Better to Buy or Rent Real Estate?

So the never ending debate of Buying Vs Renting may just have come to a close. The resolution? IT COULD GO EITHER WAY! Yes, neither is completely correct as there are many different factors. To be sure, I found this very slick calculator on the NY Times that you can use to figure what’s better for you in your situation / location.

Full URL is: http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html

Latest NY Times article talks about a recent hot streak in the housing market for Manhattan and Brooklyn in all sizes and price ranges. They attribute this recent rise in purchases to a variety of factors including recent Wall Street bonus payouts and lower inventory due to a slowdown in construction and sellers witholding listings. Prices and signed contracts rose double digit numbers in Jan compared to the year before. “The Psychology has changed” says Frederick Peters of Warburg

New York Times - Tracie Rozhon
Since the new year began, a burst of activity has broken out in Manhattan and several Brooklyn neighborhoods as New Yorkers frenetically hunt for co-ops, condominiums and town houses, sending prices higher despite sluggish sales in many other cities.

Preliminary indications from real estate firms showed that this increased activity, with open houses jammed and bidding wars taking place, has occurred in all price ranges — from tiny studios in the East Village to red-brick mansions on the Upper East Side — in counterpoint to the heavily weighted record sales of luxury properties that led the market in the late summer and fall.

Real estate brokers and statisticians are quick to point out that not every single apartment is flying into contract. During the last quarter of 2006, the major real estate agencies differed on which way prices were headed.

But now, the three largest real estate companies in the city agree: for January, at least, both prices and the number of signed contracts rose in double-digit percentages compared with the same month in 2006.

With higher Wall Street bonuses, a strong regional economy and pent-up demand from New Yorkers who were once worried that the city’s real estate market would crash, buyers’ attitudes have done an about-face. “Their psychology has changed,” said Frederick W. Peters, the president of the Warburg Realty Partnership. “For almost two years, they’ve been scared that the market would plummet and they’d end up like fools who paid too much.”

Real estate experts say they see no reason for the trend to not continue, with economists predicting stable mortgage rates and a continuing city budget surplus. However, other factors may alter New Yorkers’ renewed interest in buying real estate, including an expansion of the Iraq war, a changing employment picture or another terrorist attack.

Yet, there is “cautious exuberance,” according to Steven L. James, director of Manhattan sales for Prudential Douglas Elliman.

A week ago, one open house attracted 100 people to an Upper West Side one-bedroom; a $2.475 million house in the Park Slope neighborhood of Brooklyn sold in a day.

Across the board, the prices of Manhattan apartments are rising. Jonathan Miller, the president of Miller Samuel, an appraisal firm, said the number of contracts signed this January was 19.4 percent higher than in January 2006. Prices were up 14.4 percent in the same time period. Inventory, which was mounting last summer, is shrinking fast.

Now, according to Mr. Miller, statistics showed that sales of studio and one-bedroom units, stagnant over the past year, were up 13.7 percent in January. “It’s not like a lot of huge sales at the high end skewed the average up.”

According to a report released last week by the National Association of Realtors, prices are falling in many other metropolitan areas around the country. The report covered only the last quarter of 2006, and showed a modest increase of 3.1 percent for the New York area, which includes parts of northern New Jersey.

Anecdotally, there isn’t much talk of falling prices in Manhattan and in the most sought-after neighborhoods in Brooklyn, where young people looking for a break, empty nesters looking for a guest room and foreigners looking for a pied-à-terre say they want to live.

Katalin Shavely, a 30-year-old bedding designer in Manhattan, devotes her weekends to scanning the classifieds and attending open houses, searching for just the right one-bedroom apartment for less than $750,000. She can’t find it. “I made a mistake,” she said last week. “I should have started looking before Thanksgiving.”

Mr. Miller said New Yorkers had been reluctant to buy because of the feeling of an impending crash. “Last summer, a lot of information was being dumped on the consumer: stories about the glut of condos in Miami, Washington, D.C., and Las Vegas, exacerbated by the constant debate on the blogosphere about housing bubbles, mixed together with a barrage of negative predictions,” he said in a telephone interview.

Although no one can pinpoint the moment when New Yorkers started feverishly buying again, Kirk Henckels, the director of the private brokerage division of Stribling & Associates, said he thought the luxury market picked up after Labor Day.

He and others said the resurgence was partly fueled by the fall’s record-setting (and well-publicized) sales of a few multimillion-dollar apartments and town houses, like the Stanford White limestone palazzo at 25 East 78th Street bought by Mayor Michael R. Bloomberg for $45 million and the Harkness mansion at 4 East 75th Street sold in October for $53 million.

Then came this year’s stratospheric Wall Street bonuses, and the market exploded, real estate executives said.

From Financial Times

US house prices are likely to fall this year after the number of people selling their homes fell by the most in 17 years in 2006, according to a leading real estate broker.

