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Re: Are we heading for another recession?
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MDM wrote:
forget the stock market.

Look at industrial production, retail sales, labor participation rate, etc... None of those figures have been rosy as of late.


I wonder how much of that is just fracking hangover. It's hit the oil belt real hard.

Posted on: 2016/1/21 23:50
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JCMan8 wrote:
There's already another thread asking whether there is a real estate bubble and if so, will it burst soon.

Personally I have no idea whether we are headed for another recession, but I know the "experts" don't know shit. If you followed these financial headlines, every day the "experts" are saying something different.


As Brewster said: always. Such is the nature of economic cycles. But, there sure are many signs that things are slowing down. Local shelters are seeing more people, local soup kitchens are seeing significant increases in people coming in for weekend breakfasts, and industrial output is slowing down, which is why oil continues to drop even more than what most "experts" had predicted. Retail sales numbers were good for the holiday season, so that's somewhat comforting. Or, maybe really scary? Often time, people are in denial, so a healthy holiday season could mean nothing.

Posted on: 2016/1/21 22:35
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There's already another thread asking whether there is a real estate bubble and if so, will it burst soon.

Personally I have no idea whether we are headed for another recession, but I know the "experts" don't know shit. If you followed these financial headlines, every day the "experts" are saying something different.

Posted on: 2016/1/21 20:53
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forget the stock market.

Look at industrial production, retail sales, labor participation rate, etc... None of those figures have been rosy as of late.

Posted on: 2016/1/21 20:47
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JCGuys wrote:
Are we heading for another recession?


Yes. Always. It's what markets do, overheat then correct. Only hucksters and fools will tell you "this time it's different". The only question is timing. I hear this is brilliantly displayed in "The Big Short".

Posted on: 2016/1/21 20:38
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JCGuys wrote:
Stock market has had a very rough start to the year. Some say the economy may be slowing. I wonder if another recession is at hand and if real estate values will start to drop.

Any evidence yet?

Resized Image

Ripped from today's headlines:
Cha-ching! Jersey City waterfront condo sold for record price per square foot

Posted on: 2016/1/21 20:14
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Stock market has had a very rough start to the year. Some say the economy may be slowing. I wonder if another recession is at hand and if real estate values will start to drop.

Any evidence yet?

Posted on: 2016/1/21 19:47
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Re: Is Jersey City Real Estate in a bubble?
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I'd be careful too because the unit numbers make no sense. The #'s go up to the 10th floor and the 11th floor is considered penthouse. #2120 suggests floor 21 which doesn't exist at 102 columbus.

The realtor is all over the Internet though, he may have been confused or it/s a bait and switch.

Posted on: 2015/11/2 10:38
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Annod wrote:
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jcwalkingman wrote:
Does anyone know if this listing is real?

http://www.trulia.com/rental/32186016 ... 2120-Jersey-City-NJ-07302


I would be careful.

102 Christopher Columbus Dr is a condo and only have 11 floors.

100 Christopher Columbus Dr is a rental building.

http://www.grovepointe.com/

https://en.wikipedia.org/wiki/Grove_Pointe


Good catch - so maybe this is simply a scam of some sort....seemed a bit too good to be true.
i would not be surprised if this is a scam. I got an call today from someone telling me that the NY state lottery has $1,000 waiting for me. I told the woman to keep the money; I don't need it that much. btw, i have never played the lottery. lol

Posted on: 2015/11/1 19:48
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Re: Is Jersey City Real Estate in a bubble?
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Annod wrote:
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jcwalkingman wrote:
Does anyone know if this listing is real?

http://www.trulia.com/rental/32186016 ... 2120-Jersey-City-NJ-07302


I would be careful.

102 Christopher Columbus Dr is a condo and only have 11 floors.

100 Christopher Columbus Dr is a rental building.

http://www.grovepointe.com/

https://en.wikipedia.org/wiki/Grove_Pointe


Good catch - so maybe this is simply a scam of some sort....seemed a bit too good to be true.

