2009 Aug 12th

The Wednesday Weekly Wrap Up – Hoboken Condo Sales & Inventory for the Week of August 11th

Inventory is shrinking! Another week of fewer homes for sale. The other thing that jumps out at me is that the listed units and new listings are still at a price per square foot significantly higher than that of the sold units.  To see the report with links to the listings, please complete this:

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Here are this week’s numbers:

Here is the Weekly Wednesday Wrap Up from Aug. 4th.

Here is the Weekly Wednesday Wrap Up from July 28th.

Studio & 1 Bedroom Hoboken Condos:

12 new listings. Average list price $393,490. Average $590 per sq. ft.

178 total active – $397,780 average asking price. 106 average DOM. Average asking price $553 per sq ft.

7 dabos. 75 average DOM.

3 sold for an average price of $396,666 or $490 per sq. ft. in 101 days.

9 price reductions.

Two Bedroom Hoboken Condos:

12 new listings – average list price $548,483. Average $533 per sq. ft.

277 total active – $609,668 average asking price. 111 average DOM so far. Average asking price $521 per sq. ft.

4 dabo’d. 142 average DOM

5 sold – $588,600 average sales price or $496 / sq. ft. Average 193 DOM.

As a listing agent, these are the kind of listings I would dread. Sure they sell eventually but after a long tortuous dealing with the seller and a ton of work. Not an efficient use of my or any other agent’s time. An almost 20% price reduction over dragged out over the course of more than a year! What’s with increasing the price?

16 price reductions.

Three Bedroom and Larger Hoboken Condos:

69 active 3BR condos – $950,608 average asking price. 113 DOM so far. Average asking price $519 per sq ft.

5 new listings. Average price $917,780. Average price $496 per sq. ft.

None dabo’d.

1 sold for sales price of $459,900 in 115 days for $369 per sq. ft.

3 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. Like this report, to receive the map with the actual links, you will have to request it.

 

Want to Receive New Listings & Price Reductions Daily?

If you would like to be emailed the new listings and price reductions each weekday in either 1br, 2br or 3br categories just email us at [email protected] letting us know which size(s) you would like and we’ll add you to the daily email list.

 

You can always contact us at 201 993 9500.
Thanks for reading and, as always, we welcome your comments!
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  1. potential_buyer

    So inventory is going down – is this because there have been significant upticks in the number of sales or because people are pulling their listings? I have been following this rather closely, and I would believe that it is more the latter than the former. Please let me know if I am delusional on this one…

    Great work as always! I loved the “where things are selling map” – top notch stuff which really assists the rest of us understand the market trends. Thanks!

  2. homeboken

    The 2 BR at South Constitution listed for $599,000 is not really new. I guess it is new on MLS, since they probably just engaged a broker. But this has been FSBO for at least 90 days, and had an original asking price of $645,000 or $675,000 – I can’t remember.

    In any event, glad to see a broker got a hold of the listing and put a somewhat reasonable price on it. Though if it sells at full ask it will still be $11,000 below the 2004 sales price. This building has not held up well.

  3. Eric

    Before reading Mike’s comment, I was going to say that the increase actually helped them out. It sold for their asking price of 543 before the mistake increase to 569. If they kept it at 543, it would have gone for lower than that. All that says is that they did better than they resigned themselves to, but hey, silver lining, right?…

  4. patk14

    Homebroken, what are the reasons that the Constitution has not held up as well as some others? It is in a great location unlike poor performing SkyClub. Is it the high taxes and maintenance? Poorly built?

  5. homeboken

    patk14 – If I had to guess I would say that the combination of taxes and HOA are the biggest hits to prices here. Tax bills in this building seem to be running about $11,000 – $12,000 for a 2 BR. That is really high. The maintenance is also very high, about $700 per month for a 2BR. You are out $1,700 bucks before you even get to your mortgage.

    The location is one of the best (in my opinion) and the waterfront views should command a premium.

    My guess is that this building was subject to the biggest run-up in prices and thus have the farthest to fall. When 1025 & 1125 Maxwell were being built, units a 2 Constitution were selling for similar psf as the new construction. Granted, 2 Const is only 10 years old. The fact that the current asking prices are at 2004 levels is the noticeable thing here.

  6. thoughts

    Question for all of the pessimists on this blog – when is the sky falling? Prices did go down around 15% or so, but they never plummeted by 40-50%. Week after week there are decent sales….

    I think if you’re looking to buy – you don’t want to miss this time….

    Yes, nobody can predict the future and tell you when the bottom hits or when the recover has started, but can make an educated decision. I think we are near or at the bottom.

    Buy something priced to move – they’re out there!

    Hoboken is a strong market and limited in size. Very impressive.

    Thoughts?

  7. Tiger

    thoughts, I always had an optimist outlook, even back in September when everyone (including myself) lost significant money, whether it being home value, retirement, or lost profit. Hoboken is holding up well, I agree, but we can’t declare victory yet.

    I think we are looking at an L shaped recovery, we will probably continue on this trend until things pick up / and it will be the point when home values follow their historic trend. I’m no expert though.

  8. Fred

    Toll is starting construction on a new condo building in Hoboken. Not sure how many units planned.

  9. Fred

    Thoughts,

    Of the 26 recorded asset bubbles in history, going back to the 17th century, ALL of them popped eventually. So if you believe that Hoboken has participated in the bubble, I don’t like the odds of being on the other side of history. If you don’t think Hoboken is in a bubble, how much would real estate there have to go up in a 10-year period to convince you it’s a bubble? What is so special about Hoboken that it should intrinsically grow at 15% per annum? Or 10%? Do you know what the implications are for anything that grows at those rates long-term? I will tell you: Hoboken would eventually be bigger than the GDP of the world–a logical fallacy of course.

