Ask Curbed: Testing the Limits of Rent Stabilization
The only thing better than landing a rent-stabilized apartment is living there forever and ever, eating caviar from tiny silver spoons while your friends and neighbors scrimp and save so that they may slurp straight out of the lo mein carton. Unfortunately, it doesn't always work that way. A Curbed reader writes,
We live in a rent stabilized apartment and are wondering about when stabilization runs out? I've heard that when your annual rent goes over $2k / month the stabilization is removed? Is that true? If so, is it the lease after your rent hits that amount, or the lease when hits that amount? i.e. We just signed a lease for 1 yr. that puts us at approx. $1900 a month (2.5 bedroom in the EV) - so next year we will exceed that amount. So if the aforementioned lease de-stabilization limit is true - are we out next year? Or if we sign a 2 year lease next year are we out in 3 years? Or can we sit here as long as we want? - also - the building itself is no longer under stabilization - new leaseholders are paying market rates ($1k+ more then we are paying).Your feedback is welcome, as always, in the comments.
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[Photo via the Gotham Gazette]
1.
Isn't it about time for the $2000 ceiling to be lifted, given the huge increase in the average rents? Is this borough-specific as well, so if you have a rent stablized spot in the Bronx or Queens, you never have to worry as $2000 is unlikely.
By Jiggaboo at May 23, 2007 3:00 PM2.
For the record, you don't want to use a silver spoon with caviar. It reacts and gives an off-flavor to the roe.
By Anon at May 23, 2007 3:00 PM3.
EVERYTHING about RC/RS laws are horribly outdated and moronic
they should simply be abolished
By fred at May 23, 2007 3:02 PM4.
this depends upon which program apartment is rent stablized. I think apts rent-stabilized under the J-51 credit are not subject to the $2000 cap, but rather, are rent-stabilized for a finite period of 10 years
By lawyer at May 23, 2007 3:02 PM5.
just refuse to pay anything more than $1999
thats plentyof moneu for the greedy landlord
7.
RE: Question
I believe two criteria need to be met for a rent-stabilized unit to be moved to market (aka: pre-market). If the tenant is remaining in place, meaning your not vacating: 1) Yes, rent needs to hit the 2k a month threshold AND 2) Your certified annual income as reviewed by the city/stabilization board need to be at least 175k a year. Both have to be met, then the landlord can file for decontrol.
The landlord can decontrol the place if you vacant and the normal rent adjustment for vacancy and/or any improvements increase the rent to at least 2k. So the next renter gets a market lease.
By anon at May 23, 2007 3:09 PM8.
boo hoo. Enjoy your last year of artificially low rent at the expense of all non-rent controlled renters in the city. Then move out to brooklyn like everybody else.
By Raze at May 23, 2007 3:09 PM9.
boo hoo. Enjoy your last year of artificially low rent at the expense of all non-rent controlled renters in the city. Then move out to brooklyn like everybody else.
By Raze at May 23, 2007 3:11 PM10.
1) OCCUPIED APARTMENTS ONLY: High-Rent/High-Income ("Luxury") Decontrol
the apartment has a legal regulated rent of two thousand dollars ($2,000) or more per month AND
the apartment is occupied by persons whose total annual household income exceeds one hundred seventy-five thousand dollars ($175,000) in each of the two preceding calendar years
11.
Er... I think 'lawyer' is confused. J-51 tax abatement doesn't directly bear on rent stabilization.
By EJ at May 23, 2007 3:12 PM12.
Yeah, once it goes over $2000 its a free for all for the Landlord. I do agree that the law should be changed to raise the amount higher, only because rents are so ridiculous ($2000 cant even get you a studio nowadays). Anyways, I be be prepared for it when it comes. You should have signed a two-year lease.
By Will at May 23, 2007 3:17 PM13.
As in most Curbed post threads, it's a battle of the information vs. the misinformation. Thus, i weigh in:
#7 and #10 are both correct. Rent must be above $2K/month AND adjusted gross income (AGI) must be above $175,000 for two years running. The landlord must prove AGI is >175K for two years before de-stabilizing the apt.
14.
"Yeah, once it goes over $2000 its a free for all for the Landlord."
Not true at all. It only goes market if the combined tenant income for the unit is over $175K/year.
By Anon at May 23, 2007 3:43 PM15.
will is wrong ... see the link posted above for the real rules. you can hang on to that baby for as long as you want, provided your income doesnt reach the cap as indicated in post 10. as long as your apartment is not grossly underpriced (ie if market rate is $4000 and youre still paying $1900), and you are a good tenant, your landlord should be happy. unless of course hes a greedy curbed reader.
By mortonstreeter at May 23, 2007 3:44 PM16.
the apartment can only be de-stabilized BETWEEN tenants after it passes the 2k mark - your lease will remain stabilized until you leave (unless you make over something like 250k). I'm pretty sure, but double check.
By lalaland at May 23, 2007 3:44 PM17.
if you aren't vacating your apartment, then your rent can exceed 2K without the apartment becoming destabilized. unless, you have the "high income" as #10 noted. So, the landlord can increase your rent according to the amounts set by the rent guidelines board even though it is over 2K.
By Anonymous at May 23, 2007 3:45 PM18.
Spitzer has proposed raising the rent threshold.
Good for him.
And for current tenant with rent going over $2000 - only becomes decontrolled if you move out or your household income is more than $175k for 2 years in a row.
And for the idiots that are so critical of RS... go move to the Bronx and get your own RS apt... plenty around you can afford.
19.
You can only lose apartment if over 2K and your income as measured by AGI Adjusted Gross Income) exceeds $175,000 for two consecutive years. If you make more in one year but less the next you are fine.
landlord does not get to see your tax returns. DHCR looks at them and then reports if you are over or under. Landlord will not know by how much or which years, etc. The landlord has to reapply every year to check.
By TK at May 23, 2007 3:52 PM20.
#11 (EJ) - I guess it depends on your definition of directly.
"In newly constructed or completely rebuilt buildings, many developers take advantage of the City's 421a and J-51 tax exemption programs. In return for the tax exemption, the developer/owner of the building must maintain the units under rent stabilization for the period of the tax exemption, which usually runs 10 to 20 years."
#6 posted the link with all the relevant information, but why would anyone read it? Tis much more fun to enjoy the "battle of the information vs. the misinformation".
By Jo at May 23, 2007 3:53 PM21.
Also, the $175K figure applies to all living under your roof. So keep that in mind while planning how to shelter pre-tax income, 401K, IRA, etc.
By TK at May 23, 2007 3:54 PM22.
The real question is: Why does anyone with RS sign a 1 year lease??? It's always a better deal to go with the 2 year -- and you can always break it. The landlord will be thrilled to break it!!!
By Mid-C Frank at May 23, 2007 3:57 PM24.
