Your Morning Credit Crunch: Brooklyn Foreclosures Way Up

1.

It won't matter if we finally get a Nordstrom's. Then we'll be validated at last.

2.

So foreclosures in Manhattan in August 2007 are up by a high raising 7 apartments from August 2006. We are heading for meltdown!!! It is all doom and gloom for the Island!

3.

Bu... bu... but I thought the economy of NYC was bulletproof and that everybody had money and that all of these high prices were justified by economic fundamentals. It was supposed to be different this time, dammit!!

Can you please pass the Kool Aid?

4.

Yeah, and I'm sure those extra seven Manhattan foreclosures are all on Fifth Avenue in the 70's or in 15 CPW or the Time Warner Center and buildings like those, for sure.

Probably none in East Harlem or farther north....

5.

what about the Bronx and Staten Island, for sure that's another 10,000 foreclosures out of 2,000,000 properties? no stats on those places?

6.

This is nothing but culmination of a year noting how long it takes to get to this point. Just wait til '08 and '09 where those getting behind just now will be foreclosed on.

Curbed postings are down as the real estate hacks can't spin and sell their usual BS (it's always a great time to buy, NYC is "different", blah fucking blah).

We're at the very early stages of 2+ years of a down market in NYC real estate in inventory that can be reproduced by the thousands. A Brownstone cannot be reproduced, they're safe, this new condo inventory? The on coming glut? tight mortgage market? Agents and brokers are fucked - starve bitches starve.

7.

The barbarians are at the gate. This thing is collapsing from the outside in. Just very, very slooowwly.

8.

We will soon see a glut of foreclosures in places like W-Burg. It will also be difficult for them to get their money out of their units when they wish to bail out. Just watch!

9.

You bitter renters are still pathetic. Keep hoping for this supposed "meltdown". "Oh my god, prices in NYC are down this year, it's a melt-down, the end of the world, the economy is collapsing, I told you so back in 2002".

Yes, the subprime market is taking a big hit, but where is your evidence that the Manhattan and the Manhattanized parts of Brooklyn are in trouble?

10.

9 - well said. The irony is that it doesn't matter how much the market drops, the bitter rent stabbers still can't afford to buy. What rent stabbers don't get is that some people actually are buying new condos to live in them (shock horror I know). They have no plan (and no need) to sell for at least 5 years.

11.

#8, Instead of foreclosures, I think what you will find instead is recent buyers having to live in their apts for longer than they originally expected while they watch the values slowly go down.

12.

Some interesting data points for buyers: I went to 5 open houses this weekend in Bkln (PS, FG). 1 that was brand new to the market was busy, 1 had "moderate" traffic (total sign-ins) of 6-7 parties, 3 were dead as a doornail (i.e., we were the only ones there). Nice properties all. Checked all the sign-in sheets and they were very light, but in the case of the busy OH, we were early so I suspect that had decent traffic.

And I understand that Bkln open houses have been busier than Manhattan open houses.

Finally, no "massive price drops" but I have seen that properties in blue-chip Bkln that have closed in recent weeks have virtually all been below ask, ranging from 4% to 9% discounts off ask, so there appears to already be some return to normalcy. Based on this observation, if the market stays at this pace or slows, it wouldn't be crazy to see deals at 10-15% off ask (unless, of course, sellers lower their asks). The other thing to bear in mind regarding the 4-9% discount is that those are pre-credit-crunch signings!! This suggests the market was softening or buyers had increasing leverage even BEFORE the credit crunch.

The post-credit-crunch signings have not yet closed (or are just starting to). The data should be VERY interesting.

13.

And the buildings are still going up, all over the city!

...is that what you douchebags meant by real estate always goes up?

badum boom!

14.

In Manhattan, foreclosures are up 27% Aug 07 vs. Aug 06. That is a meaningful amount.

15.

For people who boughtin condo-land, Brooklyn, prices will not hold . If the new owners bought to live in their spaces, fine. If they bought as an investment, to sell and move up, they will be screwed. New investors are now very hesitant about taking risks.

