2009 Sep 23rd

The Weekly Wednesday Wrap Up – Hoboken Condo Sales and Inventory for the Week of September 22nd.

Hoboken Condos Inventory & Sales – Week of September 22th

Maybe it’s just the post-Labor Day influx of new listings but inventory has taken a leap upwards. Unfortunately, sales activity has not improved to match it. So the pressure stays on the sellers to keep the price movement downwards while the buyers out there have lots of options if their negotiations don’t go their way. In a few weeks I will be doing the 3rd Quarter analysis which, I believe, may provide some better insights into the market and how it compares to past performance.

To get this report with the links please complete this little form:

Here are this week’s numbers:

Here is the Weekly Wednesday Wrap Up from: September 15th, September 8th, September 1st, August 25th, August 18th..

Studio & 1 Bedroom Hoboken Condos:

22 new listings

183 total active

2 dabo. 93 average DOM.

4 sold

20 price reductions.

Two Bedroom Hoboken Condos:

19 new listings

304 total active

3 dabo’d. 25 average DOM

8 sold

21 price reductions.

Three Bedroom and Larger Hoboken Condos:

75 active

4 new listings

No dabos

4 sold

5 price reduction.

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 info@hobokensbest.com 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!
  1. hmmm

    interest rates as in the mortgage interest rates or fed rate? mortgage interest rates will be absolutely be higher but the question is always how high, right? i’m guessing it will trend towards 8 to 10% in 10 years time. No guesses/estimates for me in the short term but I’m deciding on the strategy to lock for a place next year…

  2. thoughts

    Lori or anybody –

    On a side note now that the mayoral election is set, does anybody have an answer to the following question:

    Which mayoral candidate is most likely to have a property reassessment completed as soon as possible? And, if so, when?

    My friends and I can’t get an answer to this question from any hoboken sire out there….

    Thanks in advance.

  3. vreporter

    Lori,
    Rents will be under equal pressure as inventories move over from the sale side chasing income. The renter is in a win-win situation with lower comparable cost of living (to buyers) and continued competitiveness for rental renewals for a prolonged period. Meanwhile, property tax pressures will remain on owners who will not be able to pass the cost on in any net effect. NY and NJ are in the worst such tax situation (budget-wise) than ANY OTHER STATE in the country. Condo maintenance fees will continue to escalate as operating cost gaps of empty units add their burden to the shared pool despite any service cuts. Hoboken has an unprecedented number of “unapproved” short sales. They are part of the “shadow” inventory that is running out of time. I’m talking about $1MM+ units of the past four years. Tag those at $850k when all is said and done.

  4. vreporter

    For the foreseeable future, interest rates stay low and go lower. That’s part of the deflationary pressure allowing the Fed to continue to stimulate. the 50% gains in stocks did NOTHING for RE. In fact that’s the argument to stay out of RE and in equities. But that too has about run its course. yes, I would begin to short equities again before year-end. But RE has only one direction in majority. wealth that’s been destroyed or sidelined in cash is NOT coming back. It has been destroyed or retrained for risk averse attitudes. RE is at the bottom of that desired list of options so your argument only strengthens the debate for a continued down cycle in property prices and most other hard-er assets as well.

  5. vreporter

    Andy,
    You obviously know little about what’s going on with the RE market and investors overseas. There is NO rescue coming for RE from any deval of the USD. Only industry and commercial investment can benefit, and will. It seems everyone has forgotten everything that got us here. Maybe the White House HAS done its job well. I’m 50/50 on that since there was too much to fix from the previous administration but even Obama won’t be able to support the mid-term election candidates as unemployment rises toward 10% and while PRODUCTIVITY grows. We have part-timers who are out of their full-time jobs waiting in line first so all your kids graduating in the next few years? Get their old rooms ready at home!