22 it is not "always" a good idea - generally it's a good idea to take 2 years, but not always - do the math
By anon at May 23, 2007 4:09 PM25.
I like how landlords are always called "greedy" as if there is something inherently wrong with:
1) owning a piece of property
2) charging whatever the hell I want to have someone use it
If I own a bar I can charge whatever I want for drinks. If I am a farmer I can charge whatever the market will bear for crops. But, if I am a landlord, and want to charge market rates I am greedy.
Ridiculous.
This misdirected concept of greed when it comes to personal property is absurd. The city needs to get out of the business of price controls.
By markznyc at May 23, 2007 4:10 PM26.
Barry the landlord: You lose! HA-HA (said in best Nelson voice).
If you own the building, you either (a) bought it or (b) inherited it. If it's the later, why not sell it and reap the rewards? If it's the former, YOU KNEW the apartments were rent stabilized.
Oh that's right, you're greedy. Your investment *could* be making more money. I wish my stocks would go up too, but I don't complain about it on the internet.
By Noneya2 at May 23, 2007 4:13 PM27.
yup, $2K and $175K. That is why my current rent is $1997.88 and next year I am doing a 2 year lease!!!!!!
By Anonymous at May 23, 2007 4:20 PM28.
"$2000 cant even get you a studio nowadays"
Don't you mean "$2000 can't even get you a nice studio in a desireable part of Manhattan nowadays"?
By pepperoni_punk at May 23, 2007 4:28 PM29.
Since he saids that the market apartments are only 1k more it will not take more than 5 or 7 years for the apartment to be at market rate. Just throw in a new bath, kitchen or major rehab and it will catch up to market in 5 years.
By Anonymous at May 23, 2007 4:55 PM31.
New York subsidizes not only the poor but also the middle class and sometimes the wealthy. Rent Stabilization laws are inherently anti-competitive and I WISH some bright attorney would bring a suit theragainst. how the State can justify fixing prices whereas if landlords colluded to set prices they'd be sued faster than you can say jiminy cricket. The market should be set as it was intended to be set. By reasonable buyers and sellers, not by some beholden politicians. This is communism at its best.
By Anonymous at May 23, 2007 5:01 PM32.
Does anyone know what percentage of the total housing stock are controlled/regulated?
It would be interesting to look at how much these are really skewing the prices here.
By Bing at May 23, 2007 5:02 PM33.
Has anyone else heard about the city govt raising the limit on the rent-stabilized apartments to $2800 and then giving cost-of-living increases every 5 years from then on? I don't live in a stabilized apt, so i didn't really pay attention at the time.
By Bryan at May 23, 2007 5:09 PM34.
You have a god given right to be poor
You do not have a god given right to live in Manhattan
You do not have a god given right to decide what your rent should be. This is historically why people have chosen to purchase property.
By Anonymous at May 23, 2007 5:13 PM35.
#34,
You talk foolishly. But, then, you have a god-given right to talk stupid.
Contrary to what you claim, "historically"people never owned property. It belonged to the monarch. Most of our ancestors were share-croppers,serfs or slaves.
Your petit bourgeois concept of people owning property started mostly in the last 300-400 years.
Like you, the monarchs also talked about "God-given rights" (Divine Rights of the King.)
So bugger the monarchs and bugger you.
By The Facts, Ma'am, just the Facts at May 23, 2007 5:33 PM36.
NEVER eat caviar with a silver or silverplate spoon. The silver causes an ionization process that ruins the taste of the caviar. Use gold, wood, bone, horn, or preferably mother of pearl spoons.
No matter how much your apartment costs.
By Caviar Importer at May 23, 2007 5:34 PM37.
This happened to me after a happy 12 years in a charming W. Village apt (and I & my roommate together made well under $175K!). I found the forms complicated, has anyone else filled them out? Like taxes, but worse. Getting former roommates to give me their tax returns was basically impossible... I could've fought it, but conincidentally moved in with my boyfriend, so ended up not bothering...
By Mar at May 23, 2007 5:36 PM38.
More advice to the original poster:
All the comments that say that your income has to be over $175K before you leave stabilization are correct. This is called "luxury decontrol". However, you should know that once the rent goes over $2000, the landlord has the right to send you a notice that requires you to show evidence of your income, including tax returns. If you fail to respond to this notice on time, you can lose your rights to stabilization.
For all the political posters: I agree that rent stabilization is a bad thing - and I was raised in a stabilized apartment. I just want to give the poster the right advice.
By Oliver's Neighbor at May 23, 2007 5:37 PM39.
To the folks who support RC/RS:
Other than RC/RS, can you give us examples of situations where price controls have worked over the long term (say, 5 years or more)?
By anonime at May 23, 2007 5:49 PM40.
Any household earning over 175K does not deserve a rent-stabilized apartment.
By Anonymous at May 23, 2007 5:59 PM41.
can't the state subsidize food in Ciprianis for me? I don't earn enough to eat there.
By Anonymous at May 23, 2007 6:00 PM42.
Bing, numbers are here
http://www.housingnyc.com/html/research/hvsresearch.html#2005hvs
2005 numbers:
Total housing units = 3.26M
Total of those being rental units = 2.1M
Total of those rental being RC = 43K
Total of rental being RS = 1.04M
Private non-regulated rentals = 700K
Other rental (public housing, HUD, Mitchell-Lama) = 300K
So half of all rental units are rent stabilized.
One third are free market.
do the math
By Anonymous at May 23, 2007 6:14 PM43.
#22 and #24
Definitely not always better to take the two year. In fact, I've found the one year is generally better. You really can't know know for sure, since you don't know what the next increase is going to be, but it's averaged around 3%-3.5% for the last several years. Take, for example, a $1,600 apartment with a one year lease starting in May 2004. When renewal time comes, the options are one year @ $1,656 or two years @ $1,704. If you thought it would be better to lock in that $1,704 for two years, you'd have been wrong. The Rent Guidelines Board increased the one-year rate 2.75%, meaning your second year would be only $1,701.54, still under the two-year rent of $1,704 you'd have been paying all along. A significant savings for the one-year renewal.
As you can tell, I'm using my own residence as an example, and I have a pending renewal right now, so we'll soon see what's better again. My options are a one year lease at $1,773.86, or a two year lease at $1,824.90. I'm going to be better off taking the one year, unless next year's one year rent increase is 5.75% or higher. Possible, but unlikely given the recent 3%-3.5% average.
Oh, and for bragging rights: it's a one-bedroom a block from Washington Square.
By accountant at May 23, 2007 6:14 PM44.
account, from the numbers, it looks like you'll hit the $2,000 mark in aout 5 years. let's hope that you don't ever make more than $175,000 a year for two years in a row.
By anonime at May 23, 2007 6:25 PM45.