16.

Brooklyn is on schedule to build around 12,000 new units through 2010. Williamsburg/Greenpoint alone are around 4,500 units in the next 3 years. (just look at L Train Bedford stop, they got 6 20+ stories buildings beeing built between The Edge and NorthSide Piers).

I just don't see those neighborhoods being able to command $1,000/foot - how? who has that money? wall street will be laying people off, NY Times just had an article about NYC potentially having a budget crisis.

17.

I work for CurrentForeclosures.com, a foreclosures site and have seen a huge increase in the number of foreclosures in the past 9 months. I believe it is a combination of not only sub-prime and ARM mortgages, but also the high number of people who have gotten loans with interest rates at an all time low... in addition to the rapid depreciation in some areas and the difficulty some are experiencing in selling their homes.

18.

A slow motion collapse.

These adjustable jumbo mortgages have propped up prices. The prices are unsustainable. $400K+ for a studio in Manhattan? Reality is setting in, not that many people have that much money.

Manhattan prices will drop but the real damage will be outside Manhattan.

Today I saw a $500K+ 1 bedroom in Astoria. New construction, but 1bdrm half a million and up in Queens?
astoria

19.

The real problem was no income verification and adjustable rate loans.

They artificially inflated prices. Now it is catching up with the market.

20.

Is it really meaningful that Manhattan forclosures are up 27% from August '06 to August '07?

There were 62 foreclosures in August '06 and there were 79 foreclosures in August '07. Sometimes absolute numbers are more important than percentages. If the number of people injured from a car accident was reported to be 100% more than previously thought, but we previously only thought 1 person was injured, is the 100% increase supposed to cause panic?

You're using the same tactic as fox news.

Also, ed is a retard.

21.

#12 - very interesting information, and I have had similar observations at open houses.
I think that slower open houses and greater selling discounts probably say more about Manhattan and Manhattanized-Brooklyn than foreclosures, which hit the fringe nabes. Anyway you cut it, though, it's hard to argue that we are not at the beginning of the slowdown.

22.

Best part is the continues outsourcing of well paying jobs and influx of low skilled wage earning immigrants.

$1,000/Sq' is no problem. The premise though is 4 families and about 16 people are going to live in that 1 bedroom apartment.

Don't laugh, I know of 8 mexican day laborers living in a studio apt with triple bunks.

Studio Apartments for families of 4, the new normal.

23.

Looks like somebody woke some brokers up.

If you've opened a newspaper in the last six months you know that subprime is meaningless. It's about wages, prices and liar loans.

Outside in. Slow motion. Remember these things.

24.

#18
I live 2 subway stops from the Astoria condos.
My co-op has 3 bdrm apts for $300K.

I see price chopper, in two weeks.

25.

I agree that prices are ridiculous and should come down, but the fact that the dollar hit an all-time low a week or two ago against a basket of foreign currencies means that foreigners are going to hold up demand, at least a little.

26.

The last areas to go up are the first to go down, right after the areas that never went up. The price crashes and foreclosures will be largest in Bed Stuy and other areas that never should have been able to command prices reaching $1,000 sq ft. The borough nabes that benefited from a sizzling Manhattan market did so by virtue of those fleeing for cheaper prices and larger spaces. Basic supply and demand says that this demand is somewhat artificial -- if prices fall or level in Manhattan to a point that new or existing market entrants feel they can afford (even if still high), they will never look to the boroughs. Remember, when Manhattan was still extraordinarily expensive but by some views "affordable" 10 years ago, the price differential between Manhattan and the boroughs was enormous (if not infinite, since no one even sought to live in Billyburg, etc.). While nicer apartments and developing amenities will keep some attraction in these areas despite any declines, the relative price drops if there be any in the boroughs compared to Manhattan will be substantially larger. The same pattern historically has held true even within Manhattan -- neighborhoods that developed in the late 1980s were far more affected by the real estate slowdown than the prime properties around the park and lower 5th avenue.