  6. Hmmm

    vreporter, as negative as I’m on US prospects, I really can’t foresee the doomsday scenario that you are describing. Like I mentioned previously, there are definitely some positives that our country still have in surviving and revitalizing our economy. It does however take genuine effort on everyone’s part which I don’t see happening anytime soon. Productivity only comes at the sacrifice of the dwindling workforce which will eventually force the companies to rehire again. While unemployment/underemployment may not go below 10% anytime soon, I believe we can have a recovery without it.

  7. Andy

    Hmmm, you’re absolutly right about having a recovery w/out unemployment falling below 10%. We had 10 years of exporting good jobs overseas and a reliant economy based on American consumerism. So now that capacity(excess jobs) was cut back to match demand(low consumerism) its entirely possible to continue moving forward without reabsorbing the unemployed. Should we count the job losses of building McMansions as jobs that should come back to our economy? No they were part of a culture of excess that may or may not return. Its not what people want to hear but its a very strong possibility that many of these jobs in parts of the country were unnecessary and will never return. I feel for all of these people because its entirely unfair what happened and the remaining businesses continue to ship jobs to India and China.

    Vreporter- Were you on vacation when Europeans came in droves to America with empty suitcases to buy goods at half the price litteraly half and then fly home? Thats what helped keep NYC tourism afloat in 2007-2008. The pound was strong against the dollar but as the dollar continues to decline Europeans continue to benefit from buying American investments on the cheap(from devaluation and currency perspectives). My brother-in-law is English and many of his friends are eyeing NYC area to buy a condo at a deep discount even though they lost much of their purchasing power w/ the devaluation of the pound. But at the end of the day its a very attractive investment for them to own rental property because they look to the long term and the NYC area will always command a premium to the rest of the country just like London/Tokyo/Paris will always be the most sought after places to live in the world.

    As for laid off fulltimers who have experience taking entry level jobs from college grads, I sincerely doubt to any signficant percentage you’ll see these people taking jobs away from a kid making maybe 50k out of school. A company is not going to hire a guy with 10 yrs experience and pay him 50k. Both the company and the guy w/ 10 yrs know he’s worth tripple that due to his experience and most likely the guy will quit after a year because he’s disgruntled about pay. Thats the problem that no one wants to talk about. Unless you are going for a career change the odds of you getting hired back into your old career at an entry level position are very low.

    Lastly, since you are dead set against real estate Vreporter, I’m curious what you are doing w/ your money?

  8. vreporter

    It’s been in equities and fixed income most of this year. It’s been shorting equities and commodities and long dollar vs AUD, NZD, CAD recently and likely that direction for the foreseeable future (6 months). Sold all but one Manhattan property two years ago and we live in a rental. I am not a fan of cash!

    Here’s an interesting tidbit: those that refuse to believe how the nature of this particular asset and credit recession has altered the consumer approach towards the household budget, should really have a read of Clip-and-Save Renaissance that made its way onto page B1 of last Thursday’s NYT. Coupon usage is up 23% from a year ago and the survey found that the income group that is now using coupons the most are the highest ($70k and up). Do Apple and Starbuck’s issue coupons yet?

  9. JC

    How about starbucks diving into the instant coffee market? That qualifies as a coupon in my book.

  10. hf12358

    The only way out of this hole for the U.S. is to monetize its debt — print as much $ as the rest of the world is willing to digest. In a world full of central banks competing with their printing presses, the concept of being “conservative” or “careful” is turned on its head. Cash or treasuries will most likely be the worst places for storing your wealth.

    Buying RE right now, while locking in a 5% 30yr mortgage on as much you can get your hands on, would make that mortgage all but worthless after 10 years of 10%+ inflation. You’d effectively be building equity by being paid to borrow money in real terms. Needless to say what inflation (and accompanying higher int rates) would do to a cash + treasuries “conservative” investor.

    Just something to consider.

  11. lori

    hf12358 – Could you please explain the last paragraph a bit more? I’m not sure I follow. Are you saying locking in a large mortgage at a low rate right now is a good thing because the value of the asset (the property) is going to rise due to inflation while the nominal value of the liability stays the same and is paid in deflated dollars?
    Many thanks.

