Wednesday, July 12, 2006

Affordability Pressuring Housing

From Marketwatch:

Home-price growth to slow with sales

Economists are predicting slowing home appreciation and slipping home sales for the remainder of 2006 and their key concern is the decline in affordability for many potential homeowners, caused by already high home prices.

"Generally over time, it's mortgage rates that appear to so clearly affect affordability," said Frank Nothaft, Freddie Mac's chief economist, referring to the double-digit interest rates of the 1980s and their effect on homeownership.

Although rates have edged up only slowly over the first half of the year, and the 30-year fixed-rate mortgage is expected to remain below 7% in 2006, high home prices seem to be affecting affordably more during this slowdown, Nothaft said Tuesday during a midyear housing forecast conference call.

Those high prices are working to keep first-time homeowners out of the market, said David Berson, chief economist for Fannie Mae. Inventory has soared during the first half of the year, he added, noting a marked change from recent years.

"There are a lot of homes for sale right now. A lot of those are condos -- the condo inventories have just surged," he said.
...
In matters of refinancing, homeowners are doing it less and when they do decide to tap into their home equity, it's for different reasons than in the recent past, Nothaft said. Refinancing is motivated now by the need to extract cash and to reset adjustable-rate mortgages -- not obtaining low fixed rates as it was when rates were at their lows in recent years, he added.

Mortgage market volumes are 12% less in 2006 than 2005, and refinancing has dropped by a third, he said. Adjustable-rate mortgages will fall to one in four loans in 2006, he said, after accounting for nearly 40% of the market at their recent peak.
Employment growth should help prime-loan default rates to decline, Nothaft said, although local areas that are in recession are particularly sensitive to high rates of default. A much greater proportion of mortgage defaults now stem from subprime loans, those made at higher rates to borrowers with marginal credit histories.

67 Comments:

Blogger RichInNorthNJ said...

How come done of these “economists” point to the disparity between median income and median home prices as an obvious cause for the slow market along with the increase in interest rates?

7/12/2006 07:09:00 AM  
Blogger minutesfromNYC said...

No kidding

I knew that I wasn't the only one in Bergen County who couldn't afford a home

7/12/2006 07:09:00 AM  
Anonymous Anonymous said...

Frank Nothaft is full of sh*t.
It's not the mortgage rates that affect affordability, it's PRICE.

My first house was 7.5 % and it worked fine for me, house was 3X annual salary, not the unafforable 6-10 X annual salary of today.

7/12/2006 07:10:00 AM  
Blogger grim said...

Frank Nothaft's presentation can be found here:

Frank Nothaft's Powerpoint Presentation

Some interesting details.

7/12/2006 07:28:00 AM  
Anonymous Anonymous said...

Delinquency Outlook
Prime default rates should decline as U.S. employment growth continues


What is this guy smoking? :-/

7/12/2006 08:00:00 AM  
Anonymous Anonymous said...

Lack of affordability + rising interest rates = ... anybody? Of course, a SLOWDOWN in the rise of house prices.

Look, I know some experts feel the need to put as positive as possible a spin on trends, but there is such a thing as straining credibility...

Jamey

7/12/2006 08:04:00 AM  
Blogger RichInNorthNJ said...

Thanks for the additional information Grim.

Slide 2 is VERY interesting. NAR's Affordability Index shows the only time median income could not afford a median priced home was during the entire decade of the 80s.
Yet from 2002 - 2005 affordability was still high as median income stayed in line with median incomes? Using a 30-year fixed rate mortgage?
In what world did this happen?
Have they changed the way they consider housing is affordable by using a larger percentage of income?

7/12/2006 08:21:00 AM  
Blogger skep-tic said...

