patrick.net

1sfrenter says

Gotta defend my city by the Bay:

There is a fine line between defending and hyping. Frankly we did very well for decades without the hype.

If you decide to hype, expect higher prices which kills off the economy. We already lost too many jobs due to higher costs.

Is that what you want..

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

Windemere is a Chinese ghetto! You couldn't pay me enough to live there! We are moving within walking distance of downtown Danville which is quite different than Chan-Ramon! Danville is NOT San Ramon!

Justthefactsplease says

Hi,

Someone here should be able to help me out...but it doesn't seem the median housing prices that get reported are ever controlled for differences inventory type. Something that is controlled for inventory type/by geography would be much more useful to get an accurate measure of the actual decline right?

Thanks.

The Case-Shiller Inex is very accurate partly because it is perfectly controlled for inventory type, since it tracks re-sales of the same house over time.

Also, it's not controlled by realtors!

sheltielover1 says

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

Windemere is a Chinese ghetto! You couldn't pay me enough to live there! We are moving within walking distance of downtown Danville which is quite different than Chan-Ramon! Danville is NOT San Ramon!

Knowing Danville very well, by the sounds of your posts you fit in very well there. Which is why you couldn't pay me to live there.

dunnross says

Does that include all the homeless people who visit SF every winter to escape from the cold temperatures in other cities?

Yes, but don't worry. Most other cities sweep the reflections of our choices under the rug.

New York is indeed the Capital of the World (but please have lower prices when I move there in 5-10 years), and America's best world class city, but San Francisco is pretty well-known to just about every educated person in every country. If you've heard of NY, Chicago, Boston, Philadelphia, and Los Angeles, then you've heard of San Francisco.

The Case-Shiller Inex is very accurate

Not really. The problem with Case Shiller is that it includes a very borad area. For instance, the NYC Case Shiller index includes not just NYC, but also Long Island, NJ, Connecticut, upstate, and even one county in Pennsylvania. It's absurd and you cannot possibly take it seriously when it includes such a huge area.

Michinaga says

New York is indeed the Capital of the World (but please have lower prices when I move there in 5-10 years), and America's best world class city,

It may be indeed the Capital of the World and world class city with all the benefits it earns.. I bow to that.. but not even that can justify double digit price inflation for a prolonged period of time.. something eventually has to give.

Prices in NYC are able to rise significantly because of all the foreign buyers. Plus you have Wall St. people with an endless supply of money who only pay 15% in federal income taxes.

I've been watching (and waiting) to buy in Manhattan since 2006, staying on top of this site and others. Some points here.

1) Manhattan RE has always been *expensive*. Even during the crashes when the city was a real dump, housing was much more money, smaller, and dirtier than elsewhere in the USA. This has nothing to do with the bubble; Manhattan is a small island.

2) While RE has always been expensive, it has historically made sense to buy versus rent. When you buy, you're putting down a huge down payment and tying yourself to that property for 30 years. If the numbers don't work out after 5 years, why would you do it?

3) I currently rent a small 1BR in Gramercy for $3000/month. At the height of the bubble, that apartment would sell for $650k, and now would probably sell for $600k.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

Lets fill out the famous NYT rent vs. buy calculator with a 30% downpayment (required for coops in NYC), 4% mortgage, and a 6% property tax rate (assessment level 45%, property tax level 2 is 13.433%, at 600k means $36k in property taxes per year). Set annual rent increase to 6% and leave appreciation at 2%, which is bogus, prices are slowly dropping, but bear with me. So I fill out that calculator and... it says buying is better than renting after 18 years. That's a non-starter.

Hmm.

What if my apartment rented for $4.5k/month, 50% higher than what I'm actually paying? Plug that in, and.... it's worth buying after 6 years. So that's a marginal "OK". Now that's a bit simplistic, it doesn't take mortgage tax deductions into account. But then it also assumes a 2% appreciation, and we know that ain't happening.

So, Manhattan has always been expensive, yes. But buying has historically made sense versus renting. Right now, it doesn't.

4) Why is Manhattan different? Is it all those fancy finance types? Is it that NYC is a "world city"? Well, somewhat, but all that does is sustain the really expensive apartments, the 3 bedrooms selling for $2m+. Nothing to do with a mere mortal like me.

