July Current Market Conditions Report Up with Latest Data

I just posted my July Current Market Conditions Report, with sales data through June. Sales up a bit from last month, prices down a bit ... pretty much the similar lateral market we've seen since the beginning of the year. Big change is the jump in inventory, which may lead to more seller pressure over the next few months, and bring more homes into the price ranges that buyers are looking to pay — and that could lead to more sales.

Comments

[Josh]

My prediction is that by early 2011 the market will see a drastic spike in sales. I think that people are starting to feel more comfortable that the economy will in fact bounce back, which is going to open the pocketbooks of the more reserved buyer.

[Phil Rizzo]

It looks as if the global economy is heading for a serious slowdown. Emergency austerity programs will put a drag on growth. Inventory adjustments will run their course. The effects of tax policies that steal demand from the future – such as the US “cash for clunkers” scheme, tax credits for home buyers or cash for green appliances fizzle out. Labor market conditions will remain weak or weaken further. The slow and painful deleveraging of balance sheets and income-challenged households, financial institutions and governments will continue. A short-term treasury wall of debt is arriving in 2012.

The worst is yet to come. Expect real estate bottom around 2015 (outside of any nuclear attack on US soil or other unforseen cicumstances)which may further delay bottom.
We may see another "lost decade"

[Sol Wentz]

Ho Hum.

With only one comment in the past four days regarding your Market Report for July 2010 is somewhat of an indicator of where the Sullivan County real estate market is and where it might be heading.

Sol Wentz

[rod]

Apathy has set in. The definition of the bottom.

[ar]

Pretty grim if Phil Rizzo is right, but potentially even worse if you ask the question: After the bottom, then what? Let's say by 2015 you're down 45% from your purchase price in 2008 ($180,000 on a hypothetical $400K purchase price); add to that the interest you've paid for those seven years on mortgage and/or renovation loans (somewhat mitigated, where applicable, by tax deductions) -- that's how deep your hole is at Phil's bottom. Now does that money come back to you? If so, how long will it take? Those are important questions in assessing the cost of buying at or near the peak of the bubble. For those who say that's not "real" money, remember that it's real in the pockets of your seller and your lender, right? And for those who say you "can't time the market," phooey. Of course you can; it's just really difficult to do. That's why those smart enough to pull it off are rewarded. See John Paulson, whoever sold in SC during the boom, and many who are buying now. This boom and bust was and remains a fascinating lesson in market timing.

[Eric Hart]

I see more 'window shopping' than during the bubble days of 2002-2008, but buyers are looking for 30-40% off asking prices here in Queens/Nassau. There is high viewing traffic as listings sit idle and inventory climbs to all time highs. Feedback from buyers tells us they do not want to obtain debt even if they can afford it. One buyer at an open house last week explained that even if his mortgage rate would be 0%, he does not want to pay full market value.

[bluelite]

Ar,

I am surprised to see you compliment those buying now. I thought you were a sky is falling type of guy who would see such a decision as bad.

[Nick Baily]

Hey mister AR's back. Woo hoo, howdy. That whole making up random numbers thing doesn't seem to have gone away though.

"Let's say by 2015 you're down 45% from your purchase price in 2008" you say.

What's odd is you're posting as a response to an actual fact based analysis of the market you're talking about. It would sort of make sense to read the thing you're actually commenting on. Clear as day is David's graph of median sales prices. Eyeballing it, looks like the median in 2008 hit about $165k tops, and today's median is right about 140k.

That's called a drop of 15%

Not sure how to break this news but one of those numbers is 3 times the other. One of them is actually, like, real. The other's in your head. "OH BUT NO I SAID 2015!!" isn't a real good comeback either. "Let's say" I win American Idol in 2015 also. In that scenario I would easily have offset any real estate losses.

Living in the real world is slightly more useful as a general rule, try it. In actual fact the peak was in 2007, which is blindingly obvious if you just click the helpful link to the story you're replying to. At least try harder if you're making stuff up, as that fall was a bit more sharp and you could have tacked another 15% or so on. Which still isn't 45% but hey, at least you're working a bit.

