2009 Apr 29th

The Weekly Wednesday Wrap-Up: Hoboken Condo Sales & Activity for the Week of April 29th.

Research, analysis & post by Lori Turoff

The Hoboken Condo Weekly Numbers

A few things struck me as I prepared this today.  First, that we are not far away from breaking the 600 mark in the total number of active units.  Not a good sign.  Next, there are some amazing deals out there.  Whoever bought the 2 bedroom at 904 Jefferson (which I saw and it was lovely) got a great deal.  The price was dropped $100,000!  With regard to the Case Shiller results many of you have been mentioning in the comments – they are taken from stats pertaining to homes in the area – that means all of the surrounding area. Not just Hoboken. Not just condos. They include lots of properties that have no bearing on our results. So I take them for what they are worth – a guide, but not anything definitive. In fact, there’s been some controversy about them in the WSJ. Finally, in all these stats, there is only 1 short sale.  That is a good sign.  So enjoy and more important than ANYTHING if you care about Hoboken and your property value:

Please Go Out and Vote on May 12th!

Here are this weeks stats:

Studio & 1 Bedroom Hoboken Condos:

204  total active – $424,364 average asking price. 93 average DOM.

1 dabos after 36 DOM.

  • 123 Washington – listed at $365k in March; reduced to $350k April 3.

5 sold $366,000 average price.  177 average DOM.

  • 152 6th St – listed at $355k in Oct; reduced to $339k Oct. 31; $319k Jan 9; sold for $314.5k.
  • 1222 Wash – listed at $419k in Oct; reduced to $409k Oct. 28; $395 Oct. 28; $391k Nov. 14; $359k Dec. 8; $339k Jan.2; $318k Jan. 21; dabod at $318k Feb. 10; back on market at $328k Apr 14; short sale approved at $335k on Apr 14; sold for $320k.
  • 307 1st – listed at $479k in Jan; reduced to $459k June 21;  $399k Feb. 6;  dabod at $399 Feb. 20; back on market at $405k April 22; sold for $408k.

10 new listings – average list price $438,050.

13 price reductions.

Two Bedroom Hoboken Condos:

307 total active –  $635,339 average asking price. 109 DOM so far.

6 dabo’d.  54 average DOM

  • 109 Jackson – listed at $530k in March; reduced to $509k April 3; $504k April 9; $499k April 10.
  • 380 Newark – listed at $649k in October; reduced to $629k Nov3; $609k Feb 26; $589k March 24.

5 sold – $467,800 average price.   Average 55 DOM.

  • 210 Jackson listed at $474.9k in Oct.;  reduced to $445k Jan. 7;  $429k Feb. 5;  sold for $420k.
  • 700 1st Street listed at $539k in Nov.;  reduced to $524k Dec. 30;  $505k  Feb. 5;  sold for $475k.9
  • 904 Jefferson listed at $595k in Jan.;  reduced to $575k Jan. 14;  $535K Jan. 16;  $525k Feb. 11;  $510k Feb. 12;  sold for $499k.

23  new listings – average list price $546,321.20 price reductions.

Three Bedroom and Larger Hoboken Condos:

65 active 3BR condos –  $884,125 average asking price.   123 DOM so far.

No dabos.

1  sold. $540,000.  70 DOM.

  • 510 Monroe – listed at $579k in Nov.;  reduced to $564k Jan. 16;  $549k Jan. 22;  sold for $540k.

12  price reductions

4 new listings average list price $663,234.

Hoboken Condo Open Houses

If you are in the market for a Hoboken condo, our Hoboken Open House Google Map is your single best source for locating every open house in Hoboken. It’s posted on Friday every week. The info is updated weekly. If your google search seems to pull up an older version, click on the title link to get the most current map.

Thanks for reading!

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  1. stan

    Thanks as always Lori. Your site is invaluable for local information.

    I will be voting the abc ticket, Anyone But C——– Make my final decision between the two councilwomen in the runoff.