  12. hf12358

    lori,
    Yes. All real (hard) assets go up during rampant inflation (some more, some less, depending on which sector is being flooded with the printed money at each particular moment — like stocks, especially, banks over the last 6 months), as everyone races to translate their evaporating cash wealth into something tangible, trying to chase and predict the waves of liquidity distribution by the government + Fed.

    A $2000/month mortgage payment today would be worth $850/month in today’s money in ten years after 10% inflation (devaluation) a year. And this doesn’t include the nominal “gain” in the inflated value of the property itself. It’s weird world out there when one has to keep running just to be able to stand still. ;^)

  13. Randy

    So when do i buy, this winter? next summer? or just rent for the next few years. based on everything i’m seeing, it looks like the safest bet is for me to wait till next summer

  14. hf12358

    Randy, people often miss the forest for the trees. Inflation is coming. It is the most powerful, yet sublime, vehicle for wealth transfer (blatant robbery) from savers to borrowers. Real estate has been and still is THE asset that allows retail people (mortals) to leverage and borrow at multiples of equity higher than anything else.

    The “forest” question is which one would you rather be, a beneficiary or a victim of this (both ongoing, and even larger impending) transfer? The “trees” question is whether you should buy+borrow this winter or next summer.

  15. vreporter

    I’ll keep saying it… you inflation buffs are going to be dropped on your heads. They (Feds) aren’t going to make that mistake again. Hard assets are dead money, worse than cash. This is stabilization objective and nothing else. One of your clues will be a major rally in the USD from here. I’ll be able to get a 4% mortgage and RE prices will still be dropping while you’re wiping out your equity in fine style… see you then! I’ll be renewing my rental lease again this coming year.

  16. hf12358

    vreporter,
    The mistakes have already been made — a cumulative load of them over the past few decades — and it has been out of the Fed’s hands for a while now. Here’s what you’re going to need to get a 4% mortgage next year:
    A lot of pea-brained Martians landing on Earth, which you would then need to convince into buy couple of $trillion worth of 20-30yr Treasuries (that the Chinese, the Japanese, and finally, the Fed would have stopped buying). It may work if you really put your mind to it.

  17. Laki

    hf12358 – Allocating assets so that you make a fortune if you happen to make the correct macro call (inflation vs deflation for example) is very dangerous. If you’re wrong you’ll lose a fortune. The real skill is how to allocate assets so that you BOTH make money in majority of outcomes and so that the expectation of your P/L is positive. If you can do this you’re the man (or the woman?). Very few people allocate their assets like this. It requires patience and it is difficult. Most people make directional macro calls and sometimes they’re right and sometimes they’re wrong. The ones who guessed right – they end up being thought of as smart and insightful and the ones that were wrong end up being called losers who missed what was obvious. But the reality is much different. Out of the ones who “got it right” last time around – 99% are just lucky.

    So in your example, telling people to go into an asset class (i.e. real estate) with 5 times leverage (20% down) because of the “10 year 10% inflation” macro call is dangerous. Works great if you’re right. If we’re on a verge of a deflationary spiral however (deleveraging of the entire system)- somebody following your advice loses 100% of their investment (houses go down 20% easy, their equity is wiped out).

    A person who is not wealthy should NEVER buy a house in order to protect him/her self from inflation. They should buy a house if they need a place to live, can afford it with a big margin of safety, and prefer owning to renting due to personal preference or if it just otherwise makes sense to them.

    Now don’t get me wrong, I think inflation is possible (maybe even probable down the line), but even if this is true, buying a house in the north east today is definitely an inferior investment. In fact, it is so inferior that if the market was complete (i.e. if you could go short a house) you could arb the profit out of it. (short a representative basket of houses, go long housing derivatives, go long out of the money put on the counter-party).

  18. hf12358

    Laki, I’m in complete agreement with you. It wasn’t my intention to address optimal allocation of one’s nest-egg across all global instruments.