I go back and forth on the median income issue. if an area's demographics are shaped like a barbell, with lots of high income people on one end (who are homeowners), and lots of low income people on the other (who aren't), with few in between, then median income might not be such a useful indicator of where house prices should be. the populations of places like the NYC-area and cali are increasingly becoming stratified in this way

7/12/2006 08:26:00 AM  
Blogger patient homebuyer said...

it sure is affordability

i was looking for awhile in middle village queens ny. nice area close to the city, well kept small attached homes. 2 bdromm townhouse type homes for 525k, this is ridiculous, alot of these people are very old who bought their homes for 50k 25-30 years ago and basically have not touched them. some of their neighbors got
these prices in 04-05 but now good luck and these old coots are not budging. there were never for sale signs all over like now, i am curious to see what happens in the next 12-18 months
alot of denial in queens

7/12/2006 08:28:00 AM  
Blogger skep-tic said...

Brooklyn and Queens are perfect examples of the barbell phenomenon I mentioned above. Most of the old timers trying to cash in are middle class.

How many middle class people are buying there today? None.

In the future I wouldn't be surprised if NYC turned out to be like Paris--- everyone who lives reasonably close to the city center is rich, and the city is ringed by ghettoes of people on public support

sorry for the apocalyptic vision

7/12/2006 08:51:00 AM  
Blogger RichInNorthNJ said...

Cool!

Grim, I'm sure you're already aware of this:

Matrix: A Forecast To Meet Every Need

7/12/2006 09:50:00 AM  
Anonymous Anonymous said...

What really is effecting this market more than anything is two things: 1) lack of job growth 2) the glut on the market.
In my opinion.

Interest rates are a factor, but I think the above 2 carry more weight. Then throw in taxes and energy prices.

Your up shit creek without the damn paddle.

Some of these damn economists sometimes don't know their head from from their toes. Trust me on that one, I went to Dartmouth Buisness School (Tuck) out of the service, and taught a class there for awhile in the Fall, these so called Ivy leaguers ain't nothing. They can't even put a coherent sentence together. Give me a city college boy or girl anyday.

SAS

7/12/2006 09:50:00 AM  
Anonymous Anonymous said...

these so called Ivy leaguers ain't nothing. They can't even put a coherent sentence together.

Case in point: the current President of the United States.

7/12/2006 09:52:00 AM  
Anonymous Anonymous said...

Yee anon,

he...he....remember Kerry was one of those boys too. Bush + Kerry were both skull and bones.

I have met Bush before, played tennis with him, he has a good backhand...actually, but he is in a world were people control him, he is just a puppet, (and he knows it) as with most presidents. Last president who wasn't a total puppet was Kennedy and we all know what happened to him in Dallas back in 63. And Kennedy was Harvard, one of the few people I know from Harvard who could actually give a good speech.

SAS

7/12/2006 10:12:00 AM  
Anonymous UnRealtor said...

"Case in point: the current President of the United States."


Bush went to the same school as Kerry, and got better grades than Kerry.

But this isn't a political blog, and not everyone here suffers from BDS.

7/12/2006 10:12:00 AM  
Anonymous Anonymous said...

Whats BDS ?

Only BDS I know is the "Ballroom Dancing Society", which I am proud member of....

SAS

7/12/2006 10:21:00 AM  
Blogger rymingrealtor said...

((((But this isn't a political blog, and not everyone here suffers from BDS. ))))


Bush Denial Syndrome??
Bush is a dummy syndrome??
BDKSS
Bush does'nt know Shit Syndrome???

KL

7/12/2006 10:25:00 AM  
Blogger chicagofinance said...

these so called Ivy leaguers ain't nothing. They can't even put a coherent sentence together. Give me a city college boy or girl anyday.
SAS
7/12/2006 10:50:11 AM

grrrrrrrrrrrrrrrrrrrrrrr......

7/12/2006 10:26:00 AM  
Anonymous Anonymous said...

richinnj..

The big assumption on that affordability chart (small print on bottom) is that the index assumes 20% down.

Take that out and see what the graph looks like (in reality, how many folks earning a median income now have 20% of current price). Show me all those folks that have $100k laying around for a house. Hah. What percentage of the population doesn't even have $6f saved for retirement?

Pat

7/12/2006 10:27:00 AM  
Anonymous Anonymous said...

