by LORI TUROFF
January Condo Sales Figures for Hoboken
The average price of a condo sold during the first month of ’09 is suprisingly higher than it has been for the past three years. It’s also better than it’s been for the past 4 months. In fact, it’s better than it had been for most of the past 4 years. To really make sense of an average, though, it helps to look at what actually sold. There were a good number of larger, ‘high-end’ luxury units at Maxwell Place and The Garden Street Lofts. These units tend to skew the average upwards.
So let’s look at the price per square foot number, which should give us a more accurate picture of the current state of the condo market, at least in terms of pricing (pay attention – this will matter later.) In January, the average sales price per square foot was $510. If we calculate the mean for the 3+ years of data on the chart we get $529.60. So how does that compare to where we are now? Well, the standard deviation of this collection of sales prices is $22.09. January’s $510 is just slightly more than 1 standard deviation below the mean. Even if you don’t ‘get’ statistics, this basically shows that there have not been huge swings in Hoboken condo prices on a per square foot basis over the past four years.
Even looking at actual sales prices, we get a very similar result. The mean price for the 3+ year time span is $524,779. Let’s make it $525K for the sake of simplicity. The standard deviation is $30,700. So again, the swings in price over time have been quite small. January is almost 2 deviations above the mean. Overall, however, Hoboken condo sales prices have not varied much.
So What’s The Problem?
Well, maybe the problem is that prices should have varied more than they did! When you forget about price and look at market activity there is a whole other story being told. In a nutshell – nothing is selling. Now it’s possible part of the inactivity has to do with the credit crunch. Some buyers may be having problems getting a mortgage. But it’s also likely that had sellers been more willing to lower prices more, and faster, their properties would have sold and we wouldn’t have this huge inventory buildup of condos we are now facing. Look at the number of units listed and units sold lately:
Someone made a great comment the other day. They said “the dog is chasing its own tail”. Sellers are in denial so they will lower their pricing expectations a tiny bit but never enough to matter. We go on listing appointments with sellers who just love what we have to say until we get to the price. Why these agents keep agreeing to take overpriced listings is just beyond me. Until the market comes back into price equilibrium – i.e., buyers are willing to pay what sellers will accept, there will be no sales. OK – very few sales. It’s basic economics folks. Pull out that Econ 101 text book. Nothing has fundamentally changed. I’d love to hear what you think it will take for sellers to give up the “I’m going to make a 20+% profit on a property I bought in ’04” fantasy. Thanks for reading.