    A cursory glance at the tax records and sales listed above reveals that some of these people had to bring a large chuck of money to closing. One was a particularly large amount.

    The tax mistakes brought upon by Hoboken’s govt are not helping. To enact change, a large turnout is needed.

  2. Interested

    Thanks Lori.

    My thoughts –

    1. This week once again indicates how unrealistic Sellers are in today’s market, which (in my opinion) is getting worse and worse. That’s why we decided to revisit our search efforts in 3-6 months. These i-rates are going nowhere – again, in my opinion.

    2. I believe that 95% of the listing prices are correct in relation to all of the other listings prices, but that ALL of the listing prices are approximately 10-12% off what the purchase prices should be to get things sold TODAY.

    3. A lot of Sellers are making the market worse and wasting everyone’s time. We’re interested in purchasing (maybe) in Hoboken. When we make offers or speak to the listing brokers about offers 10% off the list price, we receive the following reaction – “The Seller is not anxious to move and are just seeing what the market is”. Attention all Sellers – read the above stats to see what things are selling at – that is the market – no need to list your place! You are no going to be the one special place each month or so that gets list price because someone is trading in their euros for dollars.

    Love to hear everyone thoughts.

  3. homeboken

    Lori – You reference 904 Jefferson as a great deal. What do you mean by that? It went for $490psf and nearly $10,000/year in taxes. I only have pictures to view but the kitchen seems very narrow and the second bedroom could very well be a den, (the photo from the outward wall inward always makes me skeptical)

    What made this such a deal in your opinion. I wouldn’t consider $100,000 off asking a deal IF asking was $150,000 to high to begin with.

    Not being skeptical, I think you have valuable input into what is a deal. I am curious as to why this one stood out to you.

  4. krm425

    Lori,

    Thanks so much for the information and for the lively discussions that your website always creates.

    I’m curious as to how 904 Jefferson is a great deal. The taxes are really high at almost $10K, the living room / dining room has no place for a table, and the location is just ok.

    In my mind, the price came down $100K because it was very overpriced.

    Anyway, here’s hoping the economy / Hoboken tax situation stabilizes soon. I lived in Hoboken from 1998-2005 and would love to move back in the next year or so.

    Thanks again!

  5. Lori Turoff

    Your point about 904 Jeff is valid but here’s where I’m coming from: I had a listing for an almost identical unit in that building a few years ago. They were asking $669k. Overpriced, yes. I recommended $610k which is what he had paid a few years earlier. Had he listened, back then, he would have gotten very close to that. He was a typical buyer chasing the market. I see hundreds of units. Compared to similar units in that location, $499k is in my opinion a fair price. The kitchen is not too small, it’s actually quite nice with granite, stainless appliances and a tile backsplash. There are even a few decorative glass front cabinets. The second bedroom is not a den – it has windows and a closet. There is an elevator, w/d in the unit, cac, deeded parking, a gym and a common courtyard. It’s a well-kept building with a good reputation in a good location. I don’t know why you say “ok” because 9th and Jeff is about as good as it gets for the west side of Hoboken. Fields construction is well regarded and it’s concrete and steel. The layout is a split floor plan – bedrooms on either side of the living room, bathrooms large and with nice tile & stone and the closet space adequate. In other words, there was nothing at all wrong with it. A similar MetroHomes unit at the Southgate just went under contract at $469k asking but it is on 5th and Madison and has no gym or common outdoor space. So relative to other similar units, the price is right. Taxes are similar on all these units of this size and age. You can only compare apples to apples. I thought and still think it was a good value. There is now a similar but bigger unit listed at 1120 Clinton for $509,900. It faces the school on Willow where the buses park twice a day and let off the kids (noise?). Also a good deal in my mind. I stick to my opinion. Since someone was willing to pay $499k for it, that is its current value, no? I bet 1120 Clinton sells very soon, too.