  10. thoughts

    Fred –

    I think Hoboken went up the past 10 to 15 years because the community changed dramatically and the trend was toward urban living. Ask anyone what Hoboken was like 15 years ago – rundown, not a lot of nice restaurants, etc. I think the build up of the community caused the substantial increase in prices – Hoboken was a diamond in the rough and became a hot spot where people could get more space than NYC, but not lose the city feel.

    I agree that the “bubble” caused some of the increase and the corresponding decrease, but the development of Hoboken into what people love today was the main factor. Therefore, it’s different then other communities.

    If Hoboken was the same now, as it was 15 years ago, I would agree with you.

    Thoughts?

  11. Laki

    Thoughts, The sky will not fall, but the prices will another 30-40% over the next 5 years slowly over time.

  12. rob

    If Hoboken is established today as far as area development is concerned (in other words it is what it is with no more room for development) then in the best case the real estate prices will stabilze at the current level and likely, will not dramatically increase in the next 10-15 years
    Thoughts?

  13. stan

    “Week after week there are decent sales…”

    at lower prices points than previously encountered.

    Homeboken is right, some places are already at 2004 pricing, and more seem to be headed that way. I wouldnt be so pessimistic if I saw prices holding steady, but there has been no indication this is the case. What happens if mortgage rates rise in conjunction with already falling prices?

    “I think if you’re looking to buy – you don’t want to miss this time…..”

    When prices do stabilize, then resume their eventual price increase, whenever that may be, it won’t happen overnight, there will be plenty of time to purchase a property.

  14. thoughts

    Laki –

    Unless all of NJ (i.e. Summit, Livingston, Franklin Lakes, etc.) and NYC fall or another 30-40%, Hoboken is not falling another 30-40%. Are they?

    I highly doubt that something that was 700K, which is now around 580K, will go to 310K. If it was going to happen (like LV), it would have happened already.

    Thoughts?

  15. stan

    “Hoboken is not falling another 30-40%”

    another 30-40%? I don’t think too many RE bears on this site are in the camp that we’ll see 50%+ price declines.

    Additional 10-15% is in the cards, bounce along the bottom for a few years in my opinion.

    Thoughts-
    do you see us at the bottom, or more to go?

  16. stan

    just reread laki’s comment, he/she is calling for 30/40% additional, missed it previously.

    if that’s the case I hope I have a lot of cash on the sidelines. :)

  17. Andy

    My $0.02 — People are no longer being laid off in droves. No one is using an ARM mortgage anymore unless they are financial wizards. Most people are saving real downpayments not 5% but more like 20% or 100k+. All of these are huge positives. Now, Hoboken was very late to the game in terms of real estate apreciation over the years. What happened in Manhattan and surrounding NJ towns in the 80s and 90s did not happen in Hoboken because lets face it the place was a dump. You can’t honestly make the statement that Hoboken will decline another 40% and believe that to be true. The surrounding subburbs of Summit, Short Hills, Milburn, etc.. would have to plummet in terms of home value as they represent the alternatives to Hoboken although they are more suburban. Manhattan is still many times more expensive than Hoboken.

    Do we have excess inventory to work off? Yes.
    Do we have trouble getting financing? Yes.

    I think we may see falling prices to the tune of maybe another 5-10% but prices are already rebounding in many communities all over the country due to an overcorrection in price. Volume has picked up as well.

    We’re starting to see the volume pick up in Hoboken which is a tremendous positive. Developers are dumping units they were unable to sell and aren’t rushing into new projects to further flood our market. Eventually supply and demand does re-enter the equation here and we will see a demand uptick as we work off the over-supply.

    The major take-away is that we can no longer afford to rely on development to sustain the city of Hoboken.

  18. Laki

    Yes all of NYC metro Area (NY, NJ, CT, etc.) will drop another 30-40%. Hoboken is not an exception. I’m basing my estimates on my proprietary research. But I’m not the only one who thinks this is the case. Deutsche Bank Mortgage Research teams happens to be even more pessimistic than I am (They’re pricing in 40%+ declines in this region). On the other hand, the RPX forward markets are more optimistic than I am, as they’re pricing in only another 20% down.

  19. homeboken

    There is one stat that Lori posts every week that I find very telling about the direction of the market.

    # of price reductions.

    8/4 – 28
    7/29 – 32
    7/22 – 32
    7/15 – 35
    7/8 – 26

    This tells me two things:

    1. A majority (not all) of the time the Sellers original ask is delusional.
    2. Prices are trending downward with no sense of stabilizing anytime soon.

    Couple all the price reductions with DOM in excess of 100 and I don’t think Hoboken is bottoming out just yet.

  20. thoughts

    Stan –

    I agree with homeboken. I think we are near the bottom but not at it. That said, if you can get a good deal and are going to stay for a while, I would buy now. Get the good i-rate, tax write off and own your home. If it goes down, it won’t be much and if you drive hard bargain, you will likely get the bottom.

    Laki –

    If you were correct regarding 40% decreases at this point, nobody would be giving home loans or business loans. 40% is sooooo dramatic. I think it would have happened already….

  21. JC

    40% may revert us back to long term trend which I respect,(if hoboken housing was a stock I’d agree) but Laki cant we just drift along around these levels slightly lower for a number of years to also revert us back to long term trend? I dont see why not since governement is doing everthing it can to “inflate” prices here.

    Is financing really available out there? I just got turned down to refinance my condo at 85% LTV (PMI companies turned it down not on the bank end) Excellent credit and financials. Very dissapointed.

  22. Eric

    Laki: “I’m basing my estimates on my proprietary research.”

    I hope that was a joke. Unless you’re an analyst for S&P/CS or something (in which case I’m guessing your company prohibits you posting on these boards in the first place), get over yourself.