Posted on: 2015/11/1 19:10
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Re: Is Jersey City Real Estate in a bubble?
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jcwalkingman wrote:
Does anyone know if this listing is real?

http://www.trulia.com/rental/32186016 ... 2120-Jersey-City-NJ-07302


I would be careful.

102 Christopher Columbus Dr is a condo and only have 11 floors.

100 Christopher Columbus Dr is a rental building.

http://www.grovepointe.com/

https://en.wikipedia.org/wiki/Grove_Pointe

Posted on: 2015/11/1 15:28
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Re: Is Jersey City Real Estate in a bubble?
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Does anyone know if this listing is real? Cheapest rate at this building since way back when it opened in 2007 (and even cheaper than some class B units further from the PATH - not bad for a full-service luxury building). There's also a 1 BD listed at $2,000/month and a 2 BD/2 BA listed for around $2,700/month.

http://www.trulia.com/rental/32186016 ... 2120-Jersey-City-NJ-07302

Also, looks like studios at the brand-new M2 are going to be starting at around $1,900/month, which is about 20% cheaper than what similar new units were going for a year ago.

Posted on: 2015/11/1 14:08
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Re: Is Jersey City Real Estate in a bubble?
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SRhia wrote:
Sad, but I must agree true.

However, it's still nice to have some ball park figures though. Neither my parents, nor my husband's parents ever owned a home in USA (we're both 1st generation immigrants). And we currently own a condo. So the cost structure is very different between the two, and I honestly have very little idea/knowledge what it takes to own and maintain a brownstone.

I always like to know as much as I could before jumping into anything. And the way I approach if/when we can "upgrade" to a brownstone is to begin with how much we can afford every month (say $x) to spend on all housing related costs. From $x, I'd deduct all the fixed/known expenses such as: heating, Water/sewage/property tax/insurance/average repair per month. And whatever's left would be how much mortgage we can afford, and from that I can calculate how much "house" I can afford.

It's been good to hear everyone's input. I'm a bit surprised to hear that a couple making $400K/yr could not afford a brownstone with ease. That's very sad.


As others have already answered, it's hard to give you an estimate since many things depend on the size and condition of the house. If masonry work is needed, then be prepared to pay big $$$. We generally budgeted several thousand per year for general maintenance since things (boilers, water heaters, appliances) in older homes can go at any time. Some years we didn't spent very much ($500 or less) but other years we had to replace an appliance or a boiler. Other stuff like yard work I pretty much take care of myself (including painting our rubber roof annually).
Currently for us there is not much in terms of maintenance cost since we did major renovations to our house (windows, electrical, plumbing). Home insurance is ~$1500/yr (one million liability coverage) since no flood coverage is required on our block. We purchase more liability coverage since we rent out garden level.

Posted on: 2015/10/27 15:41
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Re: Is Jersey City Real Estate in a bubble?
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SRhia wrote:
But I'm just trying to get a ball park so I know whether we can afford a brownstone on 1-income or 2-income.


The best way to afford a brownstone may be to take time machine back to the mid 90s. I remember when I was at Saint Peter's College my parents clipped/saved for me the article linked below.

http://www.nytimes.com/1997/10/12/rea ... innings.html?pagewanted=2

SOME of the better residential areas surround Hamilton and Van Vorst Parks and the Paulus Hook Historic District, where the first permanent white settler, Michael Paulusen, a Dutch trader, built his home in 1633 and started trading with the Communipaw Indians. One-family brick or brownstone rowhouses range in price from $125,000 to $170,000, according to Ms. Skolar.

In all seriousness there are rows of brownstones/brick rowhouses scattered in other parts of town if you are open to looking outside of downtown. My block on the western slope in the heights is one of them and a 2 fam was on the market last year for $525K but did not end up selling as the price was a little high I think.

Posted on: 2015/10/27 15:33
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bodhipooh wrote:
Do you know, or realize, that if you work in NYC (or anywhere in NYS) you pay NYS income taxes?