  6. 09buyer

    I have to agree with the other posters. 904 Jefferson does not seem like it was such a good deal. The sellers bought it in mid-2005 for 481K and it now sold for 499K? That is not a large enough drop. Other examples of current listings: 1120 Clinton Street – I’ve seen it and it’s simply gorgeous, albeit not in the best location. However, the seller bought it in early-2007 for 515K and it is currently listed for 509K. That’s a 1.2% drop! Are these sellers kidding me? 818 Jefferson was bought in mid-2007 for 490K and is listed for 470K. A 5% drop? I could go on. It appears that the sellers aren’t reading the paper and expect to make a profit regardless of that fact that they bought at the height of the real estate market! It’s crazy. These folks want to sell to take advantage of the rates and prices (in the burbs or upgrading in size), but they don’t want to take a hit themselves. Greedy much?

  7. 09buyer

    514 Monroe (3B) – bought in early-2007 for $470K. List price: $514K! The folks want to make a 9% PROFIT instead of a 9% loss!! Yet, I’m sure they are looking to buy someone else’s “good deal” – prob. someone realistic that has lopped 15% off their ’07 purchase price!

  8. stan

    09buyer-

    I am amazed as well, but it is apparant those places will sit. When you look at the #’s the only ones selling are priced aggressively. I think Lori stated it before, how many sellers are really serious? How many just want someone to match their dream price?

    Look at the sales above. According to nj tax records, the one at 1222 washington sold for 412500 in 2007, it just closed for a 92k loss.

    The one on jackson sold for 80k less than an identical unit sold for in 2007. To Lori’s point that place is certainly more of a deal than it was not too long ago….. 904 jeff was definitely going for much more last year. These prices are headed down, you can’t get tomorrow price today.

  9. Smith1234

    How do you find out what someone paid in say 2007 for something they are selling now? Thanks.

  10. stan

    google nj tax records

    or here

    HTTP: //tax1.co.monmouth.nj.us/cgi-bin/prc6.cgi?&ms_user=glou&passwd=data&srch_type=0&adv=0&out_type=0&district=0905

  11. Tiger

    One thing I’m noticing is that regardless of building inventory, it looks like it’s still relatively hard for buyers to find a good place. You’d think with inventory hitting 600 units this is a buyer’s dream come true; loads of units and they just need to make their pick, but just as ‘interested’ said here and ‘potential_buyer’ said in earlier post, several sellers are giving the ‘we don’t have to sell’ response, something which probably contributes to the drop of market activity.

    If you don’t have to sell, then why are you listing your unit?

  12. Jon

    I heard there was an offer on 1120 Clinton already. Not sure if it was accepted.

  13. Lori Turoff

    I have to say – “nobody cares what you paid”. That applies to sellers but it also applies to buyers. Many sellers feel that they want to recoup their purchase price and costs. Just because you paid $500,000 doesn’t mean you’re going to get more than that today. I recently had a buyer make a very reasonable offer on a unit. The initial offer was under 10% off asking. The seller (who paid way more than what he is now asking) basically refused to negotiate. Nobody cares that he paid more 4 years ago. In this market he should have countered with a decent number. But, no. My buyer was willing to go up from her initial offer but the seller cut her off. You know what happened? My buyer walked away. There is plenty more for the buyer to choose from.

    It applies to buyers, too. It doesn’t matter what the seller paid (although it does give you come insight into their motivation). What matters is what a buyer is willing to pay today. To say a seller should expect to get x% less than what he or she paid in the past is meaningless. (See the 514 Monroe comment above). Especially when you don’t know if they’ve made any improvements. Perhaps they redid the kitchen and baths; perhaps they put in new appliances.

    All that matters is what a buyer will pay now. You may not think 904 Jeff is a good deal but it SOLD! You may not think 1120 Clinton is a good deal but let’s see what it sells for. The market is set buy the buyer who is willing to put his money where his mouth is. I see too many buyers doing a calculation that goes like this: Well, they’re asking X so I’ll offer X less 25% and come up 5 to 10% when we negotiate. If the unit is priced attractively and another buyer comes along and offers X, guess what? Your theory was wrong. It all depends on the particular property and it’s asking price. Are some overpriced? Of course. But not all. My point is simply that the unit that are priced competitively relative to similar units are the ones that sell, regardless of what the seller paid.

