2010 Jan 22nd

Hoboken Condos – How Did Condo Sales Prices Fare in 2009?

Average Sales Price versus Median Sales Price

For the next week I’ll be posting different analysis in chart form based on annual figures I’ve compiled from the MLS going back to 2000.  Today I’m starting with average sales prices (blue)  and median sales prices (red).  When I post my monthly  analysis there are some commentors who make a big deal about how the average sales prices in Hoboken are so skewed because of  the newer, high-end development like Maxwell Place and Harborside lofts.  The fact is, though, that the average and median figures have tracked each other pretty closely and both are down since 2008.  Average sales price in ’09 was just about $500,000 versus $525,000 in ’08.  So in answer to the question I’m most frequently asked – “How is the Hoboken condo market doing?” – the answer is that the average price of a Hoboken condo has come down just a smidgen under 5%. The median sales price fell to $470,000 in ’09 from 500,000 in ’08 for just about a 4% decline.

If you’d like to see the raw data that comprises the charts, just fill out this contact form and I’ll add you to the google doc.  (Why a contact form and not just give you my email address? I’ve learned that evil bots roam the web to find email addresses so they can bombard me with spam.)

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In light of what’s going on in other places of the country, a 5% or 6% decline is not too bad.  Of course, the question is where do we go from here.  So stay tuned for more year end results for the next week.

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  1. Emily Marin

    I know someone who bought a place in California when it was only down 5% a few years ago. I remember him saying that “it’s only down 5% and this is California, and real estate never goes down here b/c of blah blah blah…” Well he’s down 40% and really upset and obviously full of regret.

    I am not saying that that will happen here. But what’s concerning to me is that I hear people in NYC/Hoboken say all the time “this is NYC and real estate never goes down here b/c of Wall St, it’s international, blah blah…” Although I want to believe that is true, it’s troubling b/c I’ve heard that same tune before until the roof caved in.

  2. patk14

    Both NYC and Hoboken had very serious real estate implosions in the early 1990’s as the recession reduced job security and income. Many people got crushed and exited with their tails between their legs. Someone who arrived in 1996 has seen only a rapidly escalating market until the recent problems. Real estate escalated more quickly than incomes and obviously greatly outperformed other asset classes like equities. Banks were willing to lend freely and buyers were comfortable stretching to buy more than they could afford by using adjustable rate mortgages that came with low initial interest rates. Buyers could refinance after a few years and actually take money out of their condos to fund their lifestyle. That has come to an abrupt halt. Expected higher interest rates and tougher lending standards will hurt NYC and Hoboken.

  3. HobokenSeller

    NYC will be fine. These are blips. Prices wont skyrocket, but it’s better for everyone that they don’t.

    This doom and gloom is absurd. 2 or 3 years of bad times does not mean this is how it will be…

    Some people got stuck at the top, and that is a real shame because it is not their fault. But it will come back. Maybe not tomorrow but it will.. just as it always has…

  4. Tiger

    I think the one takeaway from this economic mess is to NEVER SAY NEVER. Any market worldwide can go down, there is no question about it. Yes people need place to live, but two people can share a tiny 600 sq ft 2 bedroom, or each live in a massive 900 sq ft 1 bedroom. Same two people, in one situation each average 300 sq ft, the other each average three times as much.

    That said though, a 5%, over the course of almost two painful years, is not bad at all. A lot of people expected the sky to have fell months ago, just check the archives.

  5. stan

    Thanks for posting Lori.The numbers are the numbers, but I see a large number of properties down 20% + from the peak. These properties are from the far west to the waterfront. Any idea why the numbers are not reflecting.this, Is it newer more expensive properties on the market? Have they raised the median/average?

    Thx.

  6. bz

    People are emotional when it comes to their money. That’s totally natural. No matter which side of the fence you are on, data won’t lie. If you choose to see only the negative points and scare yourself to death, that’s your choice.

    No doubt that the current recession (finished or not) is the most scary one for all of us except your great grandpa who lived through the Great Depression when the unemployment rate was 25%. But I guarantee you that this one is only one of many downturns we will experience for years to come. How you deal with this will indicate how you will live for the rest of your life. Check the article posted on CNN-money web site yesterday with a chart showing recessions occurring every 5-10 years, some are short, some are long, some are deep and some are shallow. Although it’s painful, it’s just the natural way of capitalism.

