Rich Turn to Renting

From CNBC:

Rich Americans Ditch Home Ownership For Renting

Patrick Lee went from homeowner to home renter this year.

It may sound like a downgrade, but the New Yorker didn’t make the switch because he couldn’t keep up with payments or because he lost his job. Instead, Lee was nervous about the state of the housing market.

So in March he sold the Manhattan apartment he bought in 2008 for about the same price he paid and moved — along with his wife and child — a few steps away into a luxury, two-bedroom rental unit in a brand new building.

Lee wouldn’t disclose what he’s paying, but similar two-bedroom apartments in the building usually rent for $11,000 a month.

“I wanted to protect ourselves from prices going down,” says Lee, who is a managing director at a major bank. “I didn’t want to be an owner anymore.”

Lee has company. Demand for luxury rental units has increased as wealthier individuals who can afford to buy are deciding not to, according to brokers and real estate analysts in affluent areas of the country such as New York City, Chicago and San Francisco.

“More affluent Americans are opting to rent as oppose to buy,” says Jack McCabe, an independent real estate analyst and CEO of McCabe Research and Consulting in Deerfield Beach, Fla. “Within the last year, so many people have seen their family and friends get burned in real estate. They don’t see it as being a risk free investment as they used to.”

Lee says that he’s the first of his peers to make the switch to renting. But that doesn’t mean they don’t want to.

“I suspect a lot of people are underwater and can’t get out,” says Lee. “A lot of people are just stuck.”

He says he doesn’t regret selling his apartment and moving to a rental, especially since the building he lives in has all the amenities and handiwork of his previous place. And he can rest easier knowing that if he has to relocate for his job, he can leave without having the burden of trying to sell an apartment.

“With so much uncertainty,” says Lee, “It gives me a lot of peace of mind.”

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63 Responses to Rich Turn to Renting

  1. grim says:

    From the WSJ:

    Second-Mortgage Standoffs Stand in Way of Short Sales

    Sergio Trujillo thought he could avoid foreclosure when an investor made an all-cash offer last month to buy his one-bedroom condominium in La Jolla, Calif., for less than the amount he owes on his mortgage.

    But a standoff between Mr. Trujillo’s lenders over a few thousand dollars threatens to derail the deal, known as a short sale.

    Like many heavily indebted borrowers, Mr. Trujillo has two mortgages: a first mortgage in the amount of $260,000, which is held by Freddie Mac; and a $50,000 second mortgage, handled by Specialized Loan Servicing LLC. Freddie Mac will allow no more than $3,000 in sale proceeds to go toward the second mortgage. But SLS says it will scotch any deal if it doesn’t get at least $7,000.

    “This is an all-parties-lose scenario,” said Brian Flock, Mr. Trujillo’s real-estate agent. “There is no housing recovery when this happens.”

    Banks are reluctant to write down second mortgages because many are still current, even if the borrowers owe more than the value of their homes. They may also be able to pursue borrowers’ assets after foreclosure.

    “If I’m the second-lien holder, I may say, ‘You know what, I want to see if I can hold out for a better deal,’ ” said Greg Hebner, president of MOS Group Inc., an Irvine, Calif., company that contacts troubled borrowers on behalf of lenders and servicers.

    Second mortgages, however, have become one of the biggest roadblocks. More than a third of about 1.33 million properties in some stage of the foreclosure process have at least one junior lien, according to publicly available data tracked by CoreLogic.

    Many seconds and home-equity lines are worth little in a foreclosure because home prices have fallen so sharply. That gives the second-lien holder “nothing-left-to-lose leverage,” said Mr. Goodman. Banks say they are approving deals where they can, but borrowers must agree to some form of debt repayment.

    In Mr. Trujillo’s case, SLS requested far more than the lien was worth on the secondary market, said Mark Johnson, who oversees short sales for Freddie Mac. “That’s always been our challenge—participation from second-lien holders,” he said. “It’s ultimately their decision about whether they want to help us save borrowers in foreclosure.” Freddie says it hopes to negotiate a deal for Mr. Trujillo. SLS declined to comment.

  2. Essex says:

    Meh. He works for a bank. He probably sees his job security as somewhat dubious. He is dumb enough to rent for $11k a month too. That says more about him than I care to know. Rich? Doubtful.

