2009 Jul 13th

End of 2nd Quarter – Hoboken Condo Sales Results & Market Analysis

Mini-Chart of Quarterly Hoboken Condo Sales 

Here is an abbreviated version of the 10 year quarterly spreadsheet we have compiled on Hoboken condo sales data.  The results are interesting because I would never have expected a bump in Q1 of this year – given that the Lehman crisis and related mess all occurred in Q4 ‘ 08.  Properties that went under contract in the midst of all that would typically close 30 to 90 days later – at the start of ’09.  I checked the actual list of properties thinking that perhaps there were a disproportionate number of Maxwell Place or Garden Street Loft units sold.  There were 3 and 6 respectively, compared to 4 and 1 this quarter so that may account for it somewhat (confirmed by the higher average list price, too).  

I tend to think that median and average price per square foot are a better indicator of the current state of the market.  Both those numbers are down compared to the recent past.  For a predictor of future activity, I like to look at number of transactions and days on market.  Compared to Q1 ’09,   more Hoboken condo properties sold in less time in Q2 ’09.  That give me a  little hope for better news down the line.  Here’s the chart:

If you’d like to see what’s happened in the Hoboken real estate market by quarter since 2000, we are happy to add you to view a google doc which is way to large a spreadsheet to post here.  Just send us a request below (or email us at info@hobokensbest.com) and add you to the googledoc as a viewer.  Once you view the googledoc, I believe you can download it and play around with the numbers yourself.  (If anyone is a googledoc expert, please correct me if I’m wrong.  I’m still learning!)

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Thanks for reading.  We always welcome your comments and discussion.  Have a great day!

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  1. homeboken

    I don’t see the “bump” in this data? I guess if you are comparing 1Q09 to 2Q09 there is a bump, but that is not apples to apples.

    Here are the stats comparing 2Q09 vs 2Q08

    List 2.7% decrease YoY
    Avg Sold 5.6% decrease YoY
    Disc 179.1% increase YOY
    Median Sold 12.1% decrease YoY
    $psf 11.4% decrease YoY
    Meadian psf 17.9% decrease YoY
    DOM 29.4% increase YoY
    # of Sales 30.7% decrease YoY

    2Q09 vs 2Q07
    List 4.0% decrease
    Avg Sold 7.25 decrease
    Disc 203.7% increase
    Median Sold 11.4% decrease
    $psf 11.2% decrease
    Medain psf 15.1% decrease
    DOM 27.9% increase
    # of sales 57.8% decrese

    Comparing 2Q to other comparable time periods shows not one positive change in year vs year numbers. Compairing 1Q vs 2Q does not factor in the very seasonal nature of real estate. The 2Q and 3Q are the best times for the market. Once the school year starts, I expect inventory to rise and DOM to follow.

  2. TS

    Historically, doesn’t inventory usually drop during Q

  3. TS

    Sorry for the last, unfinished post:

    Historically, doesn’t inventory usually drop during Q1 and Q4?

  4. homeboken

    A decline in inventory resulting from increased sales volume is a positvie indicator.

    A decline in inventory due to expired listings can be misconstrued as positive. When really, it indicates a large shadow inventory.

    A unit listed in 1Q00 that sits for 180 DOM and is then removed from market should not be mistaken for postive news regarding inventory.

  5. TS

    Homeboken, while I agree with what you say now, that was not the issue being discussed. You stated you expect inventory and DOM to rise during Q4. I merely asked if that doesn’t go against historical trends.

    You might try to say you meant “real inventory”, which exceeds that on the MLS alone. If so, how can you measure DOM (and predict a drop in that)? It’s impossible. Only the MLS can give you that kind of data.

  6. homeboken

    TS – Good point, but I will go out on a limb and predict that listed inventory and Real inventory are both 105 higher by December 2009. Just an amateur guess.

  7. homeboken

    105 = 10%

  8. Lori

    I guess if I look at the graphic chart for average sales price (click on the tabs at the bottom of the spreadsheet to go to the various charts)I see a bar for Q1 that is higher than all the others. That’s why I call it a bump and that was all I was referring to.