  14. krm425

    Outside of the school bus noise (most will be at work anyway) 1120 Clinton does seem like a pretty good deal.

    Lori, when did the mile square city get a west side? Haha. It used to be the only concern was how far off of Washington St. your apartment was or how close to the PATH, right?

  15. 09buyer

    I still think it’s important to consider what the seller paid – esp. if the unit was purchase in ’05 – ’07 because you have to consider what you’re getting and what YOUR re-sale value may be one day. I’m not versed in the market, but from what I understand real estate will never (or not for a very long time) inflate to the ’05 – ’07 prices again. With this in mind, buyers HAVE to tread lightly. I realize some of these overpriced units are still selling, but perhaps those buyers are taking chances that more conservative buyers are not willing to take. If it’s true that real estate will never or not soon be worth what is was in ’05 to ’07, why do I want to pay anywhere near what you did during that boom? Putting new cabinets and appliances in a kitchen is simply not enough to justify the sellers wanting to make a profit off of an ’05-’07 purchase. Those times are gone. And, thank goodness for that, in my opinion.

  16. Lori Turoff

    Never say never.

  17. homeboken

    09Buyer – The one point Lori made that has to ring true to you is that if a unit is listed and closes, then that closing price is the market value for that unit.

    Asking prices on most units may be too high in your opinion, but if a unit closes above your perceivd market value, then someone else saw value where you did not. Buyer’s remorse? Maybe. But that transaction was completed at the market rate.

    Good luck in your search.

  18. dkzzzz

    Hoboken has school buses? Wow, that is another money drain in a city of 1sq. mile with each family having more than one car. We have to pay for School Buses???
    Outrageous.

    I join some poster in expressing my dissapointemnt in a overall quality of Hoboken RE. Over the last year I’ve seen may be 4-5 apartments that I would’ve liked to purchase (had they been priced affordably).

  19. 09buyer

    Last week, 549 units were for sale, yet 7 went under contract. Those 7 purchases establish market rate? I don’t think so. Those 7 people may have settled and overpaid. 7/549 does not a “market rate” establish.

  20. Lori Turoff

    FYI – 1120 Clinton IS already under contract. So I guess $509,900 (or close to it, we will find out what the buyer paid when it closes) was the right price after all.

  21. homeboken

    09Buyer – Those 7 establish the market rate for those 7 units. Absent of real data, we are forced to develop opinions of value based on any number of variables.

    Disclaimer – I am a renter and potential first time buyer. I think real estate as a whole is overpriced in Hoboken. That said, if unit X is listed at $500,000 and it sells for $500,000 then that unit was properly priced. That is my point and the point Lori is trying to make.

    You may think unit X (from above) is absurdly priced at $500,000. So you bid $450,000 and lose. You were wrong in this case. The good news is, you have plenty of inventory to keep bidding on.

  22. stan

    Lori, homeboken, et al:

    I agree, if it sells for ask or close to it, it was priced right.

    If your a buyer and you think things are coming down, that doesnt mean the seller will sell the place to you for tomorrows lower price. You’ll have to wait(if you’re right).

    If your a seller and you want yesterdays price, you may have to wait……whatever it sells for was priced right, although that may not be the case for very long, one way or the other.

  23. AL

    Hi Lori,

    What is going on in the rental market? We sometimes forget that the rental market has an impact on the whole real estate market and vice versa. If rents were very low, then real estate prices would come down and vice versa. Renting is a substitute of owning and 101 economics teaches me that if the price of a good goes down then also the price of a substitute should go down. Are rents coming down in line with mortgage rates and real estate prices (= cost of owning)?