Tom Kunz, chief executive of Century 21, predicted a slight fall in prices this year as figures from the National Association of Realtors on Thursday showed the pace of existing home sales slipped 0.8 per cent last month to 6.22m.

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The fall in home sales was sharper than expected and underlines the fragile state of the housing sector, but industry economists continued to predict a stabilisation of the market this year following a protracted slowdown.

The national median price of existing homes was slightly higher than a year earlier, at $222,000, according to the industry association.

Mr Kunz predicted softening ahead: “Sellers have finally figured out that this is a buyers’ market. For too long they were hung up on the couple down the street that put their house on the market at $300,000 and got $350,000. But that is not going to happen anymore.”

“You are starting to see some price reductions. It is already happening in overheated markets like Florida, California and Boston,” said Mr Kunz, who heads one of the country’s largest real estate companies.

The sharpest drop in purchases last month was in the West, where sales fell 9.1 per cent, while they rose 4.3 per cent in the Midwest.

David Lereah, chief economist at the National Association of Realtors, pointed to a decline in inventories of unsold homes to 7.9 per cent to 3.5m as a precursor to stabilisation. “It appears that we have established a bottom,” he said.

The industry association has launched a national advertising campaign to persuade Americans that this is a good time to buy, but the Federal Reserve has warned that it continues to monitor the market closely.

Most industry analysts expect sales and construction activity to bottom out before the end of the year, and are forecasting either a slight fall or modest increase in prices.

But many bank economists argue the outlook is very uncertain, as mortgage applications – a leading indicator of activity – remain volatile despite signs of wider economic growth.

Mr Kunz said the real estate industry was pinning its hopes for a stabilisation on a shift from speculative investing to “traditional buying motivations such as births, marriages and divorces.”

Copyright 2007 Financial Times

New York Real Estate, despite some setbacks, overall had rising real estate prices for 2006. Topping the list of realized gains was Bronx and Brooklyn Real Estate.

Bronx, Brooklyn lead in NYC real estate gains
By WIRE REPORTS

NEW YORK (AP) - The New York City real estate market might not be white hot, but new data shows it’s still plenty warm.

Property values rose 19 percent last year, doubling the gain recorded in 2005, according to the city’s finance department. The value hikes defied a national housing slump.

The biggest increases took place in the Bronx and Brooklyn, where property values soared nearly 28 percent. Manhattan registered a 16.9 percent gain.

The figures are based on the annual assessment roll that includes market and assessed values for all residential, commercial and other property.

The most expensive building in the city was the Time Warner Center in Columbus Circle, with an estimated market value of $1.1 billion, up almost 10 percent from the previous year.

City officials said the total value of New York City real estate was $802.4 billion, up from $674.1 billion in 2005. The city has 980,911 taxable properties.

In addition to the double-digit gains in the Bronx and Brooklyn, homeowners in Staten Island and Queens saw property value increases of 18 percent and 12.1 percent.

But rising property values also means more taxes. The assessment roll will help set taxes for the fiscal year beginning July 1.

“Taxes are likely to be up as a result of this,” said Finance Commissioner Martha Stark

http://www.abcnews.go.com/Business/wireStory?id=2720465

NEW YORK Dec 12, 2006 (AP)— Wall Street pulled back Tuesday, finishing slightly lower as investors grappled with an economic assessment by the Federal Reserve that warned yet again of inflation risks and reported a substantial slowing of the housing sector.

The statement, which accompanied the Fed’s widely expected decision to keep the nation’s benchmark interest rate unchanged at 5.25 percent, left open the possibility that the central bank might raise rates if inflation accelerates. That disappointed some investors who were hoping for signs that the Fed was moving toward cutting rates.

Investors fear that an increase could cause problems if it comes as the economy in particular the interest rate-dependent housing sector is still slowing. The Fed’s statement described of the housing market’s slowdown as “substantial,” a change from past statements.

Still, while the Fed has said its primary concern is inflation, it is also monitoring the overall economy for signs of too much of a slowdown. The Fed predicted, “the economy seems likely to expand at a moderate pace on balance over coming quarters.”

Overall, the statement indicated that the Fed wants to keep rates steady for as long they can, analysts said.

“They’re trying to talk tough in the hopes of not having to act tougher,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank.

The Dow Jones industrial average was down 12.90, or 0.10 percent, at 12,315.58. Earlier in the day, it fell more than 76 points.

Broader stock indicators also fell, but closed above their lows as well. The Standard & Poor’s 500 index slipped 1.48, or 0.10 percent, to 1,411.56, and the Nasdaq composite index fell 11.26, or 0.46 percent, to 2,431.60.

Crude oil for January fell 27 cents to settle at $60.95 a barrel on the New York Mercantile Exchange.

Bonds climbed after the Fed meeting, with investors relieved that little had changed in the central bank’s statement. The yield on the benchmark 10-year Treasury note fell to 4.49 percent, down from 4.52 percent late Monday. The dollar was mostly lower against other major currencies, while gold prices fell.