2010 Jan 26th

More on Hoboken Condo Sales Annual Numbers and Activity

Year Over Year – Annual Average and Median Sales Prices

This chart compares year-over-year changes in prices. Blue is average sales price, red is median.

Number of Deals Being Done

Extremely important, this chart shows how many actual closings took place each year.

What You Really Seem To Want To Know

I read comments and threads on other sites and it seems people are hung up on how far down we’ve come in the Hoboken condo market since the peak. According to the data I have available to me (and I admit it is not perfect as it is limited to what is provided on the MLS), the highest average sales price annually $524,887 was in 2008. We ended 2009 at $501,337. That represents a decrease of 4%. Similarly, the peak median sales price in both 2007 and 2008 was $500,000. In 2009 it was $470,000 representing a 6% decrease.

Now, I don’t make these numbers up – they come straight from the MLS. In fact, here are the numbers:

I hear people talking about a 20% decline. Ok, show me the data.   If you know something I don’t please share it with us. I’m not interested in anecdotal evidence of “oh, my neighbor bought in 2007 for 600k and had to sell for 300k. ” That’s statistically meaningless. I’m willing to put my name to my work and provide the basis for my calculations. I challenge anyone to do the same.

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  1. senor

    what about all the sales by Toll that never were listed in MLS – do they show up in your data?

  2. Lascap

    Thank you for the data. Statistically speaking, the crucial assumption behind your interpretation of these data is that THE SAME units changed hands. Given that the number of units sold is much less, this is unlikely.
    In the absence of a differential metric (at home much the same unit sold in different years), a useful corrective would be the price/sqft. Why? Because it is not unlikely that people are “trading up” (getting bigger places, on average). This would mask a real drop in prices.

  3. Lori

    Senor – The preconstruction Toll units were mainly sold through the Toll sales office and would not be included here. Later sales were listed by Toll on the MLS as they needed realtors to help them get sold. Those are included.

    Lascap – Even the “SAME” units are never really the same as owners treat their property differently and changes in condition and appearance have a dramatic impact on price. Nonetheless, I agree that price per square foot is a good metric and I do track that monthly and quarterly. Time permitting, I’ll include it in the annual analysis. Thanks for the suggestion.

  4. Lascap

    Sorry for the confusion. It doesn’t have to be the exact same unit. Calculating the mean and comparing them implies independent sampling from the same population. If this is the case, given the sample size, one can abstract from individual units and treat them as SAME. But given the nature of the market, this assumption can be questioned. Again: $/sqft might be more accurate, but not perfect (as many factors influence that as well).

    Anyway. I really do like you data-based approach, but the interpretation can be tricky.

  5. homeboken

    Lori – I can’t see the volume chart, probably my computer. Do you have the raw data available? If so, would you mind emailing to me? Thanks.

  6. patk14

    Lori, would you advise a seller who purchased a condo in 2007/2008 and now must sell to list it for the same price as they purchased it? The 4% or 6% decline that you mention above would seem like a typical negotiated price reduction. If they list it at a 5% discount ($475 thousand on a unit purchased at $500 thousand) right away, surely buyers will bid below that offered price. Isn’t this contrary to your advice that sellers need to wake up and price their units according to the current market, not 2007 or 2008 peak? I believe pricing a unit for what was paid at peak will result in the unit not selling and that the real estate market in Hoboken is down significantly more than 4% or 6%.

  7. joe

    I agree $/sq ft would be a more apples-to-apples comparison. The other issue that we’d be confronted with is that there’s a pretty big disparity between $/sq ft a) by size and b) location – on the river = $$$, further west not so much. In a perfect world, we’d have $/sq ft by size and maybe two or three locations. But Lori has her day job too :)

  8. Jamie

    I believe Lori has two different messages–depending on who you are:

    Message #1 (to buyers): The market has gone down 5% from peak, you’re crazy if you think it has gone down more than that!!

