2010 Mar 2nd

The Weekly Wednesday Wrap Up – Hoboken Condo Sales & Activity for the Week of March 2nd.

Hoboken Condos Sales & Activity – Week of March 2nd.large_balc

The story this week is twofold. First, a few questions to ponder about this Saturday. If you own property, or if you are thinking about buying property, consider the affect the upcoming St. Patty’s Day parade may have on you. For example, if there are house parties in your condo and someone gets hurt, could the condo association be held liable? If the condo association insurance covers the claim will the rates be increased? If damage is done to the common areas, who is responsible for paying for the repairs? If your tenants have a party, can you be summoned for allowing disorderly conduct? If you host a party and serve alcohol to a guest who later goes out and causes injury can you be held liable under host liability laws? If the fire escape or deck on your building collapses due to overcrowding, what might the consequences be? Many condos are now amending their rules to prohibit house parties on this day. Similarly, many landlords are including a clause in their leases that prohibits house parties. Just food for thought.

The other story is yours. Over a hundred comments on last Wednesdays post and a really interesting discussion about several topics. Is getting an FHA loan a subsidy? The consensus is yes. Will the Fed continue to buy mortgages? On this one, the consensus is no. Does the first time home buyer credit matter in Hoboken? Not much. Are prices headed up, down or flat? Debatable. Sincere thanks for all of your contributions and the respect shown even when you disagreed. Let’s keep the discourse going! I’m going to ask my techies to make pages for the comments so you won’t have to scroll.

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Finally, I’m happy to say inventory moved down this week. Here are this weeks numbers vs. a week’s ago numbers:

Studio & 1 Bedroom Hoboken Condos:

7 new listings.

220 total active – $380,370 average asking price. Average 75 DOM.

1 dabo. Average 60 DOM

None sold.

16 price reductions.

Two Bedroom Hoboken Condos:

15 new listings

249 total listings. Average list price $577,443. Average 98 DOM.

6 dabo’d. Average 54 DOM.

8 sold. Average price $626,362. Average 76 DOM.

18 price reductions.

Three Bedroom and Larger Hoboken Condos:

4 new listings

49 active listings. Average price $975,504. Average 121 DOM.

2 dabo’d. Average 105 DOM.

2 sold. Average price $667,500. Average 50 DOM.

4 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, due to MLS regulations, to receive the map with the actual links, you will have to request it using the request form on the post. It only takes a second.

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.

A word about that – if you have an ongoing relationship with another agent we are not going to email you listings. You can ask your own agent to do that. So what is an ongoing relationship? Is that not up to you? Have you been working with another agent on a regular basis? More importantly, are you happy with that agent’s service? If so,we respect that relationship. If not, find an agent you like!

If youattend an open house or see several properties with several different agents, that’s not an ongoing relationship. That’s the nature of our job. Despite what some agents in town would like to have you believe, simply showing a buyer a single property, or even a few, does not a relationship make. You are the consumer – you get to decide with whom you wish to work. Unless you’ve signed a “buyers agency agreement”, which is highly unusual in Hoboken, an agent doesn’t have any “hold” over you. So find an agent you like, trust and whose advice you respect. It’s your money, no?

For more information you can always contact us at 201 993 9500.

Thanks for reading and, as always, we welcome your comments!

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  1. thoughts

    Shorty –

    So, this is where the rubber meets the road:

    dabo’d – 101 Park – List 670K

    This is the RARE two bed with parking and non-walk up for sale in “THE LOCATION”. It should be noted – it’s not huge (1200 sq. ft.) and it’s dated – see kitchen!

    What will it go for? I say the FMV is way over 600K kid!

    Thoughts

  2. shortsequalmarket

    I did not say the market could not sell a place I said the market is down. Today’s price quals tomorrows’s ceiling.

    Also that should put an end to your delusion about it being cheaper to own than rent.

  3. stan

    Just some background on 101 park, sold for 515k in 2003. Other sales in building were in the 700’s in previous years.

    I dont think the argument is can the place sell, its at what price was it previously. That said, I am interested so see what it finally moves at, 600k+ is a given. In full agreement has been at a premium, just less than it was in years past

    As an Aside from Path-1/2 mile discussion. mls# 100000381 400 9th street listing price is 574,000. nice building

    More Info 10/20/05 7704 250 732000 150k loss over five years.

