Sunday, July 10, 2005

Housing bubble burst: bring it on

I keep trying to figure out if the housing market here is about to take a downturn. For so many reasons, it seems like it has to. Bubble Meter is very reassuring on this topic! I set up a little grid to track how many apartments are listed on the NY Times website each week, so I can see if supply might be starting to outpace demand. I'm kind of passively apartment-hunting right now, just checking out different neighborhoods that I might need to consider, trying to figure out what might still be comparatively a bargain. It's hard to believe that the bubble-burst, when/if it comes, will be a drastic cut in prices, but there has to be some kind of dent in the long-term upward trend line. So do I wait? Buy now in an up and coming neighborhood where I can get more space and prices have more room to grow? Buy now in a well-established neighborhood and get less space but perhaps less risk of loss of value in a downturn?

I also found this article -- it certainly hit home with me. My rent, which includes gas and electric, is $850, for a small studio in a decent area, not too far out in Brooklyn. For this same monthly cost, assuming a 20% down payment and $450 monthly maintenance, the selling price would have to be around $120,000, which is about half (or less) what studio apartments go for in this area, and still a lot less most than studios even in areas quite a bit further out. I could rent a small one-bedroom for less than it would cost me to buy a small studio anywhere near here.


Anonymous said...

Owning a large home is barely ever worth the cost. Here's an article that talks about the hidden costs of owning McMansions. There's some profanity, but still worth the read.

Juan Carlos said...

Hi, great blog, so sad I didn't find it before. I have a question, where did you use to live in BK back in 2005 and how much you think it will cost right now (2011). I'm on the UWS paying $1600 for a studio, my goal is to payoff the ivy-league super expensive tuition fees ASAP and looking at my budget what it is draining my out is the rent. Thanks.