NYC running low on $1,000,000 apartments

John McGilliss wrote:

Yup, got my 2 bad / 2 bath (REALLY nice place) for 420k euro / 620k $, 10 min from Manhattan.

Jersey City is 10min from Manhattan, it is still a dump. Where did you buy?

another argument for no bubble is the comparison of price to own and price to rent. as far as i can tell, the ratio of these two items remains within the historic range for desirable manhattan neighborhoods.

that said, this is very interest rate dependent when you are talking about $800k mortgages. if mortgage interest rates go up to, say, 5.5 or 6%, that could seriously dampen selling prices unless rents are also rising (which they could be because a 6% mortgage rate suggests higher inflation generally).

Oh look! Another Letsrun economics thread with people who THINK they know what they're talking about, but in reality are just keyboard warriors that try to act like they care about the economy.

http://s.mlkshk.com/r/KS5I

NYCRunner2 wrote:

John McGilliss wrote:

Yup, got my 2 bad / 2 bath (REALLY nice place) for 420k euro / 620k $, 10 min from Manhattan.

Jersey City is 10min from Manhattan, it is still a dump. Where did you buy?

1 min walking from the L Lorimer stop

Half of the rentals are not rent controlled. It's nowhere near that number.

One thing that goes unmentioned here is that many people who take over leases on market value rental apartments actually have primary residences elsewhere. Some of the landmark brownstone blocks are pretty deserted these days. The people who do have money have lots of it.

Nigel Incubator Jones wrote:

Half of the rentals are not rent controlled. It's nowhere near that number.

As of 2011, only 39% of rentals in NYC were neither rent controlled nor rent stabilized.

That number is rising but it is still a bit off the 50% mark.

The rich want it this way: therefore they can appreciate cheap labor and have the government subsidize it.

If that number is true, it's partly a result of something even more insidious, which is that people who are poised to buy the typical brownstone with 12 or so apartments in it can kick everyone out if they say they're going to see the building for personal or family use.

So ten or more people paying market rent are suddenly without a home. That has happened to ten buildings on my one block alone. And of course this "family use" law is circumvented in many instances, and new owners start selling off floors of the building.

"The people who do have money have lots of it."

Yes, they do, which is why they can afford to buy places everywhere and not really have to use them--they are PURELY for wealth preservation. They don't even care if they drop 30% in value (which they are not), that is a good deal compared to other futures they are looking at.

Also, like I said, million isn't what it used to be. People with the money pay CASH for the properties--they are not like the chumps who get some sort of mortgage. The "price" somebody will pay for a mortgage? Do some work on an online mortgage calculator--

$1M purchase price

$800k mortgage, 30-yr @ 5%, w/1.25% property tax & 0.5% PMI:

IF only minimum payments of $5,336 are made each month for 30 years, the purchaser ends up paying $1,921,046.27 for that $1M property. Yes, the value may have risen during that 30 years, it may even have doubled to the $2M one would need to get out of it to get back what one paid.

OTOH the person with money to pay cash up front, has a completely different outlook on things.

There are people making money off this pricing, too. Consider those who acquire by inheritance, yet cannot afford the maintenance/upkeep/taxes, due to the high assessed value. They can sell and make a pot of money that they would never otherwise see. Yes they will have to dispose of a family asset, but whatever--many times if they are in that situation they MUST, in the USA, just to pay the estate tax bill.

Also, properties in some areas of DC are going up, a lot, in value. The streets in DC are "paved with gold", but it's a fool's gold--a lot of DC and surrounding areas SUCK. The housing stock SUCKS. Neighborhoods SUCK. But, the same is true in many places in the world. Overpaid government hacks with defined benefits pensions can afford it, they don't care. Many are buying up older places as tear-down's and redeveloping. Local jurisdictions are very concerned about turning single-family areas into duplexes and multi-family occupancy. Lots of monster homes going up in outlying places like Bethesda, Cabin John, etc.

The only reason to be in DC, unless it has nostalgic value for you because you grew up there, is to make money working for/off the government. The place is a swamp, unlike other places where the wealthy park their money--which is why in DC it is many locals who still own, off money they made off the backs of you and I--rather than internationals looking for wealth preservation vehicles, as in, for instance, Manhattan. The best thing about DC is its proximity to Manhattan, lol (yes the National is good and Dupont Circle can be fun if you are gay, but that's about it)(oh, Air&Space if you are 6)

coach wrote:

You can get a decent 2 bedroom apartment in a safe neighborhood for $400,000 in Brooklyn 40 minutes away from Midtown.