  4. stan

    ^^path area has been salling at a premium^^

  5. stan

    ^selling^

    need coffee uggh

  6. whynot

    Stan – 101 Park seems to be down only 10%? If so, not bad at all.

  7. boof

    The 150k loss is a 20%+ plummet.
    Wow TSHTF.

    However a couple reasons I wasn’t interested in that location:
    – noise from the stadium (although its not often)
    – at one time there was a flooding problem along the south edge of the park, although I don’t recall it reaching the building

    I’ll never forget the time I saw a transport truck trying to maneuver through 9th there…

  8. shortsequalmarket

    $150K is the minimum plummet the same sq footage in that building sold for $475 a few months back. The unit has been listed at $575 for a while without going pending. I guess no one wants to pay a $100K premium versus two months ago.

    Yes I know the $475 was a short sale, but then again that is my point. The other unit will sell for a similar price.

  9. stan

    101 park. 1573 sq ft unit
    More Info 09/04/08 8603 175 875000
    More Info 06/03/09 8680 412 776250

    1367 SF
    More Info 01/25/08 8441 211 733000
    1229 SF
    More Info 02/15/08 8456 287 715000
    1365 SF
    More Info 03/20/06 7859 305 775000

    Looks like 715k was a similar sale in 2008. So 6% decrease since over last year + if it sells at asking. Looks like the larger place was -12%.

    What is interesting is the 1573 sq foot place had the same sales price as the 1365 sq ft place in 2006.

  10. whynot

    Shortsequalmarket – My calculations show its cheaper to buy than own. Or, it’s close, but, in any event, we want to buy and make someplace our home. We just haven’t found the exact place that we want yet. There’s just not as many nice places on the market as one may think. We also really care about location because my spouse is really into safety.

  11. whynot

    Stan – I could not understand your post. Is 101 Park down only 10%?

  12. Tiger

    whynot, my advice to you is take your time. It took me over 7 months to find place, I have seen over 70 condos. But when I saw my condo, I knew it was it. There hasn’ tbeen a single day since that I don’t consider myself fortunate that I have it.

    Good luck!

  13. Tiger

    Re: Saint Patrick

    Am I the only one planning to be out of Hoboken that day?

  14. stan

    why not:

    short answer, I dont know. Looks like 6% down from 2008 for one apartment. Another apartment is down 12 from 2008%

    15 units in building, the resales I posted above, are what we have. So I would guess somewhere above that 12% number from peak-now. Have a better idea when we see what tha place closes for

  15. lori

    402 9th unit E3A – same building as 400 9th (The Columbus) – same unit as W3A. One is in the east building one the west. East has a better view over the park. It sold for $610,000 in August ’09. Over the $599k asking with multiple offers (my buyer didn’t get it).

  16. shortsequalmarket

    What about the 1300 sq ft unit that sold for $475 in Columbus after riding the market down in the summer and fall?

    Whynot, I think there are some places less expensive to own than to rent in areas not favored by Thoughts. However, many times the less expensive is based on not considering sacrificed earning on your down payment or closing costs. That being said if the unit in 101 Park goes for $650 plus it is not less expensive to own then to rent.

    Other items to consider rents are trending down while property taxes are heading up. You also better be sure about where you are going to be for the next 5+ years otherwise you will be quite underwater in your decision to own. Even Thoughts says prices will remain flat for a while.

  17. homeboken

    Not sure if this falls in thoughts’ exclusive 1/2 mile radius, but the 3 bedroom at 109 Grand was painful. Great looking unit though.

    1/20/2005 – $1,225,000
    2/09/2007 – $1,475,000
    3/02/2010 – $950,000

    $525,000 (35% drop) in 2 years!

  18. Lori

    The unit that sold for $475 was an entirely different (very long, narrow, dark) floor plan and the unit was not in great shape. It was a short sale. Short sales often are vacant and don’t show well at all. The other units I mentioned earlier were corner units with tons of light and much nicer. Apple to apples, please.

  19. thoughts

    whynot – do whatever is best for you – either way. shorty is just trying to get into the market and is upset that he or she can’t, so he bashes EVERYTHING. total and utter pessimist – likely also a Grinch! xoxoxo

    homeboken – those are big numbers!! not sure if that falls within my typical 2 bed!

