patrick.net

I'm sure if it's true, it wouldn't be a breakthrough. But seems like an interesting period for research.

Hi Patrick,

I stumbled on your site last night while doing a google search for "are housing prices still dropping?". I recently placed a bid for a single family house and was searching for more info to see if I should acquiesce an additional 5,000 to meet the owner's price. After reading some of the enlightening info on your site, I think I will hold firm at my offer.

I do have a question about your fundamental premise: that the value of a house is directly related to its rental potential. In NY, at least, there is a dichotomy between rental properties and live-in properties. Rentals in NY are typically designed for that purpose: converted one family houses that hold multiple families, or a house that is designed from the ground up to be a rental. These properties designed to be rentals will sell for notably less per square foot than a comparable single family house, though you may receive even more in rent from the house that holds multiple families.

I think there is a common belief (erroneous or not) that, all things being equal, owning your own home is worth the extra cost.

PS- if you are a baseball fan, congratulations!

AndyW says

. In NY, at least, there is a dichotomy between rental properties and live-in properties. Rentals in NY are typically designed for that purpose: converted one family houses that hold multiple families, or a house that is designed from the ground up to be a rental.

I'm talking about the difference in the exact same house. What would that particular house on that spot with the same exact quality rent for?

So it's on the top and the bottom of the ratio, and it cancels out. All that is left is whether you're spending more or less money for the exact same thing.

So places designed to be rentals may be lower quality, but that doesn't affect the calculation at all. Rent will be lower, and price should be lower too.

Same with the number of families or people. A place that holds multiple families may get higher rent, but it will also get a higher price because of that rent potential. It also drops out of the ratio.

So for you personally, the only question is this: which will cost me more, to buy or to rent this exact same quality and size place?

AndyW says

In NY, at least, there is a dichotomy between rental properties and live-in properties. Rentals in NY are typically designed for that purpose: converted one family houses that hold multiple families, or a house that is designed from the ground up to be a rental. These properties designed to be rentals will sell for notably less per square foot than a comparable single family house, though you may receive even more in rent from the house that holds multiple families.

I don't know where you are looking at Andy, but there really aren't one family homes that are 'designed from the ground up' to be a rental. Single family houses are simply SF homes, designs and the building codes used to construct them don't distinguish if they are for rent or not.

But, if the houses you are looking at are SF and have been illegally converted into multiple dwellings, or a basement apartment has been added to or pick up some under the table cash, then the owner can't (or, should not be able to) sell it as is without a zoning change. Good luck with that in the vast majority of homes in the metro NY area. The appliances and materials typically used to convert the illegal dwellings are Home Depot clearance specials, so they may not be terrific; electrical systems are often incorrect and under capacity. In the NY area, you are probably looking at are houses without C of O's for all units and the building endures hard wear and tear. Is what it is, but makes sense that is why the lower price.

Thoroughly check the C of O and legal status, and violation history of the home before you buy it.

I was telling my husband about this site last night. He asked me what Patick's day job was. I was thinking I had read that you were a software engineer somewhere. I started reading this post to see if you had said what you did. I realized that in the middle of the post there was a huge diversion into a mean arguement about parenting. It is really weird to me where these threads wander off to find themselves. Really, a mean parenting snipefest? No offense intended, but that made no sense!

Hi Patrick,

I was wondering if you could divulge which are 'the areas' where you feel housing prices have come down appropriately (as mentioned in the beginning of your latest blog entry).

I was speaking to a loan officer a few weeks ago who said he recently bought a town-house in stamford, CT. I asked how he felt about the local housing market, and he was confident that prices would dip a little but would remain stable. His reasoning was that NYC would always have large volumes of jobs and thus, there would always be a demand for houses in the area.

Do you feel that housing prices in different metropolitan areas will have different trajectories for 2011, and is it possible that neighborhoods around NYC have stabilized?

-Andy

Nomograph says

Disclaimer: Please consult your physician before shoving any medicine up your ass.

Nomo:
From what I've read, I understand that you are a physician. Obviously, the disclaimer that you've written (above) was free medical advice. So I'd like to ask for more free advice, since you seem in the mood and I'm fucking snowed in and can't even get any teevee and have no movies that I haven't seen a million times and if my dog brings me a ball to throw one more time I shall shove it up her ass... and for the record, I do realize that you have specialized in people and not dogs, but that there are certain parts of anatomy that are somewhat similar from person to canine.