  19. Andy

    HF12358, I think you made some compelling arguments. Even if we see lower inflation (more likely) since our Govt is basically out of options for anyone to buy our debt. China and Japan are done wasting thier $$ on US treasuries. But I trust that our Govt is able to spread out the damage so that we don’t see 10%/year inflation. I think it will be more subtle so as not to alarm the general public.

    As for asset allocation, I firmly believe you should have RE, Commodities(Oil and/or Gold), Equities, and Fixed Income in your portfolio.

  20. Laki

    hfr12358 – good to hear we’re in agreement 🙂 But the point I missed to verbalize is that most people buying real estate today (especially in the expensive areas such as north east) end up having to allocate their entire wealth or a significant portion of it in order to make the purchase. So buying a house in essence amounts to allocating most of your wealth to a single illiquid asset in a leveraged fashion! If the utility of owning a house is ignored – this asset allocation strategy sounds like a very bad idea to me. If due to personal preference the utility you get out of the house overwhelms the drawdowns of the inferior asset allocation proposition, then one should consider buying. But asset allocation arguments simply cannot be used for most as an argument to buy.

    Now don’t get me wrong – if you’re wealthy and the price of the house represents only a portion of your net worth – you’re in the clear and the arguments i present above don’t hold. But how many such people are out there today? I would guess that at least 80%+ of home buyers in the north east have overwhelming majority of their net worth parked in their house after they purchase it.

  21. JC

    Laki/Hfr12358…What type of investment vehicle beside the actual bricks and mortor could folks who want RE exposure buy? Homebuilder ETF? REIT?

  22. homeboken

    Regarding the inflation argument – Have we considered how the major holders of US debt (ie Japan and China) will react if we hyper-inflate and essentially wipe out their investment?

    I am curious to find out if anyone has any ideas on the political/military fall out from hyperinflation of USD.

  23. TS

    Laki,

    I agree with your comment about sinking your entire net worth (or more) into a house being a bad idea (unless you have some very strong convictions about the market direction of housing prices, rents, etc.)

    However, I can’t agree with any of these comments:

    “Allocating assets so that you make a fortune if you happen to make the correct macro call (inflation vs deflation for example) is very dangerous. If you’re wrong you’ll lose a fortune”

    Since when can’t you hedge macro positions to limit losses?

    “The real skill is how to allocate assets so that you BOTH make money in majority of outcomes and so that the expectation of your P/L is positive.”

    No, that’s not how you optimize a portfolio. In fact, it’s really bad investment advice if I understand it correctly.

    “Most people make directional macro calls and sometimes they’re right and sometimes they’re wrong… Out of the ones who “got it right” last time around – 99% are just lucky.”

    I think it’s time to give up the efficient market theory, which is what leads you (and many) to make comments like these. And why isn’t making consistently good macro calls a “real skill”?

  24. Laki

    “Since when can’t you hedge macro positions to limit losses?”

    You can do that – but most don’t do it. I don’t know anybody who has a hedge on their house for example. And most regular folks have most of their wealth in their house. So I was just trying to point out that they’re all making a mistake from an asset allocation point of view. I wasn’t pointing out what is possible and what could be done. I was simply stating what most people do.

    “And why isn’t making consistently good macro calls a “real skill””

    Take all the people who analyze the markets. The ratio of those that are successful (time and time again) to those that are not is the same as it would be if people were not analyzing the markets at all but flipping coins to decide on the macro call. This is a fact. And this mathematically DOES NOT imply that markets are efficient either. You can have inefficient markets which exhibit this pattern.