My feeling is Manhattan is different due to co-ops. Co-ops are notoriously picky about their residents. They go through your tax filings for the past 5-7 years, they question you extensively about your ability to pay, etc. If there's any doubt at all, if you seem the slightest bit sketchy, they don't allow you to buy the apartment. Oh, and they ALL require at least 30% down-- 40% is not uncommon. Who's going to walk away from a 40% downpayment?

This is why Manhattan hasn't been noticeably impacted by the housing downturn. My honest feeling is that prices will never really drop here; instead they'll remain steady until inflation catches up. And I'll continue to rent.

I've had a 40% downpayment saved for a nice 1BR since 2006, and if I had purchased an apartment back then rather than investing the money, I'd be in a significantly different and worse position right now.

I'd love some responses by others who've been watching Manhattan closely.

@Realtors:
Pretty sure you didn't read my post. Or maybe you're responding to someone else, and quoted me by accident.

@Gameover:
Finance has certainly driven prices up, but I'm not directly competing with those guys. The big shots have no interest in 600k 1BR apartments. At the mere mortal level (ie, mine), my feeling is prices are sustained artificially high due to co-op diligence.

Tons of people at my level are locked into overpriced apartments because they put down 40%, aren't underwater due to that, can afford to continue paying their mortgages, and can't sell for anything like what they paid.

Rod, Is the property tax rate in Manhattan really 6%? Wow. Is it reassessed every year, so that if the valuation goes up 10%, the tax also goes up 10%?

California properties are expensive, but at least the tax rate is only 1 to 1.25%, and once you have bought the place it can go up a max of 2% per year. And if valuations drop then so does the tax.

6%, that's amazing. A 600k apartment then is 36k yr or $3000/mo. That's rent!

The property tax rate in NYC is not 6%. Where are you getting these crazy numbers from? Most people in Manhattan don't actually pay property taxes directly since co-ops are assessed as one property as opposed to each apartment being assessed individually. So instead of each apartment paying $4,000 a year in taxes, for instance, the entire building will pay $2 or $3 million a year in taxes.

GameOver says

To TRULY enjoy NYC the way it was meant to be enjoyed, nowadays you need to be a MILLIONAIRE. Better yet, make that a MULTI-millionaire. Plain & simple. Otherwise you'll just be watching life go by while OTHERS enjoy it.

Is that also true for people who are long time tenants of rent controlled apartments?

Not sure where the 6% is coming from either. I live in NYC (5+ years now) and the actual property taxes here on my city appraised at $700K attached single family townhouse in Williamsburg Brooklyn are actually cheaper than my former $300K house was in Arkansas 5 years ago (they were $2500). This past year my taxes were around $1800 and I own my 20' x 50' 3 story house, on a 20' x 100' lot. We do pay a 6% income tax here though, but that largely gets offset and refunded since it counts as a deduction against federal and state taxes. When you factor in the homestead equivalent (STAR) property tax relief, my taxes are cheap compared to other places nearby. Friends who own apartments in Manhattan also pay these lower taxes on non-tax abated apartments. Yes the prices of the properties are crazy high here, but not the taxes.

GameOver says

NYC is a world class city, but San Francisco is not. Most people outside of the US, have never even heard of San Francisco.

According to Penn, San Francisco and New York people are the most annoying people in the world, in the way they both brag about how their cities are the "Greatest Cities in the World". There is a big difference, though. New York people happen to be right.

http://www.youtube.com/embed/NdTHlaTa4-4

GameOver says

WTF are you doing with the cut & paste?

Yes, sorry. I guess I wanted to cut and paste my own quote, but included your name there.

I'm also not some freako liberal who thinks the government should wipe my rear end! So I guess I do fit in Danville. I'm not some politically correct POS. I call a spade a spade! You can't convince me 2 + 2 = 5 although the current administration would like you to believe it. The U.S. deficit is the highest since Truman thanks to the idiots in the WH. Can't wait till November so we can get back to normal!! POTUS is a huge Wall Street benefactor and is selling out the lower and middle classes all for his rich liberal friends and donors. Enough said!

Tude says

sheltielover1 says

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

Windemere is a Chinese ghetto! You couldn't pay me enough to live there! We are moving within walking distance of downtown Danville which is quite different than Chan-Ramon! Danville is NOT San Ramon!