  24. D$

    I’m starting to hear from Hoboken buyer-friends that folks are basically looking at comparable 2005 sale prices and using that as a gauge for pricing units today (perhaps tacking on some value for home improvements). I’ve also been helping them out with some analytics…

    I have a rent vs. buy model I like to run for friends looking to buy. I believe that this model can be used to HELP determine what a condo should bid if the alternative is to continue renting a comparable property. It does not take into account any of the intangibles of home ownership (e.g., making improvements) that Lori always brings up when I mention my analytics.

    Right now, there is a $680K 2BR, 2BA listed at 2 Constitution Court. I compare it to renting a similar unit at an Applied waterfront building for $3,125 per month. I assume 0% appreciation in Years 1 and 2, 3% in Years 3, 4 and 5. To break-even vs. renting, you should pay $632K (7% discount). I’m happy to run this model for anyone looking to take a more academic approach to pricing than some arbitrary number, as I’m considering starting a personal finance website and would love some early feedback.

  25. homeboken

    D$ – Does your model figure in other owner costs such as Property Tax, HOA Fees and maintenance?

    Alternatively, does your model factor owner benefits such as mortgage interest deductions? These can have a significant affect on your model.

  26. Interested

    Questions:

    1. Is it most people’s belief that we should be using 2005 sales figures to determine todays prices/offers? From looking around, I think if you offer what a place went for in 2005, you and the Seller should be VERY close. In addition, I think its fair, but Sellers will have to budge – if not inventory will keep climbing.

    2. Do people think prices will ever going to go down to 2003 levels? (I understand that nobody can predict the future – this is just opinion and theory)….

    Thoughts?

  27. D$

    Homeboken: My model takes all of the things you mentioned into account. It also assigns an opportunity cost to your downpayment and assumes the monthly cost of the equivalent rental unit goes up over time.

  28. dkzzzz

    If it was RE bubble from 2002 to 2006 then undoubtedly prices will go down to those levels and depending on economy might even overshoot on the way down.
    RE appreciates along with inflation, so around 3-4% annually.
    Take pre bubble prices, average them and add for inflation. 2br units in Hoboken will be selling for 350-380K.
    Rental market is in a bad shape right now and this summer will be very crucial . If vacancies are not to be absorbed by incoming college students this summer then that would be the last nail in Hoboken RE. If this to happen; next year would be a year of price capitulation.

  29. Al Bern

    Personally I look to rents to guide me. Using this tool, http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html#

    regarding 904 Jefferson, if its rentasble for $2500, it should be worth about $400k. Roughly 22% lower as everyone thinks prices are going….

  30. Lori Turoff

    Al – that’s a nice chart but what are the assumptions you are punching in? That unit does not rent for $2,500 with parking. It would go for closer to 2,900 or 3,000. Units at the Curling Club nearby go for 2,800 and parking is additional and there are Stevens students living there – it’s become an ‘off campus’ dorm. 904 Jeff would easily get more rent than the Curling Club. How much are you putting down? What interest rate did you use? What do you assume appreciation will be both on the purchase and increases in rent? There is an old saying about computer models – garbage in, garbage out. If your assumptions are faulty so are your results. Furthermore, how to do measure the peace of mind that comes from not having a landlord? Or the benefit of living in a primarily owner-occupied building? It’s clearly worth something to banks since it’s a factor they consider in doing their credit analysis for borrowers. Finally, not “everyone” thinks prices are going 22% lower. If you read the comments here regularly you will see there is quite a difference of opinion expressed.

  31. Tiger

    dkzzzz, take it from this Stevens alumni, Stevens students **RARELY** rent in Hoboken itself; they either live on campus (to factor it in via their loans) or move to nearby Jersey City Heights or Union city, wherever NJ transit buses can go since they also rarely have cars.

    I personally lived in dorms as an undergrad, and then shared a couple of your ‘typical Hoboken brwonstone’ apartment with two roommates each. My name was never on the lease on any of them, and a lot of Hobokenites did not really want to share a place with a student as they were worried about rent.

