2009 Jun 17th

The Weekly Wednesday Wrap Up – Hoboken Condo Sales and Activity for the Week of June 17th

The Best Hoboken Condos Sell

What struck me this week in compiling these numbers is that the units that closed were all very nice condos and most of them sold without any price reductions from the original list price and at about 5% off asking!  The only property that required price reductions to get it sold was still a nice unit, just not in a great neighborhood.  So as I’ve said before, the good stuff sells – and when it is priced right it sells quickly and close to asking.  I’ve seen too many serious buyers waiting on the sidelines only to jump in to make an offer on a property by which time it’s to late.

Looking at what went under contract, though, shows that there were still plenty of overpriced units out there and it took significant markdowns to bring about some action.  Finally, contrary to my prediction, inventory dropped and we did not cross the 600 unit mark.  Enjoy!

Hoboken Condos Activity Holds Steady

 

Studio & 1 Bedroom Hoboken Condos:

6 new listings.  Average list price $472,316.

199  total active – $418,169 average asking price. 100 average DOM.  Average asking price = $574 / sq ft.

8  dabos after 75 average Days On Market (DOM).

2 sold Sold for an average of $412,500 in an average of 37 days.  Average sales price = $469 / sq ft. 

9 price reductions.

Two Bedroom Hoboken Condos:

17 new listings – average list price $600,284.

310 total active –  $611,683 average asking price.  108 average DOM so far.  Average asking price = $516 / sq ft.

9  dabo’d.   110 average DOM

4 sold – $606,750 average price.   Average 111 DOM.  Average sales price = $468 / sq. ft.

 20 price reductions.

Three Bedroom and Larger Hoboken Condos:

68  active 3BR condos – $887,260 average asking price.  113 DOM so far.  Average asking price = $506 / sq ft.

4 new listings.  Average list price $1,179,725.

1 dabod. 115 DOM.

1 sold.  $617,500 sales price in 50 days.  $475 / sq ft.  Another beautiful unit in a desirable building that sold without price cuts.

7 price reductions.

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.   As always thanks for reading and we welcome your comments!

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  1. Steve

    I know the owner of 830 Monroe and can tell you that the real estate agent who was listing the condo is ending of his listings with $XXX,888. This is apparently because 8 is a lucky number in Asian culture and he thought that by appealing to Asians, he could sell the condo quicker…nice try.

  2. Steve

    I know the owner of 830 Monroe and can tell you that the real estate agent who was listing the condo is ending all of his listings with $XXX,888. This is apparently because 8 is a lucky number in Asian culture and he thought that by appealing to Asians, he could sell the condo quicker…nice try.

  3. Recent Buyer

    Lori: How come 625 Washington (#4) does not show up as DABO’d even though the deposit was accepted over two weeks ago by the owner?

  4. lori

    Because some agents forget to change the status in the MLS system. It shows up as active until they manually make the change. When we call for appoinments, though they tell us no more showings because it’s under contract. It happens frequently.

  5. Recent Buyer

    No reductions in the 2 bedrooms?

  6. Aaron Miller

    http://www.time.com/time/business/article/0,8599,1905085,00.html

    Interesting article a friend just sent to me. Always nice to get an email from a friend where the clear implication is the equity in my home is wiped out. But thought the group may find this interesting. Not interested in buying or selling, but I find myself checking out this site every Wed, so thanks and great job! I know this type of data collection, analysis and presentation can be time consuming.

  7. stan

    wow 19- under contract.

    of the 7 that closed, with a quick glance at tax records, 3-4 people lost a substantial amount of money, not including transaction costs.

    Thanks Lori.

  8. homeboken

    Stan – If the article posted by aaron above is any indication those people may be the lucky ones. I’m not sure about an additional 40% drop in prices in the NY metro from where we are today. But what happens if the DB guys are even half right, and we see an additional 20% drop. Things will get downright ugly around here.

  9. potentialcondobuyer

    Lori, the numbers don’t look right.

    There were 590 last week, 18 dabos, 7 sold and 3 expired equals 28 off the market, 27 new listing means net of 1 off the market for a total of 589. Is there something that I’m missing here?

  10. Lori Turoff

    I agree the math doesn’t exactly add up but those are the correct numbers pulled from the MLS – I just double checked it all. There are various reasons for the discrepancies such as – things that were listed, withdrawn and relisted; rentals listed as sales; dabos reported late; listing dates reported inaccurately, etc. Unfortunately, I cannot take the time to resolve all of these anomolies which are mostly the result of inaccuracy by the person entering the data. There are only so many hours in the day and I do this to help you all out and don’t get paid for it. I wish we had a better MLS system. Sorry that the numbers may not be perfect but it’s better info than anything else out there.

  11. potentialcondobuyer

    No worries. I was simply asking, not trying to pursue perfection. =) Thanks for all the information that you provide.

  12. JC

    578 units active / 38.2 (average monthly closed units from 1/09 – 5/09 as per Lori’s numbers) = 15.13 months of inventory. I believe NYC is at 10 months as per streeteasy.com numbers, but I dont know if units selling from developer are listed in NYC numbers. If not, that inventory number is understated.

    well, if we do go down another 20% or more the sellers who are “testing the market” will certainly stop trying to sell and the buyers (if there are any) will have a much smaller inventory to choose from and even smaller inventory of quality units to choose from. This can make for an interesting event.

    Does Lori or anybody have an opinion on 118 garden? $667 per square foot. Its listed under the new 2 BR listings.

  13. Andy

    Guys, just looking at the 2bd condos since that seems to be the bulk of the inventory in Hoboken. Price declines look to be (using $/sqft) only a 9% drop. 515 current average asking per sq ft and sold prices of 468 / sq ft. Clearly the solds are skewed higher with all the listings in the 600k range selling. But the key to look at here is the actual solds. They were beautiful units that were aparantly a good value against where the list price was. The discount on each unit was negligible from the list price. So I think things aren’t as aweful as people thought. Will you make a profit if you sell now(no unless you bought pre-2003) but for those who can still afford to live here it doesn’t look like we’re in for a percipitous drop in prices. Economy is picking up in NYC region. Layoffs have slowed. Not calling a bottom but I’m thinking we can all relax a little.

  14. Tiger

    Very true Andy, we both been saying that for months now. I guess a lot of people / writers enjoy drama. ‘The sky is falling’ stories seem to attract more attention than ‘We should be grateful’ ones. But numbers, statistics, and facts speak for themselves, the rest is pure speculation.

    Great job as always Lori, thanks for keeping us all informed and delivering the most objective overview of RE in our area!

  15. Lori Turoff

    Thanks Tiger. I must have accidently deleted the 2br price reductions. I’ll put them back asap but if you click on the top list they are there among the 36 total reductions. Sorry. I can only speak from my personal experience but I have found there to be many buyers out there ready to buy. The interest rates and lower prices are making it attractive for many of them and they have plenty to choose from. It’s been 8 months since the Lehman debacle and the predicted crash has been much more like a slow slippage.

  16. dkzzzz

    For what it is worth.
    I just rented 2Br. 2 full baths, DW, WD, HWD floors throughout, master with bath, walk-in closets in both brooms, over 1000sq feet total in a newer (8y.o.) building on Second St. (about 10 min from Path) for 2000.00/month.
    Roommates who were renting this 2br told me they are moving to the City.
    Rents are going down in Hoboken and NYC in a crazy fashion. Hoboken uptown is hurting even more.