  20. Confused

    Thoughts, let me get this right – because shortsequalmarket has a different view of the market than you do, you call him / her a Grinch?

    Why am I not at all surprised?

    One might think you are the issue – scared of losing more money on your apartment, so you’ll just keep telling everyone that the market has bottomed out hoping people will listen to you.

    Let me remind you, again, that you haven’t provided any detailed, factual information to support your arguments.

    Keep talking, maybe everyone will give up and say you’re right.

  21. homeboken

    Thoughts – You can explain that drop away in any fashion you wish. But it is a fact. 35% drop from Feb 2007, exactly .5 miles fromt he PATH.

    Some units hold up better than others, and maybe the 2007 buyer just ridiculously overpaid. Either way, that is a signficant resale.

  22. whynot

    you guys are too funny on here.

    homeboken – i don’t think that is a typical two bedroom unit at those prices. i understand that the really high end residentail real estate market is hurting the most throughout the country. i am new to this, but a 35% drop in real estate is not what i see out there. i think you’re a little off base. i am basically seeing 10% drop on desirable units and 20% drop on less desirable units based on location. whether we are at the bottom or not, nobody (thoughts or shortsequalmarket) can perdict the future. i hate when they state their opinion as fact.

    in any event, i still have not found anything that checks all of my boxes.

  23. homeboken

    We are talking percentage terms though. This is a documented 35% drop. Prime location, unit in great condition, two parking spaces! According to some on this board, this unit should be holding value, why did it re-sell for 35% less?

  24. whynot

    homeboken – i do not think people consider that a typical unit. as i understand it, the high end market is hurting the most. that unit is a high end three bedroom and not a typical two bedroom. i do not consider that unit in my review of my market.

  25. homeboken

    Whynot- that is a very convenient view of the world.

    My question remains, high-end or not, why wouldn’t this unit hold it’s value? It has everything that a would be condo buyer would want.

    I’ll put it another way, let’s say this unit sold for the exact same 2007 price, would you take that as a sign of strength for this market?

  26. Lori

    I agree that it’s not a typical unit or building. It’s very high end. I’ve actually been in that particular unit and it’s quite nice. Have to agree that the seller took a bath on that one! But you never know – maybe he or she got transferred for work and the company paid to make him whole. It happens. You can’t take just one instance and from it make a trend.

  27. homeboken

    Nobody is answering the questiion – I agree that it isn’t a typical unit, it wasnt’ typical in 2005 when the buyer paid $1.2M (way over the typcial Hoboken price) and it wasnt’ typical in 2007 when the buyer paid $1.45M (again way over the typical Hob price).

    Why then would this not hold it’s value?

    Furthermore, how can one state that the high end is hurting ($1m plus) the low-end is hurting (small, non-updated crap shacks on Harrison or Jackson) AND that the “mid-town dead zone” is under pressure. BUT his or her own unit, is doing just fine.

    Again, I have no dog in this hunt. But to claim that 1 particular condo (which you happen to own) is holding value or increasing in value while at the same time units all around you are losing value is just your biased view of the world.

  28. mms1979

    Any news on what the units in the Capella building are selling for? I know that 2 closed last week, but no info on pricing?

    Thanks

  29. Craig

    I’ve been in 109 Grand as well to see a more “typical” 2 bedroom unit. Even those go for around the high $600s to $700k. That building as a whole is nicer than most. It remains one of the places I aspired to live in when I first started my condo search.

    A 35% decline like that is not typical. A likely contributor to the 35% drop in value that particuluar seller suffered was Hoboken’s 47% tax hike. As a result, the taxes on that 3 bedroom unit are now $20k a year. Yikes! That’s a tough sell in any market. Unless you’ve bought new construction (in which case the tax assessment was accurately based on purchase price), every homeowner in Hoboken should be looking into filing a tax appeal. The city’s outdated assessments are way out of touch with the reality of current market. My appeal will net me at least an annual $2200 reduction. Lower taxes makes a unit for sale far more sellable closer to asking price because there’s more buying power.