    In fact, I remember a friend of mine ‘had it’ with on campus living and moved out with a couple of friends to some rental property in Clinton; they had to go to hell and back to get a lease, and that was back in 2000.

    I have some friends who went to NYU and lived in Hoboken, but that wasn’t ideal for them,.

    Hoboken has never been a ‘student friendly’ rental town, so I don’t think anyone is expecting any new students to come up this summer.

  32. Lori

    We occasionally have a student walk into the office asking about rentals in the $1,000 range, to which I reply “how do you feel about Jersey City Heights”? Tiger is right – Hoboken is simply too expensive for most students unless they share.

    As for what the rental market is doing – since most rentals are not listed on the MLS it’s a bit harder to track (plus as a realtor, I don’t really handle many rentals except for my own properties or as a service to my clients). What I’ve noticed is that there is more inventory of rentals at the high end – $2,800 and up. Owners who may have thought of selling are now renting until the market picks up. Still, there hasn’t been much of a drop in rents, if any. There have been more ‘fee paid’ listings so owners can list with an agent and still compete with no-fee listings on craigslist.

  33. Tiger

    LOL! Good times! Those were the days Lori – I remember being extremely excited about my first job as a Stevens grad assistant ($1750 per month)! And that’s before taxes lol. The sales rack at Newport mall’s GAP was my best friend and we’d go to Maxwell’s only on special occasions.

  34. calvin

    If prices are dropping to pre-2002, with an adjustment for inflation, I’m waiting to buy the 2BR condo I’m looking for in Hoboken…everything seems overpriced at this point. The sellers are holding out and being unrealistic I guess.

  35. dkzzzz

    Lori I watch rental market in Hoboken closely. Inventories are up 400% and that is on 2br, 1br apartments. Last summer it was almost impossible to rent any apartment near Path. Any vacancy would have multiple bidders and would require full fee to the broker. Apartment within walking distance from Path were snapped up within days sometimes hours if they were in good shape.
    Now, the same RE brokerage has 5 pages or 139, 2br. apartments for rent, a lot of them with No Fees.
    Rentals are going down in price as well and a lot of landlords/agents are willing to negotiate. Vacancy rates in Hoboken are huge compare to a year ago.
    I pay $1800 for a remodeled 1br(700sqf), 12 min from Path.
    Today I can move much closer to Path and rent much larger apartment while paying same or less. Not to mention I will have 5-10 apartments to choose from. Just 10 months ago that would have been impossible.
    If rental vacancies keep growing throughout the summer months; the Hoboken RE goose would be cooked.
    IMHO

  36. Mark

    Just moved out of 333 River Street and their rents are ‘highly negotiable’ now. They are offering a month free (pay 12 months, get the 13 months for free) and there is no fee. Yes, it sounds like a sales pitch but I *LOVED* living there. Great building, staff and location.

    I was one of the few who took the leap from renting to buying. One will never know if I bought at the right time, but you can never time the ‘bottom’. I just know that I bought my condo at a 2004 price which I think is decent enough.

  37. Lori Turoff

    Dzzzzz – Given that there is no centralized data bank of rental info and I doubt that each individual agency is willing to provide anyone with a list of inventory (assuming that an up-to-date, accurate list even exists) I’m curious as to the source of your figures? You say inventory is up 400% but what is your authority? or is is merely anecdotal?

  38. dkzzzz

    Lori look into this http://www.libertyrealestate.com/
    Do search for available rentals in hoboken.

    Mark;
    You are mistakeing RE market with a stock market. It is very easy to time the bottom in RE market due to the fact that the RE bottom lasts for years.

  39. Tiger

    Mark – Congratulations on your purchase! Enjoy your new place man!

    dkzzzz, While I agree that there are vacancies in Hoboken – I don’t think the 400% record is accurate either. Did we overbuild overnight or did 75% of renters leave and move to other places?