    One of the secrets for Warren Buffet’s success is not looking at the market every minute of the day. That should be your secret of being successful (and happy)too.

  7. patk14

    HobokenSeller, prices did already skyrocket for over a decade and need to adjust downward. That’s not doom and gloom and it won’t be nearly as bad as places like California/Florida/Arizona. The best case would be similar to equities. They skyrocketed in the 90’s and then had a 0% return for the next whole decade. Adjusting for inflation, you had a negative real return from equities for the 2000’s. The government had been pumping taxpayer money into doing everything possible to prevent real estate from falling further, a direct transfer of wealth from buyers to sellers. There are numerous examples of Hoboken units that have declined by over 20% from peak including some on the waterfront. The SkyClub is ground zero for declining Hoboken values.

  8. myop

    $500/sq ft to live in NJ is INSANITY. I live in Manhattan and have been to Hoboken a few times. It’s depressing, but maybe for NJ it’s great.

    Manhattan prices are also overpriced. But if I’m going to lose money anyway, I’d rather do it in Manhattan and at least have a good time while I’m getting killed.

  9. FN

    Comparing average or median prices year to year does not give a ANY INDICATION on price change unless the apartments were the same year to year.

    The only way to find out the change in price is to compare the sequential price of same apartment (assuming no improvement was done). That is the method used by Case Shiller

    So if one looks at purchase price and year of the 2 beds that sold this week in Wednesday wrap up

    551 Observer 470k in 2007 now 400
    703 PARK AVE 367k in 2003 now 458k
    325 Adams 510k in 2004 500k now
    65 10th st 650k in 2007 545 now
    836 PARK AVE no record
    1500 Washington 754k in 2007 580k today
    615 Adams 830k in 2006 765 k today

    So the only person who sold at higher price than his/her purchase was the person who bought in 2003.

    Case Shiller for New york shows 10/2009 price equal to 07/2004 with a 23% increase from 2004 to 2006 and a then 19% drop (it only take 19% drop to wipe out 23% gain). The above numbers seems to show Case Shiller numbers seems reasonable for Hoboken too.

  10. G

    FN,

    You make a great point. All of this median or average price comparison is smoke and mirrors. But you can’t fool anybody when you’re comparing the same exact place. Nothing shows a clearer picture of what prices have done than the same house/apt being compared.

    Good job getting that data. Looks like those who believe the market is only down 5% from the peak are being fooled.

  11. vreporter

    That is exactly what the skew is all about – “statistical significance” – something that realtors and the NAR should learn if they’re in the business of advice! This pre-school summary was one for the books!

  12. Lori

    Go right ahead and get the data, do the work and present it. Be my guest. I do more than any agent I know and this is just ONE chart of many over the course years of writing. Oh, and tell me please how you plan to account for the change in comdition of those same units over the years that you compare the sales prices – the owners who trash the place versus the neatniks with the gorgeous furniture. Home are not static commodities. For every particular property you show me that’s moved a given direction in price I bet I can find another that’s moved the opposite direction. It’s so easy to criticize. Let’s see your anaysis if you think your so smart and mine is useless or juvenile or whatever you called it. By the way, let’s assume you have no raw data to work with besides an imperfect MLS system and an obstinante board of realtors who would prefer you kept everyone in the dark. Your name calling is in and of itself interesting because I get loads of emails and calls from actual consumers who thank me for providing the info I do.

  13. randy

    interesting stuff both by lori and FN. I know its tough to gage exactly where a market is, but the more info provided by all, the better for the consumer.

    i have little to ad, other than that as a guy wanting to buy pretty soon, the more information I can read here, the more help I am getting to figure out what price I should be at.

  14. Craig

    I don’t understand why anyone would criticize Lori here. You don’t have to agree, but be respectful. She provides a good service of giving the local market some transparency by providing the info she does – and it’s not like she benefits from it. Can anyone name another agent who does this?

    That said, I am one of the advocates of citing median pricing instead of average. Here we do see a not so insubstantial $30k difference between the two in 2009. Keep in mind Lori was just comparing 2009 to 2008. I think what everyone wants to know is where have things gone compared to before the peak in the mid 2000s. Lori makes an interesting point about the change of condition of the unit over the years being a factor. So let me give you all an example of a unit that I personally know about. I am the buyer of 325 Adams. I can personally attest to the fact that it has not changed since its 2002 construction. Everything inside is the same builder spec as when the building was built (I know this because I’ve been in another unit in the building and all the fixtures were identical). As many can see, we bought it for less than it sold for in 2004. We paid $385/ sq. ft., meanwhile less than $500 for Hoboken was unthinkable 2/3 years ago. And my 30 year fixed mortgage is at 5% to boot. So I bought at 2003 pricing with the cost of borrowing money being much cheaper than it was in 2003. I think that gives a pretty clear indication of where the market has gone since the 2006/2007 peak – at least for similar units to mine (unimproved recent construction in the southwest). My advice? Get in while it lasts.

