Looking at the recent 10-year report prepared by appraisal heavy Jonathan Miller, I once again considered whether buying my apartment in 2007 was a mistake.
As you can see from glancing at Miller’s charts below, I purchased my co-op on Manhattan’s Upper West Side close to the decade’s price peak in 2008. Of course, after Lehman Brothers imploded on Sept. 15, 2008, prices plummeted along with sales activity.
There’s little point in providing the purchase price, but the likelihood is that it was high compared with both previous and subsequent years. (There’s no way of knowing for sure without the market having weighed in.)
Yet I have no regrets.
I’m quite happy with the place, which has two bedrooms and two baths. (One of the bedrooms is my fully equipped office — at least two of everything, printers, computers, monitors — so it doesn’t strike me as extravagant.)
When I moved back to Manhattan from Washington, D.C., where I had begun my real estate career, I had to find somewhere to live in a hurry and thus rented the unit for more money than the market demanded in 2006. The freight was $5,000 a month and would be more these days.
If I had continued renting at $5,000 a month beyond a year, the cost of living in the apartment by now would have totaled $275,000 over the following four and a half years. For the sake of argument, let’s say my ownership costs after accounting for tax benefits, mortgage payments, monthly maintenance and opportunity costs have run approximately half of that amount, or more than $137,000 in round numbers.
In other words, I would have poured something like a net of $137,000 down the toilet had I been renting all this time. Moreover, I would not have had the advantages of ownership, not least of them being an increase in equity from my mortgage payments and growth of appreciation.
Do I feel as though I “lost” money because I closed at what some might argue is the wrong time? Hardly: I’ve “made” $137,000 without even considering appreciation, which has not been insignificant.
It is clear, satisfying and virtually irrelevant to me that my co-op has risen substantially in value.
In spite of having bought close to the top of the market, I can’t complain. After all, I didn’t buy for investment: I moved from renting to owning so I would have a place to live that I could call mine.
I bought shelter.
If the value of my apartment keeps rising, terrific. If not, or even should it decline, I have no doubt that I still have come out ahead.
It was for me the right decision.
Tomorrow: Bottom bombshell
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Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022