Do you know, or realize, that NJ offers a tax credit for income taxes paid to other jurisdictions?

http://www.state.nj.us/treasury/taxation/njit14.shtml


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I don't think you know, or have dealt with, AMT and its consequences.

Effective tax rates are what people actually pay to the IRS. It includes the effects of AMT.

So: If we add the federal effective rates to statutory NY State taxes on $400k married filing jointly, that's around 28%.

In the real world, JC RE taxes are another 3% of that income.

Again: Our hypothetical couple has a budget of $10k/mo for housing. That's the 30% mark.

A $1.5m home with 20% down is a $1.2m mortgage. 30 years at 3.75% is roughly $5500/mo. Taxes are around $1250/mo. It is unlikely that everything else housing-related will exceed $3250/mo.

And again, even if we take your hypothetical 40% tax costs (plus 401(k) and medical insurance), add in 35% for housing costs, that still leaves $100,000 a year for everything else.

Plus, the home is likely to appreciate in value and build equity. A significant portion of those housing costs operates more like an investment.

Even when you stack the deck as thoroughly as possible against our hypothetical couple: Buying a $1.5 million home in JC is not going to kill a couple that earns $400,000 a year.

Posted on: 2015/10/27 10:45
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bodhipooh wrote:
You are purposefully ignoring the part where I mentioned federal AND STATE taxes. NYS income taxes arent cheap.

We're not in New York. As noted in a subsequent post, the statutory rate for an NJ married couple filing jointly, income $400k, is around 5%, and RE taxes will be around 2.5-3.5% of their income.


Do you know, or realize, that if you work in NYC (or anywhere in NYS) you pay NYS income taxes? Many/most of the professionals flocking to DTJC work in NYC, and they have to pay NYS taxes, not NJ taxes.

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State taxes are also deductible from your federal return.

Yes, some deductions are capped, and dealing with AMT is very complicated. However, that's accounted for in the effective tax rates.


I don't think you know, or have dealt with, AMT and its consequences. You're not allowed to deduct state and local income taxes or property taxes under the AMT. For people in high income situations, the AMT effectively says "you are not allowed to deduct what everyone else gets to deduct... BOHICA for you!" People talk about "effective tax rate"... Please. Go look up what 200K+ pays in taxes when you don't get to deduct what others do.

Posted on: 2015/10/27 10:01
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bodhipooh wrote:
You are, again, ignoring what was stated and simple facts. Anyone buying downtown should plan for an eventual full tax rate property tax. Your example of a 1.3 MM brownstone paying 10K is not just woefully/criminally underpaying....

Lol... Yes, I forgot that your conjectures qualify as "facts."

The reality is that the "30% rule of thumb" puts their housing budget at $10,000/month. If their RE taxes jumped from $10k to $27k, that will mean they are now spending a whopping 34.5% of their income on housing. And that's not accounting for a larger tax deduction.

I'm sure they would not enjoy their RE taxes tripling. But that's a lot easier to handle with a $400k income than with a $100k income.

Posted on: 2015/10/27 8:39
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bodhipooh wrote:
You are purposefully ignoring the part where I mentioned federal AND STATE taxes. NYS income taxes arent cheap.

We're not in New York. As noted in a subsequent post, the statutory rate for an NJ married couple filing jointly, income $400k, is around 5%, and RE taxes will be around 2.5-3.5% of their income.

State taxes are also deductible from your federal return.


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And, of course, all the other things I mentioned: 401K (maxing it is another 18K/yr) plus insurance costs and other deductions.

Things like 401(k), medical insurance etc are not taxes, are a smaller percentage of your income when you earn $400k vs $50k or $75k or $200k, and are accounted for in that "30% housing" rule of thumb.

401(k)s and owning a home are investments -- especially if the home includes a rental property. Although there are no guarantees they will appreciate, it's not like buying a snazzy convertible or renting.


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Plus certain benefits and deductions are capped at high incomes thanks to the goddamned AMT. Say what you will, but every year I feel like I get raped by the taxman.

Yes, some deductions are capped, and dealing with AMT is very complicated. However, that's accounted for in the effective tax rates.