  30. whynot

    hoboken – i guess you are not too bright because you seem to not undertsand?!? at that value, it is just a differenet market. different buyers, etc. just becuase that went down 35%, does not mean that a two bedroom at the same location in the 600k’s would. this is not tough analysis. no relation. this is happening all over NJ in towns. high end has no takers, but good mid-level stuff is selling. look at 101 park.

  31. homeboken

    whynot – I won’t respond to your insults, it shows me that you are running out of steam.

    If the high end market is dead what does that say about Maxwell Place, Harborside, HTB, Garden St Lofts, etc. You state those markets have no takers, I somewhat agree.

    But try to look a few moves ahead. Don’t be like the driver that stares just over their hood while barreling 80 mph down the road. If you look out a few moves, how do you think the collapse of the high end market will affect the mid-level market?

  32. stan

    A possibility why the high end market is suffering is because the buy up market is not getting the prices it once did. The traditional gains many had expected have not materialized. The 600k units are now in the ^400/500 range. Less appreciation to use to move into the trophy residence, coupled with the higher taxes someone mentioned above is a likely reason.

    “but good mid-level stuff is selling. look at 101 park.” Some of its selling, only at a discount to what previous prices where.

    It obviosuly is not common to see thus far in Hoboken, but 35% is an enormous #. Whether its on Jackson or hudson.

  33. JC

    There are too many variables in any given sale to try and use that sale as “norm” for the market as a whole. If money was not an object and my wife was just about to pop twins out and I had to move today, then I’d have to take that haircut like 109 grand. Who knows man?! Every property is different in both structure and story. Mabye $1.475 million was way overpriced to begin with.

    homeboken asked “how does the collapse of high end affect mid level?” Well, those on the upper fringe of mid-level can now afford high end…..causing mid level to weaken slightly. However, since mid level weakens slightly those on the upper fringe of low level step up….weakening low level slightly. However, first time buyers not being able to afford now step up.

  34. homeboken

    Agreed, if that same unit was bought for 995,000 two years ago and re-sold for 1.34m (35% more) today, would we be saying “Oh that’s not a typcial unit, don’t count that.”

  35. homeboken

    JC – Add 10% + unemployment to your move-up scenario and run it again.

    I think that will witness the opposite. People will stay put, or move down. I don’t see the move-up happening until there is a full on jobs recovery, just a guess.

  36. Lori

    Sounds like a lot of steps!

    Capella –

    Unit 601, 758 sq ft 1BR Asking $389k sold for $370k
    Unit 403, 1043 sq ft 2BR Asking $469.9 sold for $460k
    Unit 605, 1135 sq ft 2BR Asking $534.9 Sold for $515k

    About 5 more “dabo’d”.

  37. whynot

    homeboken – you still do not seem to understand that it’s two different markets. right now the market is hurting, but even you cannot perdict the future. i highly doubt the prices will decline any further. get it – “i” – try it one day. anyway, whatever effect it had on the mid-market already happened.

    if the economy hasn’t been recoverying or the worst of it over, why did the stock market recovery a lot of it’s losses and been on an incline?

    recessions end at some point and we’ve been in this for a while.

  38. patk14

    Whynot, most market experts think it is a matter of when, not if, mortgage rates start to move up sharply. The Fed Govt has done everything in its power to prop up real estate prices and keep mortgage rates historically low. This will obviously have a very negative impact on affordability and put downward pressure on housing prices. We just recently exited one of the longest bull markets for real estate in our history. To think that the worst is over may prove to be a terrible mistake.

  39. whynot

    patk14 – or whatever negative pressure could be offset by an improving enconomy? no? could that happen?

    i assume most people are on this site because they are following the market in order to purchase. like me. it makes me think that a number of you are hoping the prices to drop. i beleive that they have dropped and are at the bottom. with that and the interest rate, i’m better off not renting my current apartement. could the market go down another 3%-5%? maybe, but that’s not a big risk for us, as we are staying for a while. could the market go up 3%-5% if we purchase the right place?

  40. homeboken

    Let’s not discourage differnces of opinion whynot, it is this type of back and forth that educates us all. It sounds to me like you are seeking affirmation for the decisions you may make. Some people do not agree with your take on the markets, that’s all.