Where?

You can barely find a 2 bedroom apartment for that in Flatbush.

There's no bubble in Manhattan. Prices have been pretty stable since 2006, excluding the brief bubble in 2007/08.

Everything Maserati has said is true. I'll add to that, my office view of Central Park is slowly becoming obscured by new glass high rise residential developments with all units listed north of $1mm. Normally I'd expect such an article from the Times to be a hit piece, but maybe the real estate department didn't get the memo. There is no bubble in nyc real estate, it is people with cash parking it, because they made it in very volatile markets and rightly so don't trust even liquid volatile markets today.

If you're looking for a place to live for less with the best schools in the state and fine running community go 30-40 min north of gct. There $700k gets you 3-4 beds 2 baths and if you look taxes under $18k a year. That's the cover charge, come join the party.

"There is no bubble in nyc real estate, it is people with cash parking it, because they made it in very volatile markets and rightly so don't trust even liquid volatile markets today."

EXACTLY. Well said.

Right now, I'm considering somewhere up the Hudson, a bit more than 30-40 min north of gct.

Update to this thread, with article from Yahoo News:

http://news.yahoo.com/chinese-manhattan-replace-russians-top-apartment-buyers-113332662--sector.html

It's a game you shouldn't go anywhere near, unless you have so much money that you can afford to lose a lot of it and still be rich. These are often people with no vision for the properties they are buying, other than to have their wealth somewhere other than a bank account, gold, or the markets.

how many of you live in NYC and are familiar with the public schools here. Forest Hills, 20 minutes from Midtown has 2 bedroom apts for 300-350,000. The schools are solid nd if you want to spend money on private schools there are many to choose from. Fresh Meadows, Whitestone, and Bayside have even better schools but the commute will be more difficult. You can buy a nice house for 600,000. I don't know why anyone would spend 400 + on a little box of an apt when houses are 40 minutes away. Brooklyn apts are expensive and the schools not as good as Queens schools. I wouldn't live in the Bronx but there are a few decent areas to live. Staten Island is not as nice as it once was and I'd rather live outside the city than in Staten Island. NJ has some nice suburbs with excellent school districts 40 minutes away from Mid Manhattan. Taxes are high but prices are much more affordable. You can find many houses within an hour of the city for less than 600,000 dollars. I am not the home owner type so I'm content with a 1200 square foot co-op in Queens that costs $350,000

this ^^

Not familiar with public school system but 40 min away is a world of difference for many people. Plus apartments are good for rent/sublets and they are very profitable when they are in prime areas. I rent a room in my apt for 1600, (this fall looking for raising to 1700/1800). If I rent the whole place we are talking about ~4000$.

Those are not profits that you can do if you live an hour from NY.

Interesting back-and-forth here. Thanks to all serious contributors (which seems to be just about everybody).

I don't know what the market value for our apartment is. It started as a one-plus, we bought the studio next door and did a conversion, now we've got ~1315ft^2, three bedrooms and two baths. Technically it's a penthouse apartment (just means we're on the top floor--layout is the same as on all the other floors) with good (not great) views. I'd guess you'd say we're in the Central Village.

The place is paid for, but we still pay ~$2,500/mo for maintenance--plus the occasional expenses that the owners get hit for (extra fuel for a long, cold winter, lawsuit expense, etc.). I honestly have no clue what we could sell the place for, but from that article it seems like it would be something in the seven figures.

The thing is this: we *don't* have a lot of $$$ socked away, and we didn't when we bought into the building (~25 years ago). The way things are now, I could easily see the board of a similar coop nixing our application. Because there are at least two considerations involved:

1) As someone mentioned above, you'd like to know that the buyer isn't going to have to stretch. You want someone who has plenty of reserve, if/when the economy--as a whole, or just your part of it--goes south again.

2) A board also uses a 3:1 or 4:1 reserve:price ratio to set a particular tone for its building. People with that kind of nest egg are less likely to flip the apartment soon after they buy it; are less likely to turn deadbeat on paying the maintenance; are less likely to push the board to make major changes to the building (to push up the selling price of their own apartment, while all the owners get hit with assessments to fund the improvements).

At present a coop board can set pretty stringent requirements, and buyers will meet them.