Last but not least: Even if we take your claims as completely accurate: 60% of a $400k income is $240k a year, or $20k per month. That's a lot of scratch, especially since you've already paid all your taxes, your 401(k), and your medical insurance.

If they buy a $1.5m home with 20% down, I'm guessing they can handle a $5500/month mortgage, and everything that goes with it.

Posted on: 2015/10/27 8:25
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tern wrote:
Also, many (most?) brownstones are two families with a rental apartment in the basement/ground floor.

You can figure on renting out the basement to cover property taxes as a rule of thumb.

Robin.


This is only applicable if you wish to have a tenant. I have no such desire. I rather be able to afford a place without relying or needing supplemental income.


Yup. The only thing worse than a tenant is a tenant who gets to use the garden of your mil+ house. In any case, at least in my part of the world, the renovations are all restorations to one family houses.
BTW - heating a row house is not terribly expensive, especially if it is attached on both sides. The roofs are much smaller than the equivalent area is for a ranch or two story, so less loss. Running an Energy Star window a/c in my bedroom (about 16x18) runs about a buck a night. Also, the requirement for flood insurance varies from lot to lot. I needed it for a building I owned on 5th near Jersey. Neighbors closer to Erie did not. I don't recall the cost being ridiculous, but this was a while ago.

Posted on: 2015/10/27 7:08
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think jersey city is in a bubble, try san fran bay area! i almost fell on the floor watching the video about housing prices in the bay area.

http://www.zerohedge.com/news/2015-10 ... alifornias-housing-bubble

Posted on: 2015/10/27 6:18
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tern wrote:
Also, many (most?) brownstones are two families with a rental apartment in the basement/ground floor.

You can figure on renting out the basement to cover property taxes as a rule of thumb.

Robin.


This is only applicable if you wish to have a tenant. I have no such desire. I rather be able to afford a place without relying or needing supplemental income.

Posted on: 2015/10/27 0:12
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JCCoffee wrote:
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Dolomiti wrote:
If you have a combined income of $400k, and you're paying a 40% effective tax rate, then you need to fire your accountant ASAP. It should be closer to 22%. That's the average for that income bracket (and includes payroll taxes, deductions etc)

This is just not correct at all.

It's pretty close. It includes the federal taxes and deductions.

The statutory rate for NJ taxes on $400k is around 5%. One house that sold for $1.3m pays around $10k in property taxes. That's 2.5% of our hypothetical family's income. 5 + 2.5 ? 18. Even if taxes were $15k, that's only 3.75% of their income. (And that cost would be included in the "30% rule.")

And of course, RE taxes are deductible from your federal return.

So again... if you earn $400k and you're losing 40% to taxes, you need to fire your accountant. And you can afford to hire a new one.


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If you make all your money on long term capital gains maybe....I wouldn't know, but certainly not at a normal salaried job.

Yes, part of it is that high earners are more likely to invest. Pretty typical, as they can afford it.


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Someone making $400k a year can certainly not "easily" afford $1.5M. Some banks would not even give out a loan in this situation.

30% of $400k / yr = $120k or $10k / mo.

$1.5m traditional 30 yr mortgage, 3.75%, that's around $7000. I'd say that's a tad high. $1.2m is definitely plausible.

I'm not an RE expert, and I know brownstones are not all that common in DTJC. However, $1.8 million (that's $1.5m mortgage + 20% down) buys you a hell of a lot of house in JC.


You are, again, ignoring what was stated and simple facts. Anyone buying downtown should plan for an eventual full tax rate property tax. Your example of a 1.3 MM brownstone paying 10K is not just woefully/criminally underpaying, but also more proof that a reval is way overdue AND will have a chilling effect on DTJC. The full tax levy on that property should be over 27K. That's a lot of money.

Posted on: 2015/10/27 0:10
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bodhipooh wrote:
Even if you are making 400K+ as a couple, things can be tight, even without anything going wrong. People look at salaries like 200K per person and think it is a lot, but it really isn't all that much. In between federal and state income taxes, plus labor taxes like SS and Medicare, you are likely paying out close to 40% your income.