    Also if so few people r buying then why the rents are going down?
    One would assume if people r sitting on sidelines waiting for prices do drop they would’ve looked for rentals and rentals would be hard to come by and prices would not be dropping….
    My guess is Hoboken is loosing residents. If my assumption is correct prices will go down even further come Fall.

  17. TS

    JC:

    You can’t measure absorption rate as you did, it is error-prone. If you are going to average over closings from January to May, then you will also have to average over # units on the market from that same period.

    The easier thing to do here, and one which best reflects the current market, is to look at May closings and # units available in May. This gives:

    50 units sold
    550 units available as of the first day of the month (perhaps averaging first and last day would be a better thing here, but I don’t have the #s)

    That yields 11 months supply.

    Not good, but not horrific.

  18. Andy

    I agree TS. I really don’t think we’re in a tailspin in Hoboken. I think if you don’t need to sell you aren’t going to in this market which means less people moving every few years but that can actually be a good thing for the community in terms of stability. Those that do need to sell are in a tight spot only if they bought a non-renovated unit at the height of the market. Clearly the units that are selling aren’t seeing that drastic of a price drop to make the sell but are all really nice units. Thats very telling to me on what the buyer is really thinking.

  19. patk14

    dkzzz, sounds like you found a nice place for a good price (wonder what the previous residents paid per month, I’m sure much more than $2,000). One factor that causes rents to drop is that some people are renting out their units instead of selling them into a weak market. This increases the supply of rental units. Happening in Manhattan with new condo projects expected to be sold now effectively rental buildings driving down rents.

  20. dkzzzz

    Patk14 :

    what you r saying is obviously true and is happening, but I would advise anyone looking to rent in Hoboken to stay the heck away from flip condos or be inundated with RE agents and their idle clients.

    One thing that all those RE amateurs do not do is pre-qualify their shoppers. Very small number of them are actual buyers with money for down p. or mortgage pre letter. Most of them find interesting to see other people’s homes: sort of “RE Weekend Reality Show”.

  21. Recent Buyer

    Lori:
    RE: Dutch Auction. I can’t believe someone paid anywhere near 460K for this unit. I saw it. It is falling apart. Bedrooms are tiny. Awkward spiral staircase. Very odd unit.

  22. homeboken

    There is a unit for sale in my building, same exact layout as my rental, 1 floor above mine.

    The asking price is 19.5 times my annual rent. Hmmm. Did get a great deal on my rent, or are the sellers delusional?

    (disregarding any possible upgrades of course)

  23. Andy

    Homeboken, 468k if you use 2000$ per month. no I think thats entirely reasonable given where we live. You’d be hard pressed to find something near the water in Jersey city for under 2000$ a month. But I don’t know if you live in a lux building or not. And on top whoever owns is getting a nice penny back in tax returns every year from our huge property taxes and most likely significant mortgage interest paid. I know I am.

  24. homeboken

    Andy – I agree the deduction eases the pain, but should not be looked at as a money-making venture. It is like spending a dollar to get 40 cents back, sure is nice to have the 40 cents, but its better to not pay the dollar.

    I have been working in commercial real-estate and multi-family housing for many years. I have NEVER EVER seen a property trade for 19.5 times the rent roll. NEVER. I understand that that valuation method doesn’t necessarily transfer to single-family, but the rent/buy ratio will return to normal levels before this is done. There are two ways for that to happen, 1. Increase in rents
    2. Decrease in home prices
    #2 seems much more likely to me.

  25. Recent Buyer

    Homeboken: What should a property trade for w/ respect to rent?

  26. homeboken

    Buyer – There is a wide-range of multiples. I admit that I don’t know what exactly what single-family home or condo should trade for, compared to rent. Lori is the expert there. But the number seemed so high that it surprised me.

    But for an example of multi-family…In 2005-2007 I was selling buildings in NYC around 11-12 maybe 13 times the rent roll. Now I get offers that are 8-9 times. In multi-family though, this is only one measure. Cap rates, per unit costs, comps etc are all used to value commerical real estate.

  27. lori

    Homeboken – you can’t say “disregarding any upgrades” unless you live in a fairly new building. In older, walk-up buildings there can be an enormous difference from unit to unit depending on renovations that may have been done by various owners. There is a new unit on the market right now at 155 14th St. that is a beautiful example – it is 100 times nicer than the average unit in that building and justifies a higher price than the unrenovated unit above or below it that’s had a protected tenant in it for 30 years. You have to compare apples to apples.

    RecentBuyer – I never liked that dutch auction unit. The floor plan was not great and the kitchen was just awful. It was a good option for an investor because it had 3 bedrooms and a huge backyard – can you say keg party? It would be easy to rent out to three young guys.

  28. homeboken

    Lori – I totally agree, “disregard” is probably the wrong term. I used it because I have never been in the other unit, so there could be solid-gold kitchen appliances for all I know. I meant it as, all else being equal.

  29. jc

    Andy..you mentioned owner was getting back a pretty penny each year on tax return when renting out unit. That may not be true depending on their income. Best if income is less than $100k but phased out entirely if above $150k. The tax break may be ‘banked’ and therefore wouldn’t help out on a cash flow basis. Am I not correct?

  30. Katherine

    I have to say, I am confused by the Time article. I guess I have to read the full Deutsche Bank piece to understand the affordability issue. NYC has been unaffordable for many years now -what is different about the next year and a half that will make prices drop 41%? Massive job losses in financial and pharmaceutical sales, yes, that would make sense. Mortgages either unavailable or very difficult to get would also make sense, as would skyrocketing interest rates. But affordability alone? I don’t get it.

  31. Doug

    Katherine, I completely agree…the basis of the article doesn’t make any sense. Affordability has always been an issue in this area. Expectations are extremely different here than just about anywhere else in the country. To me, its a case of not understanding the “microeconomics” of the region – you simply can’t compare NYC to, say Phoenix, and say the affordability ratio should be similar. Its just a completely different mentality.

  32. Tiger

    JC, Andy is right. Tax refund is even GREATER the more money you make. You are probably confusing the tax refund with the $8K tax credit (which by the way is very hard to get if you can afford to own in Hoboken, because you are probably above the limit).

  33. patk14

    The ATM takes a bite out of the tax benefit for many people. I know that my deduction for state/local taxes is reduced due to my income.

    I don’t buy into the thought that New Yorkers are just willing to pay a much higher percentage of their income for housing. Why is that? There is an old saying about people being land poor. Now, we have people who are “house poor” who were relying on increasing real estate prices to free up some cash for them. In a declining market, these people are stuck in their apartment, unable to take vacations or even eat out very often due to lack of cash. Why put yourself into a prison like that?

  34. JC

    Tiger – I thought Andy was talking about the advantages of tax deductions a landlord gets. Looking back it appears he is talking about owner of a primary residence not owner of a rental. thanks

  35. JC

    I agree on the whole affordability issue too. No only is it a different mentality but products and services have been more expensive in our city for years. Where is the affordability index on coffee, hot dogs, electicity…I’m sure we are at the high end, yet these dont have to come down 40% because they are unaffordable.

