half bath? I'd rather use the restroom in the cafe on the corner.

Nice one, Steve.

Steve, I am a bear too, and am certainly a sideliner. Further, I'd certainly rather rent the Ellington apartment for $3500 than buy the one at Windsor Park for $1.9MM (which is a completely ridiculous price). However, your comparison is a bit unfair. The Ellington is pretty run-down, and the location is much, much worse. $9K/month worse - of course not. But I wouldn't say the apartment are anywhere near equivalent, regardless of what the government website says.

Just use the first step as an eye opener
I buy and have a monthly burden of x $
Then search for an rental apartment which comes close or -10% to that expense.
What is the better move?

"The Ellington is pretty run-down"

I was there yesterday just to check, & though it's not luxurious, it's habitable. From what I can tell, $25,000 in work (new kitchen, new bath fixtures, a skim coat and refinished floors) would do the trick.

alpine, I just picked something fast. You can get for that same price apartments with terraces and balconies at the Ellington. Or, go for more luxury, the Archstone Midtown West - more expensive, but market-rent stabilized as the purchase was financed with government funds.

And the location is great - soundproof windows and fantastic views in most units!

No comparison is 100% perfect, but what the government does is calculate the imputed rent from condos and co-ops. Since property tax is based on this assessment, it must withstanding court review (petition for certiori).

If you do a sales search on streeteasy with the term "rent" in the description you will find many apartments that are both for sale and rent (both old and new, and all neighborhoods represented). Just quickly scanning those I would say it is, on average, half the price to rent. That is about as clean a comparison as you'll find.

mbz, I've been saying that for a year and I get back: OH, how wonderful is the experience of homeownership, at any price! OH, the tax benefit!

The truth is, if you look at it as a business, you wouldn't buy an apartment to rent it out to someone else if it cost you more to keep it than you get in rent. So why buy one for yourself to rent it out to yourself under that condition?

No reason. Not even the tax benefit, because being a landlord as equivalent tax benefits - you can deduct everything but mortgage principal.

And regarding your comparison, streeteasy contains mostly listings of condominiums for rent. A better comparison is market-rate rental buildings, which are even cheaper. Based on that, the market still has a long long way to fall.

beware formula -reliant seers,like stevejhx.ownership/rental equivilentcy theory has merit,but in my experience the logical outcome is often not the endgame.there's a whole lot more that drives people topurchase.over the last 25 years,one always was advised that they were paying too much for whatever they were buying anywhere in nyc;but today they all look like geniouses.

the best way to compare renting vs. buying is to look for apartments that are for sale AND for rent.

Somebody already suggested that and stated, and I agree, that it's usually about 1/2 to rent the same unit rather than buy it.

The sad truth is that implied whithin the overpricing of the market from this comparison is the obvious conclusion that NYC real estate has about 50% more to drop to even get to the realm of reason. Renting should be comparable or even MORE expensive than owning as ownership of real estate is tying up your money in an illiquid asset (as many of our sellers are now starting to realize). Yes, it is a hedge vs. inflation, but so are many other liquid investable assets....

I purchased in '97 because rent/buy in my neighborhood made it about 30% less expensive to own than to rent. Over the past 12 years the rent/buy made it 250% more expensive to buy than to rent! Clearly the downside will accelarate from here, especially as the overhang of completed and near-completed condos from soon-to-be-bankrupt developers adds to a swelling inventory and job losses sap demand from the rental side. This downturn is just getting started, and most real-estate people are not old enough to remember a comparable time for what is in motion....

When is the the fire sale?

I did some looking yesterday even in what I consider less-than-desirable areas (far UWS, BPC), and still, there is no comparison: renting is 50% cheaper than buying, at least.

Here are three in the same building - 159 west 53rd

Rent: $3250
http://www.streeteasy.com/nyc/rental/469476-condo-159-west-53rd-st-times-square-new-york

Buy: $1,195,000

http://www.streeteasy.com/nyc/sale/381219-condo-159-west-53rd-st-times-square-new-york

Buy: $1,275,000

http://www.streeteasy.com/nyc/sale/352983-condo-159-west-53rd-st-times-square-new-york

I like renting at 1/3 the cost of buying.

Who ARE they kidding?

An update: Matt is very interested in showing comparable rentals next to sales. I gave him some of the details on how it might be done. I also suggested separating rental buildings from broker rentals, since the former are reliable, the latter not.

Matt will be reading this thread, so if anyone wants to chime in with a wish list on the topic, feel free.

This will be a great feature...a giant, metaphoric neon sign, its three letters screaming: O-O-F.

"If you do a sales search on streeteasy with the term "rent" in the description you will find many apartments that are both for sale and rent (both old and new, and all neighborhoods represented). Just quickly scanning those I would say it is, on average, half the price to rent. That is about as clean a comparison as you'll find."