If you have a combined income of $400k, and you're paying a 40% effective tax rate, then you need to fire your accountant ASAP. It should be closer to 22%. That's the average for that income bracket (and includes payroll taxes, deductions etc)

A couple with that income could easily handle a $6,000/month mortgage. If we use the dreaded 30% rule, they could afford to spend up to $10,000 / month on housing.

Plus, the interest is a tax deduction, possibly worth $17,000 in the first year. So, that helps.

And when in doubt, use the good ol' NY Times Rent vs Own Calculators...
http://www.nytimes.com/interactive/bu ... s/buy-rent-calculator.php

http://www.nytimes.com/interactive/20 ... rent-calculator.html?_r=0


You are purposefully ignoring the part where I mentioned federal AND STATE taxes. NYS income taxes arent cheap. And, of course, all the other things I mentioned: 401K (maxing it is another 18K/yr) plus insurance costs and other deductions. Plus certain benefits and deductions are capped at high incomes thanks to the goddamned AMT. Say what you will, but every year I feel like I get raped by the taxman.

Posted on: 2015/10/27 0:05
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Also, many (most?) brownstones are two families with a rental apartment in the basement/ground floor.

You can figure on renting out the basement to cover property taxes as a rule of thumb.

Robin.

Posted on: 2015/10/26 22:40
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JCCoffee wrote:
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Dolomiti wrote:
If you have a combined income of $400k, and you're paying a 40% effective tax rate, then you need to fire your accountant ASAP. It should be closer to 22%. That's the average for that income bracket (and includes payroll taxes, deductions etc)

This is just not correct at all.

It's pretty close. It includes the federal taxes and deductions.

The statutory rate for NJ taxes on $400k is around 5%. One house that sold for $1.3m pays around $10k in property taxes. That's 2.5% of our hypothetical family's income. 5 + 2.5 ? 18. Even if taxes were $15k, that's only 3.75% of their income. (And that cost would be included in the "30% rule.")

And of course, RE taxes are deductible from your federal return.

So again... if you earn $400k and you're losing 40% to taxes, you need to fire your accountant. And you can afford to hire a new one.


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If you make all your money on long term capital gains maybe....I wouldn't know, but certainly not at a normal salaried job.

Yes, part of it is that high earners are more likely to invest. Pretty typical, as they can afford it.


Quote:
Someone making $400k a year can certainly not "easily" afford $1.5M. Some banks would not even give out a loan in this situation.

30% of $400k / yr = $120k or $10k / mo.

$1.5m traditional 30 yr mortgage, 3.75%, that's around $7000. I'd say that's a tad high. $1.2m is definitely plausible.

I'm not an RE expert, and I know brownstones are not all that common in DTJC. However, $1.8 million (that's $1.5m mortgage + 20% down) buys you a hell of a lot of house in JC.

Posted on: 2015/10/26 22:17
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JCMan8 wrote:
Many people approach real estate with the attitude, what is the most I can afford?

I don't think that's the case, especially in big metro areas. I think people start with "I want to live here," find out how much it costs, and then decide if they can afford it. If they can't, they look elsewhere (typically further out).

I don't think they say "I can afford $5000 a month, so I'm going to max it out."

We should also note that as your income goes up, so does your ability to spend more on housing. Items like food, transportation, medical costs and so forth are a smaller piece of the pie. At that income level, a home is also an investment, a tax break, a networking tool....

FYI: A household income of $400k puts you in the top 1% of income earners. Maybe top 2% in NYC, but still up there.


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IMO, that approach is very stupid. It is setting yourself up to be a wage slave for the next 20 years....

You think people who earn $200k a year plan to, what... work for 6 years and quit?

Most people earning around $200k are career-oriented, high-ranking professionals -- doctors, lawyers, financial, management, etc. These are not unambitious or wanna-get-rich-quick types.


Quote:
You should instead be asking, what can I continue to afford even if I have to take a big paycut? This way, if you or your spouse loses your job, you aren't absolutely fucked.