    Message #2 (to sellers): You’re crazy if you think this is 2006, 2007 or 2008. So don’t price your apartment that way because it will never sell. Be more realistic (read: you need to really drop the price if you want this illiquid asset to sell)!!

  9. Lori

    Homeboken – I would suggest trying to view in a different browser. I can see it in Safari, IE and Firefox so I don’t know what the problem might be.

    Pat14 – There is average and then there are individual cases. When I talk about pricing with a seller it is with regard to a specific property within a specific building. The advice I give to the owner of a condo on Jackson Street is going to be vastly different than that given to one on Hudson. It also make an enormous difference how the place shows. I can’t stress strongly enough how much the initial impact a property’s appearance makes, especially on a first time buyer.

    Another issue I see constantly are sellers who base the pricing of their unit on what they paid, plus the realtor commission, plus some arbitrary amount of profit they wish to make. Or the say, “my neighbor sold for X so I want to get X plus 10%”. That is not pricing based on reality. A seller has to look at the comps. What sold in the building recently. Or if nothing sold in building, what sold in the immediate area? How did those properties compare in terms of features and condition to the seller’s? If I’m working with a buyer, I will present an offer and justify it based on the comps.

    Then there is the psychology involved in negotiations. Buyers and sellers have different negotiating strategies. That is inherent in negotiations. We have a barter system – there is not absolute pricing in housing. Of course buyers are going to start lower than they are really willing to pay – unless they think the property is so well priced that they won’t get it for that price. Or if there is already another offer. Even now, there are many multiple offer situations and even more situations where an offer has already been made so a potential buyer decides to move onto the next rather than get involved in trying to outbid the first buyer.

    Statistical analysis is intended to provide a greater understanding of the market at a whole. It is not a replacement for case-by-case experience.

  10. Lori

    Jamie – see above. Don’t put words into my mouth. Only those with an open mind can learn.

  11. Jamie

    I don’t mean to put anything in anyone’s mouth.

  12. homeboken

    Thanks Lori, I can see it now. Can you at least post a table of the volume statistics? I am trying to drill down into more detail and I can’t get exact #’s from the chart.

  13. Lori

    year # deals % deals
    Year # Deals % change
    2000 617
    2001 621 01 vs 00 0.7%
    2002 914 02 vs 01 47.2%
    2003 1052 03 vs 02 15.1%
    2004 1050 04 vs 03 -0.2%
    2005 962 05 vs 04 -8.4%
    2006 867 06 vs 05 -9.9%
    2007 982 07 vs 06 13.3%
    2008 787 08 vs 07 -19.9%
    2009 652 09 vs 08 -17.2%

  14. thoughts

    if you look at a particular building’s highest paid (@2007) and the latest sale in the building (@2009), don’t you see a 20% or so difference in the two prices? i beleive that’s where people get the 20% from.

    losing the book store, which is an anchor of hoboken, is not good for real estate around here

    thoughts?

  15. homeboken

    I look at the volume chart when overlaid on the price charts. I see over 6600 condo units moved during the 2002-2008 years. Per Lori’s numbers and the C/S NY Condo data, this was the start of the sharp increase (2002) and the plateau at the top (July-05 – Jan09) (With respect to another real estate blog, the chart can be foun here http://www.njrereport.com look at the red line.)

    This indicates to me that there are 6,000 condos that have traded hands in Hoboken during the peak of the last bubble. Add all of the non-mls sales (Maxwell, 700 Grove, HTB, Harborside) and you probably have 6,500 sales in this period.

    I posit that there are many condo owners in this town that have not yet experienced or examined the true value of the real estate they own. I will not make any conclusions or predictions regarding price, but I really think we need to keep the current owner’s basis in mind when discussing the future price movements in town.

    Unrelated, I am sorry to see Barnes & Noble go as well, but I would welcome a local, family owned book store in town to replace it. Wish the demand was there.

  16. N Nischal

    Hi – I had done some analysis for a building I was considering buying a unit in – 82 clinton.

    Details are below – my conclusion was that the decline is 12-16% from the peak.

    Thanks.