  9. Lori

    I’m not sure about seasonal drops but this may help you understand what’s going on:
    http://tinyurl.com/lrupx2

    It’s a chart of units sold and units listed by month from ’06 to date. Looks to me like the numbers are all over the board.

  10. bz

    The average DOM in 2009 is less than that in 2001-3 (last recession).

    I also see that Hoboken market peaked at 3Q07 in terms of $/sqft and price. This is about 2 years lag the national level. I wonder if the bottoming and recovery will be proportionally delaied by 2 years. Maybe not, once the jobs come back in the tri-state area, Hoboken should turn around accordingly. Am I right?

  11. homeboken

    bz – I agree that in Hoboken (just like any region) housing prices closely follow wages and jobs. When jobs come back to the tri-state area things will improve in housing. But when is that? Unemployment seems to be rising at a steady pace each month. The President was quoted today as saying that unemployment will likely continue to rise for the next few months. Even if we start to recover some of those jobs, we may be at close to 10% unemployment. It could be 2-5 years or more before we get back to 5% unemployment.

  12. Interested

    I agree, but the final sale prices received in Hoboken have been very surprising strong. I believe there is still strong demand. In addition, a lot of people are simply holding and staying or renting it out – the totally distressed sellers are few and far between. You can only pray for one – it’s unlikely.

    I think we’re at the bottom with both the housing prices and the interest rates – you don’t want to miss this double whammy! In our history, there’s never been low interest rates and low housing prices.

    Hop into the market – just drive a hard bargain – you can only negotiate if you can walk away – be prepared and scope up a great place!

    I’m commercial real estate and banking attorney, but I’m doing a lot of residential real estate for friends and family (which is the worst) – things are moving and happening! Don’t miss it, but don’t reach.

    Just my thoughts.

  13. stan

    I think we are at the bottom of interest rates. with high unemployment, and rising interest rates we will not see a recovery quickly.

    The #’s above just signal a continued decline. The wise sellers have priced accordingly. IMO most rents do not come close to covering properties purchased in tha last 4 years.

  14. TS

    Hey stan, what did you think of Goldman’s earnings? :)

  15. Interested

    stan –

    i disagree.

    if you negotiate a good price, rent should cover principal, interest, taxes and HOA after you consider the tax deductions.

    for example, a place that goes for $550,000 with 20% down will have a total monthly payment of around $3,500. you can rent that same place for $2,500. you should save around $1,000 a month shielding income. you also bank principal and have some upside with appreciation, as prices went down.

    problem, a $550,000 place is listed for $600,000, so you have to negotiate well. at one point, sellers (who want to move) get sick of showing their place….

    thoughts?

  16. Interested

    the $3,500 is:

    mortgage of $440,000 at 5.3%
    10K of taxes
    250 HOA

  17. jc

    Yes problem with shielding income part. On an investment property you can deduct up to $25k ONLY if you make less than $100k. It’s phased out up until $150k when all the losses are ‘banked’ to offset similar cap gains.

    These banked losses dont help with cashflow at all. That’s the problem.

  18. Lori Turoff

    Inventors do not normally get mortgage rates of 5.4% That’s for owner occupied properties. Even assuming you could, how many investors are willing to put 20% down, have a monthy outlay of:

    $2,500 for mortgage
    $1,000 for taxes (10,000 is too low for a $550,000 unit that rents for mid-2000s)
    $250 or more for maintenance
    + add some number for insurance
    + add the cost of finding a tenant – almost all rentals now are fee paid by landlord
    + add the cost of painting every time a tenant moves
    + add the cost of doing repairs on the unit (not included in your maintenance)
    + add some amount for the possibility that your unit may go vacant for a month or more in this market when you are competing with Applied and Curling Club and the Metropolitan who are offering huge deals on rentals.

    for a total cash outlay of at least $3,750 to possibly get $2,500 a month in rent? Not to mention that 3,750 is way too low.

    It is extremely difficult to cover your expenses today with only 20% down on an investment property.

  19. Interested

    JC –

    You would have to check with your tax professional and your attorney, I’m definitely not giving advice, as this is not my area, but I think some people form LLCs to hold the real estate and actively manage their unit, so they can take an ordinary loss….