    If you are ready to buy, good luck to you, find a great bargain. (and call Lori or Howard to assist you)

  41. Tania Patch

    I am not going to address anyone’s comments specifically, but for those interested in more info about the 109 Grand unit sale for $950k I can offer some insight because I was the listing agent on it twice with the previous 2005 & 2007 sales. During those 2 previous sales I accompanied alot of showings there so I have insight regarding the feedback on it from many past buyers.

    I feel absolutely awful for the gentleman that just recently sold it for such a big loss. I was not involved in that sale but I was the listing agent at the time he purchased it. When he purchased it the sellers were in attorney review with another buyer, and he had to come in aggressively to secure the unit for himself.

    The unit is extremely unique and really only attracts a certain kind of buyer. In 2005 and in 2007 it had tons of showings each time it was for sale, and it had more than 1 offer each time. The thing it that the unit is not very family friendly, hence despite all the showings and how gorgeous it is, it doesn’t work for most people with children.

    The very first owner (who happened to be the developer) I believe did have a child. But every other buyer (and even all the offer we had) were singles or couples without kids.

    In TODAYS market anyone looking for something that size wants 3 bedrooms and is usually a couple expecting a child or with one all ready. This unit is a very large 2 bedroom with a den/family room on the downstairs level. The downstairs room *COULD* be used as a bedroom but there is no full bath at that level and most people don’t want to put their child on a different floor if they really need a functional bedroom for a young child.

    Each of the previous times on the market it took a while to sell because the floorplan/layout just didn’t work for most people. They loved the unit- but the layout just didn’t work for families. Aside from it being a 2 bedroom as opposed to a 3 bedroom, it didn’t have a bathtub which you need when you have children. It also had spiral stairs which was a deterrent for most people. Aside from those 3 main things, people always thought it was amazing. The finishing was well done, and the kitchen was enormous.

    I do think if the property had a true third bedroom on the same level as the other 2 bedrooms it would not have had to sell for such a deep discount from what the last owner paid.

    It definitely would have sold for less, but inline more with the 10%-20% loss most people are seeing and not 35%.

    In the past there were more singles and childless couple buyers in that price range that would have looked at it- and alot of those were in the finance industry. With the change in the buyers that have that kind of money, probably 90% of the people that looked at that unit had a family in mind.

    Essentially I think it was a case more of functional obsolescence, and the loss of those Wall St singles and childless buyers that caused the additional loss of value on that particular home.

    At the moment a different unit came up for sale there that has a different layout with 2 bedrooms and den ALL on the same level. I think this one will have better resale because of the layout. This other unit used to have a family with 2 kids in it, and the den could easily be converted to a 3rd bedroom (minus window). And there is still a separate office downstairs. It will be interesting to see how that one fairs in light of the $950k short sale.

    I hope this offers a little insight for people in understanding the situation there.

  42. thoughts

    Tania Patch –

    You’re a broker – nobody see more than you. Can you give is your incite regarding:

    1. the “bottom”
    2. 1/2 from path v. jackson – the decrease
    3. what you are seeing out there

    Thoughts – thanks!

  43. thoughts

    homeboken – read your comments and short’s comments everyday – all read like FACT and DISCOURAGE – come on! have either one of you every said something positive of agreed with the “other” side? you guys are crazy….

    by the way – i have stated that parts are hoboken are down BIG!

    recognize!

  44. Lori

    FYI – Tania is not a broker – she is a realtor associate like I am.

  45. thoughts

    sorry – tonia?

  46. stan

    Tania- how about properties within a 3 yard radius of Thoughts’ condo?

    Any idea? Can you run some numbers?

    Thanks!

    :)

  47. Lori

    I think Thought’s condo was Tania’s listing 😉

  48. Confused

    Are you kidding me???????

    “homeboken – read your comments and short’s comments everyday – all read like FACT”

    If anyone wants to know what thoughts looks like, there’s a picture of him in the dictionary if you look up hypocrite.

  49. Tiger

    Stan, lol, good one!

    Depends which three yards we are talking about. If they fall within the 0.5 mile radius from god, I mean the path, And are nice (updated kitchen and non walkup) on park then they bottomed and are a great value. :)

  50. Tania Patch

    I would like to thank Lori for emailing me earlier about the 109 Grand discussion and asking if I had any insight. She knows I have alot of history on that building, so her diligence in wanting her blog readers to have as much info to add to the discussion are what prompted me to post.

