2009 Feb 11th

Weekly Wednesday Wrap Up – Hoboken Condo Sales & Activity for Week Ending February 9th

Research, analysis & post by Lori Turoff

info@hobokensbest.com

Same As It Ever Was!

We seem to be in a holding pattern in the Hoboken condo market.  Not much has changed from week to week recently.  Just for fun, I’m going to follow up this post with a few of what I would consider ‘really good deals’ that buyers are always asking about, so stay tuned.

If you are in the market for a Hoboken condo, don’t forget to check our Hoboken Open House Google Map on Friday, Saturday & Sunday to see if any of the new listings (or old ones) are having open houses this weekend.

Here is the overall picture of Hoboken condo market activity for the past week:

Studio & 1 Bedroom Hoboken Condos:

165 total active – $458,950 average asking price. 97 average DOM so far.

1 Dabo – 118 DOM.

Note – If there were intermediate price reductions for a property to be “dabo’d” (placed under contract) or sold, they are noted here. You can check what all the others were priced at when they went under contract or sold for by clicking the link to the listings.

2 sold – 98 average DOM – $370,500 average sales price

9 new listings – average list price $378,311.

5 price changes.

Two Bedroom Hoboken Condos:

275 total active – average asking price $662,498. 113 DOM so far.

6 dabos – after 83 average DOM

4 sales – at $563,875 average sale price, 202 average DOM .

26 price changes

17 new 2BR listings – average list price $564,812.

Three Bedroom and Larger Hoboken Condos:

56 active 3BR condos – average asking price $1,167,539. 143 DOM so far.

1 dabo after 213 DOM.

1 sold – $910,000 sales price – 62 DOM.

3 price changes

4 new 3BR listing – average list price of $829,974.

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  1. Buyer

    Wow! At $300/SF, 502 Observer is the market litmus test. If it doesnt go under contract FAST then 3 Bedrooms are no where near a bottom at all…

  2. stan

    very detailed info. Thanks.

  3. homeboken

    Lori – Do you have an opnion on what must happen in order to get the market moving again? I know you don’t normalize editorialize in this space, but I for one, would appreciate your experienced take to add some color to the stats.

    My impression is that there are so many question marks in Hoboken right now.
    1. Property taxes-Will they ever top out?
    2. Physical Infrastructure-The roads, sewers and utilities all seem to need major upgrades.
    3. Political infrastructure-Are people scared of Hoboken politics and the advers effect on the community?
    4. The market in general. Buyers seem content to sit and wait. Sellers simply can’t sell at 20-30% off peak (if they bought or refi’d to that level). Sellers simply don’t have the cash to pay the bank at closing. What will break the deadlock? Are we in for a wave of foreclosures? Does the govt. rescue owners?

    Thanks in advance, and thank you for a very informative, fact-filled blog.

  4. Lori Turoff

    Homeboken – here is my quick reply. I’ll post a longer version asap. Sort of busy today. My PC ate all my word files. It’s going right in the garbage. I bought a MAC. I’ll be in a much better mood once I get it up and running.

    1 – I believe we’re basically sc**wed. The entire state of NJ need to be cleaned up politically. Until that happens, even if every one of us educated, hard-working, home-owning (or wanting to own one day) residents votes, nothing will change. Thanks elected officials. You’ve left us in a terrible mess.

    2 – You bet – but who’s going to pay for it? Another bond issue? Like the one for the hospital?

    3 – Yes. That’s why I try to stay out of it on this board. Unfortunately, politics and real estate are connected. When one goes bad it takes the other down with it.

    4 – I don’t think we’re that bad off. We’re very lucky. The young kids who bought with 5 to 10% down don’t have to move any time soon and they are on their way UP the career ladder. The couples with babies who outgrow their places and head for the ‘burbs when the kids reach school age will sell at a loss (or for less profit depending on when they bought) but they will BUY for less than they would or could have a few years ago so they come out even. There are still going to be people from Manhattan coming to Hoboken as a more affordable place to live. The foreclosures are coming in Union City, JC, and the surrounding, less affluent areas. Hoboken is a little enclave of very fortunate people. I don’t believe we’re going to feel most of the pain. A little, sure. But nothing compared to what other parts of the country are going through. At least not as long as I can look across the river and see the big city still standing there. Ultimately, we are still the 6th borough. NYC is what makes us thrive. Just my honest opinion.