43 & the renter
So you throw away 1800-2000 a month for the luxury of Manhattan. Buy a cheap coop in Brooklyn or Queens, build up equity.
Rent is money down the toilet. After 20 years of rent you made someone else rich.
By Anonymous at May 23, 2007 6:27 PM46.
accountant, does the "compounding" of rate increases impact your analysis? i ask because it's possible that a series of one-year renewals might push you over $2,000 faster than a series of two-year renewals. but i don't know how much difference there has historically been between one-year renewal rates and two-year renewal rates.
By anonime at May 23, 2007 6:29 PM47.
45: it's doubtful that any RC/RS landlord will be made rich from rental income. but your overall point is still valid... RC/RS tentants are only harming themselves over the long run.
By anonime at May 23, 2007 6:33 PM48.
If the renter had one of those 500 a month - 2 bedrooms, rent controlled, ok. Otherwise at $2K a month, buy the co-op in Queens, take the #7.
By Anonymous at May 23, 2007 6:33 PM49.
I work in a non-profit legal advocacy organization and live in a RS apartment that does need a lot of repairs but opt almost always to do the repairs. I've even bought my own appliances! And I just signed on to my 7.25% increase for two years. I can guarantee you that I will not receive that same percentage increase in my pay, but I work to help others. If I had augmented increases I would have to move out, and I do not know how I would be able to find another apartment within my reach. What would the RS/RC detractors have to offer people like myself?
By Gary at May 23, 2007 6:36 PM50.
#44
Shouldn't be a problem, and if it is, a good problem to have. I'll find something else if that's the case.
#45
Agree in theory, but a down payment is an obstacle. Plus, it's difficult to predict how long I plan to be in the NY Metro area. By the time longterm plans are in place, I'm hoping the down payment will be ready to go.
#46
Not sure exactly what the historical difference is, but as you see, in my first two years, the one year leases increased the rent slower than the two year would have. So it's a gamble. One of these years, costs will skyrocket, and then I'll probably wish I had locked in a two year rate, but it hasn't happened yet.
By accountant at May 23, 2007 6:38 PM51.
49, What I have to offer you is less expensive housing further away from Manhattan than you're current location. Why should you be entitled to any more than that?
By RS/RC detractor at May 23, 2007 6:53 PM52.
#49, freeing up 1M apts will bring down prices of the other 700K. Of course the RS will go up but the free market will come down. Over time you will find that steep increases will not happen and in a few years rent will be affordable (as income goes up) again.
Look what happened from 2001 to late 2003 when the cheapest studios on say the UES went down from 1700 per month to 1200 because of lack of demand due to recession in local (nyc) economy. It can happen again in a much bigger way than between 2001 and 2003 because net loss of residents is usually touted in the less than 100k number whereas 1M freed up apts is 10X the impact.
By Anonymous at May 23, 2007 6:56 PM53.
#45 -> throwing away money? are you kidding?
Some of you owners are so delusional, thinking the colossal debt of ownership is some kind of reward.
HELLO?!? He lives in manhattan... if he can do it for 20 years, he hasn't made someone rich, he's LIVED IN MANHATTAN FOR 20 YEARS! That's called "quality of life" (to some). Add on to that the fact he doesn't have to worry about the market, or his water heater, or his roof, and on and on... and he's liquid... when the city turns to total shit over the next ten years, he can simply move.
DUH!
Owning is, sometimes, seriously not worth it.
By Anonymous at May 23, 2007 7:37 PM54.
I agree with you that "Owning is, sometimes, seriously not worth it." But if you plan on living anywhere in the US for the next 20 years, it is almost guaranteed to be worth it to buy instead of rent. Why? If you look at any 20 year period over the last 200 years, home prices have gone up everywhere in the U.S. during that time -- even after adjusting for inflation.
On the other hand, if you can't commit to owning a home for more than 5 to 10 years, it is entirely possible (but not necessarily likely) that you will lose money by owning instead of renting.
Of course, "past performance is not a guarantee of future returns" and all that jazz, but how else are you going to predict future real estate values?
Is it possible that real estate prices will crash and burn in the next 20 years? Yes, but the historical evidence suggests that is highly unlikely. Will real estate prices plummet in the next 5 years? Maybe, but even a worst case scenario (e.g., Houston real estate in the 80s after the price of oil collapsed), prices are likely to drop by only 20% -- not the 50% that a lot of bitter renters are wishing for.
By anonime at May 23, 2007 7:57 PM55.
53
And when he retires, he can keep on paying rent and eating cat food.
56.
Every study shows that over the long term, 20 or more years the owners come out on top.
The guy is paying 2k a month thats cheap co-op range in Queens.
By Anonymous at May 23, 2007 8:01 PM57.
Right on the mark #53!
I've lived in great priced, rent stabilized apartment in Manhattan for 15 years now. I don't have to worry about the rise and fall of the market ( and it will fall again ) and maintenance like #53 mentioned, but I also don't need to lose sleep over property taxes and having to wait who knows how long before someone makes me the right offer.................before I can move!
That's quality of life.
58.
Thank you all. I appreciate the feedback and commentary.
The real reason that we are still here is that each year we plan on moving out; but those who talk about quality of life are correct. We have a nice 800sf apartment in an enjoyable neighborhood. (I got it by writing a check with money I didn't have in 1993; but have it I do).
Whenever we look to move, we find the space less & the price significantly higher. When our income breaks the 175 mark I promise you I will be out of this 5 story walk-up and moving on :-)
As for RS skewing rents around the city, that is entirely possible. If and when someone decides that and changes the law, we will change with it. However, at this point the law is in place to help people such as me; and I am appreciative for it.
Thank you again for all the information.
S_
59.
The renters 20 years from now:
Yeah, I could have bought a place that doubled in value, but I'm happy not having any equity and pay rent for the rest of my life, its cool.
By Anonymous at May 23, 2007 9:15 PM60.
Quality of life? Being trapped in a tiny apt that you have outgrown years ago?
yeah right.
http://www.curbed.com/archives/2007/05/21/it_happened_one_weekend_window_shopping_in_gramercy.php
By Anonymous at May 23, 2007 9:31 PM61.
I am always struck by the housing debate in NYC, which always boils down to how to regulate rents in some fashion so that they are cheaper than the market rates.
Why not be creative, and create market conditions that allow private developers to build rental buildings with cheap rents?
As an example, why not build dorm-style biuldings with shared bathrooms and kitchens? Why not include such accomodations in luxury condo buildings?
By alan at May 23, 2007 10:29 PM62.
I've lived in my RS apartment for 25 years. I am a writer and photographer; my partner works with a union. His job is to divert union dues into needed machinery/personnel for city hospitals. Between the two of us, we earn less that 90K per year. The neighborhood we live in was dark and dangerous when we moved here. I am a native Nyer, dating back over 150 years. I think we contribute to the city. Curb writers think, because we are renters, we are worthless. Discuss.
