2009 Jan 14th

So Just How Did Hoboken Condo Sales Stack Up Over the Past 10 Years?

by Lori Turoff – [email protected]

Average Sales Price for Hoboken Condos – The Past 10 Years

Here is a chart showing the average and median price of a Hoboken condo over the past ten years:

(Note – the charts are all links. Click to see a bigger image).

How Have Prices of Condos Sold Changed in Hoboken Over the Years?

This chart shows the percentage increase in Hoboken condo average sales price and median sales price for the past ten years:


Hoboken – Well, It Could Be Much Worse

The good news is that we’re still in positive numbers, unlike much of the country. The bad news, obviously, is that the increase rapidly shrunk.

Are The Deals Getting Done?

The next two charts show that transactions have fallen off steeply this past year:

Finally, here is the percentage change in the number of deals done from year to year:

There are some very good explanations for the freeze in the Hoboken real estate market. Here are the two principal ones that I’ve heard bandied about quite a bit recently:

Well, that’s great except what if the market continues to fall? Unless the seller can really wait 5 to 10 years, which is how long it may take for the market to stabilize, never mind recover, it may be better off to cut your losses and get out with what you can. Also, if buying elsewhere, as so many young Hoboken couple with babies do as they move to the ‘burbs, the seller will pay less for the purchased property making up for some or all of their loss. Often, they are not even selling at a loss, they are just not realizing as large a gain as they might have made a year ago.

It is possible that prices will continue to fall. Many respectable people are of that opinion. But the truth is that nobody really knows for sure how much further there is to go until we hit bottom and how long that might take. Something for the buyer to consider is this – if the price of a property drops another 10% but interest rates go up a point am I better or worse off? Just as we cannot know for sure where prices are headed, even when the trend looks downward. The cost of borrowing, availability of credit and a buyers ability to qualify for a loan is are crucial factors to consider in today’s market.

What Would You Do?

I’ve tried creating a survey but haven’t quite figured it out so I’ll keep the question open ended. Let’s say, for whatever reason, you simply must sell – getting transfered, want kids to go to school in the ‘burbs, too little space, what ever. When would you put your place on the market? Right now? In 6 months? in 2010 or later? Never – would you just rent it out? On the other hand, let’s pretend you want to buy. Would you do it right away or wait? If so, how long would you wait? Let me know what you think. Thanks!

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  1. Mark

    I want to buy a 1 bed condo but I’m waiting till fall to make a more educated decision

  2. Lori

    I think many buyers are waiting for many various reasons.

  3. Bishan Colon

    I want to sell my condo in 2010 when I think the market should be at least stablized and the interest rate should have not been raised too high. Actually. I think many sellers can and will wait out these couple of years unless he or she get laid off and absolutely can’t find another job. The frozen market in Hoboken seems reflect a “wait-and-see” mindset rather than a forced sell. Another note: I believe that the interest rate will stay low for a while…around 2004-5 level. Many ARM loan borrowers and refinancing candiadtes will benifit from it. This way they can afford to wait out the downturn. Also, even if you are having a hard time right now, you can always rent out your condo for a couple of years. Renters still want to move to Hoboken.

  4. Ari

    I’m a professional who would strongly consider buying in Hoboken, but I’m certainly going to wait till at least next December. Why would I buy an asset that I believe is going to go down in value by at least 10% in the near future? Also, the huge (allegedly temporary) increase in property taxes gives me significant pause. I have my doubts this is the last increase Hoboken will see given the state of the city’s finances.

    Though interest rates are a factor, interest rates only increase once the overall market has improved. Stock futures are in the toilet. No reason to believe interest rates will increase by any significant margin for a long time.

    As for sellers…you’ve got 2 choices. Get out now, (if you can) as Hoboken real estate prices are certain to drop. If not, and you consider your home a true investment, IMO, be prepared to live in your home for the next 5-10 years to see a real profit. Of course, that means rolling the dice that property taxes won’t keep exploding.

    Certainly tough times for all.

  5. Mark

    Looks like most wont be able to refinance

    http://online.wsj.com/article/SB123198453073784221.html

  6. Tiger

    Thanks Mark for this article! The one thing that amazes me the most about this whole mess is how irresponsibile and GREEDY people are. My parents taught me not to take anything I cannot afford, period! I can’t believe people were allowed to get away with it so easily, on something as big and major as a home, and now Fannie wants to activate a program that allows you to borrow 120%? Haven’t we LEARNED anything yet?