    You say we’re in for another 40% drop.

    But let’s take a step back. The huge decline in prices like what happened in LV never materialized in Hoboken or NJ/NY in general.

    So if your prediction is right, either (1) prices are going to slowly decrease for another decade without any improvement or (2) we’re going to have a dramatic decline after leveling. Both of those options are completely unrealistic.

  23. thoughts

    JC –

    There’s credit, but it’s hard for residentail at more than 80% LTV and 65/70% LTV for commercial. That said, I am surprised that you cannot refi at 85% LTV – Was an appraisal done by a lender that was willing to do the loan or was the value a guess?

    Thoughts

  24. Andy

    The days of more than 80% ltv are probably gone forever. If you only put down 5 or 10% then you’re in for a long haul to bring your LTV up to 80%.

    Eric is right, DB is predicting a crash that hasn’t happened and no one else is chanting this except a few RE bears on this site. Again I will reiterate that jobs are stablizing in the very fields that employ over 75% of hoboken residents and bonuses are starting to creep back into the picture. People aren’t rushing to spend their money but no one is broke either. Sellers will continue to remain firm and I would hazard to guess that smaller price drops will happen and then flatten for months at a time.

    For those who are trying to equate the stock and housing markets I’ll say look at what happened in equities. The market rallied 47% or more in recent months and institutional money was all on the sidelines. Once they enter and they will because they have performance goals to meet this year a floor will be put in place.

    Just use basic psychology. People are not as “poor” as they thought when people were screaming we’re in the Great Depression part 2. Now that we aren’t and many economists are calling the end of the recession, its a natural phenomenon that people will start to spend $$ again.

  25. JC

    Legit appraisal. PMI wont touch the loan…the refinanced prinicapal is also above the $417k sweet spot which could be the main factor.

  26. Fred

    “thoughts” sounds an awful lot like somebody else. Hmmmmmm….

    I think the whole area, not just Hoboken, will decline another 40%–Manhattan included. The 120-year trend of real estate prices following inflation has been very steady for the most part. But in 1997 to around 2007 it went well-above trend. I expect that to reverse itself and eventually end up at trend. The only thing I’m unsure of is if it will overshoot and going below trend first.

  27. Eric

    Fred, In what timeframe are you predicting this will happen?

  28. SJ

    I believe that although we (the tri-state area) were one of the last places hit by the housing crash, we will be one of the first to recover – nothing to support my theory – just based on the fact that this is such a transient area of the coutry where alot of people have alot of money. I have spoken to several friends (young professionals) whose “water-cooler” conversations have turned to “when is the bottom so we can buy”… not as much talk about job losses and foreclosures… However, I think that the biggest outlier is interest rates – if they start to creep up too much, basic economics says that will depress housing prices…
    just my opinion.

  29. Fred

    Eric,

    I do not know. It is easier to predict what will happen rather than when it will happen.

    I believe there are people with a lot of money in California, Las Vegas, Phoenix and Miami. However, that didn’t prevent the hysteria from reversing itself. People here will still have money even after the market falls a lot. Like the other areas, not many will want to step in front of a moving train. Anyone who bought Miami property 20% from the peak, may have thought it was the right move, but surely regrets it now.

    When prices stabilize here, it is amazing how many people think the next move is automatically up. This is the “buy on the dip” mentality that has served people well over the last two decades or so but history shows that is not always a smart mental construct.

  30. homeboken

    I don’t understand everyone’s fascination with this magical “bottom”. This is real estate, prices are sticky. Everyone realizes how slow, yet steady, the decline has been.

    Well multiply the decline by 2 and that is how long it will take to rise back up. There is no such thing as an over-night doubling of real estate values (unless you strike oil in your yard). Don’t worry about missing the bottom we are going to be here for a few more years at least.

    It typically takes 5 years for a homeowner to begin accruing equity over and above the downpayment. In this market it will take even longer, until that point we are all effectively renting our home, be it form a landlord or a bank. And yes, I do have stats to back up that statement. I will post the link to a detailed report from the CEPR with Lori’s permission.

  31. TS

    Fred,

    If you’re basing your argument for declines on mean reversion, and then you go on to say prices will fall another 40% then implicitly you HAVE to have a specific time-frame in mind. If you post the chart you’re looking at I can quite easily tell you then what time-frame you must hold to.

    However, if you truly believe you cannot predict the time-frame, then you are also unable to predict what % declines are in store.

    So which is it?

  32. Fred

    TS,

    I left out what I thought was understood:: A decline in “real” returns of 40%.

  33. TS

    Fred,

    That’s going to change your claim quite a bit.

    No longer are we looking at 40% drops in nominal prices, but 40% drops in real prices. However, if this RE correction stretches out over a sufficiently long period it is consistent that nominal prices never drop (because of inflation) while real prices slowly drop.

    I don’t think most people have in mind such a claim when they talk about price drops. But it does take some of the shock value out of what you said.

  34. Fred

    If inflation is low and the correction comes fast, price drops will be large. If the former is true, but correction takes 10 years, then moderate yearly price drops are in store. But if large inflation occurs, it might be that nominal prices don’t drop, but in fact purchasing power will get decimated.

    Japanese real estate is significantly below where it was 20 years ago. However, isn’t any place in the US that was at the ridiculously overvalued levels Japan experienced in 1990. Japan holds the record as far as I know. In fact, not that anyone cares, but London will see a much larger correction in real estate then we will see here. Their bubble was very bad.

  35. TS

    If large inflation occurs it’s good to have debt, i.e. a mortgage, all else equal.