The answer to your question goes sort of like this.... Warning this next part contains facts and logic so you may have trouble with it, though as I suspect it'll support your theory of setting money on fire you'll probably LOVE it. Like I said, I call it like I see it, I don't have some delusion agenda and facts are facts, I ain't afraid of them:

- Assume purchase in mid 2008 @ $400k
- Assume 10% down
- Assume 6% fixed 30yr loan, about average for 2008

Assume your house is dead on average for SC. Obviously nothing's dead average, people pay too much or too little. You know about that right? Ah yes you sure do I hear. Anyways... that aside, the math works sort of like this:

Today:

- It's July 2010, median is $139.5k
- Median in July 2008 was $162.7k
- Difference is 23.2k. Divide that by your starting number to get percentage gain/loss >> 15.3% decline
- Apply the percentage loss to your hypothetical house and you get: 400k - 15.3% = $338,800

...OK, so you've lost $61k in equity, on paper at least. Certainly not a good situation, though despite what you keep posting you have to realize gains or losses for them to count. Now you wanted to include interest in that as part of your loss. It don't really work that way, that's a cost of borrowing money, not a loss from declining real estate, but whatever, in either case let's look at how your financial situation is today. Leaving maintenance out, which of course does matter, but so does furniture, and how much you would have spent on hotel rooms and 1500 other things so stick to the basic finances:

Cash out of pocket: $40k down + $42.6k interest (first 24 months) + $9.1k (principal) = $91.7k
Actual out of pocket: $91.7k - $11.9k (mortgage tax deduction assuming 28% tax bracket) = $79.8k
Amount owed on loan: $350.8k

We'll assume you're not selling. This isn't an investment property, you did want the house after all. My proposition is to compare buying at peak vs. buying today. So things like closing costs, title, agent fees, etc are left out for an apples to apples "Bill bought in July 2008 and Steve bought in July 2010" type comparison.

OK, so let's say Bill bought house A and Steve bought identical "average house" B two years later at the now lower price. Assuming you can buy the house today for $338,800, the comp becomes:

House B cash out out of pocket: $33.9k
House B amount owed on loan: $304.1k

Bill in house A has paid out $45.9k more money in cash and accrued $44.7k more debt than Steve who now owns identical house B, for a difference of about $90k.

In exchange, Bill has gotten more 24 months of use out of his house than Steve did. Now you have to ballpark the rental equivalency. A $400k house is pretty high end for Sullivan, that should be at least a 4br modernized farmhouse or something non-tiny if lakefront. Impossible to be precise on this estimate but from what I've seen in listings I would say that a year round rate would be maybe $1500-2000 a month, or as a summer rental maybe $12-15k for the summer season plus another $2,500 for each of the shoulder months which works out to somewhere in that range annualized. Let's say $1750 a month in rental equivalency and assume that's in range.

So we revise once more. Bill has paid out $90k more than Steve did for the same house. He's received roughly $42k in value for actually getting to use the house. Note, this point can't be dropped from the math - Bill had a pretty high end vacation for two years. Steve didn't.

Now that Steve has bought too they will have the same rental equivalent value in the *future* but that's not the whole story, houses aren't stocks or bonds, their utility is a bedrock part of calculating value.

So we conclude. Bill lost about $48,000 due to the declining market. Waiting and/or renting instead would have saved him that much money. Which isn't exactly shocking.... that's about 12% of the purchase price. He bought an expensive asset, we assume it fell about 15% and he lost about that much, roughly.

But did you notice something interesting? In my scenario he actually lost LESS than the percentage decline. He lost 12% on an asset that fell by 15%. How the hell does that happen?

Answer - YOU GET TO ACTUALLY USE THE HOUSE AND GETTING TO USE A VACATION HOUSE HAS REAL TANGIBLE VALUE.

All caps there for the congenitally slow among the commenting crowd. Yes you could adjust the numbers a bit - for example if you assume the house rental equivalent value is $1,250 a month year round then you hit the nail right on the head, 15% drop = 15% loss. And yeah there's heat and so on but that's factored in as well. Rental equivalency is rental equivalency. It's what it would cost for an exact substitute. Add a little for maintenance (not mowing, utilities, stuff like roofs and so on) and the numbers shift a bit. Nothing can be broken down without simplifying a little.

** And here my dear friend AR, is what's called the POINT:

You're wrong, as usual.

Either don't understand -- or purposely misuse -- financial and economic concepts constantly. You're counting hits and not misses in this instance. You can't say "and add all the interest payments" to the percentage drop, that's nonsensical unless you also factor in BEING ABLE TO USE THE HOUSE as part of the math of, you know, actually owning a house. Seriously.... it would be like analyzing a car purchase without noting that the car is sort of useful and does things like drive you places you want to go, and not having one means you stay where you are or rent one or take taxis.