Exactly! The rent/home price ratio is being screwed up because unlike past downturns, BOTH rents AND home prices are declining, so you are actually seeing quite a few places where the after-tax mortgage+ maintainence +taxes are at least double what the rent is for THE EXACT SAME UNIT. Its all over Streeteasy, but paradoxically its less true in say Harlem or LIC, where asking prices for purchases are coming down faster, and more true in Manhattan below 96th and above Canal, where as we can see from the above and other examples one can rent a place for 2-3% of the asking price per year versus a "normal" rate of 5%.

...And unless you KNOW home prices are going to go UP in Manhattan by double digits, it makes it worth your while to rent for the next two years and sit this out...

You know what, TOP missed something obvious...that 100 WEST 58 STREET has units for sale AND rent.

These two:

http://www.streeteasy.com/nyc/sale/342481-condo-100-west-58th-st-times-square-new-york

versus this. They all have exactly the same layout and square footage. They might even be the exact same units.

http://www.streeteasy.com/nyc/rental/467053-condo-100-west-58th-street-times-square-new-york

Lets take the cheapest to buy and rent there are others in the building...):

$3500 to rent versus

$1,357,000
Common Charges: $1,136
Taxes: $947
Prudential estimated mortgage:

"Mortgage Amount = $1,085,600
Down Payment = $271,400
Monthly Mortgage Payment = $7,223 [7%]"

So assuming you are in the 45% tax bracket, its net $7252.43 per month to buy a place that costs $3500 a month to rent. Plus you would be out $271,400 for the down payment. I would say that investing $271,400 in a few two year jumbo CDs and/or investment grade muni bonds and saving $45k a year by renting would leave you ahead by $361,000 after two years. The ONLY way you would end up ahead after two years is if the place went up in value by 27% in two years. Raise you hands if you think that will happen?

I excluded closing costs and commissions, which would really mean it would have to go up a lot more.

the non-stupid ,thoughtful opinions here-in areinteresting to read .for me ,the most credible opinions are by those who have actually been experienced and successful,(preferably very successful}, in real estate over the years .regretably it seems,that most opinions hereare gratuitisly made by uninvolved amateurs.are there any pros out there who have made fortunes,of course by taking risks,when the concensus preached,"wait and see" ?

So jrw293 you think its credible to say that prices at 100 west 58th will go up 15-20% a year between now and 2011?

jason,i don't know,but all the others on this boarb also don't know;it's a gamble,but a better gamble than the alternatives.this city is great,this country is great the interest rates are great,and we will continue in greatness-so thought jaob astor ,alexander hamilton,and a multitude of financial magnates throughout past and recent eras.my belief is you should gamble on a hme purchase to live in over at least 5 years.the alternatives:rent is a waste-stocks are roulette-and inflation is more likely to be with us than deflation.

Steve,

Do you know aprx the last year it was when buying was cheaper than renting in Manhattan?

Re: the NYC comparable website, IMO, many of the comparables didn't seem comparable, like comparing an UES apt w/ an UWS apt.

correction:

Steve,
Do you know aprx the last year when buying was cheaper than renting in Manhattan?

Well jrw293 I am fairly certain that every economist and other relevant expert out there says prices in NYC will NOT rise 15-20% a year for the next two years - even perpetual cheerleaders like the head of Pru-Ell and Corcoran say they will come DOWN and then be flat for a while! And common sense SCREAMS it to me, and I would rather not "gamble" a 271k down payment in order to find out. You must be delusional to think prices in NYC will rise 15-20% per year for the next two years. Interest rates ARE low, sure, but no one can get a loan without an A+ credit score and 30%-50% down! ESPECIALLY if you work on Wall Street!

"Do you know aprx the last year when buying was cheaper than renting in Manhattan?"

I know it was 10 years ago, and I surmise it was about on par in 2003, but I have no absolute figures to prove it.

Google "historical price to rent ratio" and "new york." NYC has almost always had a ratio of less than one, even ten years ago. However, it was certainly closer than the examples given above.

I posted the info a few months back. We've definitely been under one, but it was something like 15-20 years back for last time.

Thanks Jason.

http://www.associatedcontent.com/article/725867/renting_vs_buying_in_manhattan_new.html

4/08 Renting Vs. Buying in Manhattan: New York City Real Estate

"One key indicator is the historical price-to-rent ratio of homes. According to cnn.com/magazines/fortune/price_rent_ratios" rel="nofollow">CNN, in NYC, that 15-year average is around 15:1. But in the last couple of years, it has sky rocketed to around 25:1. Rental prices have also increased but sales prices has risen at more than 1.5 times that rate. Today it costs between $4500-$8000 to rent a two bedroom apartment in the decent neighborhoods of the city but condos sell for a million dollars! So renting is a better option than buying in the current market."