  36. Andy

    Has anyone been seeing what the FED has been doing? printing money makes for major inflation. They are not as adept as we all want to think in moving policy to correct for inflation. My personal thoughts are grab as much cheap fixed debt as you can because rates are going to go back up over the next 2 years. The Fed already discussed this yesterday.

  37. Leaddontfollow

    I am neither a bull or a bear when it comes to the Hoboken market,rather an individual. IMHO you must make the choice you can live with and actually pay for. If you have the money to buy a property here,the place will make feel at “home”, and it’s better than the 600sf railroad you’ve been renting..buy with in your means and enjoy. If you can’t afford the mortgage rent a nice place and enjoy the mobility it offers.

    Let’s face it, the gold rush here is long over. The 1bd’s that were bought at $260k in 2001 and sold 4 years later for over $500k have come down 90k and will stabalize, the ugly units will stablize more, the prime units will always sell. If the place is unique,ie; outdoor space, having a garage, a large deck perhaps,it will be in demand over the crapboxes that have taken a nose dive. Buy something special…the good places are selling and if you want one of them it’s not going to sit long in any market.

    20%, 40% drop, stable market, hyperinflation.. noone knows, but if you follow the herd you will always have the same view. Just think of it..stocks are up 40% since march, atleast 40%..I’m sure glad I am an individual and took a shot. Same with realestate..if you have no skin in the game..you results in life will be mediocre at best. Buy wit in your means and go on with your life…typing won’t change a thing.

    Good luck to all.

  38. thoughts

    Leaddontfollow –

    Morning.

    I think you said it right – if you have the money and you want to buy, look around and buy the “special place” – they’re still moving and you’ll have a home. Personally, I beleive that you if get a good price (i.e. 20%-22% off the high), you’ll be pretty (not 100%) safe….

    Also, I don’t understand it, but I have read (and as stated above) it’s good to buy and have a mortgage if there’s inflation – which is likely?

    By the way, I have friends buying in Summit and Madison – 900K to 1.1MM for 2,500-3000 sq. ft. home. Obvisouly, desirable sections of North Jersey are in this together….

    Just my thoughts.

  39. Randy

    Did real-estate in this area really go up 10-15% annually for a ten year period? Is there any data to this?

  40. Bill

    I think the bulk of the increases were from 2002 to 2006

    a lot a properties nearly doubled in price

  41. homeboken

    Bill – I think you are right and I also think that is the biggest problem. Nothing fundamentally changed about Hoboken or NJ in that 4 year period. Nothing. That is why I bleive long term we will revert back to the mean.

    For the last 100 years, home prices have appreciated at the same rate as inflation. There are instances where neighborhood renewal or gentrification increase values at a higher rate. But to beleive that this town should maintain prices that are 3+ standard deviations from the mean is not logical, in my opinion.

  42. patk14

    Also, prices doubled between, say 1995 and 2000. Coming out of the recession of the early 1990’s, real estate was back to 1987 prices by 1995. Given the strong tech stock market and growth in the financial sector, prices needed to rise quickly and they did. I just don’t buy the fundamentals for the 2002 to 2006 gold rush in real estate.

  43. bz

    homeboken – “Nothing fundamentally changed about Hoboken or NJ in that 4 year period. Nothing.” How long have you been living in Hoboken? I came in 2003 and I see so many fundamental changes that have happened in Hoboken since then. I heard that Hoboken was a post-college town before I came. But now I think it has transformed itself into a yuppie, charming, yet modern town that accommodates people in a much wider age range. The town has grown along with the people that moved here and stayed here. New and high-end residential buildings, new shops and restaurants, new gyms, new day cares, new play grounds and public facilities in old parks (even new piers along the water front), new doctors’ offices, new art galleries, many more festivals and parades…I can go on and on for hours. How many times you see moms and dads walking with their kids, from infant to school aged, on the street? How many times you see and hear people from Europe and Asia walking and talking on the street? Did you see all of these before 2002? These are the fundamental changes to me which I can feel and enjoy everyday. That’s the value we are paying to live here today.

  44. bz

    I agree that there’s housing bubble in Hoboken, which is why we are experiencing the pain of the correction. But saying that there’s nothing changed in 2002-2006 period that’s worth some of the booming is not objective. Unless you don’t value the things I listed above. Then you really should look for somewhere else.

  45. thoughts

    Bill –

    “There are instances where neighborhood renewal or gentrification increase values at a higher rate.”

    Hoboken does not fit into that catagory???

    Come on – huge differences over the last 10 years.

    Thoughts

  46. TS

    I was going to jump on Homeboken’s comment as well. To say nothing fundamentally changed in Hoboken from 2002 to 2006 is so far off base. The town changed drastically in that time period, not just in terms of the demographic shift but the development of almost all areas. Clearly you didn’t live here in 2002.

  47. TS

    Thoughts,

    I think you’d be hard pressed to argue that the West end of Hoboken didn’t undergo gentrification in the last decade…let alone some other areas.

  48. homeboken

    I have lived in Hoboken since 1999. I have seen the changes. I stated that nothing “fundamentally” changed.

    What I mean by that is, there was no fantastic school opened up, there was no new transportation into the city, there was no new infrastructure etc. The fundamental shift in population happened between 1990 and 2000. Adding a few baby boutiques and wine bars in the last 4 years does not equate gentrification. By 2002, this city was gentrified, that’s why many of you moved here.

    A couple of things have changed for the worse though. The school budget has inflated to unsustainable levels. The property tax bills have increased substantially. The frequence of flooding has increased exponentially (due to the old infrastructure and overbuilding, imo). The police and fire department budgets have mushroomed.

    Hoboken is a great place, I choose to make it my home. But it is not Shangri-La, there are real serious problems that need to be addressed. These problems will 100% affect the value of your home.