Yet, renters, don't get your hopes up about some subprime meltdown crippling the NYC real estate market. NYC will feel some pain like all others if the economy continues to slow, but decreased hiring and lower demand from new transplants and not any subprime meltdown will be the cause. Remember, mortgage interest rates in 1989 for prime loans was about 12%. And, not many people are buying minimum $1MM apartments with subprime loans. An uptick from 6% to 8% in adjustable jumbos is not going to yeild a 20% price drop. Besides, any right minded person like myself locked in a 30 year fixed at 5.5% two years ago. I am not going anywhere.

27.

TSmith: Really? Ya think?

28.

Not every subprime loan will go into foreclosure. I got a no-doc loan in Sunset Park and after renovations, I have more then doubled the value of my home. I have no problem making payments and prices have gone up significantly in the neighborhood despite the credit crisis.
With rental prices at an all time high, it is not like NYC living has any other affordable options. I have been to foreclosure auctions, and the amount of bottom feeder buyers there far out weigh the amount of foreclosures.
Will the market go down? Yes perhaps slightly, but the bottom line is that there is a whole slew of buyers that are waiting for signs of decline. It also does not take away from the fact that only 34% of NYC population own and that the population increase over the next few years will reach over 200,000.
All that in consideration, (the percent of people who do not own,and the projected amount of people that will reside in the city) if we look at the market of the span of the next five years, we actually have a housing shortage.
Short term flippers are screwed. If you plan on actually holding on and living in whatever you decide to purchase, you will do just fine.

29.

I punched it into a mortgage calculator, and it looks like an uptick from 6% to 8% would increase the monthly payment on a $1m mortgage to $7338 from $5996, a little over 20% higher. It's not outrageous to assume that would drive a 10%+ drop in prices if it's sustained (which granted may not be the case), since most buyers do manage to a monthly payment. "Affordabilty" products are also probably not coming back over the next year or so...

30.

#23
bubbles inflate/reinflate from the inside out. So if they deflate from the outside in, then at some point they meet a middle. So at the end of the day, did the bubble most deflate, or did it pop? If it deflated, then at what point was the pressure equalized and where is the middle that the bubble formed around? Surely, there were assets that reasonable appreciated due to true demand and not merely speculation.

Very likely little future depreciation for high quality properties in prime locations even over the next 2 years. Maybe even some moderate appreciation.

More significantly, the liar loans didn't work for Co-ops because you still needed income documentation for the board to approve you, separate from the loan approval.

31.

I believe that 26 makes some solid points. In the "up and coming" neighborhoods of brooklyn, we have seen relatively high prices per square foot for units in the 400-800 range. This is the range where people were buying more house than they could afford by utilizing ARMS that they can no longer afford. There is no question that these projects were driven by and sold to people whoe were availing themselves of cheap money and low standards for borrowers.

However, I see nothing whatsoever to indicate a dimunition in price for units in Manhattan's prime areas (e.g. West Village, Tribeca, Upper West Side, PArk Avenue, etc.). These neighborhoods have continued to go up since the late 80's and they always seemed pricey (remember when 1.5 million for an 180 square foot two bedroom in a prime new development in Tribeca seemed ridiculous?).

So long as Manhattan maintains a high qualitiy of life, and we do not return to the standards of the 70's, prices will continue to increase because the the lack of supply and the ever growing demand. People with means from all over the world desire to own a residence in Manhattan, and they are competing with people who need to live here, as well as affluent older people who are now moving here to retire. Coops have strict finacial requirements, and new condos require at least 20% down. Anyone who is spend 2,500,000 and up is not getting a subprime mortgage, and they are most likely capable of getting a mortgage.

To sum it up, the outer boroughs will see dimunitions in price because there is too much supply and demand is and will continue to wane. That is not the case in Manhattan were demand continues to increase and there is simply not enough supply. Watch how fast the Superior Ink building in the West Village will sell out, and if they put up another 15 CPW tommorow with a five percent increase across the board, it too would sell out in a heartbeat.

32.

from the article: "Despite the decline in sales volume in the three neighborhoods, prices increased in the low- to mid-single digits."