So here's my question, dear doc:

What can I shove up my dog's ass without consulting a veteranarian? Is a tennis ball okay?

ok friends enough with the ass remarks um i think the real estate market has made an ass out of a lot of us!
happy new year to all : )

I think it's wise to CLEARLY identify the two real and actual political parties that now exist in the United States. Choose your side, but take your time deciding. One side seeks total control over society and the individual at all costs, for the grandiose goal of a perfect Utopia. The other side seeks freedom for the individual, within reason, since individual freedom is Utopia. Historically, tyranny and repression of the individual generally comes about from those who choose control over freedom.

SIDE 1: The Fabian Socialists, also known as Communitarians. Also known as the Third Way, or a cross between communism and a free republic. Note how you intentionally never hear these definitions in the Communitarian-owned mainstream media -- this is intentional as the Fabian Socialist works undercover, over a long period of time. This includes most Republican and Democrat politicians in the US today. The essence of their philosophy is that the needs of the community are always more important than those of the individual, despite that the community is made of individuals and that the freedom of the individual has moved civilization forward for millenia.

SIDE 2: The Libertarians. Not to be confused with the "Tea Party" which is an intentional bastardization of Libertarian philosophy, and was created by Side 1 which indicates the level of fanaticism and moral corruption Side 1 will undergo to pursue their goals. Libertarian ideals are best expressed through the non-racist John Birch Society, the reputation of which has been literally destroyed by the Side 1-owned mainstream media despite that the vast majority of Americans, when polled, agree with Libertarian ideals.

There you have it. If you are pro-socialist you are by default a Fabian Socialist Communitarian because there's really no other socialist game in town worth speaking of. There is no such thing as a Libertarian-Communitarian.

Patrick in his original post above seems to claim both sides. This, IMO, means he is indulging in the traditional method of the Communitarian. They decided long ago to pursue their collectivist goals at all costs, through repeated distortion and manipulation of truth.

If Patrick is a Fabian Socialist/Communitarian, I think he should come clean and let us know about it. If he is a Libertarian, we should know that, too. But there is no such thing as being both at the same time, as they completely conflict with each other on the issue of the individual vs. collectivist society. The powers that be are pushing one way or the other at this time in history. To assume both sides wreaks of the traditional Communitarian method of manipulation.

A great 6-minute video about Communitarianism as it applies to current events...
http://www.youtube.com/watch?v=LKW862_h-W4

On a similar note, it's worth mentioning that the greatest innovations that mankind has brought to civilization have generally come about through dreams -- the dreams of the individual, not of a group. The discovery of the structure of the Benzene molecule is a good example of this. In addition, historically speaking, it is the shaman of the tribe (an individual) who is responsible for the health and safety of the tribe. The shaman takes it upon himself to join the world of man with the world of spirit, for the furtherment of the community. This is something that has been going on since the dawn of man, and it still goes on today.

A collectivist society ultimately replaces the individual's dreams and the shaman's talents with the State, or a soviet (a community that leads itself through collectivism; no individual property rights, etc.). The government becomes your role model and this is under the assumption the State is capable of doing such things, which historically, it has never been able to do for any community anywhere in the world. It tries, but this is how we end up with sick society (which of course is conveniently blamed on the Libertarian).

As a former Libertarian, this poster really does hit home:

From here:

http://www.leftycartoons.com/the-24-types-of-libertarian/

This is a great thread, and this outline: http://patrick.net/housing/crash1.html is 150% spot on the mark! You nail every hard core fact with statistics to back it all up. Book about your stance? Yes.

Ruki says

But liberals don't care...liberals only care about POWER. They DREAM of having as much power as the old communist central commitees and poliburos of the past. That's all they care about.

Ruki says

I have observed that most liberals in general either are incapable of understanding that or just DO NOT WANT to acknowledge that for ideological purity reasons. It is the main reason why I feel liberals DESERVE the title LIBTARD out of all the others.

Thank you for your refreshing point of view - not sure how you can see out of such a tiny hole, tho.