Knowing Danville very well, by the sounds of your posts you fit in very well there. Which is why you couldn't pay me to live there.

sheltielover1 says

I'm also not some freako liberal who thinks the government should wipe my rear end! So I guess I do fit in Danville. I'm not some politically correct POS. I call a spade a spade! You can't convince me 2 + 2 = 5 although the current administration would like you to believe it. The U.S. deficit is the highest since Truman thanks to the idiots in the WH. Can't wait till November so we can get back to normal!! POTUS is a huge Wall Street benefactor and is selling out the lower and middle classes all for his rich liberal friends and donors. Enough said!

Wow--FOX news propaganda wins over reality yet again.

@Housingwatcher: You're right of course, but the NYT calculator has no box to input co-op/condo maintenance fees. They run around $800 to $1400/month on a 1BR, depending on the building. Which is obviously less than 6%, I messed up on the math.

So does anyone have anything insightful to say about housing in NYC, or is this thread going to turn into a political flamewar?

tatupu70 says

sheltielover1 says

I'm also not some freako liberal who thinks the government should wipe my rear end! So I guess I do fit in Danville. I'm not some politically correct POS. I call a spade a spade! You can't convince me 2 + 2 = 5 although the current administration would like you to believe it. The U.S. deficit is the highest since Truman thanks to the idiots in the WH. Can't wait till November so we can get back to normal!! POTUS is a huge Wall Street benefactor and is selling out the lower and middle classes all for his rich liberal friends and donors. Enough said!

Wow--FOX news propaganda wins over reality yet again.

Reality speaks wonders! LOOK at the national DEBT! Fox News doesn't control that!

sheltielover1 says

Reality speaks wonders! LOOK at the national DEBT! Fox News doesn't control that!

Yes, but who actually caused it?

Hint: Which President went to war with Iraq?

Guess that answers my question.

tatupu70 says

Hint: Which President went to war with Iraq?

Pick any presidential candidate in 2000... wouldnt matter..
Its was all destiny!

http://www.youtube.com/embed/0h6gehCPvpk&feature=related

http://www.youtube.com/embed/gVjeWwFTNWI

http://www.youtube.com/embed/S0f5u_0ytUs&feature=related

thomas.wong1986 says

Pick any presidential candidate in 2000... wouldnt matter..
Its was all destiny!

lol--you must be kidding.

Pick any Republican this year, and it's all the same as well.

The last President running for re-election during a period of prolonged high unemployment (8-12 percent or more) and three percent money was...Franklin Roosevelt in 1936. Right there, you know Obama has a problem. Our economy and political culture have changed a hell of lot since those days not to mention the advent of television and I have to tell you, Obama ain't FDR. He's not even close.

Did you also know Gallup, which is rarely wrong, has released its statewide presidential race map that has the unnamed Republican carrying Pennsylvania? PA is a swing state if there ever was one and it only goes Republican in years when there's a negative reaction to the guy in office (ahem) and only does it when other swing states do it as well. It's an excellent canary in the coal mine (almost as good as Ohio) and the survey research crowd knows it.

What's next? I'll tell ya. We're gonna have another recession but it'll be a different kind. I'm thinking Romney's new Fed chief (yeah, Ben's outta there) will have to find a way to constrict the money supply the way Volcker did. They stopped publishing M3 in 2005 and I'm thinking there was a damn good reason for it, but now we have to go back. I don't personally think we can get to a growth economy from where we are right now. We need to shift gears. That means change, which is what recessions in the academic sense are really about. We have two more years of this chronic doldrums dog shit economy, wring out the rest of the excesses and then we should be back to the races. That's what happened in the eighties.

I waited for the bubble to burst for years and years before finally buying my first house in coastal San Diego county 2 years ago. I paid about $1 million for a beautiful ocean view house on a half acre lot on a quiet tree lined street. I got a rock bottom interest rate and a nice tax write off. I don't have to deal with overbearing landlords. I can have pets and do whatever I want to my house. I don't ever have to move again and I plan on staying here forever. My house has probably gone down in value but guess what? I don't care. It's not an investment. It's a place to live. Buying the house was the best purchase I ever made. The bottom line is if you want to buy a house to live in for 10 or more years, then do it. The fed has shown us that they will print money and keep interest rates low to prop up the market. Hoping the market will crash so you can buy in a prime market is not a good strategy. You can't fight the fed.