    BTTP, I love my Hoboken condo, I bought last April for what is still considered a great price in todays standard, so I don’t want to move anytime soon. That said, if forced, I think I would rent it out. Before I bought I made sure that I can afford a reasonable monthly payment so I’m not up to my ears in debt, you never know what might happen.

    So yea, rent, rent, rent! Actually, if things go as planned, I hope to keep this condo forever, even if I move to a bigger place later on in life, I love it!

  7. Lori

    Here’s a scenario worth some thought:

    – You buy a condo can afford with a conventional mortgage and a 20% or more down payment;
    – You live in it for a bunch of years (5 minimum)’
    – You save your money in the meantime for the down payment on your next place.

    Then – when you are ready to move to something bigger, you rent the first property out. If you did most of the above, very often, you will be cash flow positive from the get go on your first condo which is now in investment property generating a return.

    Repeat until retirement.

    Just a though.

  8. Tiger

    Lori that’s exactly what my previous landlord did. She’s originaly from Jersey City, but bought a studio condo in Hoboken in 1986 (she used to work and moonlight as a bar tender in Hoboken). Then she got married and moved to Staten Island with her husband, they bought a new home there and she managed to keep her condo and rent it out. The mortgage has been paid off (15 year), and now she makes pure profit out of the condo now valued at quarter a million dollar.

    So yes, it is possible, if you did your homework right when you bought, to have a reasonable mortgage that after a few years would pay off for itself by rent.

  9. Rob

    Thanks for all the work you do Lori – much appreciated! Actually, I just closed on the sale of my 2 bdrm Hoboken condo today after living there for 10 years. Where am I moving? Hoboken – 4 blocks away – with more space!

    I believe time horizon is a far bigger factor than most consider. I bought my place in an average historical period for interest rates (7%) and in the middle of the Russian debt crisis and collapse of Long Term Capital (1998) – a scary period. Point is, I planned to be there (at the time) for at least 5 years – enough to go through 1 pricing cycle and as you would expect my recent sale (with all improvements included over 10 years) returned about 9% annually. Unless you are planning to flip your place in less than 2 years, you really do not need to find the absolute bottom of a market. (I found neither the bottom or the top) In fact, I’m willing to bet most will not realize the bottom was put in until at least 4-6 months after the fact.

    My opinion is that if you find a good, unique property in a good location within a low interest rate environment, you put 20%+ down and plan to be there for at least 4-5 years, now is a fairly decent time to start looking. (Nobody will hold up a magic sign that we hit bottom.) Certainly, financial security should be the first priority, but if you can afford it, I think you can do well longer term buying within the next 4-8 months.

    RB

  10. Tiger

    Congratulations Rob! And I hope you enjoy your new place! I know Hoboken is so addictive you just cannot leave it :-). Stories like yours inspire me, I’m also planning to stay five years in my condo, and I know knowing how much I hate moving it will probably be more like seven years…. 9% is a great appreciation rate, congratulations!

  11. Lori

    I think you both (Rob and Tiger) hit the nail on the head. Buy because you want a home and plan to live in it for a while – not to make a quick buck. Buy what you can afford with a normal mortgage at a low rate. You cannot time the market. But consider how much you would save by a 1% drop in interest rates vs. a 10% in purchase price. Rate under 5% are key to making now an opportune time. Plus, there is a ton of inventory on the market, no time pressure on buyers, and good bargaining power for buyers. Yes, Hoboken is a great place to live. No place is perfect, of course. I urge any property owner to get involved in what is going on at City Hall and the Mayoral election on the horizon. If every condo owner in Hoboken voted in our local elections, things would be real different around here!
    – Lori

  12. Alexa

    Hi Lori,

    I’m curious as to whether lots of lowball offers are being made on units that just aren’t turning into contracts, or whether buyers are truly on the sidelines waiting for prices to fall. Do you have any insight into this? If most are predicting prices will drop 10-20%, I would think putting offers in at this percentage under asking price is reasonable. Are sellers just not biting at offers 10-20% under asking or are the offers not being made (or are they being made significantly under this percent decrease). Thanks for your opinion. -Alexa

  13. Lori Turoff

    Alexa,
    That’s really hard to say since only the agents actually working with buyers making offers would have access to that info. I can tell you based on my experience that it seems like a little of both scenarios. Some sellers are just stubborn and unrealistic and won’t consider low offers. Some sellers don’t have to sell -they can stay put or they can rent. As for buyers, there are buyers making low offers but not all get excepted. I think most get negotiated to a higher number. An important thing I learned though is that a buyer making a lowball offer is still a serious buyer. After all, he or she made an offer! Some sellers don’t realize that and, in my opinion, are too quick to pass them over.
    – Lori

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