    Lori –

    The example was given for the people looking to buy – to show that renting is a bad idea if you’re paying $2,500 in rent and wouldn’t mind buying a place for $550,000! rates are low and prices have come down.

  20. jc

    I have investment property both in an LLC and holding outside with mortgage and title in my name. Real estate losses are not ordinary income losses unless you are a real estate proffesional (like you said) but you must declare that job title on you tax returns and the guidelines are strict.

  21. Lori Turoff

    Regardless, Stan is right if you assume a 20% downpayment. Rents do not come close to covering your costs. If you’re going to create a scenario to support your point I think you should use realist numbers or it doesn’t mean very much. That’s all.

  22. homeboken

    Interested – I have heard so many people threaten that “rates are so low, and going up, you don’t want to miss the boat.”

    Here’s my question – If rates jump 100, 200, 300bps what do you think that does to price? I contend that right now, rates are not the issue. Price is the only thing that matters.

  23. Interested

    Lori –

    My point was that right now buying is better than renting. The numbers support that:

    another example:

    417K mortgage with rate at 5.125% = $2,270
    Plus 850 a month in taxes
    Plus HOA (which covers insurance) of $300
    *factor in tax deduction

    versus

    Renting around $2,500-$2,800

    The number are basically equal!

  24. Tiger

    Interested, I agree, your scenario though works if and only if the property is owner occupied. ‘Renting out’ at this point would be negative cash flow.

    The way I see it, if you can afford mortgage, in a good shape to stay in your place 5 years or so, by the time you are ready to move on you will be very likely able to rent out your place.

  25. stan

    TS-

    let’s see the other remaining banks this week. has goldman always been the best? of course, the reasons are debatatable. I still contend that the GS profits are the result of a rigged game, are they quantifiable and reportable, sure.

    Bad debts off the books, billions in public money, bear and lehman eliminated, cmon. So Goldman’s 30k employees get more per person (assuming this happens throughout the year). Have they hired this year? ( they have not) Have they replaced the employment losses that have been mammoth from the other firms?

    Interested: I was referring to an average person who rents out their residence who purchased in the last 4 years or so. You are correct with low rates and the proper down payment, including the deduction you could approach the rental costs. However this move would have to account for the direction of prices. If a potential buyer thinkls they are going up, go for it.

    I do not think prices are headed that way over the next year.

  26. TS

    Stan,

    So how is the game rigged now? First it was the change in accounting rules that was the primary reason for Goldman’s earnings last quarter, then it was a one time “shot in the arm” due to AIG payout (the payout was real, of course, but not the sole source of profits), then the FICC profits were somehow suspect, and now it’s…?

  27. patk14

    It is always refreshing to read Lori being fair and balanced. Most realtors would automatically agree with everything Interested wrote as it supports buying now (good for realtors).

    Interested, you make a good analysis but you fail to recognize the opportunity cost of the 20% ($110 thousand) down payment in your example. That money would earn interest (I get something like 1.75% at ING right now and expectations are that rates will rise considerably) that you are now sacrificing. Not a huge number but needs to be factored in. It also is a big hit to a individuals liquidity position during a very tough economy with job losses continuing. Most people attempt to minimize expenses and get liquid during times like this. In a nightmare scenario, you buy now, tie up $110 thousand of liquidity, economy gets worse, lose job and therefore all the benefit of the tax write-off, have to sell at a lower price than you paid and lose your down payment or worse. Protect your downside.

    I also disagree with the use of the word “cheap” to reflect current Hoboken prices. Even considering the recent pullback, prices have skyrocketed over the last 10-15 years in this town. I don’t think cheap is the proper term for what is going on.

    I’m sitting on a good amount of cash right now and my behavior is being driven far more by the prospect of prices continuing to decline than by the likely prospect of higher interest rates. If the economy settles down over the next several years and job security improves and I see a trend of rising home prices, I will then step in with a large down payment. Sure, I get less of a interest deduction but I will have a low monthly fixed payment and will sleep better at night. Meanwhile, rents are declining in Manhattan and Hoboken so some very attractive apartments are reasonably affordable.