  5. stan

    Hi Lori. Point four is way off in my opinion.

    Career ladder? Big law just laid off 1,000 attorney’s yesterday, that’s one day. The financial services industry is DEAD for the next five years. This affects Hoboken directly. Rents are dropping, in some case significantly, how will these young kids pay the PITI every month if they want to rent it out. How will they refinance to get the new low rates. They can’t because they are underwater.

    I see very few people willing to or that have the wherewithall to pony up a check at closing if they move. The only option is short sales and foreclosures. We will of course be much better of than a union city or jc wtc, but we will not be spared. Not in the least. I have seen you previous posts, sellers are not waking up to the new paradigm and their apartments will sit

    I own in Hoboken btw and do not feel that we will be spared, we won’t be Miami or Vegas, but 30% declines from 2005-2006 are headed our way. Judging from recent sales, it looks like we may be at late 2005 prices right now. Basically anyone who purchased from 2006-today is underwater, and by a lot. That is four years of purchasers who are locked in. Not to mention daddy and mommy don’t have the resources to help with the dp this time around.

    anyhoo, I hope your right….but putting all the moving parts together, we are in trouble. Great site as always. I imagine your traffic is picking up, doing a good job with it…..

  6. Dave

    Agree completely with Stan. I’m an agent in Manhattan, but live in Hoboken.

    Some here may still not be aware that the latest state and city estimates are that Manhattan will lose 285,000 jobs by 2010. This is conservative and will likely be much larger.

    This of course affects Hoboken bigtime. The 10 biggest banks in the country, the ones getting all the bail out money, own 70% of all the financial assets in their sector of the business world, and they are all insolvent. It is impossible for them to reinflate the RE bubble, or credit bubble no matter how much fiat money they’re given.

    One might say TARP….SHMARP…We’re headed for a scenario much worse than being painted by the blog authors. Many potential buyers are simply afraid, they see the landscape collapsing. Who’s going to buy in this climate? A few, of course, but not many.

    Many economists say that if we are to return to historically sustainable price/income and debt/income ratios as they relate to real estate, we will have to get back to roughly 2003 price levels at a minimum.

    This is where we are inevitably headed. I know it’s going to be unbelievably tough on homeowners who purchased in 05, 06, 07 especially, but much lower prices are going to be the reality, unfortunately.

    I’m more familiar with Manhattan and it is a complex market, filled with many micromarkets so generalities are ok as long as one realizes that deals happen based on the specifics of building location, prestige, size, price point, unit condition, amenities…and often mythical factors hard to rationalize.

    Still, as indicated earlier, what happens across the Hudson will eventually happen here in Hoboken, and from my own experience and those of successful brokers I know, deals being signed today in the city are roughly 20% down (+/- 5% or so) from 2007 peaks (these are resales, many new condos are still resisting more than 10% drops, but are not moving units either — though more Toll Brother type adjustments of 20-35% are inevitable). There are always exceptions, but that is what most everyone I know is confirming as we speak.

    There are pockets of distress here and there, by the way, where people are signing contracts for 30-40% down from recent peaks, but this is still fairly rare, certainly not the norm yet. It will be though within 12-18 months in my view….both in Manhattan and in Hoboken. Prices might even go lower than 40% down, 50% would not surprise me in the end. Those who don’t have to sell, will of course try to wait it out, but many will have no choice as layoffs continue and fear stops many from buying unless a super deal is laid on the table. Wish it wasn’t looking so bad, but I think any rational look at the fundamentals of the economy and where we’re headed leads to the probability of much greater devaluations than we’ve seen so far.

