2010 Aug 24th

Tasty Tuesday Tidbits

A New Use For An Old Hoboken Bank

There is new listing today for the first condo at the old Jefferson Trust Bank building on 1st.  It’s a 2960 square foot 3 bedroom duplex under the stained glass dome for a cool $2,300,000.  Can you imagine the property taxes on that? At the ‘rule of thumb’ 1.5% x the purchase price, the lucky buyer is looking at $34,000 a year!  But if you hurry up and buy it now, you can pick your granite color.

A New Hoboken Watering Hole

Pilsener Haus & Biergarten will open at 1422 Grand St. in Hoboken this Fall.  The owner’s vision includes “wide open space under the trees, 20-foot-long communal tables that will offer a relaxed unpretentious atmosphere that will coincide with the history of biergartens’ originating in Europe. It will be a natural cultural habit that people of all ages and statuses will gather to have a good pint of beer in a fun, and friendly environment.”  Isn’t beer already part of Hoboken’s culture?  They are planning to have 18 beers on tap along with 30 to 40 bottles, German sausages and live music.  Oompah anyone?

A New Design for 14th Street & a New Viaduct

There will be a public meeting on September 7th where the design for the new viaduct and plans for the space under it will be unveiled.  According to the press release, the finals plans include a dog run and playground, pedestrianized streets, a block of active recreation space with a multi-use court and two blocks of multi-purpose space that can be used for farmer’s markets and other community purposes.  Traffic calming measures to improve pedestrian and cyclist safety will include raised sidewalks and narrowed streets. Additional East-West blocks of South Marginal Street will be closed to vehicular traffic as they currently are in front of Clearview Cinemas – which is where the meeting is being held – by the Clearview Cinema under the viaduct.  Is that anything like under the boardwalk?

Hoboken Hosts “Redevelopment 101” for Residents

Finally, City Hall is hosting a public meeting to educate the public on some crucial redevelopment matters.

“My Administration takes public input very seriously,” said Mayor Dawn Zimmer. “As we move forward with various redevelopment projects, an informed public will be in a position to offer the feedback we need to reflect our community’s vision for our City.”

The City is in the process of creating the redevelopment plan for the Western Edge and will soon be announcing a public meeting to discuss a draft of the plan. Additionally, the City is currently conducting a study to determine whether redevelopment would be appropriate for Southwest Hoboken.

Learn now and speak now, at the Multi Service Center, 124 Grand Street, on Tuesday, August 31, from 7pm to 9pm.  The meeting will be taped, replayed on television, and posted on the City website.

  1. whynot

    we don’t live in a special area?!? yes, all of the US markets are distinct:


    “Despite rising gloom about home sales across the country, sales of apartments in Manhattan appear to have strengthened this summer, with median prices up, inventory down and an increase in the number of apartment closings.”

    shortsequalmarket, hoboken and carl – i have a suggestion. if you want a cheap place to live – MOVE! but, please stop bitching, opining, hoping and wishing for the worst.

  2. Tiger

    Pilsener Haus & Biergarten: We already have something like that, it’s called Zeppelin Hall Beer Garden in JC. I agree such a setting is a nutural place for everyone to meet (from business casual happy hour-er’s to Jersey-shore-cast-look-a-like’s to the Parsippany crowd), but it could get really loud. I wonder how the neighbors feel about this.

  3. carl

    I didn’t realize that NYC and Hoboken were the same market. Keep dreaming And oo you own a place yet whynot?

  4. homeboken

    whynot – you continue to confirm my very low opinion of your intelligence. Do you even read the article, or just the headline:
    Dolly Lenz, a top-selling broker at Prudential Douglas Elliman, said that buyers have begun holding back. “There is a lack of confidence and a lack of direction,” she said. “You can feel the mood and it is not a good mood. There is no rush to buy and people are gambling that prices are going down.”

    In other parts of the city, and across the region, sales have more reflected the national trend. Volume fell after a rush of deals in the spring to take advantage of the federal tax credits, according to Jonathan Miller, an appraiser and president of Miller Samuel Inc (snip)

    The second paragraph is the key, it is stating that this reversal is exclusive to Manhattan. Hoboken would be part of the “across the region, sales have more reflected the national trend.”

  5. whynot



    Hoboken is more like the national trend than like NYC?!? foolish statement – and you talk about intelligence? 🙁 🙁 🙁 poor man or woman.

  6. Lori Turoff

    If you start name calling I will pull the comments. Please be respectful even if you disagree.