Vacation homes are not passive investments, they're a lot more like consumption than investment. Here ya go, spelled out for the dense:

* Consumption is basically when you pay money for something you use and enjoy.

* Investment loosely speaking means you send money away somewhere and hope you get back more than you sent.

Which of the above better describes a vacation home? Right... exactly.

Look, if your brilliant analysis is that buying something expensive that drops X% in price means you lose around X% then congrats, you'll have to show me your John Bates Clark medal some time...

But you're making stuff up yet again. You're assuming something that has not happened (a price drop of nearly 50%) and you're cherry picking to get your conclusions, leaving out the utility of the asset is your constantly repeated cardinal sin. Stop doin' it. I won't have to explain so much just to be a counterweight to the moron brigade.

Your point is that you can time the market. My point is that yeah, you can, there's definitely gains/losses from buying at the right time. Not what you say they are, it does require some math abilities (see above) but also -- there's a countervailing force at work.

Since time moves in one direction only last I checked, "timing" the market is a synonym for "waiting." Well ya only have so many years on the planet. The person who wants to buy in 2008 but is "smart" and waits until 2015 has to factor letting seven years of their life go by into the plan. And of course add the risk that they're wrong and prices rise, in which case it's lose/lose on both ends of the bargain.

Sure, these are tough calls... but I'm a fan of actually, you know, living life in the present day.

Try it some time, it's really fun.

Love, Nick

Obligatory PS to remind everyone why AR is so bitter:
http://blog.catskill4sale.com/catskill4sale/2009/03/real-estate-and-the-obama-budget/comments/page/2/#comments

[henry]

Nick,

Wow. Lot of attitude today. Love that you point out AR's peak purchase without mentioning your own.

On your analysis... Lucky for your hypothetical purchaser that he is only down 15%. You should use a higher figure if your "proposition is to compare buying at peak vs. buying today" as you state. Also, I think you should increase the size of the percentage loss if you are going to use an upper end property as your example.

Further, I think that your analysis excludes some material ownership costs for the additional years of ownership from the 2007 peak to today. It does not make sense to include value from addition years of ownership (in rental equivalency terms) without including all of the "cash out of pocket" costs required to enjoy this value. Some missing costs for the additional years of ownership:

* Tax cost of property ownership. $5,000+ per year?
* Insurance cost of ownership. $1,000+ per year?
* Maintenance cost of ownership.
* Opportunity cost of investing your 40K down payment. At 5% after tax rate (trying to be conservative, noting that this investment is junior to your 6% debt), this opportunity cost would be another 2,000 per year.

I also suspect that your rental equivalency value assumption of $21,000 per year is high in the current market. Looking at rental properties on a competing SC real estate website. Admittedly, no expertise here.

Lastly, I think that your 10% down assumption for a second home was aggressive a few years ago and is even more aggressive today.

[ar]

Ah, Nick The Economist, acting out again when reminded of how badly he timed the marked. Most of his post is based on a very selective reading of mine. Nick, if you'd slow down to read (it's ok, you can move your lips if you need to) the first seven words of my post, you'd see that I'm responding conditionally to a statement by another poster: "Pretty grim if Phil Rizzo is right . . ." Phil Rizzo says the market won't bottom until 2015. I suggest that if -- remember, all the words matter -- he's right, somebody (like you) who bought in 2008 could then be down 45%. No, you cry! Today I'm only down 15% from 2008, according to Dave's numbers! Ok, but remember, I'm commenting on Phil Rizzo's prediction of a further decline through 2015. If today you're down 15% over two years, that's an average of 7.5% a year (I'll explain how I did that offline, if you'd like), and if the market keeps moving down as Phil Rizzo predicts, then actually it's quite reasonable to posit a 2015 decline of more than 50% versus 2008. So, in context, my 45% hypothetical was more than reasonable. It really is that simple.

On another one of your recurrent themes -- whether a decline in value is really an economic loss -- you really outdo yourself this time. Here's what you say about a 15% decline as of today: "OK, so you've lost $61k in equity, on paper at least. Certainly not a good situation, though despite what you keep posting you have to realize gains or losses for them to count." Why, Nick is that "certainly not a good situation"? Because it's bad to buy something and then see it lose an average of 7.5% a year in value, right? That's why it's not good, right? So, contrary to the second half of your sentence, it does count, or otherwise it wouldn't be bad, right?