By NNyer at May 23, 2007 11:36 PM63.
I moved into my studio apartment 2 years ago, for $1750 - under the $2,000 limit. However, my apartment was "valued" at $2,027. So I'm not rent stabilized. I still don't understand how this "value" was established as the previous tenant never paid that rate - however that rate is "on the books" as I requested the rent history from the NYC Rent Board. Last year my rent was raised $100. Last month, our new management company raised my rent $350! It's preposterous and I'm moving out. I'm essentially being forced out.
By AJ at May 23, 2007 11:52 PM64.
Not worthless, just short term thinkers.
For 90K a year the two of you could have bought a co-op years ago. When you retire, you could have sold it for a nice profit.
The problem with long term RS apartments is that the rent will slowly make it back to market rate. When you retire, and your income drops, that will be a problem.
By Anonymous at May 23, 2007 11:57 PM65.
Too true #64.
The homes they could have bought 25 years ago for peanuts. Or even 20, 15, 10 years ago.
This is what RS/RC does to you. It cripples your ability to think ahead and to plan ahead so you are effectively trapped in a prison that you can no longer leave.
And the retirement point is a point well made. This is something that even the commenters who claim to love their RS apts don't think of.
And AJ, welcome to the real world. This has happened to countless friends and relatives of mine. They were all forced out by raising non-regulated prices. Keeping 1M RS places out of the free market and leaving only 700K out there will keep this cycle of steep rises going.
66.
On no issue do economist agree more than this issue: Rent regulation, while good for the few, is bad for most and should never be used.
Simple - ask people who know better.
We have rent regulation in NY not because it's good policy, but because it's good pandering. Elected officials don't have ethical fortitude to do the right thing.
Perhaps as more and more educated people leave the city (NY ranks 3rd worst in growth rates - and were it not for illegal immigration we would have a HUGE population decline) perhaps the powers that be will finally realize that RS is ruining the city. It's great here (that's why I live here), but it would be so much better if housing were deregulated.
By anon at May 24, 2007 9:50 AM67.
I love how if you make 2 million a year, your apartment is destabilized if your rent is $2001, but if its $201, you get to stay for a mighty long time.
Brilliant.
And Spitzer wants to *raise* that?
I don't think he's *that* stupid, so I guess he has lots of "friends" in stabilized apartments...
By Anonymous at May 24, 2007 10:04 AM68.
I am RS. Have lived in NYC for over 20 years.
I have saved over $100,000 which is invested.
Yeah, I have "equity".
Oh yeah, I want to live in NYC the rest of my life (not move). Why do you think they call it 'stabilization'?
I lived here before Seinfeld, before Giuliani- when people were being robbed and murdered all the time and the subway was a disaster.
Yeah, I think I've earned my "equity". And it's people like me who have helped NYC, and all of its cool 'hoods' (like W'burg) be what it is today
69.
I've been living here since 1985 #68. I've had my share of RS Apartments, but now I live Market Rate. I do recall the subway being somewhat seedy, and unreliable- but then it's still the same, at least in some areas. People being "robbed and murdered all time????"- don't you think that's a slight exaggeration? Dude, I lived near times square for 8 years- unscathed.
That being the case, don't honk your horn too loudly about your 100k- it ain't going to get you too far in the future.
My biggest regret today is not having bought when the market was at it's most affordable. My final question is how exactly did you help NYC and it's "cool hoods" be what they are today?
70.
JustAnotherArchitect,
In 20 years, you've only saved $100K? That's only $5,000 per year. But still, that's better than the average American.
In my case, I paid $250K for a junior one bedroom in January 2002. Based on what similar apartments in my building are selling for today, I'm pretty sure that I could sell it for about $500K (but let's say $400K at a minimum -- or $400K after the real estate bubble bursts, as so many people predict).
I freely admit that I got lucky and I don't mean to suggest that everyone will win the real estate lottery. But, to return to a point that I made earlier in this thread, if you're going to live in the same place for 20 years, the historical evidence is that you will come out ahead by owning instead of renting.
Of course, you have to compare real estate returns to other opportunities (such as investing in pork bellies or whatever). Every historical study I've looked at indicates that the long-term return is typically about 10% on stocks, and about 7% on real estate (before inflation in both cases). But when you add in all other factors (especially the preferential tax treatment that home ownership receives over stocks), I don't think the difference between stocks and real estate is all that great.
I think the "equity" you're so proud of is really a false equity.
By anonime at May 24, 2007 12:02 PM71.
Why is it mostly assumed that rent stabilized apartments are tiny? Or that their occupants don't make as much money as buyers of apartments? I know a quite a few people that live in Manhattan in big and inexpensive R/S apartments AND have bought/sold apartments elsewhere. This is something that I'm looking into as well. Why would they want to move? Most rent stabilized apartments I've seen are much bigger and are in nicer neighborhoods than owned apartments.
If all the rental apartments in NYC were stabilized we wouldn't hear any complaining about R/S at all.
72.
But they're not all RS, and they never will be. So the rest of us have to bust a nut everyday to pay market rate- while the RS Renters coast along paying a fraction of what we pay. I've lived in RS Building in the past- they pull all kinds of shit to hide their assets, etc. One M--f--r I used to live next door to, used to haul his wife and kid up to their summer place every weekend, while I sat in Central Park with a sandwich and a book. Yet another used to brag about paying 490.00 a month while making 90k- and would complain about the hallways being dirty. Scumbags.
By Anonymous at May 24, 2007 12:35 PM73.
The scumbags who own the ApartmentTherapy blog do the same thing. They have a small rent stablized apartment in Manhattan and then spend their weekends out in the Hamptons (where their family owns several different homes). Even people who support rent stabilization must be outraged that rich people take advantage of the law.
By anon at May 24, 2007 12:41 PM74.
#68, 20 years ago you could have bought a 2BR in Park Slope for between 120K and 200K
http://query.nytimes.com/gst/fullpage.html?res=940DEEDE153DF934A25756C0A961948260
or a coop (no size given but they are talking about lofts) for between 285K and 385K
http://query.nytimes.com/gst/fullpage.html?res=9F0CE1DC1E3BF930A35752C0A965958260&sec=&spon=&pagewanted=2
Others that have been renting for 20 years, look at what you missed out on.
By Anonymous at May 24, 2007 12:52 PM75.
#74... do you know what Park Slope was like 20 years ago? You would have had to live through that.
And today, you would have to go out to Queens.
Why do that, if you can rent in manhattan?
Quality of life isn't found on a spreadsheet, people!
So what if you make a good return on your investment, if that whole time you haven't lived where you wanted.
76.