    82 CLINTON
    year Unit Sq foot $ thousands $/sq foot Decline Avg $/sq foot ( 3 sales)
    2003 5a 1250 390 $312 n/a
    2003 4f 1065 372 $349 n/a
    2003 n/a 1430 515 $360 $340
    2003 n/a 1250 430 $344 $351
    2003 6d 1250 431 $345 $350
    2003 3f 1065 335 $315 $334
    2004 6b 1150 520 $452 $371
    2004 n/a 1065 347 $326 $364
    2004 6f 1065 475 $446 $408
    2004 n/a 1065 347 $326 $366
    2004 3e 1180 572 $485 $419
    2004 4c 1250 625 $500 $437
    2005 5e 1180 599 $508 $497
    2005 4d 1250 645 $516 $508
    2005 3d 1250 625 $500 $508
    2005 2b 1150 620 $539 $518
    2006 4g 1150 615 $535 $525
    2006 6e 1180 650 $551 $542
    2006 6c 1430 767 $536 $541
    2006 3g 1150 615 $535 $541
    2007 4c 1250 688 $550 $541
    2008 4e 1180 623 $528 $538
    2008 4d 1250 640 $512 $530
    2008 2f 1065 535 $502 $514
    2009 4d 1250 565 $452 12% $489
    2009 6e 1180 545 $462 16% $472

    MAX $542
    min $472
    Diff 13%

  17. homeboken

    Correction to above – The 6,500 number in paragraph two should be 7,000. That’s just an estimate though

  18. bz

    N Nischal: Insteredting observation. I’m assuming that all the units you listed in your analysis have same parking outdoor space, layout, and finish?

  19. Lori

    Of course they don’t – they can’t. The floorplans vary, the original units have white cabinets and appliances with Formica counters, not all the units have parking, some face Newark St., some face Clinton, some face the back. Some units on the top (quieter) floor have city views. Some layouts are long narrow and dark, some ate corners with multiple exposures.

  20. Lascap

    Nischal: Impressive. How did you access this data?

  21. N Nischal

    You can look at the exact units – that will give you a hint.

    And, 6E has parking, upgraded kitchen (not white cabinets).

    2005 4d 1250 645 $516
    2009 4d 1250 565 $452
    12% decline

    2006 6e 1180 650 $551
    2009 6e 1180 545 $462
    16% decline

  22. Tiger

    Guys, I think we can discuss this to death and not find an answer that will keep everyone happy.

    If indeed price trends and averages are useless, how come we keep on using the ‘prices have almost doubled from 1997 to 2007′ line? Are we saying that during those 10 years not a single higher end unit came up in the market, hence the trend is much more accurate? One can argue that just like the drop is 20%, the peak wasn’t 100% to begin with.

    And I laugh when I hear people saying ‘the 1/2 mile around the path is a sure bet’ or ‘the waterfront is always safe’. Guys, Hoboken is a micro real estate area; 1 Sq Mile, what should people in Cali say?

  23. Bill

    Tiger good point.

    In most cases averages will always skew the numbers higher if an area is developing.

    I think reality is closer to Nischal’s anecdotal 13% decline than Lori’s average based 5%

  24. bz

    N Nischal: the trend you generated is for building 82 CLINTON, nothing wrong with it. But it’s not for Hoboken as a whole. Collectively, Hoboken’s trend is not necessary as same as any individual buildings in town. I’m sure if you go to zillow.com and pull out all the units in that building, the trend lines are all different. As Lori pointed out a million times, all properties are unique. The most widely accepted and used method to measure the market dynamics is to look at the whole market trend, i.e. average or median, sales or $/sqft. Again, there’s no perfect measure in this organic market. So folks, please don’t stare at one tree and believe that’s the forest.

    Also, when you say “I think/feel/believe” ask yourself to provide some real data.