Or: You can save up for 6-12 months of expenses. That's a lot easier when you earn $400k a year.

Posted on: 2015/10/26 21:51
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SRhia wrote:
I understand prices can vary a lot depending on condition/size of the property. But I'm just trying to get a ball park so I know whether we can afford a brownstone on 1-income or 2-income. Sounds like it will most likely be a 2-income type of deal.


Not trying to be dismissive, or disrespectful, but I feel this is one of those situations where "if you have to ask, you can't afford it".

Personally, I *like* the idea of owning a brownstone. All of it, all to myself. I appreciate the workmanship that went into so many of them (all the little details and such) but realize that buying such a place will require a lot of time, money, effort, and dedication. One is left to wonder if it would be a smart decision, or just a vanity proposition. Perhaps both.

Besides the initial HUGE investment (the few TRUE brownstones I have seen come onto the market seem to start at 1 MM, and up) I think it is not at all unreasonable to expect huge cooling and heating bills during Summer and Winter months. Imagine trying to control the temperature on such a large space! Most brownstones are about 3K square feet, some even exceed 4K. I am sure it can be really expensive. Another HUGE problem, as you presume, is the matter of insurance. After Irene and Sandy, flood insurance is an almost certain requirement in DTJC. That's also very costly.


Sad, but I must agree true.

However, it's still nice to have some ball park figures though. Neither my parents, nor my husband's parents ever owned a home in USA (we're both 1st generation immigrants). And we currently own a condo. So the cost structure is very different between the two, and I honestly have very little idea/knowledge what it takes to own and maintain a brownstone.

I always like to know as much as I could before jumping into anything. And the way I approach if/when we can "upgrade" to a brownstone is to begin with how much we can afford every month (say $x) to spend on all housing related costs. From $x, I'd deduct all the fixed/known expenses such as: heating, Water/sewage/property tax/insurance/average repair per month. And whatever's left would be how much mortgage we can afford, and from that I can calculate how much "house" I can afford.

It's been good to hear everyone's input. I'm a bit surprised to hear that a couple making $400K/yr could not afford a brownstone with ease. That's very sad.

Posted on: 2015/10/26 21:32
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Re: Is Jersey City Real Estate in a bubble?
Home away from home
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bodhipooh wrote:
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third_street_hats wrote:
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jcwalkingman wrote:
Well, at least one new building downtown has upped the ante and is now advertising two free months' rent. New construction studios in an amenity-rich building for under $2k/month. And there are still about 2,500 more apartments coming on the market in the next 4 months. Folks, we may very well be entering the rental market implosion (which is already hitting real estate investors who own rental condos downtown).


Which building is this?


Yes, please share. Also, is it an "advertised" deal, or something that was offered to you after much negotiation?


The name of the building starts with a Fifty, and if you want to see for yourself, just check one of the popular listing sites (such as Trulia).

Posted on: 2015/10/26 21:18
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Re: Is Jersey City Real Estate in a bubble?
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Dolomiti wrote:
If you have a combined income of $400k, and you're paying a 40% effective tax rate, then you need to fire your accountant ASAP. It should be closer to 22%. That's the average for that income bracket (and includes payroll taxes, deductions etc)


This is just not correct at all. Your 22% figure might be right if you only consider federal tax, but once you take into account everything else bodhipooh is much closer. If you make all your money on long term capital gains maybe....I wouldn't know, but certainly not at a normal salaried job.

Someone making $400k a year can certainly not "easily" afford $1.5M. Some banks would not even give out a loan in this situation.

Posted on: 2015/10/26 20:54
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Re: Is Jersey City Real Estate in a bubble?
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Many people approach real estate with the attitude, what is the most I can afford?

IMO, that approach is very stupid. It is setting yourself up to be a wage slave for the next 20 years (unless you are one of the privileged few to be independently wealthy). You should instead be asking, what can I continue to afford even if I have to take a big paycut? This way, if you or your spouse loses your job, you aren't absolutely fucked.

Posted on: 2015/10/26 20:50
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