  3. NJGator says:

    Essex – prev 117 – The appellants are not winning only $200 each. They are winning thousands. There were 1225 appeals and the town has to refund $2.3M. They would need an extra $200 from every taxpayer in town just to cover that. And for the last 3 years they have just put it on the credit card. This year they have to pay it out of the budget and it is not exempt from the cap. Ignoring this stuff was great policy. Sarcasm off.

  4. Dan-

    I think the Jeter/Wagner debate is, at best, apples vs. oranges. It’s probably not feasible to even try to compare modern players to those from the dead ball era.

    I’m still of a mind that whoever pays up for Jeter has bought themselves a very expensive anchor.

  5. safe as houses says:

    Minka Kelly, she could do better.

  6. Essex says:

    3. The previous owner — the old lady — appealed our taxes and when we moved in they were about $6700….that was 2002. Now they are $11k. Oh joy!! Thing is, we lived fairly modestly. 3 BR 2 bath. But the place is NICE…now…let’s see how the re-evaluation goes. They just did it.

  7. grim says:

    You aren’t doing your duty as a citizen if you aren’t paying at least 13 grand.

    Leaches, all of you, for consuming services without paying your fair share.

  8. safe as houses says:

    #7 Essex,

    Have another kid or 2. That way you are making money off your town and consuming more then your share of the tax pie.

  9. Essex says:

    9. Yeah I know. Tell you what though, we have one amazing child. It is completely cool. But the way it is set up today, having more than that and you are worried about expenses…and we are well into the over $250k bracket. Poor folks seem to pop em out like rabbits. Go figure.

  10. Essex says:

    8. don’t worry grim I am sure after the re-eval we’ll crack that figure — thing is we are really happy here right now. Kid is thriving in school. Once that changes, we will probably hop the pond for a couple of years. Status quo works right now !

  11. Essex says:

    “…Life can be peaches, creme, and honey,
    using other peoples’ money….”

  12. Outofstater says:

    #10 If you want more children, have them! How will you feel when you are in your sixties? Will you wish you had had more children? You can always find a way to make it work. Don’t decide not to have more kids just because of money. Okay, I’m finished butting into the life of a guy I don’t even know.

  13. Confused In NJ says:

    The leaders of Obama’s deficit commission — Democrat Erskine Bowles, a former Clinton White House chief of staff, and Alan Simpson, a former GOP senator from Wyoming — have proposed to limit the Employer Health Insurance tax break or eliminate it along with other cherished deductions, such as the one for mortgage interest. That would allow for a big cut in tax rates.

    Sounds good, if we eliminate all Tax Breaks it will make people feel better about paying their Fair Share to support the rest of the world.

  14. NJGator says:

    Speaking of tax appeals, the town used this place as a “comp” for our appeal last year. Sold for $550k in Dec 2007. Current ask $99k.


  15. Shore Guy says:

    ” proposed to limit the Employer Health Insurance tax break or eliminate it along with other cherished deductions, such as the one for mortgage interest. ”

    It works for me. Let’s eliminate all deductions, and have a flat tax.

  16. gator (15)-

    No one will be spared. No one.

    People still laugh at me when I say that.

  17. This year’s 550K garage mahal is next year’s teardown shitbox.

  18. That fat slug of a housewife who wears too much makeup, too much bling, drives her Explorer 80 mph all over town and can’t lose a pound despite hanging out at Curves five days a week…is next year’s 11th Av $2 trick.

    Warm meat for the zombies.

  19. M!lf only a zombie would want to tap.

  20. Has there ever been a FHA foreclosure in which they haven’t found mold?

  21. safe as houses says:


    If that place sells, can you use it as a comp on your next tax appeal? If the town felt it was an appropriate comp to defend it’s tax on your place, why not return the favor?

  22. safe as houses says:

    The guy in the lead story might be looking at an expat gig and that could be another reason why he sold. He does mention if he gets transferred he doesn’t have to worry about selling. If he wants to keep climbing the corporate ladder, or at least make himself more marketable to other global banks, he may have to 2 to 3 years in HK, Singapore, Shanghai, or London.

  23. Fast Eddie says:

    The closing was like a party, with jokes, laughter, and gifts for the children from the seller. “It was a happy time for everyone,” says Amy.

    After a week living in the house, they are delighted with Tenafly. “The neighbors are super-friendly,” Amy says enthusiastically. “They brought us cookies when we moved in, and everyone is giving us information on the neighborhood — this is where you need to join the gym and the music classes, these are the best instructors — and they’ve been right about everything! I like that there’s the nature center — we can go hiking, and they have scavenger hunts for children.”

