2008 Sep 12th

News Flash – Now Really Is the Time to Buy a Hoboken Condo

Interest Rates are Low Low Low

I’d be very surprised if you have not heard of the recent drop in mortgage interest rates resulting from the federal government’s bailout of Freddie Mac & Fannie Mae. The 30 year fixed rate for primary residence condos is below 6%. When money is that cheap, renting often becomes more costly than owning.

Hoboken Condo Inventory is on the Rise

It is still a buyer’s market with plenty of nice properties on the market. Buyers are able to shop around and find good value when inventory is high. The important thing is to move while the stars are aligned in your favor – Hoboken condo prices may be bottoming out so if you’re a buyer who has been sitting on the sidelines, now may be the perfect time to make a move.

The Increase in Jumbo Loan Limits are Expiring Soon

For those of you lucky enough to be in the high-end market, the advantages of the Economic Recovery Act of 2008 are about to expire.

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  1. John

    In my honest opinion, statements like “When money is that cheap, renting often becomes more costly than owning.” have helped to fuel the recent subprime crisis as well as the financial crisis now facing tax payers who have to bail out Fannie and Freddie. Often I find that real estate agents make statements like this based on a simple mathematical model of rent payments vs mortgage payments. However, a fuller model that includes taxes, transaction costs of buying/selling, lost interest income on a down payment and future principal payments on a mortgage, home maintenance costs as well as the NPV of those decisions, often reveals that renting is far and away the cheaper option (even at lower mortgage rates).

    As this is a blog dedicated to real estate in hoboken, it might interesting for you, Lori, to post your full analysis of the rent vs buy decision as you appear to have a view on the matter. This would seem to go somewhat against your self interest, however, as I’m confident that a full analysis will only help persuade more individuals to rent and that’s not good for your business. (although it is good for the country and its tax payers)

  2. Lori

    There are many experts who disagree on what “the cause” of the current mortgage crisis might have been and I don’t believe there is a single cause. Nonetheless, lax credit standards, the securitization of mortgages without adequate assesment of the risk of the securities and the ultimate ‘lack of ownership’ of that risk seem to be the most often cited causes. I’ve not read any experts who believe that homeownership in and of itself is a bad thing or causes economic turmoil.

    When I was in grad school getting my MBA there was a finance professor who published a comprehensive analytical formula for the rent vs. buy decision which I will try to locate. The analysis requires much more than simply comparing mortgage payments to rent payments. But any comparision also requires one to take into account the investment potential of owning an asset, such as real estate, over time. A rental apartment cannot appreciate. A condo can. In addition, there are intangible benefits to owning one’s own home such as taking pride in your place of residence and community. That is the subject for another post.

    – Lori

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