I am seeing houses sitting and a few small reductions, but the homes are still unafforable. I don't see any significant price corrections et. At this pace, we may be priced out for quite awhile.


bc

7/12/2006 10:37:00 AM  
Blogger thatbigwindow said...

This blog inspired me to create my own blog which takes a comical look at NJ new construction

7/12/2006 10:40:00 AM  
Blogger thatbigwindow said...

I am beginning to see price increases on houses which aren't selling

7/12/2006 10:42:00 AM  
Blogger Shailesh Gala said...

Interest Rate Vs Affordability chart for 25 year

As you can see, for most part affordability trend exactly matches the Interest rates trend. But from 2000 to 2005, though Interest rates have been declining, affordability also has been reducing. This is contrarian to previous 20 years. The question is whether contrarian trend will continue or will we go back to historic norm !!!

The historic norm is if Interest rates increase, affordability goes down. But due to recent boom and contrarian trend, it is difficult to say what will happen this time around.

I think basically the recent boom was Psychological, where most felt more safe to put money in Housing than other investments. Whether that is going to change or not that will define the future pricing.

7/12/2006 10:45:00 AM  
Anonymous Anonymous said...

{{What really is effecting this market more than anything is two things: 1) lack of job growth 2) the glut on the market.
In my opinion.}}

No, there is job growth, but many jobs go unfilled because you cannot live in the NYC metro area on a $60,000 - $80,000 year salary, let alone buy even a condo anywhere in Hudson or Bergen county at todays prices unless you are making well in the six figures.

7/12/2006 10:48:00 AM  
Blogger grim said...

Here is my opinion on sellers who are currently raising prices.

The first - increasing asking prices at this stage in the game is an attempt to get buyers to offer an amount higher than they would have, given the old asking price.

The thought process goes something like this.

I'm asking $550,000 but I'm only getting offers of $500,000. If we raise the price to $575,000, perhaps someone will offer $525,000.

The second - an attempt to push the listing into the bottom of a higher price bracket. If a property is listed at $399k, it might not be seen by people looking for homes in the $400-500k range. By pushing the price slightly higher, you become the lowest priced listing in a higher bracket. Mainly an attempt at getting higher exposure when the agent/seller feel that there is more action in a higher price range.

Just my two cents..

grim

7/12/2006 10:53:00 AM  
Blogger grim said...

It often helps if you think of the asking price as a marketing tool, not a value based on reality.

grim

7/12/2006 10:54:00 AM  
Anonymous UnRealtor said...

BDS: "Bush Derangement Syndrome"

http://freedomagenda.com/iraq/wmd_quotes.html


And in my view partisan politics pollute this blog, and reduce its value...

7/12/2006 10:59:00 AM  
Anonymous Anonymous said...

There is job growth? Where? Tell me?
What sector? What town? and don't quote me some sissy from the NYT or The economist.

Only a matter of time before Lucent lays off people, you think those chaps are going to make what they use to make? I suspect not.

Growth of good paying jobs are gone.

Remember, if you lose your job, you are lucky to make half of what you use to make.

But with that said, I can see your point. This area has become way overpriced.

This is what we call the "cascade effect".
SAS

7/12/2006 11:14:00 AM  
Blogger Mr. Oliver said...

UnRealtor said...

And in my view partisan politics pollute this blog, and reduce its value...

Reduce its value? A good slam on this administration can make my day. I'm just glad I can get my New Jersey bubble fix, and slams on Dubya, both in the same convenient location.

Nothing like one-stop shopping.

7/12/2006 11:52:00 AM  
Blogger Space Ghost said...


Frank Nothaft is full of sh*t.
It's not the mortgage rates that affect affordability, it's PRICE.


Maybe thats the way it should be, but thats not the way that most homebuyers seem to look at it, and its not the way the BLS looks at it too.

7/12/2006 11:54:00 AM  
Anonymous Anonymous said...

Here is my observation
Existing SF homes are slowly reducing asking prices by 10-15%.

New SF homes built recently (with in last 3-4 years) are stuck because of the owners bought it at the higher price and are not ready for the 10-15% loss.