So prices are up, after all. Volume is down; does that mean that sellers are waiting out the market. I don't see a comparison year to year re listings, so we have no way of knowing.

having said all that, my guess is that if you buy between now and feb. 09 (after the next administration takes office), you'll be in good shape after that. People hate uncertainty, and once the Bushies are gone we'll at least know what we're in for...

33.

# 28
Generally I agree, hold on to the property while you live there, but many people with no income verification loans also got adjustable rates loans.

They are watching the monthly payment increase faster than their salaries. Hence the problem, they can not hold on until the market recovers. The question is do they represent a large enough population to affect prices? I believe the answer is yes.

The problem of other buyers is that they can not afford current prices. Yes if you cut prices more people can buy houses, but how much money did current owners lose? Also as we are now seeing, lenders are cutting back, checking incomes, both make it harder for people to buy.

34.

many just don't get it. what the mortgage market meltdown is doing is weeding out, period.

the past years were built on, driven on, empowering those really not qualified, and the marginally qualified to enter the game, thereby effectively bidding up prices. a rigged "demand" was created.

agents & brokers gathered shoppers could then in a room @ an opening say since there were SO MANY shoopers you better bid $50K, $100K+ over asking etc. to get the place.

A lot of people in '04 through all of '06 paid a price driven by a demand and or bid that never should have existed, however the mortgage market enabled the marginally or not at all qualified enter the game with a mortgage.

what you paid is a reflection of the bullshit and loose lending practices, not the real value of the place. remove the buyers, the marginally and not at all qualified and "poof", gone is your competition, if you're legitimally qualified. The nonsense, fuel & heat is removed.

The Weeding out of the rigged demand + inventory explosion in some parts = total buyers market for at least the next 2 years.

35.

I agree that it feels like the foreign investment is still propping up prices. But here's the mini doomsday scenario. Fed cutes rates. Dollar goes into free fall. Fed has to raise rates (a lot) to bring foreign investment back in. 2008 ARM resets blow up. Prices start a real downward slide as mortgage rates go way up and foreigners take their profits out of the NY RE market.

36.

#34 -
i think the real question is how much weeding out is necessary in some locations. From the sounds of it, significant in new condoland, especially in Brooklyn, LIC, Queens, and the rest of the country. It doesn't seem as likely that Manhattan, where the majority of buyers that weren't qualified for mortgages didn't get approved by co-op boards, or paid all-cash will experience as much or any of the mortgage "weeding out" you're talking about. A price decline would come from excess supply, job losses by formerly qualified buyers, and panic sellers. It seems most likely that only option 2 seems likely at this point.

To the extent that job losses are bad, sellers may be forced to emerge, but if job losses are being over estimated at this point, sellers may not come forward in Manhattan at reduced prices. I think this is the last issue to play out, and unfortunately we won't have much guidance until December/January on that front.

37.

#35 - i think you got your econ 101 graphs mixed up.

If the dollar tanks, inflation (read price) will drive up. Loans made today are actually less expensive and prices skyrocket in nominal terms ($400k studio purchased in 2007 is worth $200k in 2007 dollars, but is worth $450k in 2010 dollars). You can afford to pay back the bank, but you aren't actually $50k more wealthy, since that $50k is barely worth what $20k bought 3 years earlier. This is truly a doomsday scenario, but for global US dominance (and vacations abroad) and actually a good thing for domestic US RE sellers/purchasers, even at the unbelievably high mortgage rates that would prevail.

With a Fed that is concerned about inflation, this scenario won't happen. I think they'd rather let a recession happen than a period of rapid inflation that could cause foundation of the economy to become unstable. But thats just my opinion, we'll find out in the next 15 minutes.

38.

#37, what I'm saying is that the fed will then have to jack up rates (more than they just cut them) when the dollar plummets (as it is at this very moment) and inflation gets even worse.

That's gonna hurt marginal mortgage holders. And it's going to give incentive to foreigners to take their profits out of NY in droves.

39.