  7. Lori Turoff

    Obviously, none of us know what is going to happen going forward. In fact, I change my view from hour to hour as I learn new news and events. Maybe I’m just in denial – I don’t want to see my wonderful little town wrecked. That’s normal, no? Time will tell. I sincerely hope the fall out is not as bad as some predict. There is validity in the more pessimistic forecasts certainly but there is no ‘right answer’ to this discussion. I guess the best thing to do is hope for the best but prepare for the worst. And remember, knowledge is power so learn all you can. Thanks for your info. Some very good points to ponder. Have a great weekend!

  8. Tiger

    Obviously these are tough times. I just got back from dinner with friends, and we were just talking the job situation. But I guess the question is how bad will it get? Not long time ago we had the dotcom bubble, and let me say, it was NOT as bad as everyone expected it to be. We found a way to evolve and reinvent ourselves.

    Now of course we are talking about something bigger this time; but that doesn’t mean that this will be it for us, I don’t think our beautiful Hoboken will be broken or wrecked. I think we’ll reinvent ourselves again and make it :-)

  9. FAP

    The problem is we really never faced the end of the dot-com bubble. We replaced over consumption fueled by the dot-com wealth effect with over consumption fueled by the housing wealth effect.

    We’re facing the true after effects of both bubbles now.

    It’s late and this is from memory but I believe over the last few years about 1% of GDP came from MEW (Mortgage Equity Withdrawal) consumption.

  10. Tiger

    FAP, I tend to disagree. Billions of dollars vanished in the dotcom bubble. Perhaps on a smaller scale, the .com bubble was a bubble; people borrowed, invested, and spent money on equity (companies) that did not exist; a company with a mini-office and five employees would be traded as if it’s worth millions of dollars, and then it all crashed.

    Couple that job losses we faced a year after when ‘outsourcing’ became the norm. It started with IT, then moved up the scale to your typical everyday employees, and even some managers and MBA holders got outsourced.

    But it turned around, and we all found a way to survive. Whether it being switching directions, or changing jobs. I know the housing bubble is bigger and probably more painful, I just think we will be fine.

  11. stan

    Tiger,

    I believe we will be fine eventually. But the time frame is what you have to look at.

    The next five years will be very painful in my opinion.

    We will innovate, but it will be very tough. There will be no leverage of any kind in the next 3-5 years. Not in real estate, not in fixed income or equities. I agree with FAP, this was false growth. The spigot is off…..I think its a good thing actually for the future, but it will be a painful experience. To make or even maintain economic status we must innovate, manufacture or produce something that people value….taking dollars from one pocket and moving it to another, selling each other foreign goods, and having everyone go to business school or law school when times gets tough will not work this time.

    Investment firms and big law will have to reinvent themselves if they want to survive in a scale similar to what we see today. Their pay scales and income levels have been drastically changed, seemingly overnight. I mention these two because these are two of the the area’s biggest industries.

    1990 -2007 was one bubble after another. As FAP said prolonging the inevitable collapse of the smaller ones, we have created a huge one.

    I am not talking apocalypse here, just a different future than we were anticipating, which has always happened throughout history. I have depressed myself, but have a nice 3 dayweekend everyone…..

  12. Lori Turoff

    I’m just throwing this out there as a question to you all – Typcially there is an inverse relationship between buying and renting. if nobody is going to buy due to the lousy economy, lost jobs, fear etc., won’t that eventually put upward pressure on the rental market causing rents to rise? People have to live somewhere. If they can’t or won’t buy, they rent. More demand = higher prices. No? Interested to hear your opinions on this.

  13. Willy

    Lori,
    Rents are already declining for a reason. Under normal inventory circumstances, yes we would have higher rents. that cycle actually began a couple of years ago as sales prices were peaking and buyers began to hold off. But what we had working in parallel with this price bubble was an inventory bubble that was even further ahead of projected demand. It was fueled by underlying policies such as tax abatements from municipalities to builders. Sound familiar? So we now not only have a lower path in sales price demands but also a lower path in rental price demands. Velocity was just the beginning of the conversion of sales to rentals if they were built at just the wrong time. Inventory is bloated at both ends so the balance is still adjusting to demand which unfortunately is non-existent. It’s not hard to negotiate a two-bedroom landlord down to $2,500 upon renewal from $3,000 just a few months ago. I should know. That $6,000 per year opportunity loss is equal to the possibility of the unit remaining empty for two months and that is probably conservative in this market so it gets accepted by any realistic calculation. How do investors justify their recent purchases (last two years) in Hoboken with the new cash flow math? That is a troubling question.