Hey wait a minute 72 and 73. Those people signed legal leases and they can do whatever they want business wise. They sound pretty smart to me. I'd do the same. In a lot of cases renting is better than buying. Get the facts.
By anonymous at May 24, 2007 1:15 PM77.
#75, didn't you read what one of the 20 year RS ppl said? They said they moved into a "dark and dangerous" hood before anyone wnated to lived there.
also, did you not see the Soho numbers? Of course you did but you had to ignore those to prove a weak point
By Anonymous at May 24, 2007 2:27 PM79.
late to the game, and slightly off-topic, but in reply to #35:
People have historically owned property - just happens that in the 'Western' civilisations property ownership did not start until comparatively recent times. During King Hammurabi's time (1700 years before christ in case you are counting) there were three classes (as described in the Code of hammurabi). First amongst these were people who were property owners and the wealthy and upper classes. Ancient Israelites owned their land as described in the Talmud. Heck, even the Chinese Emperor Wang Mang in 7AD redistributed the land that was concentrated in private hands to the peasant masses (much like Mugabe has done in Zimbabwe and Chavez is attempting in Vzla - and much like with Mugabe and what is beginning to happen in Vzla the economy collapsed and supply problems emerged resulting in massive starvation). Just my $0.02. Fwiw, I have no idea if RS/RC is good or bad, heck, I don't even live in NYC!
By Facts Indeed at May 24, 2007 6:42 PM80.
I bought the studio I am living in now for 159K in 2004. It is now worth 300K. So much for taking 20 years to save 100K! When you have so much equity, you're not stuck, I am planning to sell my studio and use it as a down payment to purchase a 2 bed in Harlem.
Of course if I bought it in 1988 when it first went coop, the price would have been 60K (I think!)
Twenty five years ago, a friend bought a coop in Park Slope for 80K, now it's worth 800K.
Even when you have a cheap rent, you are stuck with no options, you can never leave. You're a prisoner. I can take my equity and move wherever I want to.
By happy in midtown east at May 24, 2007 11:05 PM81.
I've lived here since 1969. Yep, I remember Times Square when it was full of porn and hookers. Today's disney version makes me want to yak and I don't even like porn or hookers. I guess I like them better than starbucks.
I bought back in 1994. My place cost $125k then. One day I'll sell to one of you and go buy a town in the midwest with the profits. That's a New York thing to do.
By seven at May 24, 2007 11:14 PM82.
I think many New Yorkers in rent stabilized apartments are waiting to be offered their own apartments to purchase. Most likely at a deep discount!
My friend just bought his one bedroom apartment in Chelsea for roughly 100K. It's easily worth 4 times that much. Sweet deal.
83.
Yeah yeah, just make something up that is contrary to what happens in the real world.
Rather than being offered a cheap apt, the typical RS tenant (in a situation where the LL is trying to redevelop or get them out - the former being the case of your "friend"), there are many cases of the LL trying every ttrick in the book to evict.
Look at the case of the building on Duane where City Hall restaraunt is. The owner is trying to use the demolition clause to evict all RS tenants even thought the shell will remain. Or the place in the EV where the owner is trying to use the family use clause to evict a whole bunch of tenants. Or the LL can simply make life hell for the RS tenant so they eventually move out.
The kind of situation you are talking about is more likely where a subsidized purchase coop is going private (the owner already owns the place but bought for huge discount and can't sell for profit - this was done in a program that was a precursor to Mitchell LLama). The owner - Not the renter - gets market rates after buying for deep discount years ago as long as the developer can get enough apts to develop and sell for themsevles.
Google southbridge towers for more or read this link
http://query.nytimes.com/gst/fullpage.html?res=9F03E1D61F3AF930A35751C0A9649C8B63
Your friend and his/her bargain apt does not exist.
Go make up antother story for a more gullible and less informed audience.
86.
Oh I forgot to mention the country place. Probably now worth $500,000.
But you knew that.
87.
#82 - That could be true, but the number of rentals "going co-op" is way down these days. Only TWELVE (12) buildings have gone co-op since 2000. See the following Observer article from this week:
http://www.nyobserver.com/2007/manhattan-co-op-endangered-species
So if you're hanging onto your RS apt hoping for a chance to buy, don't hold your breath. ...
By kristin at May 25, 2007 11:43 AM88.
I bought my apartment in Hell's Kitchen in 2005 for 102K. I was paying $512 a month in rent and am now paying $647 in maintenance. I guess I was one of the lucky 12.
Oh......check the sales history of this building to confirm: 434 West 47th Street.
#83 You're in denial big time.
89.
#51-When I moved in 14 years ago and you were hanging with your nanny I had to watch my back because the neighborhood was so bad, and now that people like me have made my neighborhood desirable you think I should just move out of it because your greed wants my space? Too damn bad, buddy.
Now you can go back to outsourcing jobs and temporarily pocketing the money. These damn midwesterners.
By Gary at May 25, 2007 2:27 PM90.
#87. The point of the article you cited is that conversions are to condos, not coops.
By Black Hat at May 25, 2007 2:41 PM91.
#89 Gary,
Oh sure, everyone who's against RS/RC is a "damn midwesterner." Even if that were true, why is it relevant? RS/RC screws up the rental market for everyone who isn't a part of the scam -- regardless of where you're from originally or how old you are (for what it's worth, I was probably YOUR nanny back in the day).
Also, I love hearing about how RS/RC renters moved into a bad neighborhood was 20 years ago and single-handedly turned everything around. What a crock! First off, it wasn't as bad back then as everyone likes to say it was (some people have only an "imagined recollection" of old NYC that is based on some dumb movie). Second, the presence of RS/RC renters in a neighborhood would have a negligible effect on improving crime rates and other quality of life issues. In fact, I would more easily believe that the presence of RS/RC renters in a neighborhood actually SLOWED DOWN gentrification.
Shame on all of you greedy RS/RC renters!
By RS/RC detractor at May 25, 2007 3:54 PM92.
No. 91 - Would you like all rent stabilized tenants to step aside and hand over their apartments so they can be inhabited by people that can pay more? Talk about greedy. I own my apartment and totally support the current rent stabilization laws.
Why don't you complainers just get a better paying job and save your money and buy an apartment of your own instead of belly-aching about what other people have that you don't have. Boo-hoo.
93.
You make a lot of assumptions. As it happens, I own my apartment and my salary is in the high $100,000 range. Yet, I'm still opposed to RS/RC.
If you think price controls for rent are so great, are you in favor of expanding price controls to cover EVERYTHING? Just imagine a world in which there could never be a price increase for milk, or haircuts, or computers, or anthing else you want to buy. Actually, you don't have to use your imagination. Price controls have been used around the world for all kinds of goods and services. And you know what? They don't work in the long run. None of them. Not one.
