[bahamaman]

On the issue of rain, it is highly variable. Prior to this summer, we got an above average amount of rain for two or three years in a row IIRC (which had the effect of moderating the temperatures). Unfortunately, this year has been very, very dry (and, not surprisingly, very hot). In fact, although not typical, this year we had some 80 degree days in November

 

[Oski]

Here's an interesting article on this very topic:

http://www.washingtonmonthly.com/fea...ace-wells.html

Quote:

Truth is, in most of the country there's no housing bubble. Perhaps the crucial ratio from which economists determine whether housing markets are out of whack is the ratio of home prices to annual income. In most of the country, it is modest, 2.4:1 in Wisconsin, 2.2:1 in Kentucky, 2.9:1 in Illinois. Only in about 20 metro areas, mostly located in eight states, does the relationship of home price to income defy logic. The bad news is that those areas contain roughly half the housing wealth of the country. In California, the price of a home stands at 8.3 times the annual family income of its occupants; in Massachusetts, the ratio is 5.9:1; in Hawaii, a stunning, 10.1:1. To some extent, there are sound and basic economic reasons for this anomaly: supply and demand. Salaries in these areas have been going up faster than in the nation as a whole. The other is supply: These metro areas are "built out," with zoning ordinances that limit the ability of developers to add new homes. But at some point, incomes simply can't sustain the prices. That point has now been reached. In California, a middle-class family with two earners each making $50,000 a year now owns, on average, an $830,000 home. In the late 80s, the last time these eight states saw price-to-income ratios this high, the real estate market collapsed.

The scary thing is that article is from April 2004, housing prices have gone up by probably 30% in NYC and California since.

 

[Oski]

Quote:

Originally Posted by Jahn Basically they figured out that the avg Delawarean gets paid like a New Yorker, but buys houses at bargain prices. Not a bad combo!

But then you are stuck in Delaware.

 

[wakeride74]

Our summer was much cooler here as well and we also had a bit of a warm spell in Nov. I'm not used to any rain in the summer so I was just curious if you get much.

Jahn - DE is too far east for me... it would be hard enough to leave the big family we have here in CA (if we could even muster the confidence to do that).

Oski - You just ruined my plans for Maui... I was going to open the first Hawaiian Honky Tonk!

 

[VicAjax]

Quote:

Originally Posted by Oski But this is probably not that dissimilar to VicAjax above with 5x, as I assume he has dual income with his wife.

actually, after our son was born my wife left an incredibly promising (and demanding) career to be a mom. she was most likely on an executive path. she'll probably return to work soon, as it's been a challenge sticking to a spartan budget.

she's probably the only middle-class woman in nyc to do that. (more power to her)

we bought the apartment after she stopped working. fortunately we saved up a lot of money while we were both working, so we had a healthy down payment.

still, nearly half of my monthly paycheck goes to pay the mortgage and maintenance.

even though it's a strain on our finances, i see it as a sound investment, because:

1) we live in one of the most valuable real estate markets in the country.
2) simply by paying down the principle every month, we're essentially paying that money to ourselves.
3) despite a weakening market, our apartment has appreciated by 40% (!) since we purchased it a mere two years ago.

 

[Jahn]

Haha, or as Delaware themselves put it,

 

[Oski]

Quote:

Originally Posted by VicAjax 1) we live in one of the most valuable real estate markets in the country. 2) simply by paying down the principle every month, we're essentially paying that money to ourselves. 3) despite a weakening market, our apartment has appreciated by 40% (!) since we purchased it a mere two years ago.

That was a great time to buy, as interest rates reached its nadir in the middle of 2003. I also see that you made the sensible decision to go with an amortizing loan.

That is how people are still managing to buy in this market, interest only or negative amortization loans! These people are going to get burned badly once the market corrects...and I hope soon too, because like you, I believe in the fundamentals of NYC and would love to put more money in real estate, but only at manageable valuations.

 

[wakeride74]

Example:
This home (which I would buy in a second if I lived there) is $329k and over 3500sq ft. In a decent area here this would be pushing 1.5-2 million without breaking a sweat... minus the bad furniture of course (btw I'm a sucker for the Spanish styles

)

 

[Jahn]

That house is only $329k? Wow! Man, for $329k you can buy a 700sq ft one-bedroom in Manhattan if you're lucky!

 

[VicAjax]

Quote:

Originally Posted by Oski That was a great time to buy, as interest rates reached its nadir in the middle of 2003. I also see that you made the sensible decision to go with an amortizing loan.

one of the things that made it possible for us to buy was a unique product offered through my credit union that is actually no longer available:

a 3/3 ARM. it started at 4.25% and can be adjusted once every three years, by a maximum of 2 points each 3 years, with a 5 point lifetime maximum.

it's a place we will certainly outgrow in four years or less (from now), so the risk to us is negligible.

Quote:

That is how people are still managing to buy in this market, interest only or negative amortization loans! These people are going to get burned badly once the market corrects...and I hope soon too, because like you, I believe in the fundamentals of NYC and would love to put more money in real estate, but only at manageable valuations.

i do feel bad for those people... many of them are slyly misinformed by the brokers peddling those products... although many should know better, as well.

the market is in the process of correcting, however i'm bullish that the current overvaluation is not so severe as to be a bubble. i could certainly be wrong, however.

 

[wakeride74]

Quote:

Originally Posted by Jahn That house is only $329k? Wow! Man, for $329k you can buy a 700sq ft one-bedroom in Manhattan if you're lucky!

Yup, there's no way you are not sharing walls with someone here for under $400k

 

[VicAjax]

Quote:

Originally Posted by Jahn That house is only $329k? Wow! Man, for $329k you can buy a 700sq ft one-bedroom in Manhattan if you're lucky!

dude, you haven't checked out the listings in awhile.

these days, $329k will hardly get you a 550sf studio. seriously.

 

[VicAjax]

Quote:

Originally Posted by wakeride74 ... minus the bad furniture of course...

that is indeed some ugly furniture.

nice house, though!

 

[Illah]

Quote:

Originally Posted by Jahn That house is only $329k? Wow! Man, for $329k you can buy a 700sq ft one-bedroom in Manhattan if you're lucky!

Add $100K and you can get a 500 sq ft studio in the trendy parts of SF - I'm sure in Midtown, SOHO, or the villiage it would be $750K!

And whoever posted those ratios that's about right. My fiance and I are considering places here in SF and at the lowest we'd be looking at a 7:1 ratio, and to get nice places in cool neighborhoods we'd be more like 10:1! It's insane, but from speaking with realtors it's possible considering our stellar credit and a variety of programs for new home buyers. Still - I'd hate to buy and have the Bay bubble pop and lose out big time...wish I did it two years ago because even though prices were still insane I'd have banked $100K minimum by now.

--Illah

 

[socrates63]

Seattle isn't any different from all the places being talked about. Different areas of the region have seen double-digit annual increases in price. I know people who were saving money for a few years to buy their first house but felt they got priced out of the market and are now renting a house.

Median price in Seattle was around $350,000 a year ago. What you get for that price really depends on the neighborhood and it can vary a lot. For example, in Bellevue (trendy Seattle suburb which has grown into a city of its own), that will get you a 30-40 year old house, 2000-2500 sq ft. Move north about ten miles and that same money will get you a 20 year old house of comparable size.

I don't feel housing prices are commensurate with the wage in the area. I'm astounded by where people get their money to buy $600,000+ houses.