  28. Trumpinator

    “I tend to think that median and average price per square foot are a better indicator of the current state of the market.”

    What complete, blindly optimistic bullshit. Total sales are a better indicator – and comparing the 303 total sold units in 2007, versus the 128 sold in Q2 (qtr to qtr) reflects the demise of the real estate market.

    Another sign that the authors of this blog / website are completely biased, and are real estate-sales oriented. Take these figures and opinions as light heartedly as you can to protect yourself.

  29. stan

    TS- we shall see.

    you ignore the rest of my post to suit your argument. I admitted Goldman had a blowout quarter, (albeit from means I find questionable) what of the rest of the banks?

    The most important questions, how will this affect Hoboken real estate? The answer: it won’t. Not until someone starts hiring, which Goldman has not(they reduced their work force year to date).

    If Goldman isnt hiring and they are so flush with cash, what of the other banks that employ much more people in the area?

  30. Eric

    Trumpinator – Median $/sf is always a good indicator of what the market is doing, i.e., “the current state of the market.” No one said the market is better than it was in Q2 2007. Obviously that’s not the case.

    And how about you keep reading, you’re actually agreeing with Lori:

    “I tend to think that median and average price per square foot are a better indicator of the current state of the market. Both those numbers are down compared to the recent past. For a predictor of future activity, I like to look at number of transactions and days on market.”

  31. Recent Buyer

    I just purchased a 2 BR condo on washigton/7th (just closed on friday!) for $395,000. 5.5% 30-year fixed. $142 HOA fees. My monthly mortgage, HOA, taxes, and PMI is $2,793.

    I just found out that the owner of the only other avail unit in the building ended up taking it off the market and renting it because he had his listed for $15K above our sale price and his unit was not updated.

    We’re on the 2nd floor and that unit is on the 3rd. They rented it for $2,000. The unit has not been upgraded whereas ours was totally gut renovated and updated with high-end finishes (ss appliances, custom Hunter Douglas blinds, imported slate countertops, all new electrical and plumbing, all new pella windows, all new kitchen cabinetry, california closets, mosaic backsplash). No parking. Add’l storage in basement. It is in an old building (with 10 units) that was condo converted in 1989.

    I’m wondering what you guys think re: a) what we could rent it for should we not be able to sell (we’ll likely outgrow it in 5 years bc it’s small (850 sq ft) and we hope to have two kids by then, and b) with the tax benefits, did we make a good move w/ respect to buying? We live in Manhattan now and pay $1795 in rent. We needed to get out of Manhattan because the taxes were killing us and considered renting, but ultimately bought for the tax benefits (28% tax bracket). Now, I feel like many folks are saying that 5 years will not make a difference in property values…yes, I know, everyone has a different opinion…

    But, just in case, I highly doubt we will be able to rent it for $2793 now that I know that the unit above was rented for $2000. I just don’t think the finishes will raise the price $700…thoughts?

    Just picking your brains. :o)

  32. stan

    trumpinator. I disagree,

    Lori seems to be one of the relaible, honest realtors out there.

    If not, why the unbiased access to her data?

  33. homeboken

    Recent – Congrats on your purchase. My experience with the area of Wash where you own is this. 850sqft 2 BR with no parking, will attract the roommate pair. Two, unrelated professionals that are probably 0-3 years out of school. This type of renter will put more importance on rent than finishes.

    What I mean is, offer them a $1000 per person rate to rent the unit above you that isn’t upgraded or $1400 per person to rent your high-end finishes unit, and they will take the lower rent all day long.

    Just my humble .02. Again, congrats on your purchase.

  34. TS

    Stan,

    Last quarter you came here saying that GS’s earnings were “smoke and mirrors”. You explained away every good thing by saying it’s either a one time thing (AIG payout), an accounting trick, or what have you. Now you’re changing your argument to GS’s earnings being of questionable means(?), not that they’re not real. Make up your mind already and stick with an argument, or admit you were wrong.

    GS stopped cuts earlier in the year, they announced it in May. You can’t expect firms to start hiring the second they have a good quarter. But I think that good earnings is a harbinger to future hiring.