I'll concede that price controls can be useful in certain limited situations -- but only for a short period. After a while, price controls have a really corrosive effect on markets, especially since they tend to discourage investment. I'm not a total free-wheeling capitalist pig, but it's pretty well established that using price controls to mess with supply and demand is a BAD BAD BAD idea over the long haul.
By RS/RC detractor at May 25, 2007 5:16 PM94.
Yes, as an apartment owner, I am a supporter of the current rent stabilization laws. I lived in a rent stabilized apartment for close to 10 years and at the time I signed the lease ( 1990 ), there was a minor recession. Some landlords were offering 1 month free rent, discounts on rent etc. Most of these apartments, and there were many that were vacant, were stabilized to boot.
Rent stabilization is phasing itself out, albeit slowly. Apartments are becoming destabilized in Manhattan as we speak. I support this. Most rent stabilized tenants, whether rich or poor, aren't greedy and should not feel ashamed. Ridiculous. Blaming these renters for the lack of affordable housing in NYC is convoluted and too easy.
And NYC WAS a pretty dangerous place compared to the city it is now. Giuliani and Bloomberg aren't letting us forget that. Look at the crime rate 20 years ago compared to what it is today.
95.
Of course NYC is *more* safe today than it was 20 years ago. But the way RS/RC supports describe old NYC, you'd think it was like Beirut in the 80s or Fallujah today.
The point is that they use the alleged dangerousness of old NYC to justify why they're entitled to price controls on their rent. In truth, they're just greedy.
By RS/RC detractor at May 25, 2007 6:50 PM96.
there are some great landlords of rs apts. out there.
my landord has given us discounts on our east village apts. to stay! why? because he likes that we're stable and pay our rents on time.
he likes us and we like him.
By mike at May 25, 2007 8:00 PM97.
I love how people who want to get paid for providing a roof, heat, water and other necessary services are considered greedy while those who consume all of these things but think they should not have to pay for them are somehow not considered greedy. What a load.
And why do these people think they should not have to pay to live here? Because they saved New York and made neighborhoods cool? MY ASS!! When I look back on all the buildings I have lived in and all the tenants/neighbors I have had to deal with over the years, the rent-regulated ones were, hands down, the most annoying, self-righteous, greedy pricks I ever had the dispeasure of meeting . . . not to mention that they were ten times more likely to keep messy households, smell, abuse the public spaces, make a mess of the trash area, steal lighbulbs and other fixtures from the hallways, not recycle, and bitch about everything.
Ungrateful leeches.
By RS/RC Suck at May 25, 2007 8:03 PM98.
Yes Richard, you were one of the lucky few.
The point is that border line illegal evictions of RS tenants is far more prevalent than offers to buy cheap. You are the exception to the rule (as are a few others) because many more ppl in RS places did not get as lucky.
You are the one in denial.
By Anonymous at May 25, 2007 8:15 PM99.
#94 I supplied the numbers before.
There are 2.1 million rental units in NYc
1 million are RS
700k are free market
300K are under some govt housing plan.
The phasing out of RS will take many decades so in effect it is not really phasing out.
Imagine all supermarkets having to sell 50% of its goods at artificially low rates but only to ppl who signed a deal years ago or those who inherited such a deal. Anyone else that shops there has to pay market rates for the 33% of the goods available to them. another 15% or so get govt subsidies.
So the supermarkets have to jack up prices on the 33% of goods that are under no price control to make a decent profit on the total number of goods available.
Not a perfect correlation because not one entity is affected by price controls but it goes to show why restricting 50% of the market to price controls while allowing 33% to be free market dramtically skews prices upwards for that 33%.
That's what happens in NYC with the 33% free market apts we have.
By Anonymous at May 25, 2007 8:27 PM100.
Actually a better example:
50% of all nyc supermarkets are permitted to sell all household goods and food at strict price controls to ppl on a special list.
33% of all nyc supermarkets can only supply of all household goods and food but at any price they like.
Naturally, knowing that only ppl on a special list can get the super low controlled prices the free market supermarkets sell at a huge markup screwing all that are not on the list.
Just think what would happen to those jacked up prices if the 50% of price controlled prices became decontrolled. those prices would go up but the 33% of free market would have to come down. All prcies would be fairer.
By Anonymous at May 25, 2007 8:35 PM101.
99 & 100
good examples. unfortunately, RS/RC leeches aren't interested in what's "fair" to everyone. they're just out to get all they can for themselves (which is the very definition of greed). so, im not sure that your examples will persuade any of them.
By RS/RC detractor at May 25, 2007 11:14 PM102.
Jealous, jealous, jealous.........
"you have it and I want it!"
ick.
By hee ha at May 25, 2007 11:18 PM103.
as i mentioned earlier, i own my apartment. RS/RC doesn't affect me at all (unless i decide to rent out my place -- which i can do at market prices -- and the rent i get would be higher than it would be if there were no RS/RC).
By RS/RC detractor at May 25, 2007 11:28 PM105.
apparently, cheap rent has made you soft in the head and incapable of formulating a coherent response.
triple ick.
By RS/RC detractor at May 25, 2007 11:54 PM107.
Having a good RS apartment *is* like equity. Likely better than the kind of equity you get in a co-op, where you pay 2 mortgages. I had a rent stabilized place, and put hundreds of thousands in the bank over 7 years because I didn't have to pay it in rent.
Those who bought 5-10 years ago also have done well. Maybe not as well as me, but hey.
But those who bought in the last year or two... idiots.
From the NY Times:
"But in a stark reversal, it's now clear that people who chose renting over buying in the last two years made the right move... recent home buyers have faced higher monthly costs than renters and have lost money on their investment in the meantime. It's almost as if they have thrown money away, an insult once reserved for renters.
buying has never been quite as beneficial as Realtors -- and mortgage brokers, home builders and everybody else who makes money off home purchases -- have made it out to be. Buyers have to pay property taxes on top of their mortgage, while renters have the taxes included in their monthly rent bill. Buyers also face thousands of dollars in closing costs (and, in Manhattan, co-op charges). Renters, meanwhile, can invest what they would have spent on closing costs and a down payment in the stock market, which hasn't exactly delivered a bad return over the last 20 years. "
Told you So.
By Eddie Wilson at May 26, 2007 9:38 AM108.
107.......I couldn't have said it better myself.
Especially line #3.
109.