    @Thoughts – I think for some places the bottom has passed. When I say some, I mean the location you are already in. The last few properties downtown/2bed2bath/parking/terrace have all gone quickly and some with multiple offer (as there were multiple offers when you purchased yours as well). The prices aren’t increasing, but the demand on those is finally back strongly *IF* the price is right.

    If its asking under $600k- its selling. Recent examples are 325 Willow (4 Offers), 83 Grand (3 Offers), 70 Adams 5f (I heard 3 offers), 70 Adams 3N (off the market 1 day), 215 Grand 2F (2 offers), 215 Grand 1R (gone in 1 week), 84 Adams, 380 Newark…all gone quickly with lots of interest.

    There are marked price differences between elevator vs non-elevator. But if you are south of 3rd and have those amenities you have a better chance of selling than some other things in town.

    Nice 1-Families and 3 bedrooms are the other 2 high demand category at the moment. In 6 months it could be completely different, so I am only taking about the now.

    Thoughts – I am sure we would probably disagree on the value of your place. On the market now it would be probably $20k-$30k more than what you paid – but only if it showed well. Why it sold for what it did then was a slightly slower summer/year, and that it didn’t *wow*. If it showed well now it would be very comparable to 215 Grand. The sellers at the time didn’t make some of the changes that would have gotten them more $$, but ultimately the money spent on those changes would have evened out on sales price. So it would have been a wash.

    Other properties in town I still see room for prices to decrease. Its unfortunate but true. But if they are priced well now, there is still opportunity for movement. Lori says it all the time and I agree…its all about pricing!

    The biggest mistake I see buyers still make is assuming everything should sell at a discount to what it is asking. You have to evaluate the property and its initial asking price to determine if they are priced correctly for the NOW, and not the past.

    @Lori – actually I am a Broker-Associate. I got my brokers license a few years back when I thought I was going to be buying an office in town (you may have heard that story!). In hindsight things worked out for the best, I know I wouldn’t want the kind of stress that comes with being a Broker-owner or Broker-manager.

    So that people don’t get the wrong idea- Lori and I have the same access to all the same info. And she spends alot more time evaluating the stats than I do. I don’t analyze the same way, and she is more savvy than I am with that. Our job positions are the same otherwise.

    @Stan – hopefully I answered some of what you asked with my response. Lori is the numbers gal, and as its her blog I don’t want to over step either. She provides alot of info and I think she has covered those stats with the DABO info she provides.

    Thank you Lori for allowing me to post. Its your bog and I appreciate your openness to having another agent give their input.

  51. whynot

    Thanks Tania – Your insight is very helpful to me. I am not a number crunching person like a lot of people that post on this site. I try to look at the nuts and bolts of things. We are going to stay in Hoboken for a while, so things may look very different if we ever sell in the future. I think that is maybe where my analysis differs than some.

    On a different subject, I was reading about inflation. It was a little confusing. I am not a financial person. Does anybody know, in laymen’s terms, how inflation will affect prices and holding a mortgage? Lori, it seems like a very interesting topic for a blog in these times.

  52. Lori

    Thanks again Tania – RE: Broker-Associate, my sincere apologies. I looked at your website to check and it just says realtor associate under your name. My bad. You and any other agent in town are always welcome to comment and contribute. I’ve said all along – more transparency and information can only help both the market and the consumer. That is what it’s all about.

  53. whynot

    Here is a decent article on inflation and real estate:

    http://www.ehow.com/how-does_4564234_inflation-affect-house-prices.html

    Can someone interpret? I assume that inflation is coming, but it is not here yet?

    I am now obsessed with the issue. We are likely looking to buy anyway, but we still want to be smart.

  54. homeboken

    whynot – In basic terms, if you are entering an environment of increasing inflation you want to be a net borrower. Inflation will benefit a borrower and equally negatively impact a lender.

    That is why people will say that having a mortgage is a good hedge against inflation.

    I would discourage someone from buying only due to inflation fears, but if you are going to buy anyway, inflation will be a benefit to you, with respect to your debt.