Old townhouses/condos are NOT reducing at all, they are actually increasing in some cases to avoid potential loss.

Newer townhomes/condos are in the same boat as news SF homes. They are stuck.

Since the interest rates are higher the townhouses is the only affordable options now remain for the middle class families who want to buy a house. Other SF homes are just completely out of reach.

The sellers with townhomes (2-3 BR) are waiting to cash out on this scenario.

7/12/2006 12:02:00 PM  
Anonymous Anonymous said...

IMHO, townhomes are not a viable option for families with children.
Not when they can rent a SFH.

I don't think the middle class is going to be the salvation of the New Jersey Townhome.

They are going down with the rest of the Titanic...no, probably first.

Pat

7/12/2006 12:14:00 PM  
Anonymous Anonymous said...

{{Brooklyn and Queens are perfect examples of the barbell phenomenon I mentioned above. Most of the old timers trying to cash in are middle class.

How many middle class people are buying there today? None. }}}

You are right, especially in areas of northern Queens like Jackson Heights & Astoria which have become yuppie central.

Even someone making $80,000 as a single person cannot afford (or qualify) to rent in most of Queens.

Astoria, Woodside, Flushing, Jackson Heights have seen rents skyrocket in the past 2-3 years

The only options for the middle class in Queens are areas like Jamaica, Bellerose, Queens Village, Cambria Heights, and the area near the Belt Parkway.

7/12/2006 12:30:00 PM  
Anonymous Anonymous said...

Real estate industry is corrupted and full of lies. I don't even listen to any bulls*t of so called real estate agents or economists.

They keep putting their foot in their mouth.

7/12/2006 12:33:00 PM  
Anonymous Anonymous said...

Could somebody pls explain it to me...if the rent keep on increasing like in NYC and Vincity (also NNJ area like Fort Lee, or Hoboken, Edgewater etc which has excellent transportation to NYC), the house price will not go down but will keep up with rent, especially townhousese or condos in those areas.

I have not seen Rent reduce from year-to-year, may be I am too young (31 years old)

-Ph.D.

7/12/2006 12:43:00 PM  
Blogger NJGal said...

"also NNJ area like Fort Lee, or Hoboken, Edgewater etc which has excellent transportation to NYC), the house price will not go down but will keep up with rent, especially townhousese or condos in those areas."

Does anyone want to respond to the realtor from Edgewater?:)

7/12/2006 12:48:00 PM  
Blogger thatbigwindow said...

Well, they can charge more for rent if you live near a house with a big window in the center of it

7/12/2006 12:51:00 PM  
Blogger thatbigwindow said...

Oh, and I am going to start signing my posts...it is something to be proud of. I earned it

- GED

7/12/2006 12:54:00 PM  
Anonymous Anonymous said...

Anon. PhD:

In 1991, sorta fresh outta college, I moved to NYC. Six months of Manhattan rents later, and I went to Hoboken, where I found a place, a large 1 Br for $800/month, right across the street from Maxwells and the historical marker for Elysian Fields (home of the first baseball game). Before long, my Hoboken apartment was broken into, and the cost of commuting mitigated any savings in rent. When my Hoboken lease expired, I started looking for new apts, both in Hoboken and elsewhere. By that time--May 1993--rents in Hoboken had stabilized or were increasing slightly. But rents in Manhattan seemed to be somewhat in decline, at least for the types of places I was browsing. (Also, brokers were so hungry, they were partially waiving fees, reducing fees, or getting fees paid by landlords.)

Not sure what all this means for today's markets, but in my years (and I'm not yet ancient), I have experienced a softening rent market.

7/12/2006 12:58:00 PM  
Blogger chaoticchild said...

Ph D,
Could somebody pls explain it to me...if the rent keep on increasing like in NYC and Vincity (also NNJ area like Fort Lee, or Hoboken, Edgewater etc which has excellent transportation to NYC), the house price will not go down but will keep up with rent, especially townhousese or condos in those areas.