    “And we’ve seen deer in the back yard!” adds James.

    I’m curious to see a follow-up on this story a few years from now. I wanna see if part two of this candy-coated, feel goody-good, vomit inducing epic holds up to the original score.

  24. Essex says:

    24. I have been in my hood for 8 years now. No issues. Neighbors are great. Street is fine. Life is good. Of course I am surrounded by members of my tribe. So I do not worry so much about them breaking and entering or bugging me on a saturday.

  25. safe as houses says:

    #24 Fast Eddie,

    At least she’s good looking.

    The cookie people are the worst. Almost guaranteed they will be the neighborhood gossips with the kids most likely to wind up in juvenile hall and/or rehab.

  26. NJGator says:

    Safe 22 – Will be non-useable. It’s a distress sale.

    We have always thought the $550k sale was fishy. This is in one of the worst neighborhoods in town. Always thought that sale was fraudulent. Hoe much you want to bet it was bought with almost no money down? Some bank is gonna lose beaucoup bucks on this one.

  27. Fast Eddie says:

    Amy and James had no trouble obtaining a mortgage…

    No trouble obtaining a mortgage for a $929,000 price tag. It just made me chuckle. Close to 20% real unemployment, ridiculous asking prices still the norm for something deemed a starter and this article has this nonchalant, toffee-nosed air about it.

  28. Essex says:

    28. No thanks. We live relatively cheaply compared to that. Ugh.

  29. Barbara says:

    Fast Eddie,
    its called pretentious, and its a Northern NJ thing. You know, Northern NJ, where every college graduate with a marketable degree is earning over 250k by 32….

  30. Barbara says:

    actually, toffee nosed works too ;P missed that.

  31. yo'me says:

    32 yo making $250,000 got layed off and getting $560.00/week in unemployment before tax will not be able to pay that PITI

  32. Essex says:

    30. More than likely a combined income (or not) but I fail to see what is pretentious about making $250k as an income. There are folks in the area making millions. WTF?

  33. Essex says:

    $150k here is almost a minimum living wage. Anything else and you are starving.

  34. Fast Eddie says:


    Pretentious and toffee-nosed! The little darlings! Yeah, I wanna see how that $5000 in PITI feels when the hammer drops on Mr. Bread Winner!

  35. Fast Eddie says:

    Finally, the Giants score!!

  36. Barbara says:

    Statistics just will not back up your assertions. There are two issues here. Yes, NJ is too expensive. However, its not “I can’t live on less than 150k” expensive. To declare otherwise is a form of stealth braggarting. Starving? C’mon. You might have to drive your (gasp) domestic for a good 8-10 years, but you’ll eat just fine.

  37. Schrodinger's Cat says:


    NEW GROWTH MARKET! We could start a mail order business selling black mold kits to homeowners that plan on walking away. They can inoculate the entire house for a low low price of 29.99 + shipping and handling. The bank will have to rip down the entire structure after that!

    Just place a basic inoculation plate in your home HVAC duct work and have the entire home inoculated in a matter of days, floor to ceiling, wall to wall.

  38. Schrodinger's Cat says:


    Did you see the recent Wikileaks claim that one of their documents details how the US thinks North Korea may be about to collapse? That would make an interesting back drop for the recent artillery strikes by NK. What are you thoughts on wikileaks being fed info in order to generate a disinformation campaign?

  39. Dan says:

    There has to be theories on North Korea on the brink of collapse. Heck, there’s no stray dogs or cats in the country due to lack of food. The amount of internal corruption inside NK to get any access to power will eventually come out. The fighter pilots get just enough fuel to fly around and not leave the airspace and have the ejectors disabled. How long a war can an army fight when they have no spare supplies and no communications capabilities. Nuclear blackmail is all they got left but since everyone probably believes that they would trade nukes between Seoul and Pyongyang, they might get away with it.

  40. Dan says:

    Speaking of other whack jobs, looks like dictator Chavez is looking for cash in selling Citgo. Why not? He’ll just nationalize whatever he sells in a couple of years anyhow…

  41. Essex says:

    37. I wish that were true. Homeowner . Two cars. Healthy appetite and a couple of hobbies….Taxes….and viola. We aint in Kansas anymore!

  42. Juice Box says:

    re: # 39 – re: Wikileaks “Saudi Arabian donors remain the chief backers of Sunni militant groups like Al Qaeda”

    I have been saying it since 2002 we should have invaded Saudi Arabia not Afghanistan and cut the head off the snake.