    That said, I don’t think we’re out of the woods yet and things will be rosy. But I think disaster has been averted, and we are in a much better position than we were Q4 2008 when people were screaming imminent collapse of most investment banks.

  35. stan

    I have been nothing but correct in regards to last quarters earnings. Your telling me this quarters earning would have been as they are with out the suspension of mark to market. That is laughable.

    illustrate to me where I declared armeggedon, I believe my argument was that earnings are bs, which they are. Of course earnings are up, we are paying for it.

    The fact of the matter is if banks were still using last years accounting methods they would be in far worse shape. don’t take my word for it:

    “Aggressive accounting could also pump up the lenders’ results. Most of the big banks took advantage of an 11th-hour rule accounting rule change in the first quarter to book smaller losses on troubled securities. Jack T. Ciesielski of The Analyst’s Accounting Observer estimated that without the change, earnings for the biggest banks in the Standard & Poor’s financial index would have been almost cut in half. In the second quarter, the impact could be even greater.”
    http://www dot cnbc dot com/id/31921784

    Read the article.

    “Under the program, Bank of America could receive as much as $6 billion to offset part of the losses it incurs from lowering monthly loan payments and to defray its costs, according Treasury Department data.”

  36. stan

    Lori you can keep that one in moderation, I removed the link, thx.

    I have been nothing but correct in regards to last quarters earnings. Your telling me this quarters earning would have been as they are with out the suspension of mark to market. That is laughable.

    illustrate to me where I declared armeggedon, I believe my argument was that earnings are bs, which they are. Of course earnings are up, their subsidized

    The fact of the matter is if banks were still using last years accounting methods they would be in far worse shape. don’t take my word for it:

    “Aggressive accounting could also pump up the lenders’ results. Most of the big banks took advantage of an 11th-hour rule accounting rule change in the first quarter to book smaller losses on troubled securities. Jack T. Ciesielski of The Analyst’s Accounting Observer estimated that without the change, earnings for the biggest banks in the Standard & Poor’s financial index would have been almost cut in half. In the second quarter, the impact could be even greater.”
    www dot cnbc dot com/id/31921784

    Read the article.

    “Under the program, Bank of America could receive as much as $6 billion to offset part of the losses it incurs from lowering monthly loan payments and to defray its costs, according Treasury Department data.”

  37. dkzzzz

    To explain GS earning s one does not need to be a financial analyst:) GS has been in bed with every government of every country in which they r operating.
    If they did not own US government they would have been shut down for insider trading a few decades ago.
    Superior trading system and information gathering my ass. GS are a bunch of superior crooks.
    People looked at Madoff’s superior trading for decades and said it is statistically impossible , but they look at GS unflinching returns and performance, unmatched by any other Co. in history of the market and they don’t see insider trading they see a “pure genius”. Lol.

  38. Andy

    Recent, I think 850 sq ft could command a 2k rent roll. but I think you’d be pressing it if you tried to cover your monthly expenses. Once you get the PMI paid down to the point where you can get it removed then I think you might be better off. Just keep a steady eye on what manhattan commands in terms of rent. I know a bunch of my friends just moved back into manhattan because rents dropped quite a bit. Hoboken can’t command high rents if its just as expensive(or cheap) to live in Manhattan. We take all of our housing cues from the NY city market since over 50% of the town work in the city and choose Hoboken because it offers a cheaper alternative.

  39. Recent Buyer

    Thanks Andy! :o)

  40. Recent Buyer

    2K would cover the mortgage, so not too bad…

  41. TS

    Stan,

    “Your telling me this quarters earning would have been as they are with out the suspension of mark to market”

    No, what I am saying is that you cannot explain away GS’s earnings with this alone. That their earnings are not all “smoke and mirrors” and “pathetic” (your words).

    And where did I say you screamed armegeddon??

    This conversation has exhausted itself. I’ll check in with you next quarter.

  42. Lori Turoff

    Recent Buyer – you’ll be able to rent it for $2,000 (right now). Who knows what the market will bring in 5 yrs. Enjoy your new home – it’s very nice! Welcome to Hoboken, too.