  25. homeboken

    I understand the median and average discussions and how it is difficult to relate one sale to a macro trend.
    But here is a summary from this weeks round-up of 2BR’s:

    717 Madison: sold 2004 180,000 – Sold 2010 485,000 What a return, wonder how much of this was improvements

    325 Adams: Sold 2004 510,000 – Sold 2010 500,000. 10k loss in 6 years of “ownership” Taxes + HOA fees for 6 years sum to more than $70,000. Better off renting?

    508 Garden: Sold 2003 382,000 – Sold 2010 500,000 (but this was a short sale, owner refi’d the hell out this baby and spent the equity on ???)

    65 10th: Sold 2007 650,000 – Sold 2010 545,000. $105,000 loss in 3 years.

    508 1st: Sold 2004 440,000 – Sold 2010 550,000. Nice return 20% appreciation in 6 years. Improved?

    615 Adams: Sold 2006 830,000 – Sold 2010 765,000. $65,000 loss in 4 years.

    I continue to see people come to market with 2006-2008 pricing and nobody is getting that. The 2004 and earlier buyers seem to be doing OK though. On the whole, pricing seems to be back at the 2005 levels. Where it goes from here, who knows.

  26. Marc

    One issue that no one is addressing is that fact Hoboken’s professional workforce (roughly 40%) is in the finance market.

    During the “boom years” 2004 to the end of 2007, bonuses were heavy and liquidity high. The average salary in Hoboken was 88K, now it is down 14% to the mid 70’s. Previous lending practices allowed 4 x annual gross earnings (estimated on 88K x 4 =$352k). Couple that with current traditional lending practices x 3 annual gross earnings (estimate 75k x 3=$225k, the purchasing power has been reduced by 36%.

    Anyone whom questions this, look at the rental market for the true value of real estate as that is based on current incomes, not what you can borrow over 30 years.

    The market will not recover until wages and earnings recover to the 04-07 range. Ask yourself this is anyone expecting a 36% raise this year?

  27. TS

    “Ask yourself this is anyone expecting a 36% raise this year?” – Yes, many are getting it as you speak (in banking).

  28. marc

    “financial crisis responsibility fee”

    Not to mention most finance people whom live in Hoboken have back office jobs and not in the bonus pools which we read about. Go visit Manhattan, Greenwich CT or Summit NJ for that..

  29. N Nischal

    Adding to Homeboken’s comment: Most of those sellers would also be incurring ~6% real estate commission/fee, I’d thik – not an insignificant amount given the total $ value of the transaction.

  30. thoughts

    N Nischal – thanks for applying my concept – i think it proved a lot….

    Hoboken – i agree with you – 2005 prices. The latest comp in my building indicates 2005 prices….

    marc – 40% of hoboken is not on wall street….

    anyway, the trend in is “urbanization” – look it up. purchasing at 2005 or so prices may be the best investment you ever made….

  31. marc

    your right not 40% , it is actually 23%

    Number 3 most affected town in america

    http://realestate.msn.com//slideshow.aspx?cp-documentid=13108497#4

  32. marc

    http://realestate.msn.com//slideshow.aspx?cp-documentid=13108497#4

  33. thoughts

    marc – you say “Number 3 most affected town in america” like it already happened. read the article – it’s trying to predict the future based on a few factors that may never happen….

    the 23% was for all of wall street, banking, insurance, real estate, etc. therefore, your 40% estimate is likely around 3-5% at best….

  34. marc

    it is not 3-4% take the PATH train to WTC or the 126 to Midtown

  35. thoughts

    okay – i’ll go over 3-4% – good point

  36. teaorcoffee

    Well, I ride the 126 to Midtown and I am not in banking. My husband takes the PATH to WTC and he is not on Wall Street. Thinking about the people I know in town, very few are in finance…more are in pharma.

  37. marc

    Have you seen the layoffs in Pharma?

  38. Tiger

    marc, I worked in multiple pharma firms in New Jersey and Connecticut. Pharma industry typically functions on a slightly different, slower cycle compared to the rest of the economy. It is actually kinda weird, but they had the worst times during the ‘bloom’.

    That said, some pharma companies are struggling now simply due to competition.