    Now there are dozens of other ways that inflation will impact you (wages, prices, etc) but you only asked about how it relates to a mortgage.

  55. Lori

    It’s not that complicated. Inflation causes the price of assets to rise. Property is an asset. If you buy when there is very low or no inflation (now) and we get hit with inflation, the price of your property will rise. So if you sell, say after a few years of inflated prices, you’ll get a higher dollar amount for the sale. BUT those dollars won’t have the same purchasing power since in an inflationary economy all prices typically rise – so you’re not really gaining anything.

  56. whynot

    Homeboken – If you have free time, please elaborate. Don’t limit your discussion to mortgages. It’s interesting to know, especially if it happens. Thanks!

    Lori, so inflation had nothing to do with the recent bubble. Also, if prices rise because of inflation in the future, they will rise evrywhere, so it does not matter not much.

  57. shortsequalmarket

    For the record if I bought, unlike some who posted on this board, I would put 20% down. In fact I have agents aking me to buy. Why would I. Thoughts says prices are likely to remain flat for a while. What is the benefit of using up my liquidity to buy a non-appreciating asset?

    To sum up the comments. The high end is suffering, the low end is suffering, but the mid priced near the PATH is clearly at the bottom and will be safe for a long time. What happens if the “high end” prices move close to mid end prices? any chance people might want to pay less for those units?

  58. homeboken

    A simple exercise (though nearly implausible) is what they teach in Econ 101, called the Pink Dollar scenario.

    Imagine that the President goes on TV and says that starting March 6 at 9:00 am the current USD (green dollars) all must be traded in for new pink dollars. Every greenback you turn in will get you 2 pink dollars. Greenbacks can no longer be used for any trade.

    What has just happened is that the price of everything just instantly doubled. A cup of coffee that used to cost 1 greenback, now costs 2 pink dollars. Your wages would double as well, if you used to make 1,000 greenbacks a week, now you make 2,000 pink dollars. So it would seem that you are no better or worse off, since effectively everything just doubled in cost.

    But your debts did not. Your debts represent greenbacks already spent. If you owe 5,000 greenbacks on your credit card, you now owe $5,000 pink dollars, but you have twice as many pink dollars as you used to have in green. That debt can’t increase because of inflation though, since it is an agreement to repay green dollars that were spent already.

    So in this case, all of your debts just got cut in half. This sounds like a great deal right, but everything comes with an impact. The banks (and any net lender ie owners of UST hint: China) would be decimated and I think we all know to well what happens when banks start to have financial troubles. Moreover, how would we expect other nations to react when we cut the value of the US Treasury holdings in half (WW III anyone?).

    The long answer is out there, but inflation is a very complex issue, to complex to write up in a comment.

  59. whynot

    Thanks homeboken, but what really scares me is what would happen if wages DON’T double as well.

    Do you think inflation is coming?

  60. whynot

    shortsequalmarket – i think you may have hit the nail on the head when you say “using up my liquidity to buy a non-appreciating asset”. this issue has a lot of different answers for a lot of different people. whatever works for you, may not work for someone else. it also assumes there is no appreciation during someone’s holding period and that purchasing a home is only for investment.

  61. Craig

    Thanks Tania, that does give a little insight and makes perfect sense. Another contributing factor to the huge loss on unit 206 was that the buyer overpaid in 2007 when he swooped in to snatch it from those people who were in attorney review for it. As you put it, he had to come in aggressively. In my view, that’s usually a nice way of saying someone overpaid to outbid someone. Nearly $1.5 million for a 2 bedroom that’s not on the water was a recipie for disaster.

    I’ve been in 109 Grand to see 2 different units. The layouts are nice, as are the finishes. But this is not Maxwell Place. The units I saw are the 1360 sq. ft. 02 units on 2 different floors. The owners of these paid in the 700s, but I think the magic number for those units now starts with a 6 in that building. I’m guessing the one with a den that just went on sale is an 01 unit – haven’t seen those. We’ll see how it does.

  62. shortsequalmarket

    Whynot

    You are correct within Hoboken that is my primary disagreement with Thoughts. While some might be prepared to live in Hoboken and send their kids to private school that is not my goal of licing in Hoboken.