  14. Tiger

    Rents are down because they also reached their own bubble, especially with ‘luxury’ condos all around. A friend of mine rented a studio in Newport back in 2003 for $1500, when it was time to renew, her rent rose to $1950, of course she passed. Now rents are down, of course, because again people are worried about their jobs, and are not looking to get stuck in a lease that could run them dry.

    So people will probably spend less on their rents. There was a long discussion about this on Hoboken411, apparently your typical ‘mom and pop’ building owners are not seeing a crunch, their rents weren’t too expensive to begin with so even if they lower it it wouldn’t affect their bottom line too much.

    Hoboken remains a desirable place to live, good economy or bad economy. We are not a vacation destination (thank God!) but we definitely have a great all-around balance.

  15. Navin M

    I’m new to this blog and late to this thread but I think Lori’s assertion that young people who put 5-10% down are not moving anytime soon and are on their way UP the career ladder is way off base. Really, this comment reads like it’s from 2006 or something. Lori, are you a realtor?

    Unfortunately with the current economic situation many careers have stalled, or are in limbo. Even for the people who are still employed and doing relatively well, their income is probably no better than flat compared with a few years ago, and rather than climbing the career ladder, they are worried about keeping their jobs. Financial services, probably the single biggest employer of well-off Hoboken residents and the biggest support to the high-end condo market, is in shambles, and the outlook is for a slow and weak recovery that will not start any time soon.

    So I’d think many young people who put 5-10% down on a Hoboken place a few years ago did so with some expectation that their income, and the value of their property, would keep increasing the way it had been. Given that the opposite is happening, people are struggling mightily.

  16. Lori Turoff

    Navin, yes I am a realtor. If you go back and read my past posts and keep reading, however, you will see that I don’t BS and always sing a happy. That’s just not my gig. My statement of opinion (and I admit that it is just that) comes from having lived through the recessions in the ’70’s and ’80’s. Beside gray hair and a few wrinkles, getting older does give one some degree of perspective and wisdom that younger people who have known nothing but good times and continued prosperity may not enjoy. In general, do you not agree that the population of young (25 to 35 yr.) professionals are likely to make more money in the future than they are now? If not, what do you base that on? Because demographically, I think I can find support for my view. Sure there are people right now who may not have gotten a raise this year or may even be laid off. But overall, they are at the start of their career and in the next 10 to 20 years if they stay in the workforce they are likely going to make more money, not less. I admit that there are individuals struggling. But not to the degree in Hoboken that they are in, say, Tampa or Las Vegas. And if these young buyers cannot move in the next few years because they didn’t get a raise, they are just going to stay where they are and ride it out. Will every one of them do so? No. Most of them, however, I think will. If you have evidence to the contrary please do tell.
    In any event, thanks for your input. I always appreciate diverse opinions.
    Lori

  17. Navin M

    Lori,

    I like your site, it has a lot of good data and objective information, and I agree that you are not the typical cheerleading realtor. Or at least you don;t seem that way (I’ve never met you).

    But going back to our point of debate — I just don;t see how 25-35 year olds being on their way up the career ladder is a support to the Hoboken real estate market right now, as you assert. Sure, people in that age range will generally see their incomes rise, but aren’t there ALWAYS people in this category, no matter what the market? So why is the group now a support to the market.

    To me it’s akin to saying the Hoboken real estate market isn’t in that bad shape because there are middle-aged homeowners with stable incomes who will keep paying their mortgages.

  18. Lori

    Thanks Navin. I guess I make that statement because of the actual demographics of Hoboken and the relatively large number of homeowners and home buyers we have in that particular age group. I have some demographic data in my office that I’ll try to post here tomorrow to show you what I mean.
    – Lori

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