  49. TS

    You don’t think the building of the Corporate Waterfront Center, class A office buildings, was a fundamental change for Hoboken??? That’s just one example. What about all the developments on the west end that mostly happened after 2002? The redevelopment of the North End waterfront? What the heck do you mean by “fundamental” change if not this?

    And the demographic has changed a lot since 2000 (when I moved to the area). You didn’t see even remotely this # of young children. Plus the average HH income went up drastically in that time period.

    Yes, Hoboken faces serious problems but to say nothing fundamental has changed is either just total nonsense, or you have a notion of fundamental change that is idiosyncratic to you.

  50. TS

    Homeboken: “What I mean by that is, there was no fantastic school opened up, there was no new transportation into the city, there was no new infrastructure etc.”

    1. While I agree the schools are still lacking they have improved considerably, especially for younger children, since 2002.
    2. What new trasportation to the city do you want?? As of now you have the PATH, buses, ferries into the city. Also, the Hoboken Terminal trains and the light rail for within NJ – and the light rail at the Hoboken terminal opened in 2002, I believe.

  51. Andy

    Transportation has had a huge impact on Hoboken. Look at the light rail. You think people would have been buying condos as far back as Jackson or Madison if there was no way to get there except to walk? The rehab of the old factories and teardowns that occured on the west side of town were huge improvements to the area. I used to live on 4th and Adams in 2002 and I can tell that the area has had some major development in the past 7 yrs. I hardly recognized it anymore which is a major improvement.

    And I agree completely w/ the gentrification of the town. Young poeple stopped leaving in droves and started to settle down. That has a direct impact on the demographic of the town. No longer do you have just transients who care less about the town other than its drinking establishments. You have couples settling down and having children. New parks, people w/ animals everywhere and a feeling of safety that only Hoboken seems to offer. Now, for anyone to draw comparisons and say that housing values need to return to levels when this town was not a thriving gentrified city is not being realistic. Thats like saying Manhattan should be priced more like Queens because at one point all of Manhattan was more like Queens. Hoboken has always commanded a premium to our neighbors because we offer services and amennities that our neighbors do not.

    The schools have not had a major impact on recnt growth. In fact only recently has it become a major issue mostly due to the fact that people have bought apartments and had children and can’t afford to send them to private school on top of getting hit w/ a 47% tax increase. This was not a deciding factor for many who moved to Hoboken in the past decade or so and I would suggest that if our tax bills didn’t increase there would be only a minority who even cared enough to try to change the school board.

  52. Laki

    All of you discussing Hoboken specifics when it comes to the future prices are arguing about second order effects. Sure they matter on a margin, but the overall real estate trend in the New York metro area matters A LOT more. Hoboken does not exist in a vacuum. What if Manhattan real estate drops to $500 per square foot? (This is where the prices were in early 2000s). This is a first order effect. If you think in this scenario Hoboken prices decouple and stay strong – then you must live in a different universe than me.

  53. Andy

    Laki, if manhattan real estate drops to 500$ / sq ft then you’ll see major economic pain unfold. NYC was bought and bid up by anyone and everyone including those overseas. Will prices come down there sure due to oversupply but eventually you will find a bottom. To throw a figure out there which btw is half of what the going sq ft rate for much of manhattan is absurd. Are you all hoping for some doomsday scenario because you want to swoop in like vultures picking a carcass? Be realistic. I’ll entertain 20% maybe even 30%. If it ever hits 50% I’ll eat my hat 😉

  54. SJ

    Laki-

    What on earth makes you think that Manhattan real estate prices are going to drop to $500 per square foot??

    And if that ever happened I don’t think anyone here would argue that that wouldn’t affect Hoboken prices!!

  55. Tiger

    Let me know when Manhattan prices drop to $500 per sq ft, I’ll be very interested in buying a second condo.

  56. bz

    Laki, our posts were to homeboken’s comments about if Hoboken’s changes in the past years justifys the past RE bomming.

  57. patk14

    I’ve been here over 10 years now and there have been improvements. I live on Garden Street so haven’t seen the massive developments on the western side of town. Those areas (so I’m told) have been greatly improved over the last decade. The development of the northeast sector was under way back then and has brought higher income people to town. Pier A has been a nice development. Not much has changed at all along Washington Street during this time, not too many new restaurants or shops that would fuel real estate prices. Same bars/restaurants by the PATH (Texas AZ has been there for something like 20 years). It was a safe town 10 years ago, less so 20 years ago. Plenty of police and little violent crime.

    Compared to what existed west of Willow, prices in those sections have been upgraded majorly and easy credit (Hoboken didn’t require the level of down payment that Manhattan did) drove prices up rapidly. Easy credit is gone, people flipping are gone, prices are steadily declining, so we’ll likely see continued downward price movement. The town fiscal situation and rising taxes were not expected and have had a negative impact on prices. Paying $1,000/month in taxes reduces affordability.

  58. Andy

    Patk14, if you’re paying 1k a month in taxes you must enjoy the mansion on castle point you’re living in. Otherwise you are really getting screwed and should appeal your bill. But I agree with you the tax situation does nothing to help our situation. NJ already has the highest property taxes Hoboken raising them doesn’t help.

    Hobojoe, I’ve been clammoring that on this site for days now. If you lost your job I’m sorry for you but the rest of us who are still employed are not poor and not broke and not selling unless we absolutely have to. Ridding the town of developers overstocked cookie cutter condos is exactly what this town needs. If it happens below market values so it expidites things than I’m all for it. Supply and Demand dictate price. We’re sliding down the supply curve as we work off inventory. Once that is done and if we stop people from over developing and turning the town into highrises then we’ll see eventual price increase due to limited space constraints.

  59. Andy

    Need to clarify was not referring to Hobojoe as if he lost his job. Rereading it didn’t sound right. Meant it in the generic.

