17 different women, 36 crazy children, 0 babies in utero
Adventures, Advice and Questions from a group of Mormon women who met in Queens, NY and have now scattered all over the place.

Wednesday, December 13, 2006

Okay, I know this is totally not about Christmas

It's about real estate.

My husband and I are financial crazies. We actually live below our means and we actually have less than 2 credit cards....we listen to all of those financial whiz-kids and do what they say. Stay out of debt, blah blah blah. One thing we are hearing a lot right now:
It's a buyers market....buy buy buy! It is smart to own a house...stop renting blah blah blah.

But we hesitate. We ALMOST bought this spring, and we have been looking ever since. And now we have found a great place and we are just beside ourselves. I want it for the simple fact that it has a washer and dryer in it. I am easy to please. He is just so tied up in knots I think because of the pricetag. It's not a starter home, and it doesn't have a starter-home pricetag. It's NYC...that doesn't exist. We have never owned our entire marriage. He is in his mid-thirties, and we have worked hard to save our money, so I think it is ok to buy a home right about now, but he is just freaking out a little bit.

I don't know what to do, or what to tell him. I think we could really make it work and be really happy in this condo...The location is not the MOST convenient, but I am willing to sacrifice that if it is a smart financial decision. So, how do I know that it's a smart financial decision?

Any homeowners out there, and specifically urban-living condo-owners out there have any advice to share? We're just totally clueless.


  • I'm not an "urban-living condo owner", but I'm a homeowner, and I'd say I agree with the financial whiz-kids. . .being an "owner" is your best bet. You're building equity. . ."paying yourself" is what my dad would always say. If you're able to buy and not put yourself in total financial distress (i.e. interest only loans) then do it!
    posted by Blogger wendysue at 12/13/2006 06:28:00 AM  

  • It's such a hard decision...especially in NYC. We were looking for condos in DC and decided against it because 1) the schools are so bad we would probably be forced to go the private school route 2) DC market (inside, not the suburbs) is overpriced and due for a pretty big correction 3) condo fees are insane. In NY, #1 and #2 are not as big of issues. You can find good schools and the NY market, although very expensive, has a good economic base. #3 though...condo or coop fees are so insane and there is no investment value in them. That is the one thing that I would consider buying versus renting. Are those condo fees really worth it versus paying rent?

    We just purchased (like, last week officially) a townhouse outside the city. I will miss the urban lifestyle, but the town is a planned community, completely walkable, and has many of the features of an urban landscape, so I am happy. I am also stress-free about it because I know we can afford it. It IS a really good time to buy. We got all of our closing costs paid by seller and bought $20,000 below asking price. Still, I was a nervous wreck.... more the idea of committing to one place for a long period of time...setting up roots, etc. But a week later, I'm excited.

    Anyways, my advice is that if you guys want to stay in NYC for the next 5-10 years or longer, do it. The general rule is, you shouldn't spend more than 3X your annual gross income on a house, but I'm not sure if that rule applies anymore with housing going up so much. It WILL be a good investment, and it is SO scary to buy at first..I had to keep telling myself that the $ out of our account for the downpayment isn't being spent, it is transferring accounts (because it is still your money in house equity).

    Finally, through my recent experience, don't get too attached to one place. There are tons of places available right now. So if you don't get the deal you want, don't get so attached you can't walk away. Good luck!!! I'm dying to know where you are looking...
    posted by Blogger Jen at 12/13/2006 06:40:00 AM  

  • It's almost always better to own than rent - what wendysue said about "paying yourself". One of our favorite books is The Automatic Millionaire Homeowner (or something to that affect) by David Bach. I have recommended it to many friends thinking about becoming homeowners.
    posted by Anonymous Julie P at 12/13/2006 06:59:00 AM  

  • Condos do not hold value like single family homes, they are more subject to the vagaries of the market. Condo prices across the USA have been softening and declining. Consult a knowledgeable realtor with no invested interest in your purchase regarding whether the condo market in your area has bottomed out. If they do not see it as bottoming out, then the value of the condo you purchase now may decline below what you paid for it over the next year or two. Interest rates are still low, which encourages a purchase now. But, there is presently nothing to suggest interest rates will be increasing in the upcoming months.

    Condo associations typically have high fees relative to HOAs. Find out what the fees are before you buy, and find out how agressive the Condo Association is about enforcement and fines. Very carefully read the Associations agreements before you buy, and be very aware of all covenant restrictions. Some restrictions may be so strict and penalties so high you might consider them unacceptable.

    The money you are paying in rent is currently going to someone else. If you pay it into a mortgage, that is money you are effectively paying yourself...assuming your real estate maintains or increases its value.

    The other benefit of a mortgage is interest is tax deductable, which can have a significant impact, on the order of thousands of dollars, on your Federal Tax Return. Calculate this into your financial estimates.
    posted by Anonymous Anonymous at 12/13/2006 07:22:00 AM  

  • We learned our lesson by NOT buying in Boston. Our neighbors walked away from their condo with over $100,000 equity, whereas we walked away from paying 3 years of rent. We bought when we moved to DC, and got out just as the market was softening. The equity we built in just a year and a half, both from our mortgage payments as well as rising market value allowed us to buy a bigger house with a smaller mortgage in a cooler market, as well as build a nice savings account to offset home repairs, etc, that are inevitable when you own a home. If you can do it without strapping yourselves completely, do it. Espeically in NY, where housing will always be in demand.
    posted by Blogger Heather O. at 12/13/2006 07:52:00 AM  

  • It is a really hard decision. I second the comments that have already been made - if you think you're going to be there for 5-10 years, and it's a place you can get into with a traditional mortgage (not the interest-only ones) then it is a good financial bet. But you have to feel good about it. It's a lot of money and stress, and just because the numbers all add up doesn't necessarily mean it's the right thing for your family.