    I’m curious as to what the average household income the writer used to come up with this affordability ratio. (it wasnt disclosed in the article) Many folks who own property in this city make a ton of money and have a ton of money. I’m just not sure if the proper incomes are reflected in this ratio.

  36. Tiger

    Very true JC, our area was never tagged affordable even during the less-glamorous dangerous days of the 70s and 80s. IN fact, it annoys me that the new tax credit (and stiumlus checks, and all stupid band-aid-on-a-bullet-wound solutions) our government come up with has an absolute limit in terms of the ‘phase out’ income. Hello! Did you know that the affordability radio between NYC metro area and Houston, TX (which is by the way considered expensive down south) is 5:3??? If you make $100K in NYC area you are enjoying a similar lifestyle of a person making $60K in Houston. It is even lower in other cities.

    SO unfair!

  37. homeboken

    Here are the AMI #’s for NJ (2009)

    Family Size
    1 Person – 57,120
    2 Person – 69,853
    3 Person – 85.397
    4 Person – 103,034

    This is state-wide AMI. 50% of the population makes more than this, 50% makes less. I would say that Hoboken is probably firmly in the higher bracket of AMI.

    Lets get aggressive and say the average Hoboken 3 person house-hold is 40% higher than the state-wide AMI

    85,397*1.40= 119,555 per family of 3 (estimated, I know)

    Throw that income into a mortgage calculator with 50,000 down and taxes at 2.0% of the purchase. It spits out that this family could quailfiy for appx $380,000 purchase on a home.

    There are 310 2 BR condo’s on the market in Hoboken per Lori’s numbers. Take out the 10 moste expensive 2BR and the 10 lease expensive 2BR and the average ask is $596,531. To me this is the affordability problem in a nutshell. The average 2 parent, 1 child household can’t afford the average 2 bedroom in Hoboken, they fall more than $200,000 short. Moreover, they should not be given any sort of exotic loan to fill the gap, too dangerous to their own financial well-being.

    Disclaimer (I know that I switch between meadian and mean and there are outliers properties and earners that change things, but I stand behind my point)

    If there are some glaring flaws I am missing here, please point them out.

  38. Andy

    Just to clarify, I was talking about as a primary owner in regards to the tax credit received each year vs the rental cost. While it is more expensive to own currently I prefer to build equity(30 yr fixed mortgage) by merely paying down the loan each month and getting a hefty tax return each year compared to the pittance I got when I was a renter for 6+ years. Its really about the return I get from the Feds as it relates to the taxes I pay. I honestly no next to nothing about the tax benefits from a landlord perspective.

  39. Andy

    JC, on affordability index I agree with you. Inflation has built in a major percentage of the affordability index of the Tri-state area. Everything from food to gas to housing is all more expensive because of the relative pricing that occurs. I seriously doubt that any of our personal costs will decline 40%. I think a prime example is the cost of a Beer in the NYC area. 7$ is the norm. Go to Philly its 5$ go to a place like New Orleans its 4$ or less. I think fear is what is ruling this market correction and when that subsides the fundamentals which influence our purchase decisions will still be intact. Thus keeping the price we are willing to pay to be in the NYC area inflated.

  40. JC

    homeboken – Good analysis. I assume you are using 30% of gross income as the max used for payments?

    So $50k down and a $380k mortgage ($430k home) plus 2% taxes = approx $3k per month or 30% of your $120k average household income on a 30 year fixed @ 6% interest rate. So in this scenario $50k represents 11.5% down. If we used 20% down the buyer can afford approx $470k house.

    Lets stay with your example of $430k house with 11.5% down. Obviously this buyer needs to come up with $3k in cash on a monthly basis but the net monthly cost is less if we take into consideration the year end tax benefits. Lets assume 30% tax bracket.

    $9600 in annual taxes = $2880 refund
    $22060 in annual interest = $6618 refund
    Total annual refund = $9498
    total monthly refund = $791

    $3,000 – $791 = $2209 x 12 months = $26508 which is now 22% of this owners gross income!

    If we take into consideration prinicpal payments of around $450 the monthly net decreases to $1760 or $21100 annualy representing only 17.5% of gross income.

    In conclusion if owner is able to afford monthly payments and wait for the tax refund at year end then affordability for this owner is not at 30% but only 17.5% of gross income or 22% if you dont want to count equity.

    I understand the industry only looks at affordability through gross payments and I agree on a conservative level. However, in my view, the net payment should also be taken into consideration.

  41. Tiger

    Lori can probably give a better insight, I’m no expert about Landlord taxation law but I think you can deduct mortgage interest, property tax, AND condo fees from your rental income. So basically, if you rent a condo for exactly it’s mortgage + taxes + fees, they cancel each other out (except for equity, which depends how far you are in your mortgage).

    My former landlord bought her Hoboken studio condo when she finished college back in 1986, she took a hit first, but then broke even in the early 90s renting it out (she lived there a couple of years but then got married and moved to SI). She paid off her mortgage early in the late 90s, and now she has a studio that’s worth 200K+ and generates $1K a month. I hope I can do that with my condo.

  42. homeboken

    JC – I agree with your deductions analysis, but there is a difference. The $380,000 is the purchase price of the home, not the mortgage. With $50,000 down and income ~ 120k, the total qualified purchase price is $380,000 (implies a mortgage of $330,000).

    I realize I did not include HOA fess (common in Hoboken) and insurance. So frankly, I think the scenario is a little bleaker than I first thought.

    I will run some numbers this weekend and play with the assumptions.

  43. Lori Turoff

    Why are you guys using 2% for taxes? Even on new construction the figure is 1.3%. Just curious.

    Tiger – on an investment property you can deduct mortgage interest, property taxes, the monthly maintenance and you can depreciate the property. (Keep in mind that if and when you ultimately sell, your basis will be lower because of the depreciation, so your profit at the time of sale may be greater, but in most cases that will be sheltered.) You can also write off expenses like what it costs you to advertise to find a tenant, and/or out-of-pocket repairs not covered by the maintenance like if you need to send a plumber or electrician over to fix something inside the unit.

    Andy – some of us will pay whatever it takes to be in the NYC area because that’s where we want to live.

  44. JC

    Homeboken – if the purcahse price is $380k then buyer is in a better situation. In my view a buyer making $120k can afford $430k home. That is 30% of gross income. What metric are you using to come up with affording only $380k?

    Lori/Homeboken: I was using 2% as a quick number to INCLUDE condo fees and insurance.

  45. JC

    clarrification: In my view a buyer making $120k can afford a lot more than $430k home. I’m just doing the math on affordability at 30% of gross income. $3,000 a month can buy a $430k home with the paramaters used from above.

  46. homeboken

    JC – Correct, if a bank will lend to them they can. Look at this way, a $430,000 is 3.6x gross income (at $120k). That is getting into the danger zone.

    My point is that I think that we are witnessing a fundamental shift in the consumption habits of Americans. This is in all areas, specifically in housing though. I just think that the stigma that “buying is the only avenue to wealth” and “paying rent is like throwing money away” are finally being realized as false. Historically, home-onwership was not something for the majority. Most people are better off renting, and I think they are starting to figure that out.