  39. marc

    I work in Pharma too, generics, politics, regulatory limitations, M and A have killed an industry. The industry was bloated for sometime and now is shrinking to the new marketplace and NJ will be ground zero as “pharmaceutical row” is 25 miles away from Hoboken.

  40. Tiger

    marc, very true. I also did a long project at a clinical trails company in Seattle; the amount of paperwork, regulations, reviews, etc… is mindblowing. I never realized how expensive it is to develop a new medicine until I it first hand.

    Nowadays I am working at a consumer goods company. One would think that they are safe, but they are not. Discounted generic store brands, environmental regulations are also causing a strain on them.

    My one takeaway from this economic mess, as I mentioned in an earlier post, is to never say never. Everything can change, no one is safe.

  41. marc

    Totally agree with you on that one. My wife and I both work in different industries and have seen mass attrition. We have a neighbor with a beautiful apartment whom is on the higher end marketplace and cant sell. The key demo whom would buy her apartment (mid 30’s with 1 or two kids under 5) cant risk losing a job. Therefore her place has been on the market close to a year. It’s a real sad state of affairs. We are seeing what Phoenix, Tampa, LA saw 2 to 3 years ago. I think many of us should get use to taking a loss or making a meager gain.
    Sorry to sound like a sad sack, but the reality we were insulated from for so long is here for a long time.

  42. bz

    I used to work in pharma and was laid off in 2006 for restructuring due to blockbuster drugs off patent. I know that pharma’s lay offs are very targeted, sales and admin first, then manufacturing, then research. Fortunately, NJ is the center of US pharma camp; it’s relatively easy to find another pharma or healthcare job. Now I’m in Manhattan midtown, not for pharma nor finance. All my pharma friends are still in pharma, some moved to different functions or companies thanks to M&As and lay offs. It’s funny that the severance packages fomr big pharma companies is so good that many of us actually benefit from the layoffs. I used the money got myself an MBA degree in Finance, my boss used his money combined with proceed from selling his old home bought a nice house in short hills, in cash. My point is that not all lay offs are the same. At least don’t treat pharma industry as same as finance. By the way, people in other industries don’t have the same spending habits as financial folks do, in general. I’m sure there are some people struggling in Pharma too, but definitely not as near bad as finance.

  43. Tiger

    yes marc, I have several friends who are ready, capable of buying a condo yet are hesitant as they are not sure about their jobs. I don’t necessarily agree though we will see Cali and Florida scale drops. IMO the ‘early’ peak of Hoboken made it hard for less-than-ideal candidates to qualify for condos they can’t afford. Again though, never say never. For the time being I am just enjoying my condo (all nights of the weekend that I am actually there).

    bz, for my last pharma client they had a sales restructure. They gave them excellent pacakges; some of sales reps were even ready to retire in a year or a couple of years time, they basically gave them the same packages they would have they worked those extra years. Those who weren’t got something like 6+ months package and continued benefits.

    Definitely beats the package my designer friend got: same day notice, 2 weeks of pay.

  44. marc

    http://finance.yahoo.com/real-estate/article/108679/when-owning-your-own-home-doesnt-pay?mod=realestate-buy

  45. Tiger

    Thanks marc. That’s a good article, and I guess it points people to the right direction of calculating the true cost of ownership.

    However, I am not sure I agree with its take on building equity; for long term, I still think nothing beats building equity in a home. My parents did it, your parents did it, and it’s almost a universal concept. Are you saying that people who bought whole brownstones in Hoboken for 10K in the 70s didn’t build equity? It also seems to be the case that people will either stick in their home and live rent free as they get older, OR they downscale (kids moved out) by either moving to a condo or in the case of MANY hoboken landlords just take an apartment and rent out the rest of the home, or in the case of my parents, they have had it with the congested area they lived in for over 30 years and are looking to move somewhere quite.

    You rarely see people ‘trade up’ in the same area as they grow older; they typically trade up when the family is growing, stick to it or trade down when the kids move out.

    just my take

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