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.

2 comments:

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.

http://www.violentacres.com/archives/35/mcmansions-are-for-mcidiots

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.