  7. homeboken

    whynot – I pulled the quote directly from the article you are claiming supports your position. Call it foolish if you wish but that quote is from Dolly Lenz who is just about the most bullish realtor you will ever find anywhere.

  8. JC

    Now Bill Gross wants Fannie to ease down payment restictions?!

    The easing of up-front cash requirements is paramount so housing can play a leading role in the economic recovery, said Gross, co-CEO of Pacific Investment Management Co. (Pimco) and head of the world’s largest bond fund.


  9. curious

    JC – the funny part about his statement is that last week he said, that as an investor, he wouldn’t buy a mortgage backed bond that didn’t have at least 30% down payment. He thinks lowering the down payment requirements are good for the economy, but still too risky to invest in.

  10. patk14

    Just a terrible idea to ease down payment requirements (does Gross want this to bail himself out of his current holdings?). The risk falls to the taxpayers. Credit 101. Those people who are unable to save 20% of the purchase price of a home will likely have problems making their mortgage payments even if they don’t lose their job or become sick. That’s the big lesson from this debacle. People who didn’t lose their job or become otherwise incapacitated, still couldn’t afford their mortgages even in a low interest rate environment.

  11. Craig

    Patk14 – I didn’t put down 20% on my home and yet I afford the mortgage payments easily, as my monthly housing costs are about the same as the monthly rent was on my old apartment after tax deductions. I also have enough savings for 6 months of living expenses even if I were to lose my job – a rainy day fund I wouldn’t have had if I had exhausted my savings in an attempt to put down 20%. So I guess there are people who put down less than 20% who can make their payments after all. That kind of blows up your erroneous statement. Way to go with the overbroad generalization.

  12. JC

    I think patk know he/she is making a generalization but borrowers arent the only ones at fault. I beleive everybody is responsible for their own decisions so I am no way saying these folks are the victim, but did any mortgage lenders or banks take that credit 101 class? Why lend to a borrower with more than 35% debt to income. Why lend to borrower with no documents?

    So many borrowers took out liar loans, or bought more house than they could afford…..but who defines “afford”. Who is underwriting this?

    Also, dont underestimate the amount of strategic defaults out there. Regardless if folks can afford the mortgage, many are willing to take the credit hit and go the short sale route or even foreclosure. Antyhing to get out of an asset that is worth half what they bought and especially owners that owe more than 6 digits.

    There are so many reasons we are where we are

  13. patk14

    JC, the Federal Govt (thru Fannie and Freddie and now the FHA) was underwriting it. Without the massive support (and now massive losses for the taxpayers), the bubble would not have ever gotten to the point that it did. The government wanted poorer people to be able to purchase homes. Those people were unable to save money for a down payment and it therefore required altering the historic 20% down payment criteria and most other underwriting standards (like documenting your income and assets). Who benefitted from all of this? Sellers of real estate, real estate agents, lawyers, and mortgage loan officers and traders. Who lost? Primarily the poorer people who should have remained renters and got destroyed in the downturn and taxpayers.

    Craig, I would not have lent 30-year money to you based on your stats. You were unable to save a 20% down payment and took a govt insured (subsidized by the taxpayers) loan. Your reasoning is that if you put 20% down, you would have exhausted your savings and had no buffer. Guess what, you should have waited longer, saved longer, and been able to afford both the 20% and a 1-year buffer like most people did before the late 1990’s. By the way, did you happen to catch the WSJ article earlier this week in which it indicated that the FHA is now raising its insurance premiums. Seems it is blowing thru its reserves at a rapid rate and will undoubtedly need to be bailed out unless the national real estate market stages a huge rally. Can you believe that people with 3.5% down are defaulting on their new mortages at historically high rates? None of us saw that coming.

  14. homeboken

    patk- I agree with everything that you are saying, but from a personal perspective puttin 3.5% down is not a bad idea. Why tie up liquidity when you don’t have to? The mortgage is non-recourse, so it basically gives the borrower a free call option on housing.

    Now, that will tranlsate to a real problem for the economy on a macro level, but individuals don’t think about the marco effects of their decisions. They care only about how the choice effects themselves.

  15. patk14

    Homebroken, I agree. I don’t blame Craig or anyone else who takes advantage of what the govt is offering to them. I guarantee that Craig will be able to earn a tax adjusted return on his money that is above his mortgage rate for most of the 30 years (or more likely 10 years) that the mortgage is outstanding. I’m saying from a lending perspective, I would not make that loan to him with such a small down payment unless his parents guaranteed it and they had substantial collateral. Without the FHA guarantee, no other lender would either.