Half point cut. Studio Condos to $2 Million!

40.

And oil to $110!

41.

A lot of folks are commenting on the huge demand for residential real estate that they beleive will prop up prices in the City. The easy way to tell if housing prices are too high is to look at the revenue you could generate in rent on a property - if the purchase price is higher than the rental income, then a property is over valued. In my neighborhood, Bay Ridge Brooklyn, these numbers are very out of balance. Up until a few years ago, it was more expensive to rent than to own in most of the City - and the country - this is what a normal real estate market looks like. Before you plunk down $1 mill for a two bedroom apartment in a generic high rise, you should ask yourself if someone else would rent the place for $8000/mo. - not likely in most cases.

42.

A lot of folks are commenting on the huge demand for residential real estate that they beleive will prop up prices in the City. The easy way to tell if housing prices are too high is to look at the revenue you could generate in rent on a property - if the purchase price is higher than the rental income, then a property is over valued. In my neighborhood, Bay Ridge Brooklyn, these numbers are very out of balance. Up until a few years ago, it was more expensive to rent than to own in most of the City - and the country - this is what a normal real estate market looks like. Before you plunk down $1 mill for a two bedroom apartment in a generic high rise, you should ask yourself if someone else would rent the place for $8000/mo. - not likely in most cases. Until you have renters who will pay as much or more than owners, you can be assured that purchase prices are not being justified by too much demand for housing.

43.

Re: #42 - the interesting thing here is that a cut by the Fed could even exacerbate the own/rent equation further. How? Well, by cutting aggressively, the Fed is essentially willing to sacrifice the dollar. A weaker dollar will continue to attract foreign buyers to NYC (mostly Manhattan). Manhattan, and even areas outside of Manhattan, will be owned by what are effectively foreign landlords, whose purchase decisions aren't based on rents but who may just want pied-a-terres or be making investments. SO, you have a further detachment between prices and local incomes, and therefore between prices and rents. A rational decision at that point, remarkably, would be for locally-based owners to sell their apts to foreign buyers and rent back, capturing that arbitrage.

44.

tim-
no doubt there is a premium for owning. But you can't look at a direct cap rate on owning an apartment.

In most of the country, you couldn't even rent out your house because there is little demand for a 3 bedroom rental house in the suburbs, so you aren't making a good comparison. At least in NYC, you're very likely to rent it out at a price that allows you to carry the property.

If you're buying an investment then you're right, but if you're buying to live there its what you pay in rent, plus what you're paying in premium to have a place you own vs. a place someone else can kick you out of, plus a (smaller) premium for any upside appreciation potential.

45.

There is a lot of mixed-messaged or plain old mixed-up economics here. If you assume that a lot of foreign investors prop up the market, and then the dollar will be propped up, no foreign currency buyer is going to sell out in an era of a strengthening dollar -- that is what the buyer is banking on. This is precisely why investing in real estate in NYC is so atractive to foreign buyers. Consider the (relatively real) scenario where a Euro is worth twice as much dollars today than a few years ago. Grossly oversimplifying, buying a $2 million apartment equates to about $1 million in equivalent real dollars to the European buyer in terms of buying power. Now, assume that fed or economic conditions cause the recent Euro-dollar exchange to reverse, making the dollar worth twice its current rate against the Euro (or where it was a few years ago when a trip to Italy was affordable). This is an enormously good situation for the foreign buyer. Even without any price inflation on the property, by playing the currency market, the apartment in strict Euro terms has generated an incredible return. Add in even a modest dollar-based profit on the real estate, and the return is astonishing.

46.

#43 Interesting point. I'm still not sure the pool of foreign suckers is big enough to prop up the inflation we have seen - at some point a land lord (even a foreigh land lord) has to make a profit, no matter how much the dollar sucks. You're probably right about Manhattan though.

47.