    I love this town, that’s why I live here. But there are a lot of question marks about the future of Hoboken too.

  47. homeboken

    Check out this chart (hope the link works)

    http://www.ritholtz.com/blog/2009/02/us-existing-house-price-median-family-income/

    From 1965-2000 Nation wide – Home Prices as a multiple of income were 2.5-3.4 times. Suddenly, the advent of exotic mortgage products, amongst other things, the multiple shot up to a high of 5.2 times.

    I look at that chart and see 35 years of data tracking in a tight band. Why wouldn’t the market revert to that mean? Do we really think that we in NJ or Hoboken are so special that we should stay 4-5 standar deviations above the 35 year historical mean? Home prices and Income should move in lock-step.

  48. JC

    homeboken – I agree about the fundamental shift. Just take a look at the savings rate skyrocket in the last few months. Consumers will be consumers but this debacle has scared many folks into what will be the “new normal”.

    Unfortunately our last administration passed legislature making it extremely easy for folks to afford homes. You know…so EVERYBODY can fulfill the american dream! Now we are all paying for it.

    Personally, i will not cut back regarding my home. there are other places I can cut back. My home brings me too much joy to skimp on, but everybody is different and that’s what makes a market.

  49. Andy

    JC, I agree with you about the spending habits. I am very happy I bought my home for the sheer fact I got a good deal at the time I bought it and put 20% down on my home so am in no danger of being underwater anytime soon. On saving habits, I have stepped up my game in that regard and cut back on the little luxuries in life and have surprised myself at how much we are able to save every month and we are not rich by any stretch but on average for hoboken. I really think that in the next 10 years we will see a trend upwards in both rents and home values again. Real estate is cyclical. I really think the only possible hits Hoboken may take will be the development of Jersey city and Edgewater to the north to the same degree as Hoboken. Until that happens though people who want to live here will always pay to do so. Do I think it will happen at the pace we saw for the last few years? A more realistic growth rate of 3% is more likely.

  50. homeboken

    Andy & JC – Good insight, I posted a graph and some analysis that is in moderation. I am interested in hearing your thoughts when you view the chart and history.

  51. Tiger

    It is a shame that it took a full collapse in our financial system to achieve this, but one positive outcome of this is that people FINALLY save as they should. We should compare ourselves to other nations, we spend way too much and save way too little. But now this is changing / for the better!

  52. Andy

    Homeboken let me know where to go re the chart.

  53. Recent Buyer

    120K income…430K house? Not if you’re the usual grad student these days graduating w/ 120K+ student loans…

    I wonder why there’s no mention of that current phenomenon. Med students are graduating with 200K+ loans…law students with 150K+ loans…and that doesn’t count undergrand loans.

  54. homeboken

    Andy – Look above, my post made it through moderation

  55. JC

    I always respect historical averages and yes, I do think we revert back to the mean. I just dont know nor does anybody know the timing. It actually could be an L shaped housing recovery and incomes will catch up with stagnant prices a few years down the road. Either way its a bearish outlook.

  56. JC

    Of course that is a national chart with national numbers and what we really care about (for now) is Hoboken. I’d love to see a chart for our area that shows historic ratio’s.

  57. homeboken

    JC – I am working preparing exaclty that. The data is available. Historical AMI for Hudson County and Case-Shiller for NYC Metro. I will chart the home and condo index. Will finish it this weekend, and if post a link.

  58. JC

    look forward to it, thanks

  59. potentialbuyer

    Annual Monthly %
    Gross Inc $120,000.00 $10,000.00 100.00%
    401K 10% $9,600.00 $800.00 8.00%
    Net of 401K $110,400.00 $9,200.00 92.00%
    Taxes 33% $36,432.00 $3,036.00 30.36%
    Total Net $73,968.00 $6,164.00 61.64%
    Car Payment $400.00 4.00%
    Student Loans $600.00 6.00%
    Car Insurance $150.00 1.50%
    Savings/Emergency Fd 10% Net $616.40 6.16%
    Food $750.00 7.50%
    Entertainment $500.00 5.00%
    Household $300.00 3.00%
    House Budget $2,847.60 28.48%

    Budget $2,847.60
    Condo Fee $500.00
    Insurance $120.00
    Taxes $600.00
    Amount Left 4 Mtge $1,627.60

    Annual Mtge Payment $27,871.20 $2,322.60
    Deduction Assume 33%, 90% Int $8,277.75
    Monthly Deduction $689.81 $2,317.41

    Approx Max Mortgage $2,317.41
    Mortgage Amount $397,107.18
    Down Payment $80,000.00
    Total House $477,107.18

    JC or Homeboken or any else,

    Please comment whether this is reasonable assumption using that 120,000 number previously talked about. I made a lot of assumption. But this in my opinion give the most someone should be able to afford without killing themselves. That 10% emergency is the absolute minimum in my opinion. I’m open for argument.

  60. potentialbuyer

    I meant to state 8% for 401K instead of 10%.

  61. lori

    $750 a month for food? Do you eat out at a nice restaurant every night? I remember when I first got out of school, cooking rice and getting take out veggies and tofu from the local chinese because it was cheap and relatively healthy. Seems like a lot to me. I’d rather save more money for a down payment, keep my mortgage to under 75% of purchase price, pay off the student loans, skip the car and ride a bike. But then I guess I’m of a different era – the one that had parents who lived through the depression and taught us to live within our means and save our money for a rainy day. Maybe this all has something to do with all the rain we’ve been having???

  62. Katherine

    Potentialbuyer,

    Your assumptions look pretty good. The only items that are jumping out at me are the condo fee and insurance. I assume you are purchasing a 2BR/2BA, so both #s are high. $500 HOA is high unless you are in a luxury full service building. And we were paying under $600/year for homeowners insurance, so $50/month is more accurate than $120. But even with your current #s, you can still get a really nice 2BR/2BA for under $500k.

  63. Katherine

    Yeah, I noticed the $750 food budget. But I also noticed the $500 for entertainment and $300 for household; that’s $800 for what? Going out to dinner on weekends and ordering from drugstore.com? That’s a lot of money for something you can really cut down on ($10k/year toward your down payment/emergency fund).

  64. potentialbuyer

    $750 is assuming the grocery is around $15 per day for a family of 3 for 3 meals a day and about 4 to 8 times going out for food. I think that is pretty reasonable. I personally spend more but I’m actually assuming a clamped down scenerio for a family here.

    For HOA, from all the 2bd/2bath I see in any kind of high rise, $500 looked average. By going down on the HOA, I think we can increase the max mortgage a bit more to around $500,000 for a 2 bedroom/2 bath.

  65. potentialbuyer

    $300 is for all miscellaneous stuff that may happen for the condo, stuff like utilities, repairs, shampoo, conditional, body lotion, tooth paste, etc, etc, etc. not sure if that makes sense.

  66. potentialbuyer

    entertainment includes everything that you would do for vacation, movies, happy hours, weekend trips. For example, a one week vacation for a family of 3 should cost around $3000 to $4000 including airfare, hotel and all the entertainment. That’s around $300 there for that one trip already.
    The $800 in total might or might not be for everyone but I think for a family that earns 120,000, it sounds reasonable, but maybe not.
    I’m open to suggestions.