  43. Recent Buyer

    Thanks Lori! So, you agree with homeboken that the updates are not factored into the rental price?

  44. bz

    Recent Buyer – Congrats! Don’t worry about renting your new home. You just bought it. Enjoy. As Lori said, who knows what’s going to happen in 5 years. Life isn’t all about worrying about the future. It should be all about being happy. I moved to Hoboken 6 years ago, met with my husband (who was the first guy I met in town), got married, just had a beautiful baby girl, and planning to have another one. I think Hoboken will be a piece of fertile land for your life. It has been for me. Welcome.

  45. dkzzzz

    Regarding renting 2 br on Washington and 7th. It does not command 2000.00 right now. Uptown is hurting right now. The pnly places that are in more trouble are “ghetto” streets of Hoboken those beyond Adams St.
    Yoou most likely will ahve tyo go down to 1800 to rent it.
    I rented 2br-2bth condo (Not a railroad) on Second street in Hoboken for $2000.00
    To give you an idea of what is happening on a rental market : I had to fight other renters to get a tiny 580sq feet railroad 1br. for $1800.00 just last Summer.
    Rental market is down and inventory is huge.
    This Summer is quite different market.

  46. Tiger

    bz, congratulations! :-)

    I liked your comment about Hoboken ‘a fertile land for your life’. I know it has been for me (though I haven’t been lucky yet to find the one and start a family, but it will happen, I’m not stressing about it :-) )

  47. Recent Buyer

    Hmmm. Well, the one upstairs just rented for $2,000 this month w/o any upgrades…so, I think ours must be at least worth the same. I also liked the fertile land comment – nice! :-)

  48. Andy

    dkzzz, depends on how old you are and what your needs are regarding the town. Given where I am today you couldn’t pay me to live downtown again. I feel really old saying this but all the young people and bar noise downtown makes me cringe. I used to live on Garden and 1st and I thought it was lovely until the bars let out and people would stumble home drunk. That sucked.

    Uptown is 150% nicer in terms of quality of life. There are better parks and less Path/out of town riff-raf. If you take the bus to midtown its a non-issue regarding the commute. IMO.

  49. Eric

    Andy, I hope you’re right. I moved from 2nd and Grand to 11th and Adams last month, and I haven’t gotten used to the difference. It’s like living in a different city. We were so used to having our favorite restaurants within a couple blocks. Uptown is so… residential. The 10 block walk is killer :) Haha.

  50. dkzzzz

    Andy I completely agree that uptown is nicer; streets are pretty ,houses are nicer all wroth iron walk ups -beautiful.
    I am not old, but I dislike jersey crowds of 20 something’s as much as you.

    However I did not move to Hoboken for it’s exquisite restaurants and entertainment venues:) I live in Hoboken because it has Path, because Path is 24×7 route to Manhattan where I really want to be if not for 10% city tax.

    If anyone enjoys Hoboken for Hoboken “atmosphere” they might as well move into deep Jersey locations with better schools, better air, less traffic, lower taxes, lower property prices etc, etc, etc.

  51. lori

    I love Hoboken for its “Hoboken atmosphere” and would slit my wrists if I had to live in the ‘burbs. Being 10 minutes from Manhattan in a town with tons of charecter (good and bad), history, uniqueness and charm is what makes Hoboken so special!

  52. TS

    If what you say is true: “However I did not move to Hoboken for it’s exquisite restaurants and entertainment venues:) I live in Hoboken because it has Path, because Path is 24×7 route to Manhattan where I really want to be if not for 10% city tax.”

    Then why didn’t you move to, say, Jersey City…where you don’t get Hoboken’s “charm” but you can pay substantially less? Surely there must be more to Hoboken than you state, otherwise you would have explored cheaper alternatives.

  53. wally

    Actually, GS is selectively hiring believe it or not. They are just poaching the best talent available.

  54. Tiger

    TS, that’s the same exact advice I gave to dkzzz, I don’t think he likes to admit it, but he IS attached to Hoboken.

    It’s ok, during my Stevens days ‘I couldn’t wait’ to finish college to get out of this town… August 17th, 2009 will be my 11th year in Hoboken 😀

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