I'll help -- you were right the first time: It is not a good situation when you buy a house and then its value declines. It means you have less wealth. Economics has a lot to do with wealth. A measure of wealth is the value of assets you own. Most people understand this. In fact, economists have documented a correlation between economic behavior and the value of residential real estate -- a correlation that functions, believe it or not, even when gains or losses on the house have not been realized! Guess what the economists call it -- the "wealth effect!" Why do you think they call it that . . . Ok, it's because most people perceive themselves to be more or less wealthy when one of their major assets (that would be a house in this case) increases or decreases in value. They believe it so firmly, in fact, that they act on their perception by spending more or less.

As for my prior post, I've given up on helping you with basic English. In that post, where I lamented having overpaid by mistiming the market, I also described the "priceless pleasures" I've enjoyed from owning a house in SC, and I used the word "love" three times to describe my feelings about the area and my house. Reading those words, Nick describes my post as "bitter." I'll leave it to those who passed third grade reading to reach their own conclusions. (By the way, interesting thread to cherry pick, Nick, since it includes commentary on your crass denigration of a local family that suffered personal tragedy -- everybody remember Nick's "Brittany" joke?)

To state the obvious, since I own (and still love) a house up here, I hope Phil Rizzo is wrong, and I hope that what another poster, on another thread, described as the worst real estate market up here in 25 years someday turns around. Why? Because I'd like my wealth (and everybody else's, even Nick's) to increase. That just doesn't happen when asset values decline.

[rod]

Actually, Phil Rizzo didn't say 'assume by 2015, you are down 45%', ar did.

I guess this time is different, - the business cycle is dead forever (although that probably would be as bad of a bet as thinking real estate is a liquid asset that can be sold whenever the whim hits).

Buy at the peak, sell at the bottom. OMG, I lost money!

[ar]

Actually, Rod, this time is different: a near worldwide economic collapse followed by the worst recession in 70 years is, by any reasonable definition, a different situation than anything ever experienced by any current participant, or potential participant, in the second-home market. Characterizing today's environment as merely the downside of an ordinary business cycle is a bit like saying Mrs. Lincoln didn't care for the play. To focus on just one important metric, when, in any other downturn, have there been as many foreclosures as there are now? How many of today's potential second-home buyers have ever witnessed or experienced the degree of employment insecurity that prevails even as "the recovery" is said to be taking hold? At a certain point, quantitative measures morph into qualitative social changes; the Great Depression altered the psychology -- and therefore the economic behavior -- of many of its survivors for long after the "cycle" shifted.

So it's fair to ask whether any recovery in the second-home market will look different than past recoveries. Now, if you're a seller or a broker or a builder, naturally you're going to be a proponent of "this too shall pass." And you may turn out to be correct. But that doesn't change the fact that this time is, by any objective measure, different. And that means nobody should rely on the assumptions that worked in the past.

[nick]

I've mentioned my own purchase in excruciating detail plenty of times. I also asked AR a million times what his position was (did he own or not, etc) and he just never answered until it was unearthed back in a long ago thread. I ain't hiding anything.

And yes people who bought real estate 2006-2008 most of the time, in most places, as a generalization, have lost equity.

Since I'm dealing with AR and he's not too good at reading comprehension, let's repeat that:

I have probably lost a substantial amount of real estate equity due to price declines in housing and economic recession.

It's not so hard, what's the big deal? It happens all the time. But nothing happens in a vacuum. Poster above says the opportunity cost of capital is 5%. On what planet? Seriously tell me where you could put cash and get a very low risk 5% return these days, has nobody noticed interest rates are near the zero bound? Stock market? Whoops. Fact is the prices for huge categories of long term asset classes have plummeted during this crisis. Should have kept the assets in a nice portfolio of blue chip stocks like the S&P 500? Wouldn't have been too fun if you'd done that in July of 2008 either.

A serious economic recession is a bad thing. You tend to lose something when those happen. Shocking.

There are way too many variables. Yes you could compare 2007 to the present, then the numbers would look worse. But AR said "2008" pretty clearly. I actually corrected him. Yes you should put insurance and taxes in. But you also have trade offs in every direction. What if you live in NYC and can get rid of a self storage rental? Savings. What if you need to buy a car now to come to your house? Cost. What if....

Right, this stuff is way too varied for that level of granularity. So I compared apples to apples. This is a sullivan county real estate blog. If you don't take as a premise that sullivan county real estate might be an interesting thing to own then this conversation makes no sense. Go to motley fool and discuss personal finance. The given is that being up here is interesting.

