New Yorkers, where would you live in NYC for $3k/mo?

[jackdaniels]

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Buying in NYC is basically gambling on real estate. The prices to buy compared to rent only make any sense if you price in a fairly optimistic appreciation rate.

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It is interesting that you say an appreciation in price is important when buying in the city. I figure that any appreciation would make it better than renting and the only concern I would have would be a real estate bubble burst. As for Manhattan, well the city is fairly unique in that it is limited. There is no where to expand without going over a bridge or through a tunnel. This is why real estate prices in the city are not likely to scale back (barring a terrorist attack that scares people away from any place that dense - which didn't work the first time and prolly wouldn't if it happened again).

It is similar to the "captive audience" approach movie theatres have when they sell you popcorn. They know they can charge you more because you have no choice but to buy it from them. Since Manhattan is and (I am willing to wager) for the rest of my life will be a place where there is a captive audience, I see no reason for the price of real estate to fall.

You can find similar economic models for real estate on University campuses (where students are replenished yearly and people who go there must BE there). Prices rarely fall for on campus real estate and if they do it is temporary.

[ceczar]

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My comment was striclty designed to show that TODAY, while mortgage rates are low, is a good time to buy if you are interested in BUILDING WEALTH. Part of this equation is having to spend a little less each month in order to save for a downpayment.

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the best reason to buy is for the tax deduction on mortgage interest. there are times when, compared with buying, renting is relatively cheap and times when renting is relatively expensive, based on supply/demand, random fluxuations in the real estate market, etc. i have no idea if renting is historically cheap or expensive in the current NYC market. but it is certainly not the case the renting is automatically worse from a financial standpoint.

mortgage rates are still historically very low, but prices are historically high. as rates go up, monthly mortgage payments for a given loan amount will go up, which actually should put downward pressure on home prices. by taking a big mortgage you are making a very large leveraged bet on the NYC housing market, and it may or may not be a good time to make that bet.

you are totally discounting the very important concept of opportunity cost, and the down payment can be instead invested in something else, which may be a more prudent financial decision, and is probably less risky. again the only real advantage to buying a house when compared to other investments is the tax advantage.

[sfer]

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As for Manhattan, well the city is fairly unique in that it is limited. There is no where to expand without going over a bridge or through a tunnel.

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Huh? There dozens of large residential buildings that went up in the last 3 years.

[slickpoppa]

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It is similar to the "captive audience" approach movie theatres have when they sell you popcorn. They know they can charge you more because you have no choice but to buy it from them. Since Manhattan is and (I am willing to wager) for the rest of my life will be a place where there is a captive audience, I see no reason for the price of real estate to fall.

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But all of this is obvious to everyone else, so the current price of real estate should take all of that into account. If it is so obvious that prices will rise in the future, then people will start paying higher prices now, thus limiting your rate of return.

Also, no one is saying that the price of real estate is necessarily going to fall. You get the worst of it by investing in real estate if prices rise less than the interest rate.

[Voltron87]

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As for Manhattan, well the city is fairly unique in that it is limited. There is no where to expand without going over a bridge or through a tunnel.

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Huh? There dozens of large residential buildings that went up in the last 3 years.

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his point still stands. manhattan is not getting bigger.

[jackdaniels]

I did mention the opportunity cost of putting that down payment on a house may make it a bad investment for some (another poster before me spoke about this). I simply qualified it with the fact that it is a fairly safe investment (compared to many others) and that most people don't have the knowledge to invest in anything better. Clearly, if you are market savvy, own a business that can use a cash infusion or are a successful poker player looking to move up in stakes, taking that money and sinking it into a home may not be the best idea. If none of the above (or similar) applies to you, an investment in real estate is a pretty rewarding route to take.

BTW the tax benefits are another EXCELLENT reason to do this (I currently live in Canada and had to do some maneuvering in order to deduct my mortgage interest off my taxes as the law here does not allow for a deduction on your primary residences interest - it IS possible if any Canadians want to know how, PM me - P.S. This is nothing illeagal). This is a very good point.

[Paluka]

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As for Manhattan, well the city is fairly unique in that it is limited. There is no where to expand without going over a bridge or through a tunnel.

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Huh? There dozens of large residential buildings that went up in the last 3 years.

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his point still stands. manhattan is not getting bigger.

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Not true. When they tear down a small building and put up a high rise apartment building, Manhattan does effectively get bigger. NYC is 3 dimensional.

[sfer]

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As for Manhattan, well the city is fairly unique in that it is limited. There is no where to expand without going over a bridge or through a tunnel.

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Huh? There dozens of large residential buildings that went up in the last 3 years.

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his point still stands. manhattan is not getting bigger.

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No his point does not stand. Reread it. He's saying that since Manhattan is fixed in area there is a finite amount of usable space. Not true. Anyone with half a brain can see that by looking up.

[citanul]

in addition to looking up, there's no reason to believe that nyc will not expand into water area in the future, as japan does, as other countries have done, and as i believe manhattan has already done at least once, building a park by just basically putting a big pile of garbage next to the island, then paving it over.

citanul

[Voltron87]

ok, yes, it is expanding, but marginally. i'd be interested in finding what % increase there was in housing last year, i dont know.

the point of whoever brought this up is that housing in manhattan is a relatively finite quantity, and it holds value very well. theyre right, and one of the reasons is because it is very hard to build more housing and it does not have much effect. there are also people willing to move into these new buildings, which is why they are being built, which supports that point that housing holds value.