    I still think of the co-op we thought about buying in Queens back in '03 for $180K. It seemed like a lot of money at the time (I had just left my job to be home full-time, and when you add in co-op fees, the monthly payment starts to look pretty big) but when we left NYC two years later, the same apartment was selling for $350K. I'm glad we didn't do it, but I still kick myself sometimes!

    I'm happy to be a homeowner now, but Jen's right, handing over all that money and signing on the dotted line for that much more kind of takes your breath away.
    posted by Blogger marian at 12/13/2006 08:14:00 AM  

  • We bought an over-priced urban home and my husband was stressed throughout the whole transaction, but was happy in the end. We just bought another home recently and once again he is stressed. I think they just worry about the financial burden. Yesterday I asked him if he was happy about the home, and he said"I am happy, but what makes me happier is that you love the house."

    One thing that helped me to ease his stress is we both met with our accountant and I also found an online calculator that estimated the benefit of buying (we need to stay put for four years to make this most recent move pay off).

    Happy House Hunting!
    posted by Blogger trimama at 12/13/2006 08:29:00 AM  

  • Anonymouse's condo comment doesn't apply to NYC where NO ONE owns unattached single-fam houses.
    posted by Blogger Jen at 12/13/2006 08:31:00 AM  

  • Ah, buying your first corner of the world (be it a home or a condo) - SO scary. And SO worth it. We lived and rented in NYC for 7 years and spent 3 1/2 of those years looking at real estate, both in the city and in the NY suburbs...and never bought. Lots of reasons why but at the end of the day we weren't fully committed to staying in the NY area so it didn't seem right ponying up the huge amount of money. Fo you guys, however, this isn't really an issue as you have decided to be New Yorkers for the long haul.

    So yes, I think it's worth it to buy for you guys since you're planning to be there for awhile.

    It was terrifying to buy our first house because it was so much money and we'd never done anything like it before. But worth every penny and now we have a huge investment that we can parlay into another house next year - it's a builiding block and great security.

    I say go for it :)
    posted by Blogger chloe at 12/13/2006 08:32:00 AM  

  • The other option for us is to move to/rent in Manhattan, and we are looking at a min. of $3500 a month in rent....so after reading the comments, I just keep thinking about throwing away
    $42000- a year. YIKES. The fees that Jen were talking about are more reasonable then many we have come across...throwing away only 6-8K a year, as opposed to that bigger number up there.

    Jen, or anyone, I am wondering about tax abatement. There is a 10 year tax abatement (this is really common for these new developments around the area), so that we only pay a very low percentage of tax a month, and then it goes up to 100 percent in 10 years. In theory, we will be growing our businesses in that time, and will be able to afford it, but how will that affect resale? And the sponsor-lady was also talking about some tax that normally the seller pays, but b/c it is new we (the buyer) have to pay it, and then when we become the seller, we have to pay it again....does that make sense to anyone?
    posted by Blogger Kage at 12/13/2006 09:25:00 AM  

  • Kage, not sure about the tax abatement....it might be a small factor, but one of many that will decide what your resale value will be, my best guess. NYC real estate is its own beast, I was always a little intimidated by it...not to say you shouldn't go for it, but get lots of advice before you do. Have you talked to the illustrious Tony (guy w. lots of real estate holdings in our Astoria Ward)? He knows the ins and outs....sorry, that is my best suggestion!
    posted by Blogger Jen at 12/13/2006 05:12:00 PM  

  • I feel for your dilemma Kage. After almost 11 years of marriage and 8 kids we just bought our first home. The decision making process for us was very different. Sometimes you just know it is the perfect storm and you go for it. We started looking Friday night...found one on the internet in Utah that night, had family look at it on Saturday, went to the temple, called and made an offer Saturday afternoon. We have paid rent for many years and this investment has really worked in our favor, but the timing was right and we felt no discomfort about buying. I know this is not your situation, but hopefully you'll use all your resources to get good information and then feel at peace. Good Luck
    posted by Blogger Shaleen at 12/13/2006 07:51:00 PM  

  • Wow, Shaleen! Congratulations - very exciting!
    posted by Blogger chloe at 12/13/2006 10:16:00 PM  

  • Hey Shaleen! It's been a long time! Since when did you have eight kids?
    posted by Blogger TftCarrie at 12/13/2006 10:21:00 PM  

  • Yeah, did you have another set of twins that we don't know about shaleen? good catch Carrie, I didn't even bat an eye when she wrote 8 kids....
    posted by Blogger Kage at 12/14/2006 04:42:00 AM  

  • Wow, I missed that too. Seriously Shaleen, I only knew about the first 6 - who are the other two? Details please!
    posted by Blogger chloe at 12/14/2006 08:57:00 AM  

  • If anyone is still visiting this thread, WE ARE DOING IT. We are buying our FIRST HOUSE (ok...tiny condo)....but it's our FIRST and we're DOING IT. AHAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAH!
    posted by Blogger Kage at 12/19/2006 04:32:00 PM  

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