Buying today versus in 2008 would have been a better decision economically. That's what my numbers show. Even AFTER you factor in rental equivalency you're still looking at a loss of tens of thousands in equity. As I said, that's not a good situation, one's better than the other. Not sure why I'm pointing out the obvious but yes, looking in hindsight you can pretty clearly explain why buying something expensive that's about to decline causes losses.

My point is just that it's not that big of a deal, this gloom and doom stuff is so tiring. Losses and gains in equity when you're holding something very long term are distractions. You can spend your life obsessing about them, or not.

As for the theories of total economic collapse, eh. I have a theory of my own -- when there's a consensus opinion about which direction things are going and it gets out into every tiny little corner of the world, that's pretty often when things are about to change.

In 1997 tech people were big into the internet. In 2000 when grandma was walking into the brokerage firm and saying put it all on "internet" things were about to be problematic. After 9/11 when everyone said that the US economy was headed for the dumpster things went the other way. Then everyone was saying real estate never lost value and there was no bubble. Whoops.

When guys like AR who don't know too much are this just SURE they've got it figured out.... well, time will tell methinks.

[keith]

In support of AR's last post. A "perfect storm" may be brewing...

http://finance.yahoo.com/tech-ticker/the-u.s.-middle-class-is-being-wiped-out-here%27s-the-stats-to-prove-it-520657.html?tickers=^DJI,^GSPC,SPY,MCD,WMT,XRT,DIA

[KJ]

One more point about Nick and his analysis - about the rent costs one would have saved. Not sure this applies at all to the hundreds (thousands?) of people who bought as a weekend house/second home. In fact, that would totally blow away your financial calculations about loss and equity (more loss). This comes from a happy home owner in Delaware County who bought in 2006. Since the house is our second home and we have no intention of selling, all this analysis doesn't matter to us - but - I think AR's points are valid if you are a homeowner looking to sell or you are on your way to being "underwater" on your mortgage. Which might be happening to a lot of people. My two cents.

[nick]

Nah I tried to consider the weekend house thing in there. It doesn't change much. In weekend house type areas there's not much difference between renting for the summer season, extended, and renting for year round. I suppose it's sorta like trying to sell a cake after someone's licked all the icing off... Hunters aside, can you imagine wanting to pay someone money to move into a cabin near a lake at the end of September and then get out by beginning of May? What would ya pay for that. Same difference... I put both in, the summer rental price and an annualized price. Of course you have to guess so it's all fudged a bit anyways.

But no, doesn't change the calculation at all, it's right in there.

As for AR's "points" I believe they involve the sky falling, or at least literally speaking comparing what's happening now to watching your husband get shot in the back of the head at close range. Vivid, but eh... wish he would find the yahoo stock boards or something already for this armchair prognostication.

[henry]

Nick,

Quick get on your soapbox and write tediously (again) about how “tiring” it has been to have been wrong for years and how justified you were in losing a lot of money. Then throw out a model to make your investment look less bad by ignoring, among other things, material ownership costs. Then head further into Nickland where all with opposing views are “doom and gloomers” and where other posters have no interest in SC real estate. Such a wonderful place where buyers should welcome the opportunity to earn less than 5% in an illiquid real estate deal levered 9:1 (your assumption). Please forgive me for not using caps here. I know how much you like them.

For my part, I like opposing views… and am more interested in where the SC market (especially upper end lake front) is today and where it was going. In particular, I am interested in what price/time it will take to clear the inventory overhang (currently 67 >$400K according to the popular searches on this website). Not pretty given the low sales rate.

Generally, I see the absolute all-in cost of SC lake front as high for what you get (especially given the seasonal nature), and relative cost as even worse versus the alternatives (including buying in other counties, renting or staying in hotels). Consequently, I don’t see the inventory clearing in the near term, and believe that most are better off waiting for a market that is still adjusting (large bid/ask spread with few sales). None of this is news, and not much has changed since I posted in more detail on this topic in response to another one of your rambles two years ago: http://blog.catskill4sale.com/catskill4sale/2008/10/sullivan-remix.html .

In spite of the above, I am not permanently bearish. After five years of considering buying a summer home, I actually became one of the few people that purchased an upper end property in SC this year. It took some very special circumstances related to the property and transaction to make the deal the right move for me. As much as I wish it were otherwise, I believe that most looking in this market segment are better off waiting (and enjoying a large vacation lodging budget elsewhere) while the market adjusts.

Final thought… Nick, if you don’t care about losses or gains in equity due to your long-term view, why do you spending hours reading and posting to this website.