SwamiAlex says

My house has probably gone down in value but guess what? I don't care. It's not an investment. It's a place to live. Buying the house was the best purchase I ever made. The bottom line is.....

Welcome to patnet.

http://en.wikipedia.org/wiki/Post-purchase_rationalization

I don't know about NYC (I lived there many years). The inventory is just very limited but I think there is a bubble by price to income.

SwamiAlex says

You can't fight the fed.

Hey, I don't think there's anything more fundamental about the United States constitution than fighting the fed. Buck up, my fellow American, you can do it too.

Bob Jones says

2. Public Employees - This is not a Democrat or Republican rant. At least on Long Island (included in NYC housing stats), a cop starting salary is $105k / yr. Teachers earn $80-$90k. Median HOUSEHOLD income on long island is $78k for two income earners. I feel for teachers and cops in places like Wisconsin and FL where they don't make much, but here they earn much more than private sector workers. Declines in property taxes have caused mass layoffs in this area which are finally impacting the local economy.

Not to nitpick, but I am an NYC firefighter. Cops don't make 105k starting here. Suffolk county which you cite, does not make 105k starting salary. They make 45k. They reach 105k after I believe 5 years. The FDNY and NYPD do not reach anywhere near that in base salary, Suffolk is an anomaly. It is also a relatively small police force of about 2500. The NYPD is around 33 thousand I believe, and the FDNY is about 11 thousand, to give you some comparisons. So I would have to guess that they do not make that much of an impact on the economy as you say they do. For me to make over 100 grand in base pay, I would have to be promoted twice, and once again, the pay goes up in small steps after promotion. It takes years to get there, civil service isn't all it is cracked up to be. (It only has been cracked up to be anything since the financial industry took a dump, before that we were a laughing stock who routinely got 0% contracts while investment bankers made millions in bonuses). I am trying to keep this out of the political realm so I digress. We do it because we love the job. Period. NYC teachers make 85 grand after like 15 years of continuously being employed, and they are all MISERABLE. I find it laughable comparing us to private sector employees. I have a friend who I went to school with, who is working for Morgan Stanley pulling in more in salary and bonuses than I will ever make. He isn't anything special, just an analyst that graduated from Fordham. And he doesn't have to work in the elements daily, work nights, holidays, weekends, or put his life on the line behind his desk. But he doesn't have the best job in the world either.

Anyway, I would be interested in any insight you can offer into the outer boroughs on where real estate prices are headed over the next 5 years. I am starting to save up a substantial downpayment for a rental property here in the Bronx. NYC is very different than any other city in that it is one city comprised of 5 boroughs. When people talk about NYC they think Manhattan, but that's only one borough. Everyone knows prices aren't budging there. I would like to know if the 4 other boroughs are going to experience severe price decreases, I doubt it but I think they might fall very little over the next 4-5 years, and then maybe a little more when interest rates go up (if they go up).

I agree with Outsider about the income vs price here. It is damn near impossible to afford a house here and put down 20% with the income I make as a lowly firefighter. And now even that the financial sector is shaken, you need an MBA just to find an entry level job. Honestly, 500 grand doesn't get you much here, and how many people have 100k liquid in their early 20s? To own here it seems you have to put family, marriage, everything on hold, just to get a savings built up to by a home, which is ridiculous. I personally did not want to be changing diapers in my 40s, so I bought a 2/1 800 sf coop in the Bronx (detached home on a 20X40 lot.) It cost me 97 grand after negotiating and I think I got it at a steal. I could have probably got a 1600 sq ft house in Ohio for the same price, and it wouldn't have required the renovation that mine did though.

TechGromit says

Oil Can says

It's starting to happen in LA, we just need 6% mortgage rates and it's all over.

Don't look for 6% interest rates anytime soon. The only reason the fed raises interest rates is to try to slow down an over heated economy, and the economy is pretty dead right now. I don't foresee-higher interest rates for at least 5 more years and more like 10 years before rates hit 6% again.

Fed does not control mortgage rates!

I forgot to mention the almost inevitable occurrence of another terrorist attack in NYC, which seriously shook the financial sector for a while 10 years ago. If that were to happen again, I think it could cause some problems for us economically.