  16. laki

    The entire mortgage industry today is a joke. It was a massive bubble before that was fueled by both the government and the private sector. The private sector pulled away after have been largely bailed out by the government. And today the entire mortgage market is the government. Fannie, Freddie, FHA, the FED, and the Government issue the mortgages, set the rates, provide incentives, provide the leverage, and decide the mortgage bond prices.

    Bill gross says government should lower the down payment and push the rates lower. But he also says that if the government doesn’t do this, the private sector would demand much higher mortgage rates and would require significantly higher down payments.

    So, why should the taxpayer take the risk-reward proposition that seems like an awful choice for a private investor? Would you lend your own money for 30 years to someone you don’t know (and whose financial situation you don’t know) backed by a house you’ve never seen before with that person putting 3.5% down for a 4.36% annual interest rate (the average 30 year rate last week)?

    Btw, Bill Gross talks his book all the time. Makes me sick. He goes out and buys mortgages and then lobbies the government to push the mortgage prices up by lowering the yields.

  17. Craig

    Patk14 – you would make a terrible loan officer. You would deny me a loan without knowing a thing about my financials. You would also base your decision on an incorrect assumption – that I only had the FHA minimum 3.5% to put down. While I didn’t put down a full 20%, I still have a substantial amount of skin in the game. Lastly, taxpayers did not subsidize my loan. I pay a hefty amount of mortgage insurance to back my loan, as do all FHA users. Taxpayers do not fund FHA. I’m betting you don’t mind government backing if it benefits you. I doubt you have equal distain for the FDIC, which guarantees your bank deposits. That agency has blown through far more cash via all the bank failures than FHA has via mortgage defaults.

  18. UPennAlaskan

    Many countries have much different mortgage standards than the US. Down payment minimums are 20-50%. Amazing we are still even talking about basically no money down purchases (3.5% vs 0%). We almost OD on this junk and we are back at it.

    At an individual level, if someone is offering you lots of capital at a cheap rate with a small collateral requirement….take it. It’s a very very cheap call option on housing.

    Who is at fault? The drug dealer or the druggie?

  19. homeboken

    Step 1 – Make first mortgages recourse in every state. We can talk about down-payment %’s once it is perfectly clear that you will be expected to pay back every penny you borrowed. If you don’t the lender will go after every asset you have for repayment and you no one will ever loan you money again.

  20. patk14

    Craig, re-read what I wrote. I understand that you could have put 20% down but that would have left you with no rainy day funds. For that very reason, I would reject you immediately (unless the govt or your mommy/daddy guaranteed the debt). In this volatile market, as a lender, I would be very worried a 20% decline would wipe you out and that without substantial other assets, I could take a loss on my loan. Christ, you only put 3.5% down and you wrote you have just 6 months living expenses in cash. If you put down the full 20%, you would have nothing in cash. Face it, you are a terrible credit risk without the FHA insurance. I absolutely do not place any blame whatsoever on you for taking out a loan that the government subsidizes and encourages to prevent the real estate market from tanking further. Just that the taxpayers are likely to pay a big price at the end of the day for these FHA insured low down payment mortgages.

    Now on to the FHA which you simply do not understand despite being a customer. You write that you “pay a hefty amount of insurance to back my loan, as do all FHA users. Tax payers do not fund the FHA.” Craig, who do you think pays once the FHA burns thru its reserves as it is clearly doing, the Tooth Fairy? Why are private mortgage insurers not competing with the FHA? Because the FHA premiums are set so ridiculously low that no profit-driven institution would ever even try to compete until lending terms were tightened or premiums increased dramatically.

    From the 8/24/10 WSJ.

    The country’s most popular federal mortgage-insurance program is set to raise fees to borrowers in a bid to avoid burning through its dwindling reserves as home prices come under renewed pressure.

    The move reflects new threats facing the Federal Housing administration, a New Deal-era agency that has taken a central role in the housing market since mortgage markets seized up three years ago. The FHA, which doesn’t make loans but rather insures lenders against losses, guaranteed $857 billion in loans at the end of June, up 24% from a year ago.

    The FHA offers among the easiest lending terms available, with minimum down payments of 3.5%, and it has backed nearly half of all home-purchase loans during the first half of the year, according to research firm Zelman & Associates.

    But playing savior to the housing market has come at a big cost. The agency’s reserves are falling sharply as many of those loans have defaulted at a rapid clip. While fees from new business have, for now, boosted the agency’s cash on hand, the FHA has set aside nearly 90% of that money to pay for projected expenses over 30 years. That has left just $3.5 billion to cover unanticipated losses, down from $10 billion one year ago.