107,
you haven't addressed the fact that RS/RC causes the rents of non-RS/RC units to go up. but then, i guess you (like the RS/RC leeches) just don't care that RS/RC is highly inequitable.
on the question of whether it's more advantageous to own or rent... although it's probably true that those who bought in the last 1-2 years have lost some money on their investment, if you fast forward 10 years, i think they will definitely come out better than renting (even controlling for inflation and any "extra" investing that a renter might be able to do). so, time will tell if they are idiots.
for example, look at people who bought in NYC at the HEIGHT of the real estate boom of the late 80s (just before the tremendous bust of the early 90s). those people have done quite nicely for themselves -- even before the massive price increases of the last 5 years.
even though buying has never been quite AS BENEFICIAL AS realtors make it out to be, that doesn't mean it's not beneficial. you're not suggesting that home ownership is a TERRIBLE investment, are you?
and yes, owners must pay mortgages. but at least a mortgage ends after a specific period of time. renters will ALWAYS have to pay rent (hence the old cliche about "throwing money away").
and yes, owners must pay closing costs and a down payment. investing in the stock market has it's own costs, too (broker fees and maintenance charges). so, no form of investment is without transaction costs.
nevertheless, home ownership receives preferential tax treatment that stocks don't get. aside from the deduction for mortgage interest, the first $250k (or $500k for married couples) of capital gain from the sale of a residence is TAX FREE. by comparison, all capital gains from stock are subject to tax (around 15-20%, i believe). the differing treatment of capital gain alone will significantly affect your net returns on investment in a home vs. stocks.
By RS/RC detractor at May 26, 2007 11:46 AM110.
To "fast forward 10 years"? The world situation is vastly different than it was in the late 1980's.
By melanie at May 26, 2007 12:06 PM111.
melanie, i think post #54 (about historical precedents) best responds to your concern. yes, there are ups and downs over time. but if you take any 20 period, real estate has historically returned about 7% per year. and around 90% of all 10 year periods also return about 7% per year.
By RS/RC detractor at May 26, 2007 12:15 PM112.
i wonder how many of you people against rent stabilization would've turned down a rent stabilized apartment 15 or 20 years ago because you were afraid you might be "screwing up the housing market" or that it just wasn't "fair" to rent a rent stabilized apartment ?
"Oh no mister landord.....I just couldn't rent this stabilized apartment, though its a good price.....because it just wouldn't be fair to other people.........."
By van at May 26, 2007 3:14 PM113.
That's not the point.
I would love for the underserved areas of Queens etc (when it comes to mass transport) to have fast reliable service into Manhattan to work. If it means paying a congestion fee then I'm all for it.
I live in Manhattan but see the primary benefit is to aid those that have the longest commute times. At least that's what moitvates me when it comes to congestion pricing.
114.
Ergo, it's possible to want to serve the greater good and also pay the price for doing so vis a vis RS or congestion pricing etc
By Anonymous at May 26, 2007 6:27 PM115.
I am sure we all know couples who have split up. The one who is left cannot afford the RS rent alone and is trapped into getting a roommate situation. Contrast that with a couple who made a wise investment in a coop years ago and is now splitting up. At least they can sell the apartment and split the profit, each can go their separate ways, with a nice down payment.
As far as renters who are so afraid to buy because they think the maintenance fee is a way to steal from their pockets, they really are a bunch of dinosaurs! #107 thinks owners are, "paying double mortgage". Most of these renters secretly regret not buying in to a coop 15 or 20 years ago, and their fear centered on not understanding the maintenance fee in a coop, also not understanding it includes property taxes which is usually 50% or more tax deductible.
People who have rented in NY for 20 years have probably never committed to anything including a serious relationship.
By happy in midtown east at May 26, 2007 7:00 PM116.
I know of MANY renters that have invested successfully and I know of apartment owners that have really screwed themselves.
One doesn't have to own an apartment to be a successful and smart investor.
By apartment owner at May 26, 2007 7:26 PM117.
I know of MANY renters that wish they could stay in Manhattan to raise their family but cannot because they did not buy 5 years ago and I know of MANY apartment owners that have many hundreds of thousands of $ of equity. A lot with at least a million. In my building alone we have had ppl sell $3.5M after buying for less than $2M 2 years ago. The rest are sitting on equity that would need a catastrophic global economic crash to wipe out.
I rented in BPC while waiting for a new place to be finished and the conversation that overtook all was why they did not buy before. Most were families so needed at least 2BRs in a good school district. Most moved out to NJ or upstate because they did not invest well enough (I guess based on your approach to this argument)to stay and raise kids. These were lawyers, and other 6 figure income professionals.
No amount of investment returns that they had could keep up with apt appreciation in nyc from 2000 to 2006. The ppl that bought were not more intelligent I grant you but the traders and bankers I knew that did not buy because they thought they were being clever were the ones that bought much later at much higher prices.
118.
Exactly my point #117.
Someone who is renting for 20 years, and never bought, now can never upgrade into a bigger 2 BR Manhattan apartment. They can't afford to because don't have equity in their place of residence. They must stay forever in the same tiny apartment their income could cover when they first started out, fresh out of college.
119.
118, you are an idiot.
Someone who rented for 20 years and paid 1/4 of your monthly payment for your overpriced dump which is losing 10% in value a week could have put just *half* the remaining money into a money market at would have 10 times your net worth.
Thank god for the people like you who never took Economics 101 and pretend you know anything about anything having to do with the housing market.
Its how the rest of us get rich.
By Eddie Wilson at May 26, 2007 11:20 PM120.
> although it's
> probably true that those who bought in the last
> 1-2 years have lost some money on their
> investment, if you fast forward 10 years, i
> think they will definitely come out better
> than renting
Uh, yeah, keep telling yourself that and everything will befine.
See, this is the *exact* kind of idiot I'm talking about.
Gotta love the folks who talk about "breaking even" over 12 years, and completely miss the fact that in real dollar terms, they got a condo shoved up their ass.
Sorry, when the rent/buy equation is running almost 2 to 1, you *lose* money if you don't get 10% appreciation EVERY YEAR.
"Breaking even" and ending up with the same value, or even getting a 10 or 20% bump, you LOST money, sucker.
> for example, look at people who bought in NYC
> at the HEIGHT of the real estate boom of the
> late 80s (just before the tremendous bust of
> the early 90s). those people have done quite
> nicely for themselves -- even before the
> massive price increases of the last 5 years.
Uh, no they didn't.
Time for economics 101 for you. But, then again, no...
without the stupid lemmings like this, the rest of us would have quite the same change to be rich.
Thank god for people like you.
By Eddie Wilson at May 26, 2007 11:21 PM122.
Eddie Wilson has not said anything of any significance or anything with anything solid to back himself up.
You are losing 10% value per week.
In real terms they got a condo shoved up their ass.
Those two "facts" stand by themselves in Eddie's eyes. No need to explain or back up.
Well done #121 for not knowing what you could not have better yourself. Genius!
By Anonymous at May 26, 2007 11:56 PM123.
Rationalize all your want. Lets look at some facts.
> Someone who is renting for 20 years, and never bought, now can
> never upgrade into a bigger 2 BR Manhattan apartment. They can't
> afford to because don't have equity in their place of residence.