  60. leafgreen99

    Great reading!

    It’s not only the uptown brownstones paying in excess of 1k/month in taxes (and I do now people paying twice that) but from reading the MLS links in Lori’s posts, there are plenty of condos playing 15k in annual taxes and that’s not for a single family home…

    Anyway, on a separate note: is there any blog/website comparable to this that evaluates real estate in other Hudson County towns?

    And, I know many posters here regularly cite tax records and sale records. Where do you get that information? If anyone could post a link, I would appreciate it.

    Thanks.

  61. Laki

    Why is 500 per square foot so outrageous? We were there just 7-9 years ago. Look at the following chart:

    http://analytics.radarlogic.com/radar-logic-home/historical-data.aspx (select Manhattan Condominium).

    Prices can go down the same way they went up. This is true for all asset classes including real estate. You are naive if you believe this CANNOT happen in New York. It might not, but this is different than CANNOT. It happened in other cities and the world didn’t come to an end.

    If you simply add up all the condos that exist in Manhattan you will get a number that makes Hoboken seem like a drop in the ocean. Now figure out how much money an average person needs to make to be able to afford an average Manhattan condo (mortgage payment + RE taxes + maintenance fees that make up lets say 30-50% of their monthly after tax income). Then think about what percentage of people that live in Manhattan that you know personally make that kind of money. You’ll realize the numbers don’t come even close to adding up. You’ll realize that very few of your friends are able to afford the median manhattan condo… This makes the current status unsustainable. Either incomes have to rise or RE has to drop. I wouldn’t bet on the first one occurring anytime soon (if ever in real terms).

  62. Tiger

    Laki, correct me if I’m wrong but I don’t recall Manhattan being exactly affordable, even in the hip days of the 70s.

    And like I said, I really would be **VERY** interested in buying a nice Manhattan condo for $500 / sq ft. Holly smokes that means I can get a 1000 sq ft for $500K! That would be a dream come true!

  63. TS

    Laki,

    I don’t think anyone is arguing it’s a logical impossibility for prices to tank to 500/sqft. That said, it seems very unlikely except under doomsday scenarios.

    That said, the data you linked is of questionable merit (unless I’m misreading something). Miller Samuel data conflicts with it. The following is average price per square foot of Condos in Manhattan:

    Year – Average Price per Square Foot
    2001 – 691
    2002 – 741
    2003 – 765
    2004 – 873
    2005 – 1086
    2006 – 1142
    2007 – 1225

    I don’t think this is inflation-adjusted, which makes it even more unlikely to return to 500/sqft, but I can’t say that for certain.

  64. Laki

    The link to the chart I posted is from radar logic which is the underlying index for the tradable forwards (RPX). So people trade hundreds of millions of dollars and these bets are tied to this index. This gives it some legitimacy. Also, the methodology for this index is published so you can see how it is computed (it roughly tracks the median price per square foot of ALL transactions in a given time frame). I’m not sure what the Miller Samuel data is and how it is compiled. I’m very comfortable with RPX because I know the methodology used and because it has virtually no subjective inputs (only looks at prices at which properties move, and it ignores things like listing prices, appraisal values, etc etc.).

    As far as the comment that manhattan condo prices were never affordable – well they’re extremely unaffordable right now. just look at median price / median income and median price / median rent ratios over time and you will be enlightened. Massive correction is needed just so these ratios revert to levels observed historically.

  65. TS

    Laki,

    Miller Samuel provides the most trusted data for the Manhattan market. The differences are quite wide between his and the one you posted, and based on memory I don’t recall prices being that low earlier in the decade as the chart indicates. However, this could boil down to a difference in measure since Miller Samuel had the peak above 1400/sqft, while Radar Logic’s had it at 1200/sqft. The point being you can still trade off the data since it tracks similar price moves on a % basis.

    Personally I believe Miller Samuel is going to give you more accurate data since he specializes in the Manhattan market.

    Given the large disparity in the #s perhaps we could better frame the debate in terms of % drop from the peak rather than real $ terms.

  66. Laki

    “That said, the data you linked is of questionable merit (unless I’m misreading something)”.

    You are misreading something. RPX indices are the most transparent and objective data series that exist out there. It is not a coincidence that housing derivatives are based on them. And these housing derivatives are backed by all the wall street firms and have traded billions of dollars worth of contracts. Short of committing outright fraud there is no way to manipulate this series or have any subjectivity in it.

    On the other hand I don’t know what legitimacy Miller Samuel has. It might as well be completely legit as well (i simply have no idea) and all the differences could be due to the methodology used and the fact that your data series looks at average prices wheras RPX’s are median. Remember, average prices can be heavily skewed by outliers (i.e. high end luxury market), wheras median prices are not. Median prices are a better measure of a representative home in a given area. Half of the homes get sold for the price lower than the median one.

  67. TS

    Laki,

    It could be due to the difference in median vs mean, or perhaps they adjust for inflation. Perhaps that’s why we were talking past each other. When you say prices are going to 500/sqft and someone else says that’s too far that’s due to the fact you’re using different metrics (mean vs median) and different sources of information (most people cite Miller Samuel data in that regard).

    As I said though, perhaps your view that 500/sqft isn’t unreasonable could better be framed in terms of % drop from the peak as that way we factor out the different metrics and sources, which appear to each have their own merit.

  68. Laki

    In terms of % – I already stated my prediction – down 30-40% from where we are today. this brings you down to to the 500-600 ppsf on the RPX index that I was referring to.

  69. Laki

    RPX is not inflation adjusted btw.