  67. potentialbuyer

    I haven’t own a place yet so I didn’t know the insurance so I just put down whatever number. I’ll take that $50 per month into consideration. Thanks.

  68. Katherine

    We are a family of four with #s very similar to the ones in your assumption. The $750 for food is quite high. I spend about $100/week for food, and then my husband spends about $160/month for lunch. $300/month is about right for utilities, cable & phone bills. However the auto insurance is really high, plus we paid off our car so have no monthly payment. We are paying about $800/year for insurance, so $67/month. For the kinds of #s you are showing to own a car, you would be better off renting when you need to drive (once a week?) Another owner in my old building rented out their deeded parking spot for $250/month, so you could add that to your income column.

  69. homeboken

    potential – I haven’t priced out single family mortgages in a while but one issue I see is including the mortgage interest deduction in your max monthly mortgage payment. This assumes that a lender will allow you to leverage that deduction.

    I don’t think you will see lenders doing that, but I could easily be wrong. Lori? Anyone else?

    I would think a bank would not be too willing to underwrite a mortgage interest deduction, given the possibility that it could be phased out at any time during the mortgage term. Thoughts

  70. juslookin

    70 Adams St. #2, is actually a 1 bedroom with den. I wasted time seeing this unit. I hate when realtors fail to tell the entire truth on listings.

  71. JC

    Good analysis potential! I think all numbers look good and agree with Katharine Condo fees are at least $150 too high and insurance should be $500 a year.

    Regarding food/entertainment that looks good to me but we all are different. Sure this is a category to cut back on if needed but for the affordability discussion from yesterday I agree with your budget.

    I also agree with Homeboken, the bank wont take into consideration the tax deductions you will get when contemplating their analysis on what you can afford but in my view buyers should find out the REAL cost of ownership and to me you must factor in the tax deductions. (Obviously it doesnt matter if you can afford the higher number if you cant get a mortgage for it, but thats another discussion)

    If your able to afford the gross monthly payments of your carrying costs then come April 15 you will get a nice tax refund. You then put that $ in a separate account and use to supplement your monthly payments. Rinse and repeat.

  72. JC

    Can somebody please tell me if there was recently a city wide reassesment of property taxes? (I’m not talking about the 47% increase)

    If so, will the million dollar condo at maxwell place have the same tax bill as the million dollar single family brownstone? If not, why and will that ever happen?

  73. lori

    JC what you’re referring to is commonly called a “reval” or reevaluation. No, there has not been a reval of all Hoboken properties in many years. There has been talk of one taking place in the future, however, but it is not certain if or when it may take place.

    There is a lot of confusion about this. The issue is not the million dollar brownstone vs. the million dollar Maxwell unit. If the brownstone has been renovated (which most have) the brownstone’s taxes were reassessed based on the renovations. Most renovated brownstones have taxes very similar to Maxwell taxes. The crux of the “unfairness” issue here is the 5 or 10 unit UNrenovated rental building. Say the owner has had the rental building since the 30’s or 40’s or 50’s. The rents are low due to rent control and because the owner has not been able to increase the rents much, improvements were never made. The taxes on these buildings are very low since they were based on old assessed values when the building was worth a fraction of its current value and the taxes were NOT reassessed because the building has never been renovated. These properties were bought for $50K or $100K but are now worth 3 to5 mil. These are the building owners who are not paying their fair share. The ‘old time’ Hoboken landlords who have no mortgage on a building they’ve owned for years, pay next to nothing to maintain them, and sit back collecting their rent roll.

    Guess who these long-time Hoboken landlords support politically? Maybe the reason a reval has not been done for all these years has something to do with the fact that it is politically easier to charge the Maxwell buyers and the young families who fix up the run down row houses and then pay taxes on them at rates similar to as if they were new construction. In fact, if the same multi-family rental building is gut renovated and condo converted, the new condo owners pay taxes as if it were new contruction – 1.3% times the sales price.

    I hope people start to understand where the real inequities are when it comes to property taxes and assessed values because it’s not about new construction vs. brownstones although that is what one often reads. If you want to learn more about this, look up the tax records and compare tax bills on some new units, some ‘done’ brownstones, and the multi-family rental buildings. You will see very quickly who isn’t paying enough and who is footing the bill!

  74. JC

    thanks for the detailed answer and I very much see who isnt paying there fair share. I asked the question because I am trying to figure out if in the long run it would be more cost effective regarding taxes only to buy small single family or a condo of similar size.

    If one buys a single family not updated at all (with a low tax basis) after a permit is issued for renovation work will the city come in and tax you on the actual amount of the upgrades only? (you pay a higher tax proportion for your $60k kitchen)but the same tax basis on the rest of the place? Or will they do a complete revaluation on the property? Thanks in advance.

  75. Lori Turoff

    The city knows you do work because you get a building permit. That notifies the tax assessor. They come in and take a look. Unfortunately, when the city increases your taxes after the work is complete, they don’t give any reasons/breakdown or analysis. So I can’t answer where the number comes from or what it’s based upon.

  76. homeboken

    Back to the projection numbers from above…Lori will the bank lend on the tax deduction, it seems that most think the answer is no…

    Potential – If that is true, then you need to drop your “monthly available for mortgage amount” to $1,628. The difference is staggering. You can’t rent a 2BR for 1,700 anywhere in town. The property tax situation is a huge part of the problem, the other is price. I think anyone buying today at 2007 levels will be very upset with their decision in 2 years. I get no joy out of that projection, if I am wrong, so be it. But the stats point to renting and waiting.

    Back to Potential Buyers stats…True some of your other costs may be too high, but how does it seem reasonable that the average asking price is $150,000 over what a family making 120k per year can get financing for?

    The issue is affordability. I don’t believe Hoboken is any different than the rest of America.

  77. potentialbuyer

    Homeboken,

    Even if the bank don’t put the tax deduction into consideration when applying mortgage, I think the family will generally be able to get approve for more than the 400k that I projected, that is because not everyone will necessary have that kind of budget and they might not budget for savings. I will find out when I pre-approve for my mortage in 3 to 6 months (still loading for backup fund and down payment). I guess someone that has this pre-approval experience recently would have a better sense of max mortgage that a bank are willing to give to a 120K family. I think my idea is what is the ABOSOLUTE MAX should a family take on and not necessary how much a bank are willing to let the family take on. So a normal family should definitely borrow less than this max number. As we know from this crisis, the bank don’t really do a good job of that. Let’s leave that for another discussion.

    I think I’m probably off on HOA, definitely off on insurance. That is 2 areas that can be adjusted. I don’t think I should back off on entertainment, food, and household items too much.

    Katherine mentioned her food bill is approximately $600 per month. This area is something that could be higher or lower depending on alot of factors. I’m single and me myself already passed that $600 number. Let’s say both the husband and the wife are working, then they will both be spending money on lunch, making it closely approach the $750 number. While I was in college, I already went over $450 by myself. So I don’t know.

    Entertainment, this is your fun bill. Like I mentioned, just one trip is enough to take out $300 from the $500. I guess we can squeeze $100 or $150 out of this. Then again, there miscellaneous stuff that doesn’t appear on my cost assumptions. For example, I’ve been taking some certification exams in recent years taking couple of grand a year in registration and classes. There are many other things including monthly debt payment that we don’t see for this very generalistic family. You get the idea.