  15. FN

    Agree with Randy critizing Lori is totally out of place. Lori does great work here and the info she put out is invaluable for anyone looking to buy in Hoboken. Lori is giving the data not just her conculsions. Even if one disagrees with the Lori’s conclusions one has the data which both difficult and time consuming to get.

    Craig makes a good point once you adjust for interest rate and tax credit you might be 2002 levels of total payment (mortgage + HOA + property tax – tax benefit). The only cavet is you cannot transfer mortgage unless it is FHA. So value of low interest is subject to not refinancing or selling for a very long long time.

    Thanks Lori and Continue the good work

  16. thoughts

    FN –

    I think FN’s point (despite the “data”) is that we’re approximately 20% off the high. I don’t think that can be argued.

    I’ve had 5 friends (3 hobo, 2 nj burbs) purchase in the last 6 months – every one of them got approximately 20% off the highest price paid on comps. In addition, I have friends looking now – all plan on paying 20% off the high….

    I’ve yet to see 25% off the high – therefore, I think we hit the bottom…..

    Lastly – they all great rates!

    Nobody can predict the future – so ignore the phrases “things will get worse” – they may or they may not – things have been holding!!

    Thoughts

  17. Randy

    Thoughts,

    you got it right on the nail, “Nobody can predict the future”.

  18. potential_buyer

    Lori & Howie,

    You two have done a wonderful job in compiling these data for all of us to analyze. No doubt, you have done more to get this out into the open than anyone else I have come across in the area! The mere fact that we can being having these discussions regarding median/mean or median over same apartment being sold over a course of 5 years is a testament to the work & dedication you guys have put forth. Both camps have points to be made and I am appreciative of both!

    Keep it coming!

  19. pp

    I dont think the weekly roundup example given above by FN is a big enough sample. I sold some condos in a middle of 2006 that within the past few weeks re-sold for about 9% over the price I sold them for in 2006.

    this was a duplex condo in a small building (under 4 units).

    I would say if you have a unique product you are going to take much less of a hit then if you have a cookie cutter unit.

  20. thoughts

    i also agree with PP –

    something great – near the PATH, parking, outdoor space, etc. – still gets a pretty penny….

    we always argue about it – but the stuff on the outskirts of hoboken (1st and jeff, 4th and monroe, 12th and clinton, etc.) is what’s suffering big time. people want to live in Hoboken.

    that’s why i always pushed people to buy something within a half-mile or so from the PATH – that area is holding up very well compared to other areas of Hoboken, JC, NYC, Brooklyn, etc….

  21. TS

    Why anyone would take anything vreporter says seriously is beyond me. Have you seen his blog – copy and paste someone else’s (negative) article, and add a line or two of truly pre-school commentary (i.e., name-calling)?

  22. thoughts

    question – i’m not a big number or stats person:

    Was Lori making the argument that Hoboken is only 5% or so off of the high? or just 5% for the year?

  23. Craig

    “we always argue about it – but the stuff on the outskirts of hoboken (1st and jeff, 4th and monroe, 12th and clinton, etc.) is what’s suffering big time. people want to live in Hoboken.

    that’s why i always pushed people to buy something within a half-mile or so from the PATH – that area is holding up very well compared to other areas of Hoboken, JC, NYC, Brooklyn, etc….” – Thoughts

    Dude, what are you talking about? Hoboken is only a square mile in size. Half the city is within your preferred 1/2 mile from the PATH radius. You think 1st & Jefferson is on the “outskirts of Hoboken” and is more than 1/2 a mile away from the PATH? It’s approx. 2000 feet from the PATH.

  24. vreporter

    I think all these defensive responses to my post say it all. Most also don’t know how to read. Enough said.

  25. thoughts

    craig – i just looked on a map – 1st and jeff is a closer than i thought, but it’s still on the outskirts – there was (or still is) a lot of inventory in that area.

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