  25. Laki

    JC,

    I wouldn’t touch homebuilders or any old REITs that have legacy assets. Way too risky. They could all go to 0 if you ask me. If you have institutional type of money buy RPX forwards or distressed mortgage bonds. If you’re just a typical guy sitting at home with his etrade account – it’s much harder. You have way fewer options available to you. If this is the case, and you still want RE exposure, i would advise buying one of the newly IPOed REITS that are buying distressed mortgages. They have a clean slate and can pick up some cheap bonds, and there is plenty of such bonds out there. I would pick a couple out of the ones that ipoed over the past couple of months. Some of the ones that I recall are: PMT, IVZ, STWD, CLNY. They’re not all equal, so do some research before you buy anything. But remember these things will not give you any explosive upside. More likely, in case the real estate truly bottoms, they will give you 12-15% per annum for several years. Not more than that.

    Good luck.

  26. TS

    “You can do that – but most don’t do it.”

    Yes, that’s the case but you didn’t qualify that originally, which is probably the source of disagreement.

    “Take all the people who analyze the markets. The ratio of those that are successful (time and time again) to those that are not is the same as it would be if people were not analyzing the markets at all but flipping coins to decide on the macro call. This is a fact. And this mathematically DOES NOT imply that markets are efficient either. You can have inefficient markets which exhibit this pattern.”

    Actually, it does seem to imply efficient markets insofar as you’re claiming, essentially, that markets are martingale (your coin toss illustration). Although it’s not entirely clear what you’re saying so perhaps this is, again, a disagreement due to lack of mutual understanding.

    That aside, you still haven’t answered the question. Why don’t people who consistently make the right macro calls have a “real skill” – I would think if there are so few of them, as you say, that this in fact would be as “real” and valuable a skill as any.

  27. TS

    Laki,

    Ok, I just understood your point. You’re basically arguing that the % of people who make consistently good macro calls is the same % as those who would turn out consistently right if they made their decisions by a coin toss. So you’re saying this “skill” of consistently good macro calls is just chance.

    To this I have to say:
    1. This is the efficient market hypothesis to the core.
    2. This is not established fact; in fact there is a vast amount of literature on each side of the debate with their own empirical evidence.

  28. Lori

    How can markets be truly efficient when we have unequal information, access and timing (i.e., the whole recent debate over split second trades or whatever it is called)?

  29. Laki

    I’m not arguing on market efficiency. In fact I do believe that market is inefficient. However though mathematically speaking:

    markets are efficient => coin toss outcomes

    but

    coin toss outcomes DO NOT imply market efficiency

    This is not … it is one way =>

    So I’m saying we have toin-coss outcomes when it comes to directional macro bets, but we don’t have an efficient market by any stretch of imagination. The market is not even close to being efficient as can be seen from bubbles and busts and even arbitrage opportunities that persist out there for years sometimes.

  30. Laki

    … was meant to be

  31. Laki

    well the equivalent sign (iff) this message board for some reason doesn’t like it so it goes away.

  32. homeboken

    Efficient market hypothesis is great in a class room, useless in the real world.

    Lori you are thinking of program trading. It costs retail investors billions each year.

    The problem is that the best and brightest financial minds are (were?) not banging down the doors of the SEC to go to work. They are all trying to get into GS, JPM, C etc.

  33. TS

    Laki,

    You’re all over the place.

    “So I’m saying we have toin-coss outcomes when it comes to directional macro bets”
    “The market is not even close to being efficient as can be seen from bubbles and busts…”

    Weren’t some of those bubbles and busts due to incorrect macro calls/views held marketwide??

    Secondly, we might be speaking past each other here but the (dominant) mathematical formulations of the various versions of EMH definitionally state a market is martingale iff it is efficient. But maybe I’m missing something here, I’d really like to see an example of an inefficient martingale market (I don’t believe it’s theoretically possible).

  34. TS

    Laki,

    Ignore my first point.

  35. lori

    OK kids – it’s Friday night. Time to go have a little fun – off line 😉

  36. The Weekly Wednesday Wrap Up – Hoboken Condo Sales and Inventory … | 7 Article

    […] from:  The Weekly Wednesday Wrap Up – Hoboken Condo Sales and Inventory … Tags: condo-sales, dabos, Fashion, Finance, legal, new-listings, october-2nd, open-houses, Real […]

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