Rent is normally affected by income level and home prices. Since home prices have been crazy in the last few years. Homes prices don't affect rent anymore. Since NYC Metro economy is solid, income level is good. Rent is not going down.

Home prices are so high, most new (last few years) landlords have negative cashflow (rent doesn't cover mortgage and expenses) on their properties. Home prices and rent aren't in sync anymore.

If there is inflation, wages will increase. And rent will increase. If Homes Prices fall 20%, most recent landlords would still have negative cashflow.

We can potentialy have home prices falling and rent increasing.

CC

7/12/2006 12:59:00 PM  
Anonymous Anonymous said...

Ph.D.:

Can you please explain to us what correlation the current home prices in Hoboken have to the rent there? Now compare home prices in Hoboken to rents in Hoboken in 1999.

Can you describe the meaning of any disparity?

Thanks,
Pat

(Since it's still lunchtime, I'll take that explanation with some salt on the side, maybe a grain or so.)

7/12/2006 01:01:00 PM  
Anonymous UnRealtor said...

"Reduce its value? A good slam on this administration can make my day."

They add zero value to real estate discussions, and in fact sidetrack real estate discussions. Such posts are worse than spam.



"I'm just glad I can get my New Jersey bubble fix, and slams on Dubya, both in the same convenient location."

Hopefully you're honest and objective enough to slam all politicians, and not just those with an "R" next to their name:

http://freedomagenda.com/iraq/wmd_quotes.html

7/12/2006 01:02:00 PM  
Blogger Flop that house said...

Thanks Anon 1:58

I am seriously asking the question. I am not a realtor. I have been looking for houses in NNJ because my wife got a job in CT. Whereever I go to open houses in fort lee, englewood and areas closeby. the first thing the realtor ask is if we work in the city. I guess the only ones left with money/stupidity to buy now is wall-streeter.

7/12/2006 01:03:00 PM  
Blogger Flop that house said...

The only time that I have seen rent "sort of" decrease is when the interest rate was very low as in 2003-2004 where everybody was buying a house and there is nobody to rent. Apartment complexes are giving away one month's rent just to get people to sign lease. I was not in the NNJ area then (still doing my grad school) Just want to get the historical persceptive of rent in the NNJ area

7/12/2006 01:12:00 PM  
Blogger Flop that house said...

As chaoticchild said, the rent is no going down unless some serious economic downturn.

Is it not better for me to buy a $450K townhouse then renting for $2500/month?

7/12/2006 01:31:00 PM  
Anonymous LeeS said...

What do 1BR apts rent for in Queens nowadays? I found a rent-stabilized and I'm staying here until prices go down. Would appreciate it if anyone could let me know. Thanks.

(Especially in Forest Hills)

7/12/2006 01:42:00 PM  
Anonymous Anonymous said...

if you don't buy your 450k townhouse
right it could be worth
300K in a hurry.

Be carefull. Prices are dropping like
rocks.

Ask, any realtor. (thats honest)

7/12/2006 01:46:00 PM  
Anonymous Anonymous said...

{{{Apartment complexes are giving away one month's rent just to get people to sign lease. I was not in the NNJ area then (still doing my grad school) Just want to get the historical persceptive of rent in the NNJ area }}}


There aren't doing that now especially in Queens, Hoboken & Jersey City and of course Manhattan.

Its a very arrogant attitude and basically it is a landlords market everywhere in the NYC metro area, NNJ & Long Island.

In those places they target single corporate professionals from the suburbs who are making the six figures. Plus the 15% brokers fee and sometimes 6 months of rent paid in advance.

7/12/2006 01:51:00 PM  
Blogger chaoticchild said...

Ph.D,

Is it not better for me to buy a $450K townhouse then renting for $2500/month?

If you subscribe to the Housing Bubble, the $450k townhouse would be $337.5K in 1-3 years (most predict 25% decrease in next 1-3 year in this blog). Your down payment would be wiped out by then and you would have no equity in your townhouse. With other owning expenses (taxes, closing cost...etc), you still come out ahead with 2500 rent.