    They have burned thru $6.5 billion in reserves in the last year despite drastically increasing their business flow and therefore their collection of insurance premiums. This will end ugly for the taxpayer.

  21. Tiger

    One more massive bailout like this, and I think we will have no other choice than to get them money printers spinning. At which point, we will get hit with our savings, as they will be worth less.

  22. Craig

    patk14 – your poor reading comprehension skills are yet another example of why I am glad you are not my loan officer. Despite me clearly stating that I put down more than 3.5%, you again claimed that’s what I put down. It is you who need to re-read what I wrote. There’s no need to worry about a 20% decline wiping me out. One, I bought my place as my primary shelter. I don’t care how much value it loses, I’m not going anywhere unless I want to be homeless. Two, the identical unit above me just sold for $95k more than I paid in January. I’m not too worried about my equity situation.

    You can speak hypothetically all you want, but the fact is that notwithstanding their dwindling funds, FHA has never taken a dime of taxpayer money. It is you who do not understand how FHA works. They do not take any appropriated funds from Congress. They are completely self-financed from the insurance premiums they charge. They are raising the premiums to flush their reserves with more cash and cover their losses. If they ever do take taxpayer money, then you can tell me “I told you so”. Until then, you don’t have a leg to stand on. Right now private banks have been subsidized with far more taxpayer money than FHA customers like me. Your disdain should be for the all private banks that took your money. I wonder if the similarly self-financed FDIC ever runs out of money, will you be as against potential taxpayer support for that too? I’m betting no, because you want your bank deposits insured at all costs.

  23. carl

    so if you put a 50k downpayment is that considered “considerable skin in game” I dont think so. 20% should be the standard(mininum). no if ands or buts. If a majority of people can’t make that standard then housing prices are overvalued and should come down. It’s very simple.

  24. Laki


    I’m a mortgage trader and analyst. If you asked 100 random intelligent unbiased mortgage analysts if FHA is a form of subsidy I’m confident that all of them would say yes. I would be straight up shocked if even one of them thought otherwise. I personally don’t know anyone who is a serious participant in these markets who would agree with you. The situation is so clear that this is not even a matter of opinion. I once presented a very detailed logical breakdown of how this subsidy works on this blog. So I’m not going to do it again. Just because they haven’t yet taken a dollar from the US treasury DOES NOT imply no subsidy. You’re making a logically flawed argument.

    Also, FDIC insurance is a form of subsidy to banks. No way would banks be able to borrow so cheaply in the capital markets if FDIC didn’t exist. If you took mark to market of all banking assets the FDIC would be in the red to the dune of hundreds of billions of dollars if not a whole trillion. And yet these insolvent institutions can borrow at 0%, because FDIC (which is insolvent as well) is backing them.

    So the fact is that FDIC and FHA are very similar, both provide subsidies. One subsidizes individuals who’re buying houses and the other one is subsidizing banks.

  25. Craig

    Carl – perhaps in your world $50k is not a lot of money. But for most it’s a lot and most people would not be willing to walk away from that much money.

  26. Craig

    Laki – if you want to call FHA a subsidy, that’s fine. But what you can’t credibly argue is that it’s a taxpayer funded subsidy. Like FDIC it is funded solely by its participants. That fact cannot be disputed.

  27. Tiger

    It is a subsidy, and there’s nothing wrong with that Craig! If I had that option I would have taken it too, heck, someone is telling me that you can live in the same home, save situation, keep your money in the bank, and just pay a little more every month? Why not?

    Other subsidies that all homeowners enjoy: Tax deduction, and histroic low interest rates. My original rate was 6.125% and last January I refinanced at 4.375%. That’s $400 in savings! each month! You think I let it go? This tipped my condo to a point where I am literally paying less than what my friend pays in rent in JERSEY CITY! And his apartment is smaller with lower end finishes and appliances.

    Homeownership is a responsibility and a risk, might as well enjoy what you’re given, while it lasts

  28. carl

    if you want to be big time and live in hoboken or nyc 50K is not a lot of dough. 20% min down payment will solve a lot of problems. Im in Patk14 camp. I wouldn’t loan you money

  29. UPennAlaskan

    Tiger, well done. Sounds like you scored a great deal. My impression is others are not as fortunate as you. Many are underwater (and/or have bad credit) and thus can not refi without bring substantial capital to the table.

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