    Car payment and insurance, I guess this is one area that can be improve on/reduced, especially for people that got their cars already or don’t plan to have a car in hoboken. I still would like to built that in projection because I know I would still like to have a car if I buy in Hoboken or Newport simply be able to visit people whenever I want. I know my insurance is less than $100, but I know co-workers who pays significant more. Let’s reduce it down to $100. Car payment can be more or less, let’s be frugle and make that number $250 whether it be renting the parking, lease a car, regular car payment, repair/maintenance cost.

    I was thinking about my numbers today, I forgot couple of pretty significant costs that everyone faces, commute and medical. Commute cost me $100 now. I would think the absolute minimum is $100 if you just use Path alone for a 3 member family. I won’t put anything for medical since I don’t want to dwell into that. That could be 0 to millions depending on condition so it’s be volatile to predict. Because of this, I think it’s reasonable to increase Household to $400 instead of $300 that I had previously.

    I’ll post the new numbers in the next post. I think what I want to get at with this whole discussion is to see where the median housing prices for Hoboken should be given the average profile that was discussed before. I agree with some that the prices will need to come down at least a bit more before the area stabilize. As with Homeboken, this is the affordability issue that is at hand here. While DB’s and GS’s predictions of over 30% decline can be ignored, the fact remains the area in general is overpriced. Someone may or may not agree with this but it should be something they should consider before making a purchase.

    I for one will not only look at these factors and say I won’t buy since we simply can not calculate the intangible values in having a home.

  78. potentialbuyer

    Annual Monthly %
    Gross Inc $120,000.00 $10,000.00 100.00%
    401K 10% $9,600.00 $800.00 8.00%
    Net of 401K $110,400.00 $9,200.00 92.00%
    Taxes 33% $36,432.00 $3,036.00 30.36%
    Total Net $73,968.00 $6,164.00 61.64%
    Car Payment $250.00 2.50%
    Student Loans $600.00 6.00%
    Car Insurance $100.00 1.00%
    Savings/Emergency Fd 10% Net $616.40 6.16%
    Food $750.00 7.50%
    Entertainment $500.00 5.00%
    Household $400.00 4.00%
    House Budget $2,947.60 29.48%

    Budget $2,947.60
    Condo Fee $350.00
    Insurance $50.00
    Taxes $600.00
    Amount Left 4 Mtge $1,947.60
    Annual Mtge Payment $33,355.20 $2,779.60
    Deduction Assume 33%, 90% Int $9,906.49
    Monthly Deduction $825.54 $2,773.14

    Approx Max Mortgage $2,773.14
    Mortgage Amount $475,200.51
    Down Payment $80,000.00
    Total House $555,200.51

  79. Lori Turoff

    Potential Buyer – You can make up numbers all you want but that doesn’t make them an “average profile” for Hoboken. Nor does it prove what prices should be. Go talk to a mortgage broker for a reality check. If a family of three is making only 120K and has the lifestyle you’re describing with lots of spending, other debt and little savings perhaps that family shouldn’t be buying a home for over half a million. It’s not a question of affordability, in my mind. It’s a question of learning to live frugally day to day so you can afford the big things in life you want. That starts with having 20% for a down payment.

  80. potentialbuyer

    Lori,

    Obviously, this exercise alone won’t prove where the prices should be. It wouldn’t and it shouldn’t as we have to do more research as to what a real typical family/buyer in hoboken looks like. I hope you don’t take offensive to what I wrote.

    I’m not a family of 3 so I wouldn’t know any better. I really didn’t thought the lifestyle that I described is with alot of spending, this is why I adjust them as I get feedbacks and really try to explain where I get my numbers from. While these numbers may not be me, I am curious to see what I may face really far down in the future when I going to clamped down especially with all the needs of a child: child care, diapers, etc, etc.

  81. JC

    Homeboken – I agree with your weak housing projection based on the reverting back to the long term mean of the charts you posted here. From 1991 – 2007 the least affordable large metro area’s have always been in California. Beginning in 2008 and continuing into this year its our metro area. This information is posted on the nahb.org webiste. Maybe once we see a California area listed once again as least affordable we will know our decline is close to over?!

  82. Katherine

    Potentialbuyer,

    Based off our exchange here, I started putting together a summary of my family’s monthly expenses. But to sum it up, we are a family of four (two toddlers), one parent working out of the house, with an income of about $130k/year. And we just bought a 4BR in Hoboken for $787k.

    The reason why were able to pull that off is because we put down a huge down payment (30%). We are extremely frugal and have been saving for over a decade now for just this purpose. I very rarely pay full price, but we shop at Pottery Barn Kids, J Crew, Nordstrom, so it’s not like we stint ourselves. I am just very, very good at shopping, which is how I justify staying home.

  83. homeboken

    Katherine – Congrats on your purchase. Based on your info, I am calculating that you have a mortgage that is 4.23 times your gross income. That seems pretty high to me. But if you were able to put 30% down (236k) then you must have been saving for a long time, which means you must have a good handle on your month-to-month finances.

  84. Tiger

    Happy Fathers Day everyone!

    What a fun discussion!

    Guys, no one is denying that there’s still more to come in terms of price adjustments / inflation / whatever. But I just wanted to point out the unique demographics of Hoboken area; most people here are lawyers, work in finance, PHARMA (Novatis, Wyth, Pfizer) or in the general ‘skilled worker’ category as the department of Labour refers to it. Even with the subprime hype, a lot of people, renters or buyers, are financial savvy; we are not talking about a schoolbus driver buying an 800K condo here. So even if the ARMS reset; changes are that person now can hangle the higher payment, or they probably already refinanced.

    And even when you talk nationally; not all areas were hit as bad as you think; Austin and downtown Houston in TX have had a 5% decline offpeak, a market that slowed down but still managed to have only 5% decline; mainly due to demographics of people living there.

  85. potential_buyer

    Just came across an interesting article on Reuters – more distressing news (http://www.reuters.com/article/smallBusinessNews/idUSTRE55I3CJ20090619). Granted, the prices have come down in Hoboken a bit, and the “good places” are selling for just a bit under asking, but we will see how much longer that lasts. Again as many others have stated, it could get very interesting over the next 5-6 months…

    Oh, and I am not the same “potentialbuyer” as above, as I have been following/contributing to this blog now for over 5 months.

  86. Katherine

    Yes, our mortgage is a high multiple of our income. However, we have no debt and superb credit (all three credit scores for both me and my husband are over 800), so we qualified for an interest rate of 4.5% on a jumbo 30-year fixed rate loan. I ran the #s past our CPA and figured out our monthly expenses exactly match our income. We should get a huge refund next April, so net net we come out ahead. We have done this three times now (we buy apts when the monthly payments match the rent we have been paying, and then save the tax refunds each year). Our 4BR costs us $4200/month gross (mortgage, CAM and taxes)-I have friends paying that much to own 2BRs.