  70. Andy

    Good luck w/ $500/sq ft. I hear Harlem is up and coming for the 3rd time this century. The point is unless manhattan has a mass exodus of business and people take a 30-40% salary cut across the board it will always be expensive for the fact that London/Tokyo/Moscow/etc are all expensive. Sure you might be able to find bargains on 12th ave in manhattan but a desireable place to live will always be desireable and command a premium. Hence why Hoboken was always priced higher than Jersey city heights. No one is taking 30-40% pay cuts unless they are desperate and bonuses are coming back as well. I sincerely think doomsday has passed and no major earthquakes occured. I think the price drops you are looking for will be felt in the ex-urbs of the Poconos and upstate NY.

  71. Lori Turoff

    I agree, Andy. Even here in depressed Sullivan County in upstate NY – where I am today – the ordinary properties are bargain basement ($200k gets you a nice house and 5 acres) but lakefront commands a premium. It’s all about location. The people who do have the means will buy the prime properties and the junk will not sell unless it’s priced low.

  72. Bill

    “In terms of % – I already stated my prediction – down 30-40% from where we are today. this brings you down to to the 500-600 ppsf on the RPX index that I was referring to.”

    what is the time frame for this prediction?

  73. Laki

    Andy, you seem to be saying that in order to return to the 2001 state of things in Manhattan we need to undergo a “mass exodus of businesses” and a “doomsday” scenario needs to play out. Were things that awful in 2001? I remember 2001 – things didn’t seem all THAT much different to me. In my opinion no cataclysmic event needs to take place in order for pricing to revert to those levels.

    And if you were to isolate the population of marginal real estate buyers in manhattan in the last 10 years – you bet their salaries are down 30-40% or more. I’m not counting someone making 100K – that guy didn’t lose 40% but then again he never could afford to buy in manhattan. But if you look at people making 500K+ these people’s salaries are way down. I work in finance. I personally know tons of people who used to make this kind of money from 2004 to 2007 – and their salaries today are way down. Most of them are down to 150K base and those that are lucky might take home 50-100 K bonus. Those that are not lucky don’t have a job anymore and the base case is 150K base and no meaningful bonus whatsoever.

    In my opinion the bonuses are not coming back.

  74. Laki

    “The people who do have the means will buy the prime properties and the junk will not sell unless it’s priced low.”…

    In general I agree Lori, however, nowadays there are tons of “prime properties” and not so many people that “have the means”. There is simply not enough people to buy all these apartments. And this will become clear in the next 2-3 years.

  75. TS

    Laki,

    What makes your certain that Wall St bonuses will persist at last year’s levels or worse indefinitely? The #s from the first half of this year are showing otherwise, as well as the guidance that many are getting from their desks.

  76. Andy

    Laki, I work in finacne as well. Bonuses are def coming back at good firms. Getting $1mm for doing your day job is not going to fly anymore so sure some people will see declines but all of my friends in finance are still doing well and in fact many received raises and retention bonuses so maybe the Tea Building and Shipyards aren’t going to sell so well in the high end of Hoboken but the 500-600k range can easily be afforded by the majority of town. In fact I’d say for Hoboken specifically that is the bulk of our market. The high end units only make our town more expensive due to the relative nature of pricing.

    Manhattan has the exact same effects but in a grander scale because of desireable neighborhoods. I’ll give you 100$ when Gramercy Park/CPW/SOHO return to 500$/sq ft rents. My point and perhaps it was lost in my reply was that location dictates a premium in price. Blanket asumptions of returning to statistical means is not an accurate view especially when looking at housing because of the “got to have it” factor. If a celebrity moves down the street and you put your place on the market some buyer may pay a premium to live near that celebrity(this example sucks so please forgive me but you get the point). I personally feel that Hoboken has a real leg up on its surrounding communities on the NJ side w/ Edgewater slowly giving us a run for our money. Those condos on the water are huge and have the same wonderful views. But Hoboken has the transportation and nightlife benefits that Edgewater has yet to build.

    Laki, I do agree not everyone has the means to buy expensive apartments and so they shouldn’t and the best thing that will happen to Hoboken is greedy developers will go away and stop building poorly constructed cookie cutter condos in the NW section of our town adding to housing stock. As someone in Finance you know supply and demand. If we reduce oversupply eventual equilibrium will be achieved and demand which still exists will begin driving price apreciation all over again. The worst happened and is most likely over. U shaped recovery is being forecasted by many reputable sources. Why would NY be subject to a 40-50% price correction if the rest of the country is already starting to come out of its recession? I don’t buy the argument that we’re suddenly all smart money investors and are squeezing our 2 pennies together as tight as we can.

  77. Tiger

    Andy, I kinda like Edgewater, but if only they fix River road and that horrible three-way intersection that leads to it :-)!

  78. homeboken

    From Andy’s post:

    “If we reduce oversupply eventual equilibrium will be achieved and demand which still exists will begin driving price apreciation all over again.”

    This should happen in about 5 years. “Demand, which still exists” How can you say that with a straight face? Demand has fallen off a cliff.

    And supply? Take Lori’s number above and add about 100 to account for the developer owned units that are not on the MLS. Then add about 300 for the buildings that are planned and approved, but haven’t broken ground yet but will within the next 12-24 months.

  79. Andy

    Are units selling? Yes then demand still exists. We have never had a prolonged stretch where no sales occured. Sure the steady clip of boom sales is over but I”m not using that as a reference point as normal demand. Good units are actually still getting multiple offers. You can’t cherrypick what data you choose to acknowledge. I repeatedly have stated that we are going to see a smaller than 30% price reduction due to oversupply and fear in the market. But I do not think unless there is some catastrophic event you will see a decline to pre 2001 levels.