#45, good point, but in today's housing market, the foreign investor would be a lot better off investing in the US stock market. more upside potential and much more liquid. i personally don't buy the foreign investor prop-up theory. you and i can buy a pimpin' place in buenos aires for $50k with the US dollar, but would you go through all that trouble and country risk? plus, let's face it, the housing markets in europe are pretty frothy as well and most sane people would have their primary residence in order before even dreaming of investing overseas. i would argue that the actual number of those able/willing to do that in this market is actually pretty small. all the new paradigm, new demographics, foreign buyer theories are flimsy compared to the easy money theory when we think of why prices were pushed up so much in such a short period.

48.

#44 - I defy you to purchase an apartment in Manhattan right now and rent it out for a profit. Also, I don't make up the rules of supply and demand. In a functioning economy, there is no such thing as an ownership premium - otherwise poor people would own everything.

#45 - see #46

49.

in sum there is a tremendous amount of uncertainty out there (the dollar, oil, iraq). i honestly, seriously, unfortunately feel eventually NYC (subways, etc.) is going to become another of the world's terror battle grounds and suicide attacks, etc. on the subway, in large nyc gathering places, etc. is going to happen.

Americans can't take this scenario, unlike many other places in the world we are not conditioned for this. Real estate is going going to suffer tremendously if this stuff takes root in Manhattan. I think it's just a matter of time.

50.

So, if all those foreign buyers snatch up the thousands of over-priced apts. and visit NYC only a few weeks a year, this will have no negative impact on the NYC economy, especially the service economy?

All NYC will be let with is low income folks and some silly rich Russians for a few weeks a year.

51.

#44 - you fail to mention that in suburban USA people buy houses because there is generally NO rental market for houses in suburbia!!

Here you have an ability to switch back and forth fluidly between renting and owning, making it not only a valid but a necessary economic analysis.

52.

On behalf of #45, I never said that I bought into the notion that foreigners are or will prop up the market -- frankly I think the volume is too small to do so. I was saying that, if you believe that the market is propped by foreign buyers, it makes no sense to suggest that a resurgence in the dollar will cause them to sell -- that will only cause them to smile a lot. I think the investment makes sense because of the long term stability of the NYC market, but it is not driving pricing.

I must confess to not understanding the argument above that you can't buy an apartment and rent it at a profit. That has rarely if ever been the case in NYC. And, given the current state of the rental market, the current market may be as close as one will come to doing so if you look at it from a tax efficient perspective. The apartment above me was sold three months ago for $1.6MM, and had been renting before that for $8000 a month. That is about break-even if you look at the after tax mortgage carry and $400 a month common charges.

53.

I'm not sure what 2 bedroom rents for $8000 and sells for 1.6. 1.6 gets you a large one bed these days. $4000 or $5000 a month tops in a luxury rental building.

54.

^ apartment buidlings are everywhere in the burbs

55.

Aol is moving it's headquarters to NYC.

That's about 3000 new jobs for the city.

56.

what rental market are you living in? Luxury one-bedrooms rent for $3,500 to $4,000. A real two-bedroom hits $6,000 - $7,000 without breaking a sweat. You're thinking of $4,000 for a one bedroom that is converted to 2 which is most common. The two-bed would be converted to 3 or 4 bedrooms.

57.

#52 - your math might be close to working out, except if you factor in property tax - which could run up to 10,000/mo. or more depending on the circumstances. Also, where is this building that has $400/mo. condo fees - East New York?

58.

$10,000 a month in taxes??? Maybe for Bloomberg's townhouse. The taxes on my 3,800 sq ft village loft are about $1,000 a month. And, condo fees vary widely depending upon the building's needs and sources of income. We have substantial non-fee income, and my monthly fees are well below $1,000

59.

Holy crow, this is all making my head spin. You New Yorkers are such suckers! While you bicker about whether such and such property is worth $1200 or $1400 a square foot, or whether it's hipper to live in Williamsburg or the LES, the rest of the nation is laughing at you. No, really. Seriously laughing.

60.

Yes, #59, they are all laughing. And reading our blogs, evidently.

61.

#59 - are you laughing because...