    I have been saving for the last 10 years because I knew we were going to have to put down a huge down payment since our income is low relative to the area. When interest rates and prices both dropped in December, we realized the timing was about as ideal as we were ever going to get (we were able to sell our 2BR and simultaneously bought our 4BR on a sale-contingency basis). The sale price on our 2BR dropped about $50k after October but our 4BR dropped $100k over the same period. If we waited for the price on the 4BR to drop further, changes are we would have taken a much bigger hit proportionally on our 2BR. Plus higher interest rates would have made the 4BR straightup unaffordable.

    Most families in Hoboken are dual income, making easily $300k and up. We knew we couldn’t compete with that once people stopped being scared of losing their jobs. With buyers scarce on the ground right now, this was our chance to get the home that we wanted.

  87. JC

    Katherine…that interest rate is amazing for a jumbo! You were able to secure that recently? Would you mind letting me know which bank? thanks in advance.

  88. homeboken

    Kathy – Again congrats on your purchase.

    But I would caution you against using assumptions that are so far out of whack. You said that “most couples in Hoboken are dual income, earning easily over $300,000 combined.” This is not true. The statistics offered by the BLS and HUD point to the highest earning Hudson county couples make about 1/3 to 1/2 of that. You may know a millionaire couple or two, but the median incomes are facts.

    There seems to be a stigma that the Hoboken yuppies are earning 300k, but that is not the case. Don’t contradict facts unless you have facts to back it up.

  89. Katherine

    I have been condo board president in two largish SW Hoboken buildings (68 units and 46 units) so unless those buildings are completely unrepresentative of Hoboken couples, I think $300k is a conservative estimate. Both buildings have pharmaceutical sales reps, Toys R Us management, i-bankers, attorneys, marketing/ad execs, all in their late 20s and early 30s. $150k is a conservative estimate for one individual in those industries who has a graduate degree. I know that the couple that bought my 2BR (i-banker and pharma sales rep) make far more than my husband and I do.

    I haven’t looked at Hoboken demographics but I have lived here for seven years -Lori, am I off-base with my assumption of $150k earnings for individual buyers in Hoboken over the last five years?

  90. MCD

    Katherine – what is the April refund? Your federal tax refund?

  91. Katherine

    The April refund is the combination of my federal, NY & NJ refunds. Yes, I know I have too much withholding, I need to adjust my husband’s W-2s when I get a chance.

  92. Andy

    Katherine, I think you are a good example that many responsible homeowners are able to live comfortably in Hoboken. I have a similar profile to yours minus the kids so that helps out my cash flow each month. I really think those w/ 30 yr fixed mtg who are building equity each year and on top of the tax rebates/refunds its a complete win win. I cringe when I look at how much $$ I gave my landlord for 6.5 years.

  93. Katherine

    Thanks, Andy. My husband and I are comfortable making the long-term bet on our 4BR. My husband’s career is pretty stable and his earning prospects are excellent, plus if/when I go back to work, the mortgage becomes easy to handle.

    I know many, many couples making $300k+ in Hoboken. It is not at all unusual given all the pharmaceutical sales reps, corporate management, financial services execs and attorneys who live here. I know that Hoboken is not representative of Hudson county as a whole; the kinds of people who live here are one who want short commutes and 24-access to transportation. Most of my neighbors in my old building are sitting on “tiny” mortgages on their 1BR and 2BR apts, as they put it to me, so they don’t care what happens with the real estate market since they can easily cover the monthly costs.

    I know there is a lot of negativity about the real estate market, but nobody seems to be thinking beyond 2010. Time tends to pass really quickly for me and my family, so 2011 will be here in an eyeblink. it’s not like we’re going to try to sell our 4BR for many years, by then the market will have stabilized and/or we will have built up enough equity that we will be fine.

  94. Tiger

    Congratulations to you Katherine! I think you are doing the right thing. A four bedroom will sustain you for a long time. I totally agree with you, it is all SPECULATION at best for now. Like Lori pointed out later, it’s been 8 months, coming to 9 since the collapse of LB, everyone expected a horrible market but so far it has been good, we should be grateful.

    I also agree with you regarding the demographics of people living here, and that’s one more reason why I don’t see a collapse; but it’s just me – I’m known to be optimistic.

  95. patk14

    Katherine, it does seem that you are frugal and constantly saved over the years. Those are rare qualities these days. Given the relatively large monthly payment that you have relative to your income, you must be extremely confident of your husband’s job security. In this economy, not many families can or should do what you have done. A sudden job loss, major health issue, or a sharp decline in income (no bonus) could exhaust family savings very quickly and then you are in a position where you have to sell. People don’t seem to protect themselves on the downside well enough.

    After the large bubble, you could see Hoboken real estate declining and then leveling off for the next decade. Anyone who expects to sell over the next 5 years would be better renting, in my opinion.

    You paid over $750K for your place. I’m sure it is in a nice building so your neighbors might all make $300K. In buildings like Maxwell Place or the Tea Building, that is the norm. But for Hoboken as a whole, income is closer to what your family makes.

    I spend $15/day on breakfast/lunch in midtown and on weekends in Hoboken. That is $300/month right there. Having dinner out for 2 with a few drinks once a week (generally $100/outing) is another $400/month. So, I would estimate that we spend closer to $1,000/month for food (and we are not fat). Gym membership is $80/month. Parking car is $185. Max out 401K ($16,500 in 2009) and then save an additional $50K/year toward a down payment. Doesn’t leave me with much spare cash.

  96. Katherine

    We rarely eat out because we find we prefer the quality of the food we have at home (organic pizzas, homemade soups and stews). Breakfast is yogurt and shredded wheat, french toast for the kids, costs us maybe $5/day for the entire family.

    We had a gym in our old building but rarely used it so no gym membership fee, we max out our 401k, deeded parking in our building so no expenses there. It is costing us $1,000 more a month to live in our 4BR vs. our 2BR, the utilities are actually less despite the much larger square footage.

    We originally thought we would buy in the suburbs (Montclair, Tenafly) but when we went to go look at comparable properties, we found there is about $100k price difference. Add in the much longer commute, higher property taxes, the cost of maintaining multiple cars, and suddenly the $100k didn’t look like such a big difference. My kids get to see their father every night, and that is worth scrimping and saving.

  97. patk14

    Your husband is a lucky man. Good point about the ability to see his kids every night due to the short commute. There is no price for that. Good luck!!!

  98. JC

    Anybody see the article about Goldman Sachs on track to make record bonus payouts? There was a similar article about two other banks (BofA i think and one other) on track to make substantial bonus payouts mostly to keep talent.

    Those who have jobs in banking are still getting paid big time it seems. Or maybe the big revenue execs gets all the big bonus $ while more “normal” workers get less?

  99. Andy

    JC, as someone who has worked on WS for all of my career but not in that star trader role, they will be paying some execs the big $$ and the rest will get their $$ cut to match the rest of the street. Alot of these top level guys got shaken up about not beign able to afford the multiple mansions if they had to give up the bonus so many got base salaries bumped up to 400K from 250k in the past. The rest of us who keep these businesses running every day don’t ever get to see anything even close to those figures.