For $450k townhouse, your monthly payment probably would be 3k with taxes and common charges (assuming 20% down and 6.7%). If you are in a high tax bracket, your tax return would probably make sense for you to buy (6k return a year). Other than that renting makes more sense.


CC

7/12/2006 02:00:00 PM  
Blogger chaoticchild said...

Lees,

Rent for 1 bed in Forest Hills is about 1200 - 2200. Depending on how close to LIRR or Express Train on 71st ave and the hip Austin St area.

A decent 1 bed near 71st and Austin should be around 1800 - 2000. Nice 2000 - 2200. Near local train (67th st) should be around 1600-1800.

CC

7/12/2006 02:03:00 PM  
Blogger chicagofinance said...

Ultimately, the need for housing is relatively strong in the NYC area - renting or owning.

There has not been a major economic downturn in a long time.

Have a recession blow through here, coupled with wholesale layoffs in the financial sector.

I think rents will go down.....

....along with housing prices.....

....along with your 401(k)'s....

....along with all the baby faces buying $506 jeans....

7/12/2006 02:05:00 PM  
Anonymous Anonymous said...

Cool. My cash is in cash. [mostly.]

I'd love to see more comparative analysis of the housing industry without finance assumptions.

Hah.

7/12/2006 02:16:00 PM  
Blogger Flop that house said...

chicagofinance and chaoticchild,

Thanks for the analysis. Exactly as I said, unless there is economic downturn, there would not be less demand for housing/renting. If recession comes, I don't think anybody is immune.
My wife and I are making $160K combined, I do not know what tax bracket that brings us. and also how much house I could afford.

7/12/2006 02:22:00 PM  
Anonymous Anonymous said...

Some of the rising rental rates in today's market can be attributed to the fact that rents have been relatively flat over the last 5 yrs, during a time when the cost to purchase properties has skyrocketed 50-100%.

For example, I own and rent out a two family house in Edgewater and have raised the rent a total of 10% in the last 5 years, less than the rate of CPI inflation. Renting is still a bargain compared to purchasing but economic realities will eventually force a balance. The only reason I can afford to do this is that I bought the property 20 years ago.

ph.d.
Purchasing a 450k townhouse at the top of this RE cycle will be more costly in interest + taxes + maintenance + insurance than a $2500 rental. You should not buy now unless

1.you believe appreciation will more than compensate you for the additional cost - although many believe the reverse will be true, it will lose value over many years before any recovery.

2.the idea of "owning" and living in your own place is so compelling that it's worth the extra premium and substantial downside risk of buying at the top of the market.

btw, you don't have to spend $2500, I have a 2-bed $2300 rental opening up on Sept 1 in Edgewater with river view and ferry to NYC...look on craigslist.

just so you know that I am not some hypocritical landlord living large in a garrish mcmansion while I am advising you to rent, I am also a tenant and currently rent a sfh. (I have little kids and need a backyard or I would live in edgewater house.) I sold my house last year and I will buy again when sanity returns.

love the blog grim! you've created a fascinating community sharing a wealth of information.

JAY

7/12/2006 02:29:00 PM  
Blogger Flop that house said...

JAY, Thanks for the info. But is it true that the rent does not go up according to the inflation? Or just that you are such as good landlord you do not raise the rent on your tenant.

BTW, the extra $6000 tax relief will be quite an incentive

7/12/2006 02:49:00 PM  
Blogger NJGal said...

"BTW, the extra $6000 tax relief will be quite an incentive"

PhD, I have been told never to think about the tax relief as a reason to buy - think about it this way. Sure, you will get 6K back in taxes...for shelling out almost 2K a month more for buying (most of which will be interest - on a potentially depreciating asset - for the first few years) than you would renting. So, save 6K in taxes, or save 24K in cash for the year? What's your choice?

It doesn't always work this way, but when things are so out of whack, you're better off. Believe me, I need a tax break badly, but right now, I rent for 2200 a month...to buy a place where I would want to buy I would have to pay 5K a month in costs, not including maintenance, etc. If you are disciplined, you would be better off saving the difference. I do, plus extra, and I'm satisfied for now.