    Based on the number of listings I see where the picture of the 2nd bedroom is a nursery it appears to me many people consider Hoboken a stop in life. Since I cannot say with assurance Hoboken will be my home 5, 10, 20, etc years in the future it is not the right time to buy a non-appreciating asset. Even worse an equal chance it might depreciate.

    What will happen to prices in Hoboken when the variety of items I listed occur. It is likely to really hurt and create a new group of indentured servants. They will be indentured to their house. I do not want this.

    I post bacause most of the media speak that the simple act of home buying is a mythical power to super wealth and stability. Currently, to me it appears it is anything but.

  63. whynot

    shortsequalmarket – i totally understand your position. if you’re not staying for at least 5 years or so, then do not buy. that said, you cannot say simply that hoboken is not changing. you also cannot talk like certain things are fact when they are just your opinion – the future is simply unwriten history. re-read your post. that is what i take issue with.

    “What will happen to prices in Hoboken when the variety of items I listed occur.”

    should be changed to:

    “What will happen to prices in Hoboken IF the variety of items I listed DID occur?”

    Hopefully, we can agree to disagree and have a good weekend.

  64. EmmaC

    Hi, This has been mentioned a few times so as someone who has listed a unit that has a nursery I wanted to say that we’ll be staying in hoboken, we’re just trying to get some more space. I think Hoboken is great for little kids and families and it does seem to get better each year (hoping the trend continues!). I know of at least 5 others w/babies who have sold/listed their places in the past 6 mos to buy places w/ more space in town.

  65. JC

    Off Topic…but its Friday. This NYC broker babble is too funny to pass up. “ballroom sized living space! Its 20 x 20! 6 star condo! Is that like 6 star pizza on 4th/garden?!:

    This is the most gracious, generous and glamorous full floor doorman 2BR/2.5 condo loft in the West Village. Showcasing the most grand and fluid floorplan at Morton Square, this sprawling space is sunblasted by floor to ceiling windows and hosts 2 exposures! 10 foot ceilings add a sense of drama, depth and volume. This is the ONLY line at Morton Square that has a Ballroom sized entertaining space. Morton Square is the West Village’s ONLY 6 star full service condo with an unrivaled host of amenities including 24 doorman and concierge….

    http://www.prudentialelliman.com/listings.ASpx?listingid=1000153&utm_source=Streeteasy&utm_campaign=corporate&utm_medium=listings

  66. homeboken

    HA – That broker must have been a creative writing major.

    The sail fish adds a sense of ocean tranquility to the second bedroom…

  67. patk14

    Liquidity means different things to different people. If your parents will step in if you have liquidity problems, then you can utilize every dollar that you have available. If your parents cannot afford to do that and you work in a volatile industry (can we all spell finance), having liquidity means much more and you are less likely to risk it in today’s real estate market. I really feel for that guy who took a 35% hit on an expensive condo. How many of us could afford to take such a hit?

  68. shortsequalmarket

    The items I listed in a previous thread will occur or at least the government has said they will occur. These items include:

    *The Fed will stop buying MBS
    *The first time home buyers credit will expire
    *FHA criteria will become more strict

    These items will occur and it is hard to see them having anything other than a negative impact on home prices.

    The units with the nurseries I have seen have been the fairly standard 2/2 1,200 sq ft with parking. I am not saying there are not larger units in Hoboken. However they are few and far between. Which means many people with kids are trying to leave Hoboken (or they are going to be out of luck when it comes to finding a larger place). Will the next set of young families be willing to risk being indentured to their house to paint a room pink?

  69. shortsequalmarket

    Inflation typically favors debtors but we should note that inflation does not occur evenly across all products assets. With the exception being a true hyperinflation.

    During the ’90s and 00’s many products declined in price as their production was outsourced. Think consumer goods at Target and Wal-Mart. When was the last time you went to an actual butcher, etc? Based on these savings there were more dollars chasing all the other goods, housing being one of them.

    Now that so much production has been outsourced as a nation we are at the whim of our foreign suppliers. If China says we are increasing wages then get prepared to pay more for an iPad ;). This means there will be less dollars for chasing other goods, particularly domestic produced goods like housing.

    This is actually occurring. The CPI is negative or near zero because owners equivalent rent (housing cost) but the prices of many other goods have been increasing.

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