  100. Andy

    Patk14, saw your post about your monthly costs. 2 big items that will save you a huge amount each month. Sell the car and dump the insurance and parking costs. You can rent a car for the times you really need to leave town for substantial savings compared with owning a car. (If you need it for work disregard). Make your own coffee and breakfast each morning. You’d be shocked at how much you save each week right there. Also 100$ for dinner for two is a little pricey. Cut back to 1 drink each on the alcohol and you’ll save $$ and still enjoy a night out. By not drinking as much alcohol and walking everywhere w/out the car you can dump the gym membership too. I think I just saved you $345 each month and I didn’t wager a guess at what your insurance might cost to keep the car.

    Sorry if it came out wrong I was channeling my inner Suze Orman. :)

  101. Tiger

    patk14, one of the BEST tips I got when I joined Club KO’s 10 week challenge was brown bagging. Granted I travel a lot for work, but in the few days I’m commuting I have a quick breakfast at home and brownbag lunch and snacks. It is very healthy, and is also budget friendly even if you shop at Whole Foods or Kings.

    Katherine, so glad to hear your story, I like your point about spending time together; makes all the difference for your kids and you can’t put a pricetag on that! And I agree with patk14, your husband is lucky! Do you have a single sister :-)?

  102. TS

    JC:
    I wouldn’t bring up good news, many people here don’t like to hear it and usually resort to name-calling when you refuse to concede to their (now-proven-to-be-wrong) claims.

    Andy:
    Banks will pay up those people who are producers, whether in trading sales or whatever role, in order to retain them. There is a lot of movement going on among the higher ranks between banks so they’ll need to protect themselves. It makes absolutely no sense – especially not for shareholders – to pay up those who are easily substitutable.

  103. Andy

    TS, unfortunately we in Mid/back office are subject to the bonus “Pool”(which is kiddie size at best) and almost never get the retention bonuses that we hear so much about. I got told that times are tough and no bonus for me last year. That was 25% of my income gone in a flash. I am just glad I was smart and never counted my bonus as income and bought my house based on my base salary alone.

  104. jc

    Andy – what % of bonuses are in cash vs. Stock? Thnx

  105. potentialbuyer

    Katherine,

    Congrats on the new purchase. I think it’s great to know that there is still family out there that still make it work in the expensive NYC metro.

    I guess I just can’t see myself in that shoe. I’m more like Patk14 now in terms of food spending so my clamp down scenerio didn’t make much sense in a fruggle family’s budget. In all honestly, I couldn’t even see myself with any condo/house higher than 500k with a profile like your. With a family, I most likely will move away from NYC metro area and take a pay cut in order to be with my family more.

    JC, I did see that article about GS. I think a lot of it have to do with their powerful position in the market now. While they are not the sole liquidity provider, their presence can be felt more so than ever before.

    Regarding housing, I think the same as before, I will buy when I’m ready. None of those 0% down or 3.5% down like the FHA loan make any sense when it was popular and it makes even less sense now that the market prove all the misconceptions wrong. Just remember, 1% interest equals 10% in price in a 30 year loan (close enough). Both numbers have been pretty volatile lately that we shouldn’t be playing that game like people playing the stock market.

  106. Andy

    Depends on your title and pay levels. VPs usually get something like 50% cash 50% stock(vesting over 3-5 yrs)but some places have an even higher % of stock. I was lucky when I used to work for a HF a few yrs ago. all bonuses for everyone at the firm were 100% cash. But like I said not getting one last year at all sucked. You have to feel a little sorry for those people who got stock over the past few years and watched the value of it sink into the toilet and know that they couldn’t sell it because of vesting requirements. They got doubly screwed. The big traders/sales people will make out fine but the support people got clobbered pretty good.

  107. Bill

    For the IB I used to work for, you would start getting stock over a fixed $$ amount, i believe it was 10% of bonus is your bonus was 50k or more (pre crash)

    so if your bonus was 75k, you would get 7.5k in stock and 67.5 in cash.

    I think the 10% ramps up pretty quickly as bonus goes into 6 figures

  108. TS

    Andy,
    I’ve never heard of a VP level getting 50% stock but I guess it depends on the bank. Most top out at 50% and that’s reserved for MD’s who make 7-figure bonuses. Typical for someone getting, say, a 500k bonus from what I’ve seen is 30% stock. But again, I’m sure it varies.

    Also, people can always hedge their stock while they wait for it to vest. Not that people actually did it, but clearly they should think about it from now on.

  109. Matt

    Any thoughts on the proposed $15k tax credit for a new home purchase, with no income limit?

  110. Tiger

    Matt, I think this tax credit is like putting a badaid on a bullet wound. They already tried with the homeowner tax credit act, TWICE, and none of that worked, at least not as expected. What’s the point?

    I can think of a few dozen things they need to be spending money on rather than lame tax credits

  111. bz

    Matt—Here’s an article about this proposal: http://moneyfeatures.blogs.money.cnn.com/2009/06/16/senator-wants-to-sweeten-home-buyer-tax-credit/
    I think it’s a good idea, not great. It will for sure spur the demand and help drain some of the inventory. Most people that oppose it come from two walks: one feels that they, just bought their homes in 2007-8, missed boat; and the other one that thinks it’s not fair for taxpayers to pay the bill. But to me, missed-the-boaters have to calm down from the time-the-market mentality; and the folks that foot the bill of this $15k proposal just have to admit that when the boat is sinking, you need to do something to save the boat. Otherwise, you come done with the boat.
    Hope that it will be passed and more homes will be sold quick.

  112. Recent Buyer

    re: 15K credit: Great for Hoboken because the 8K credit is not an incentive for those purchasing in Hoboken (due to the income limitations). But, I hear it only applies to multi-family units? ie: not condos?

  113. JC

    Regarding that DB article about 40% declines….samuel miller (possible #1 appraiser in NYC) came out on his blog and questioned the methodology and reliability for this 40% decline.

    “The market area covered was NYC, Long Island, Fairfield and Westchester, Northern NJ and 1 PA county. The 3 big national reports are the data source but FHFA and CSI exclude co-ops and condos, which are a significant portion of NYC housing units and NAR is light on co-op data.”

    He did say we still have a way to go on the correction.

  114. potentialbuyer

    bz,

    I’m in the camp that don’t think it’s a good idea but not in either of the groups that you mentioned.

    Like Tiger said, we need to spend money on the things that matter and not increase the load any more with things that don’t work. All the proposal does is subsidize the seller while doing absolutely nothing in regards to bringing the market into an equilibrium.

    Also, if they were to do it at all, it should be limited (whether to first time buyer or certain income) as it could really get out of hand. Our government’s budget is already in the gutters, we don’t need more needless spending like that.

    To keep the boat from sinking, we need to create real jobs by using projects and by innovating.

  115. bz

    potentialbuyer – I agree with most you have said. But this proposal isn’t endless spending. It’s temperary, as far as I understand it. Increasing jobs is altimately the right solution but it takes years to get millions of people back on track. Tax credit, historically, is a patch work that at most acts as a short-term solution. I think it’s working. a couple of my friends have decided to take advantage of this year’s $8000 and buy condos in Hoboken. I actually recommended this blog and Lori for them to start with. They were completely on the sideline until this $8000 is on the table. Again, I don’t think the proposal is great, but it works in a quick fix. Reducing the inventory might be one of the most important triggers for the market to start getting back to the equilibrium. It’s just what I think. I don’t have a better idea and I haven’t seen a better idea yet.

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