(1) NY real estate is worth multiples of what RE is worth in the rest of the country?
(2) NY real estate has to date withstood the decline that has plagued the rest of the country?
(3) NY is the only city of any interest (from an investment standpoint and probably otherwise) to people from the rest of the world?

62.

Re #58 - my bad. I meant $10,000/yr. in taxes - I still don't think you could cover your costs by renting out a two bedrom apt purchased today for 1.5 million.

63.

Actually, #61, you missed one:

(4) Because NYers are so obsessed with real estate that they post comments like yours.

I'm laughing because, like all rich people, I live in Ohio, and don't worry much about multiples or whatever. Who wants Crown Heights when you've got Canton?

64.

I was under the impression that all Ohioans were in NY

65.

tim.m
Last year's rent averages:
http://www.citi-habitats.com/media/pdf/bw2006.pdf

Quick search on corcoran for chelsea 2BR under $1.5M
http://www.corcoran.com/property/listing.aspx?Region=NYC&ListingID=989560&ohDat=9/23/2007%2012:00:00%20AM;

$4560 to rent last year = about $5K this year (you did know that rents have been rising at dramatic rates didn't you?)
$4750 monthly costs after tax deductions

You are ahead today by buying.

66.

Don't buy now...just watch and wait and see...

67.

#65 Didn't you forget something? How about the down payment? I don't know what percentage helped you to get such low monthly costs but has to be at least 20% which you could have invested elsewhere. Not to mention the exorbitant closing costs. Plus you have to take into account the costs of selling. Plus insurance, repairs etc. There is no way owning is cheaper.

68.

#65 Using the calculator that accomapanied the real estate listing you linked to, it shows the monthly expenses of purchasing the $1.2 milliom apartment is $7,252 (20% down payment). The highest average two bedroom rental price from the report you linked to was in the west Village at $5,300. to my mind this means that you are coming up short $2,000/mo. by owning vs. renting. Not to mention all the intangibles like home repairs and insurance costs. I'm not saying people shouldn't purchase property. I'm just saying that the cost of purchasing property, at this moment, is too high and the prices are not being proped up by actual demand for housing. They may be propped up by the desire of folks to own property no matter what the cost - but that won't last.

69.

tim-
in 1997, the average price for an apartment in manhattan was $430,000. If you put 20% down, your monthly payment on 1997 average mortgage rates of 7.75% was $2,470. Average rent for a studio was $1,000 and $1,500 for a 1-bedroom (i can't find 2 bedroom average and i assume $430,000 would be more like a small 2-bedroom than a 1-bedroom), and i'm going to assume it was $1,900 for a 2-bedroom. Either way, when adding in taxes and common charges, the economic analysis you're doing didn't work before the housing boom, so why would it work now? Based on percentages, you're probably closer to breaking even now than you were 10 years ago.

70.

10:40 - how much of that rent do you ever get back? At least a mortgage - even if it is higher than rent - you get your money back when you sell. As far as taxes/mortgage interest it is a federal tax deduction. Common charges generally include interest on the building's mortgage - which you get a tax break on as well.

71.

If you live in brownstone brooklyn, Carroll Gardens, cobble hill, brooklyn heights, park slope, fort green , clinton hill you will be just fine folks just sit back and let the time move on. These areas are solid.

72.

interesting scenario #49

like ive said before and ill say it again
if these doomsday scenarios occur

dont count on pedro the $7 an hour doorman to protect your $1.5MM studio

dont count on a low paid McCop from the suburbs to stick it out when TSHTF

i gleefully dream of a future where landlords are hung from lamposts...

73.

dontbelievedahypeness -

thanks for your leninist (read: communist) ideology. ill be glad to let you know that you've exited the boat and now live in the United States of America, where capitalism is defended by force. If you want to see landlords hung or the government as the only property owner, then please exit the land of the free, renounce your inherant rights of life, liberty and the pursuit of happiness, and move to cuba or china.

I'm sure you'll be happy when you go to work in a rice field for 12 hours a day and still manage to develop lung cancer from second hand smoke within 15 years.

74.

actually i was thinking of moving to iran

long live Ahmadinejad!!!