    Rental market is quicker to respond to economic changes; rents did go down in Hoboken in 2001 and 2002, but believe me, they skyrocketed in 2003 and beyond. I know because we were hit with a 15% increase when we were offered to renew lease on a 550 sq ft 2 bd on Monroe St, and a year later I was shown the same unit for 32% more than what we used to pay in 2002.

  40. homeboken

    Quick change of topic – Hoboken Mayoral election. I wont’ go into an endorsement of a candidate but it appears to me that the Mason-Zimmer camps are going to be fighting over the same pool of votes. Thus allowing Cammarano to sneak out a victory.

    It’s the classic 3 horse race where the third horse wins because the the other two couldn’t unify.

    Any thoughts?

  41. Tiger

    I agree homeboken, it’s a shame. That’s what I’ve been telling people; apparently even the ‘Kids First’ celebration party last week became a drama with a capital D.

    It seems that Mason has a lot of followers; but several reformers are hesitant to vote for her after her vote for extending CT pilots; On the other hand, Zimmer seems to be reformer’s choice, but her wish-washy voting record does not help at all, especially her recent vote on the budget (what the hell was that?)

    We’ll see how it plays out. Fingers crossed

  42. homeboken

    Agreed, I am not endorsing either M or Z, but I will come out against C. I don’t think this town can stomach Roberts Jr for another term. Things in Hoboken seem to be at a tipping point, I’d hate to lose momentum and end up with the machine running things again.

  43. Lori Turoff

    Dzzzz – just because Liberty has rentals listed on a website doesn’t mean they are still available. That proves nothing.

  44. stan

    I think it’ll be a runoff, I really may be underestimating Cammypoo, but i dont think he has a shot. I can’t imagine any sane individual being fooled by him. He’s Roberts 2.

  45. Interested

    Lets get back to real estate!

    Mark – congrats on your purchase! at 2004 levels….

    So, the largest jump in real estate was from 2003 to 2004 when the lending requirements were loosened. For example, a place listed at 600K today was likely 540K in 2004 and 450K in 2003 – Therefore, is buying at 2004 levels still good? It’s 10% under list and avoids all of the increases from 2005 to 2008.

    Thoughts?

  46. calvin

    I’m currently looking at something that is listed for $459K (2BR, 900 sq. ft.). In looking into the tax records of the other units in the building (there are about 10 units, all the same size), it appears that those that bought in 2004 paid $405K – $450K. Those that bought in 2007 paid 495K. Those that bought in 2002 paid $240 – $290K. Comparing the 2002 numbers to the 2004 numbers, it seems to me that the 2004 buyers bought after the prices inflated. What does that mean for a potential buyer today? Should we compare to the 2002 numbers or 2004?

  47. Interested

    Calvin –

    That’s my question – Is buying at 2004 numbers good or bad? Or, is it simply good for today and then time will tell?

    What scares me is that nobody is really jumping into the water at this point in time and inventory is building up, so things could get WAY worse (i.e. 2002/2003) numbers. Maybe?

  48. calvin

    My husband thinks that looking at 2002-2003 prices only makes sense in established areas. Not that Hoboken is not established, but according to our broker, people starting converting/building condos in Hoboken in 2001 – that’s when the wave started? Now, it’s a very popular place for first time buyers, esp. for those who work in NYC. So, if that’s true, it makes sense that in 2004, the real estate prices drastically increased (prob. due to a mixture of popularity of Hoboken + RE bubble). I’m just wondering whether we cannot compare Hoboken in 2001-02 to Hoboken in 2004-05 when there are 4 Starbucks shops now….

    Any thoughts?

  49. Tiger

    calvin, from what I gathered throughout my ten years in Hoboken and talking to friends, Hoboken has had a conversion fever back in 1986, dozens of brownstones, schools, factories got converted to condos (including my own). There was another one in 2001, but it stalled a bit due to 9-11, hence Hoboken did see a bit of a slowdown in the early 2000.