  43. relo says:

    Prior Thread:

    That Wagner was the better ballplayer of their respective era’s is beyond dispute, and overall as well. But I’d wager he can’t live up to even this short list…

  44. Shore Guy says:

    “What are you thoughts on wikileaks being fed info in order to generate a disinformation campaign?”

    Were it a leak of a handful of documents, I might buy it. This latest leak, though, is part of the trove of documents downloaded by that former soldier who is under arrest for releasing the combat action reports. This release is a major pain in the @ss for the USG.

    As for PRK, I would not be surprised to see them lash out in a last-gasp attempt to remain afloat, even if, perhaps, especially if, it meant having half its population killed in the conflict. This would be all the more true were they able to sink the South’s productive capacity at the same time. As Anthrax once sang, “Your failure is my success.”

  45. Confused In NJ says:

    Were it a leak of a handful of documents, I might buy it. This latest leak, though, is part of the trove of documents downloaded by that former soldier who is under arrest for releasing the combat action reports. This release is a major pain in the @ss for the USG.

    The sad part is no checks and balances to flag all those documents being down loaded? If we can’t secure our own documents, what can we do? You would think something like that should trigger a flag to someone.

  46. Gary (35)-

    That whole mess is a drunk driver headed straight at a bridge abutment.

    No one will be spared. No one.

  47. Schrodinger's Cat says:


    Here is one quote just for you from the wikileaks dump

    The American ambassador to Eritrea reported last year that “Eritrean officials are ignorant or lying” in denying that they were supporting the Shabab, a militant Islamist group in Somalia. The cable then mused about which seemed more likely.

  48. Schrodinger's Cat says:


    I should trademark Schrodinger Economics

  49. shore (45)-

    Shit. There goes my idea for a new motto for my office.

    “As Anthrax once sang, “Your failure is my success.”

  50. Schrodinger's Cat says:


    it’s now everyone’s responsability, duty, to default. If governments globally choose to protect bankers from their bad bets at the cost of the present and future generations prosperity, the only effective step before revolution is intentional default.

    Embrace the chaos.

  51. Shore Guy says:

    Don’t call me Shirley!

    I really thought he had died a few years ago. Is anyone sure Abe really is still alive?

  52. Shore Guy says:

    “Eritrean officials ”

    I think I mentioned here, maybe as far as two or so years ago, that Eritrea is THE conduit of weapons to el Shabaab. I have had some fascinating conversations with government officials in the Horn and I still remain persuaded that the Horn will bite the West on the backside, due to inattention.

  53. Shore Guy says:

    Wow! US bugs found throughout the UN. Leave officials irritated, scratching their heads:

  54. Shore Guy says:

    “A month ago, the UN finally admitted it had been battling the blood-sucking pests in various parts of its sprawling office complex for more than a year. ”

    But enough about the delegation from: (Insert name of country to insult here)

  55. Shore Guy says:

    Do I hear sleigh bells coming down the road? Starting in Colts Neck, winding down through Rumson and ending in Asbury? BC? Do you hear it too? NJC? How is your hearing? Does anyone hear it, or is it just my wishful thinking?

  56. chicagofinance says:

    Dan says:
    November 28, 2010 at 12:13 am
    Clot, As for Jeter and other positions, he would have been a good center fielder, second or third and was known for having great range on texas leaguers hit out in shallow left or in the first row of the stands in foul territory.

    Dan: Nice blind eye for the truth….even the most die hard Yankee fans I know refer to Jeter as Bruce Hornsby without the Range……..did you check his home/road splits BTW?
    Not only is the new Y-stadium a band box, but it is also tailor made for his swing……he slugged .317 on the road….

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  58. Schrodinger's Cat says:

    Well this could be fun!!!!

    Exclusive: WikiLeaks Will Unveil Major Bank Scandal
    Nov. 29 2010 – 5:01 pm | 5,704 views | 1 recommendation | 1 comment

    First WikiLeaks spilled the guts of government. Next up: The private sector, starting with one major American bank.

    In an exclusive interview earlier this month, WikiLeaks founder Julian Assange told Forbes that his whistleblower site will release tens of thousands of documents from a major U.S. financial firm in early 2011. Assange wouldn’t say exactly what date, what bank, or what documents, but he compared the coming release to the emails that emerged in the Enron trial, a comprehensive look at a corporation’s bad behavior.

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