> They must stay forever in the same tiny apartment their income
> could cover when they first started out, fresh out of college.
BS.
If you have a rent stabilized apartment for 20 years, and you invest the savings in an index fund.... the long term average is 11%, and its more in the last 20 years, but we'll go with just 11%. Folks can save $1k or more with a RS apartment, but lets just say $600 a month gets put away.
And, of course, we're comparing it to the supposed genius who bought an apartment, so there had to have been some down payment. Nobody was getting principal only mortgages 20 years ago, so lets assume a down payment in there, and the equivalent RS renter gets $20k to start with.
Cut to today, he's got $700k in the bank.
Now, we're talking about a scenario where the comparison is someone making mortgage payments, so obviously the renter scenario has some sort of income as well. With an income even less than average for Manhattan (and the person is at least, what, 40 now), they have a $750k down payment and can easily afford a million dollar apartment or more.
Now, what do we think the same person who didn't have too much income back then was really buying? He's still also making interest payments on it, might have refinanced a couple of times. And, odds are, his "equity" really isn't anywhere near $700k.
That "equity" they sell you, that’s the joke of the century. When you overpay for something, and when that something COSTS YOU money (maintenance, taxes), especially in the NYC market, pretending your high up above the folks with actual liquid assets... Wow, that’s a funny one.
By Eddie Wilson at May 27, 2007 9:46 AM124.
>> for example, look at people who bought in NYC
>> at the HEIGHT of the real estate boom of the
>> late 80s (just before the tremendous bust of
>> the early 90s). those people have done quite
>> nicely for themselves -- even before the
>> massive price increases of the last 5 years.
>Uh, no they didn't.
Uh, yes they did.
By anon at May 27, 2007 11:59 AM125.
Eddie Wilson,
Your post in #123 is much better than the unfounded generalizations you made in #120. Nevertheless, I have a hard time following your reasoning in #123.
To come up with the $750k "downpayment" you mention, a renter would have to save $1,000 per month for 20 years -- AND those savings would have to earn a 10% return every year with NO inflation. That's hardly a realistic scenario.
Assuming that annual inflation is 3% (and deducting that 3% from the 10% growth you assume -- for a real growth rate of 7% per year), the renter would have about $525k after 20 years.
And it's not like the person who buys an apartment is left with nothing -- no assets and zero returns on the real estate investment.
By RS/RC detractor at May 27, 2007 1:02 PM126.
>>Uh, no they didn't.
>Uh, yes they did.
Hey, who let their toddler on the board?
Can the retards with the stupid posts like that at least *try* and bring in something involving, oh, a fact or two...?
> To come up with the $750k "downpayment" you
> mention, a renter would have to save $1,000 per
> month for 20 years -- AND those savings would
> have to earn a 10% return every year with NO
> inflation. That's hardly a realistic scenario.
Again, no.
The average investment return over the last 100 years or so is 11% a year. We did significantly better than that in the last 20. I don't have those stats handy, but I think we're talking 15%
A thousand a month at 15% FV in 20 years is... $1.5 million.
(Plus, the real return on real estate from 1890 to 1990 was actually zero, and its been about 3.6% since then, which is a little over 6% after inflation)
As for the tax issues, you're talking long term stock market gain. Most of your gains would have been taxed at 15% had you sold 'em in the last few years.
> And it's not like the person who buys an
> apartment is left with nothing -- no assets and
> zero returns on the real estate investment.
I didn't know that only losing a part of your investment was considered an investment goal these days.
I love how "breaking even" after 10 years, after all the maintenance and inflation, is considered a sign you weren't stupid after all.
By Eddie Wilson at May 27, 2007 2:25 PM127.
BTW, especially when we're talking about co-ops, the word "asset" is a kind of funny one to use.
You have entered into a legal obligation to pay yet another mortgage (on top of your own). You will make maintenance payments, etc. Some asset.
Considering these days that the rental rates are generally lower than the carrying costs of such a coop, that leaves you with a negative cash flow. You're talking about buying something that will spit off $1000 a month, but costs you $1200 to put in. You can say "well, I'm not renting out my apartment to someone else", but the math still applies if you're living in it compared to paying rent elsewhere.
With prices falling, the stupidity of this exercise becomes even more obvious. It costs you every month to own it, and the exchange value gets less. That might technically be an asset, but its a stupid asset to own. Ever worse, your losses are *leveraged*.
But there it is, the stupidity of the people yelling out "equity" who just don't get it.
If you overpay for the *actual* equity you have, you lost money.
Plain and simple.
By Eddie Wilson at May 27, 2007 2:32 PM128.
> (Plus, the real return on real estate from 1890
> to 1990 was actually zero, and its been about
> 3.6% since then, which is a little over 6%
> after inflation)
Oh yeah, I forgot to mention... this was through LAST year.
Add in this year's dips, and we're probably talking 5%/3% already, and soon to be approaching 0% in real terms.
"Equity", yeah...
129.
The fact that your calculations exclude inflation (even after that has been pointed out to you) lead me to conclude that you're too stupid to respond to.
Plain and simple.
By RS/RC detractor at May 27, 2007 2:45 PM130.
You're right. Eddie is too stupid but for others that find this interesting read this link about long term stock returns. Basic gist is timing is everything:
http://www.evansonasset.com/index.cfm/Page/13.htm
If you were fully invested in the market in 1929 then it took until 1998 (almost 69 years) for your ave annual return to reach 10%. There have been similar long trough years and we are near the end of a typical bull market in stocks so be careful with those predictions ppl.
Another point is that Eddie assumes that the RS renter was a diligent saver and investor (i.e. saved his/her disposable income due to cheap rent) but if you read any stories of ppl losing RS status or battling to keep their RS place you will never hear of anyone that has save that mythical $1.5M that he talks about. In fact human nature being what it is and nyc being the kind of city where you need to spend to survive, it is highly unlikely that many RS renters saved much at all.
On the other hand, there are plenty of baby boomers who were in a forced savings plan (that would be a 30 year amortizing mortgage) who are sitting on a million or so without having to cset aside money for investment.
The old lady I rented from in Park slope is a prime example as are many long timers in PS, Bay Ridge, etc.
PPl sitting on sizeable equity is a far more common occurance than RS tenants that have made a million by investing the difference.
That is another reason why Eddie is stupid. He actually thinks his hypothetical examples hold weight.
By Anonymous at May 27, 2007 5:58 PM131.
Wow 130, you're a moron.
Renters can't save money because they pay rent?
Apartment owners can save because they pay maintenence?
You and most ( not all ) of the other apartment owners on this page are so desperate sounding in your attempts to justify the crummy property purchases you probably have made.
Your comments, I'm sure, will make people not want to buy in NYC.