7/12/2006 03:18:00 PM  
Anonymous Anonymous said...

I'm a most excellent landlord among other things, but that aside, landlords in general have had lower demand during the bubble.

The rents in a given area respond to classic supply and demand. During the bubble demand for rentals dropped as more renters became owners, which increased supply. Landlords could not raise rents much with the greater competition and a smaller pool of renters. Now that purchase affordability has dropped and a lot of rental units were removed from the market in condo conversions, there is more demand and less units, and rents are beginning to rise catching up to purchase prices which are simultaneously falling.

What I am not sure about is what happens when speculators and homeowners who bought at the top of the bubble need to sell but can't because they are upside-down on resale value, and then try to rent out their properties. They will need to ask for very high rents to cover their bubble costs, or have a negative cash flow month after month. Will this push rents up higher? or create a glut that pushes them lower. Anybody want to take a crack at that?

JAY

7/12/2006 03:24:00 PM  
Blogger NJGal said...

"They will need to ask for very high rents to cover their bubble costs, or have a negative cash flow month after month. Will this push rents up higher?"

I think that will be a goldmine for people who owned before the bubble and can rent at rates well below what those folks are asking for. You'll be guaranteed renters. But I doubt those people will be able to rent at those prices because at that point, it would be smarter for a renter to buy than rent!

7/12/2006 03:45:00 PM  
Blogger Flop that house said...

JAY,

Is there any law prohibiting you (the landlord) from increasing the rent annual (or more frequently) in NNJ?

7/12/2006 03:51:00 PM  
Anonymous Anonymous said...

There are municipal rent control laws in some cities and towns in New Jersey. Generally they apply to apt. buildings that have a a number of units, not SFH or 2FAM.

JAY

7/12/2006 04:13:00 PM  
Anonymous Anonymous said...

phd

of course rent increases more often than on a lease renewal would be a violation of the contract.

you could always negotiate a longer term lease, maybe two years to try and fix your cost, then buy.

JAY

7/12/2006 04:21:00 PM  
Blogger Space Ghost said...

Non owner occupied 2 fams and 3 fams in many towns come under rent control.

7/12/2006 04:32:00 PM  
Anonymous Anonymous said...

Any rent increases above 5% are worth fighting in court. However, you must continue to pay the rent based on the old terms of the lease.

7/12/2006 05:09:00 PM  
Anonymous Anonymous said...

It doesn't always work this way, but when things are so out of whack, you're better off. Believe me, I need a tax break badly, but right now, I rent for 2200 a month...to buy a place where I would want to buy I would have to pay 5K a month in costs, not including maintenance, etc. If you are disciplined, you would be better off saving the difference. I do, plus extra, and I'm satisfied for now.


The key is to find a nice place to rent--where you will feel at home for the next 18 months. NNJ is know for its rental dumbs--landlords who don't give $#&^ about their property and end up getting the bottom feeders.

You are better off going into a complex where the space is small, but clean and well kept.

7/12/2006 05:15:00 PM  
Anonymous Anonymous said...

Ph.D,

Read up on some Blackjack theory & probabilities ! Go to Atlantic city with about $50K in cash. You will either come back with $100K and the extra $50K will cushion any risk in your new home purchase. Of course, in the unlikely event that you lose the $50K, it would have forced your mind to rent anyways.

Good luck,
CNS

7/12/2006 07:28:00 PM  
Anonymous Anonymous said...

CNS..you're serious? The guy's a dirt devil, for heaven's sake. I thought I was bad.

At least tell him go with some table buds.

Pat

7/12/2006 09:04:00 PM  
Anonymous Anonymous said...

pat,

I am absolutely serious ! Blackjack, Poker, Ebay Auctions etc are now not just for a side income anymore - they can make for a great lifestyle on their own. Plus, another side advantage is that many working couples dramatically improve their sex lives by visiting fantasy locales like casinos. I am sure the Ph.D would love that as well.

CNS




;-)

7/13/2006 01:29:00 AM  

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