    I think a major factor is the fact that Hoboken itself became a better place to live in the past decade. I know prices went up too high, but Hoboken definitely is a better place to live now than 10 years ago. More shopping, major grocery stores, lots of gyms, lots of cafes, restaurants, safer, and hence became what it is today.

    You can never tell where prices are heading; they are going down; but how far? Some go as far as say 90’s prices – I think that’s very extreme. Some say 2004 to 2002. Only time will tell.

  50. JC

    D$….let us all know if you go forward with your website. What’s the “opportunity cost” input in the analysis you ran for 904 Jefferson? That’s always the kicker for me with these type of rent vs. buy models. If you put down $100k on a property with an opportunity cost of your current money market yield (1%) vs. 8% yield on some corporate bonds your outputs are totally different. Your appreciation rates are very modest and that can totally change your outputs as well. Its tough.

  51. D$

    Thanks, JC – I’ll keep you guys posted. I’m using a 3% opportunity cost, so basically your savings keeps pace with normalized inflation. So you know, I didn’t post about 904 Jefferson. The person who did used a fancy black box calculator on the NYT website. It’s a good model, but it’s easy for folks to draw the wrong conclusions without digging into the advanced assumptions.

    Here’s my thought on 904 Jeff. I rent my west-facing 2 BR apartment at 333 River for $2.55 per square foot per month. Let’s assume the comparable rental price is $2,700. That’s $2.65 per square foot. The rental market in that part of town is severely out of whack when you can rent in a waterfront doorman building 5 min. from the PATH for 4 PERCENT LESS per square foot. My guess is that this will self-correct over time, and you’ll start to see rent in that area return to the low-$2,000’s. Consistent with this, my model pegs the breakeven rent for 904 Jefferson at its $499,000 sale price at $2,431 (including parking).

  52. Al Bern

    Lori, thanks for reponse on rents. I use the assumption typically of 20% down, 2% HPI, 2% inflation, and 2% rent increase. I use actual property taxes, 5.0% APR, 30 yr mtg, 0.5% maintenance, 0.5% homeowners insurance, 1.5% renters insurance. 25% tax bracket..Price is detemriend by breakeven period. I like <5 yrs….

    Your comment on rents is dead on! If its really $2900 per month income, then most definitely you should think its worth 490 area….

    I just looked through craigslist for comps…you can get ALOT for $2,500. For $2900-3000, you can rent a 3br, 2bath…I pay 50% more than that now in 333..will be renegotiating though…

    BUT more importantly, the logic is right. Price = Function of (RENTS)

    D$: how does your model compare to the NY times one?

    http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html#

  53. Al Bern

    D$, Lori, et al: what do you think of 109 Grand? Unit 206? What do you think it rents for?

    I am guessing $5,500 incl parking; with such high taxes and maintenance, I am ballparking pricing at way way below the offering $1,199,000…notably it was sold for $850,000 in 2002 and I think its fair value at just around $900k.

  54. potential_buyer

    Lovely conversation, as always…

    Many of you may have already seen this, but I didn’t see it posted above so I thought it could be of value to some folks. Essentially, the NYtimes piece went on to state that the sellers in NYC are finally “getting it” and are slashing prices to move inventory. And guess what? It appears to be working (in at least the two examples they mentioned). I see Hoboken coming down a bit, but it hasn’t been as much as I was expecting. So I wait and watch…

    http://www.nytimes.com/2009/05/03/realestate/03deal1.html?ref=realestate

  55. TS

    Al,
    So you think prices are at 2002 levels??

  56. Al Bern

    Heard 2004 from realtor, but I think rents and prices have to converge…it doesn’t makes sense for us to buy a 4 bed went we can rent one for way less…

  57. TS

    Al,
    Well, the unit you referred to actually went into contract this past week. I’m going to go out on a limb and say they didn’t accept a 900k offer (25% off asking). So it seems that it was worth more than you thought.

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