Lothar, I don't think it's negative, I think it's fabulous to see this math.

When everyone was in the buying craze, I always figured that it just ain't that easy to make a fortune, even break even sometimes! A lot of folks are freaking about the slumped market. I just looked at the whole buying thing more holistically as a learning process, enjoyment of owning something, and if we make any money at all, it's gravy.

Of course, you have to be smart. Modesty does sometimes help, not taking a loan according to what the bank says you can afford does, too.

Owning is great - there are lots of advantages - so there are deductions (common fess, though generally aren't deductible) I didn't mention. Plus there is the general positive nature of owning where you live and of building equity over time with money yopu probably wouldn't squirrel away if you didn;t have to. My real point is that historically anywhere, what something should cost to buy acts in relation to what it costs to rent (whether you want to rent it or not), which I why I mention the rent comparison at all.
Take it another way. At $575,000, that's 13 times a year's rental income if you could get that $3,700 a month in rent (that is, the is what's called the 'cap rate', the number of years it will take you to earn back the money you invest). But, you have to assume there will be some vacancy. Typically, you assume 15% of the time the unit will be vacant, so then gross rental income is $37,740 a year, so that brings it to a smidgen over 15 times gross rental income. If you look at what you can get in the market, let's assume $3,200 a month, less that 15% vacancy rate, you're looking at 17.6 times (that is, a cap rate of 17.6). Before the real estate boom really took off about 3 years ago. the typical cap rate downtown was 14 for decent properties and the typical cap rate in Manhattan was 17 to 18 for an apartment.

I don't mean to be so negative - I love Jersey City and think the development is ultimately good for the whole city. I've been wanting to buy since I sold in Hamilton Park two years ago, but the numbers just don't make sense to me. That also doesn't mean I think condos will never rise in value from where they are now, or that the 'A' isn't a good investment or home for the right person, I just think the market is well ahead of itself now, and it will be a long time of stagnation before they would grow again.

Yes, but don't forget that standard deductions often compete with itemized if you own a reasonably-priced unit and don't have lots of other holdings.

But at the end of the day, it's always been about having lots of assets.

Quote:

Property taxes and mortgage interest are tax-deductible.

Have you considered it in your calculation?

Lothar, it's an interesting issue. I think the tax margin in JC has precluded the "get back in rent" idea for some time. With jumps of up to 35% in any given year, you could be in the clear one moment, gone the next. I think folks have to rethink the "always cover yourself with renting out" backup. Home equity possibilities and loving where you live may have to be enough.

Wow. So if you put 20% down on the 2 bedroom and you get a mortgage of 6%, your monthly payment is around $2,750 a month, then add on taxes which will be around $8,500 (about 1.5% of the purchase price) and say a measly $200 a month in common fees, your cost is $3,666 a month. Is there any way in the world anyone could rent that out to cover that price (let alone make a return on that $115,000 down payment)?
The price is out of whack, but then so has the JC market for a few years.

Received an email this morning. Here is the pricing...

Pricing for one bedroom homes begins at $395,000 (31B)
Pricing for two bedroom homes begins at $575,000 (12A)

~$200k for an extra bedroom.