[bluelite]

Touché Henry. People try all sorts of approaches to rationalize bad situations. In the end if Nick holds on long enough he may recover his capital but he could have had a much better recovery if he had purchased now instead of at the peak. I agree with Nick that life is too short but in the grand scheme of things holding off a few years would not have impacted long term memories. I have been kicking the tires for a few years and I have a young child so I may have lost out on some experiences and memories. Hopefully if everything goes as planned I should be a second home owner in the next 30 -45 days and let the memories begin. Now, I don’t know if prices will continue to fall and who knows I could have an interruption in income but I weighed all that against a ticking clock and decided to take the plunge. I am not purchasing at the upper end as you describe (>$400,000) but I am not purchasing at the low end either.

I spend a great deal of time each day constructing very complex financial models and calculating investment returns and as you probably know you can pretty much get Excel to produce whatever is most helpful to you. Nick is trying that same approach.

Let me leave by saying hello Catskills……

[Nick Baily]

Henry, you're clearly not a moron. You posted intelligent comments two years ago in that thread (which I don't remember but as you can see I didn't reply/disagree) and your comments now make sense too.

I have no issue with intelligent disagreement. Just the perpetual sky is falling cut and pastes. You bought up here because you found a situation you were happy with. So did I. I have said a million times I feel SC will do ok long term. Not bubble/hamptons/great but ok. I assume you don't disagree.

As for lakefront I totally agree, cost/value just doesn't work for me either. Personally I think the "deal" up here, broadly speaking, is serious acreage cheap. That's hard to do in a two hour radius from manhattan.

And my numbers were just to illustrate the actual way one might start calculating, rather than the ignorant "add the interest" comment. As you can see even in my conservative made up scenario our hero still loses tens of thousands off dollars. That's kinda bad, not sure where that fits into rationalizing, economy sucks now. Though I am gonna stop short of second great depression hype.

As for why read this site and comment? Well because David is super smart and informative, and because I enjoy it, respectively. Similar to the reasons I ended up buying here in the first place. ;-)

[KJ]

Nick

You didn't get my point. I am not saving money on my rent...nor making money on renting. I use my house all year round. Your point in your calculations was that people would save money from owning instead of renting in the city. But for those of us who already are renting in the city and bought a summer house for ourselves and own a house and are paying a mortgage in the city there is no "rent" savings. You can't keep changing your numbers to make your premise work...which is what it appears. Again...I am a happy home owner up here...but you can't pretend that people who bought aren't losing on their supposed equity.

My two cents

[nick]

KJ - You didn't get my point clearly. You are saving money in rent because you get to use the vacation home. Using a vacation home has VALUE. It might be $1500 a month. It might be $80 a month, that's a harder figure to pin down, sure. You can quibble about what it's worth, but it has some value. And AR's post (and yours, I guess) shows a lack of understanding.

The point is that you can't evaluate a property you get to USE the same as an investment you just have sitting in an account. It's BOTH and investment (one that you can gain *or* lose money on, naturally) and ALSO a good or service, one that you are allowed to use and enjoy.

When you assess the rent vs. own value of any real estate you're factoring in the fact that owning the house isn't passive, like a stock, it's something you can go to, invite friends to, and do instead of getting a summer rental or hotel room or whatever else.

The point is that people save money (vs. what it would cost to get the *same* thing in another way) from owning a vacation home. You are saving rent, you're saving the amount that renting your weekend home would cost, the other way you could use it.

When you buy a weekend home, you get to use the weekend home. The point is really not more complicated than that.

When owning costs more than renting (like now, in a declining market) then that was a losing bet. Renting a vacation home would have been a better bet. But I'm not comparing renting upstate vs. the city. I assume having a weekend retreat is something you WANT and then comparing the two possible ways you could get it. Apples to apples.

[Mal]

KJ, I think your point was based on a misreading of Nick's original post. Nick's calculations were exclusively focused on the Sullivan county property purchase; he explicitly ignored the myriad other factors that might shape a purchase decision, including whether you simultaneously own or rent additional property. His reference to rental costs was simply that waiting to buy that SC property means you don't get to use the property while you are waiting. He was reminding us that this extra time using (or not using) the property has real value. He estimated what it might have cost to rent a similar property during that waiting period. Alternatively, think of "Bill" renting out his house for two years while "Steve" waits to buy. They both then start occupancy at the same time, but Bill has the rental cash to offset some of his capital loss.