  80. Andy

    Sorry didn’t see this be4 poting but Homeboken those developers that have buildings planned and approved will most likely not be building new units in Hoboken. They will cancel before any ground breaking happens and either return deposits or run for the hills due to over supply. I think it may very well take 5 years to work off the supply but I seriously doubt you will see any 20+ unit buildings come onto the market anytime soon. That is why I always felt that the West side of town with the newer overdeveloped condos would be hit harder than the more established NE side of town(excluding maxwell) in the downturn. This was all due to personal observations of lack of amenities and the walking distance factor discussed at length on here.

  81. homeboken

    Andy – You see that 12 story rental tower going up on 14th street? True it is rental, but builders will build. They will just realize less profit when they sell.

    The costs of carrying vacant land are brutal. I work in multi-family and from my experience, builders will build to a lower price-point, sell and make a little less money. They will not sit on vacant land for years waiting for the market to come back.

  82. homeboken

    One more thing – Do you know that the NE section of town is slated to be developed with 2 more 12 story Maxwell buildings and another 12 story Tea building? Both Toll brothers projects that are part of their master plan. There will be plenty of brand new inventory coming on line in the next 5 years.

  83. Andy

    Did you read the Toll Brothers financials? They are putting those projects on hold indefinately due to funding constraints. In fact they may turn the land into a park or parkinglot whichever is more economical for them. But yes their original master plan was to build those 2 additional buildings. I followed that very closely in the fall of last year as Toll has several developments up where my parents live as well.

  84. homeboken

    Andy – Do you have any facts that support the claim that they will turn that area into a park or parking? Or is that what you “hope” they will do with the land?

    Parks = Zero dollars

    Parking – Close to zero

    When you consider what they paid for that land, I think you will come to a different conclusion on what it will be used for. If you have some facts that they are going to utilize this land for a use other than residential living space, I would like to see it.

  85. Lori Turoff

    Toll has always had an ability to “dribble” the new units onto the market so they could artificially hold down supply and boost sales prices. The 2 other buildings planned for Maxwell and at least 2 more for Hudson Tea were supposed to be built by now. That they haven’t done it, right there tells us something. (Applied also owns the pier in front of Hudson Tea and could build on that). My guess – and I have no way to know this – is that they will sit tight until the market improves a bit more and the current units are sold out, then they will build but they will offer them for sale in dribs and drabs. Remember, Hudson Tea was a non-eviction plan. Toll owns the renters’ units and every time a tenant vacates, they renovate and sell. I have heard they are offering some good deals on the lower floors of the Hudson Tea buildings. They also offer huge incentives to agents to sell their product.

  86. Andy

    I don’t have access to the equity research site anymore since I changed jobs. But they actually mentioned it specifically on their previous quarterly investor call. Sorry I don’t have any links to share.

  87. homeboken

    Andy – I am sure the shareholders were thrilled that executive management was/is mulling over negative returns and zero future value for those assets.

  88. Lori Turoff

    Toll Brothers’ Website to Broadcast Its August 27, 2009 Third Quarter 2009 Earnings Conference Call Live

    HORSHAM, Pa., Aug. 13, 2009 — Toll Brothers, Inc. (NYSE:TOL), the nation’s leading builder of luxury homes, will broadcast live on its website, http://www.tollbrothers.com, a conference call to discuss its third quarter 2009 earnings results. The event is scheduled for 2:00 P.M. (EDT) on Thursday, August 27, 2009. It will follow announcement of the Company’s third quarter 2009 results for earnings, revenues, contracts and backlog before the market opens on Thursday, August 27, 2009. The call will be hosted by Robert I. Toll, Chairman and Chief Executive Officer.

  89. Andy

    Lori, thanks for digging that up. The one where they specifically mentioned poorly performing assets in Hoboken was Q3 2008 I believe. And Homeboken, yes the investors punished Toll stock since they did not just invest millions in Hoboken. They have land all over the United States which sits undeveloped because of lack of funding and incredible amounts of debt service. Toll is a good company fundamentally but they got greedy at the height of the market and were castigated accordingly. Centex/Lennar/KBHomes/Hovnanian all were destroyed in the markets recently but are making a comeback. They will not abandon land but rather than leave eyesores they may decide to develop the Maxwell unused land into a park/parkinglot temporarily but I can assure you that they discussed no plans to move ahead with the 2 other buildings at least until they finish moving the existing units they built.

    I would like to think that if Toll is in trouble that most other developers who are moving ahead w/ groundbreaking must be in much better financial shape and can afford to build condos and have them sit on the market for a long stretch. I do agree with Lori that eventually when things recover they will re-develop that land into the remaining buildings but their plans are put on hold indefinately for Hoboken. I don’t work for Toll and can’t comment on their internal workings but as someone who follows them pretty closely it may make sense for people interested to listen to the recap of the call next Thurs.

  90. mike

    From NY Times Real estate last week-“In the Grip of Indecision”

    Ms. Gorman said she regretted not lowering the sale price in November as she watched similar apartments in the same building plummet to $400,000. She called her mother for comfort. “She told me not to do anything drastic,” Ms. Gorman said. She approached her co-op board about subletting; the answer was no.

    “Please tell me what to do,” she said she implored her fiancé one night over dinner. He declined, she said, telling her he did not want to influence her decision.

    “I thought, ‘Am I going to have this apartment in Manhattan the rest of my life?’ ” she said.

    Five months ago she decided to put it back on the market, for $625,000. In June, she lowered the price to $575,000, assuring a loss. This month, she lowered the price to $559,000. But her decision came down to this: she could either keep the apartment or use money from a sale to help buy something bigger for herself and her fiancé.

    maybe a reason inventory is not increasing

  91. homeboken

    Thanks Lori, I will be on the road that day, but I am sure I will be able to catch a taped web-cast that evening. Not sure if they will mention Hoboken specifically, I know they loved to in the boom times when they were “killing it in Hoboken”

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