There were two interesting and somewhat conflicting articles in the Real Estate Section of Sunday’s New York Times. The first, appearing on the cover, entitled “A Market Flirts With Stability“, proclaimed that the big NYC brokerages were reporting a rebound in sales and signs of stability. While prices were low, they have been stable, inventory is said to be at healthy levels and sales have picked up in the past 6 months. Noah Rosenblatt of the blog UrbanDigs was quoted as saying the Manhattan market hit bottom and just about every other broker interviewed shared his optimism, even though a few expressed some caveats based on the still high unemployment level in the city.
Turn a few pages to the New Jersey Section and the headline is “A Cool Summer for Housing”. A market analyst, Jeffrey Otteau, says the trends are negative in New Jersey and sites lagging sales, declining prices and inventory build up. He predicted that no county, community or neighborhood in New Jersey would be unaffected by the 2011 downward slump. On the other hand, Judy Appleby, the president of the NJ Association of Realtors was much more optimistic but then, most realtors are.
So who is right? Is Hoboken more like Manhattan where the market has found an even keel or should it be thought of as part of Hudson County where, according to Otteau, inventory has swelled to a 15.7 months supply by the start of September? Well, Mr. Otteau does much the same thing I do every month to come up with his analysis – we pull closed sales data, active listings, look at the number of contracts and compare it all to past time periods in a nice, neat chart – sort of like this one:
One big difference, though, is that my data and chart is just for Hoboken condos – not for all of Hudson County and all property types. I don’t believe you can lump together all of Hudson County and get any meaningful result – the neighborhoods are simply too different. Looking at Hoboken’s numbers, there is no doubt that condo sales prices are down, probably back to 2005 levels. While there was a bump in sales activity due to the Federal first-time-home-buyer tax credit, sales seem to have leveled off, as have new listings and the current inventory supply on hand is about 7 to 8 months – a far cry from the 15+ months of Hudson County as a whole. To my mind, and based on my day-to-day experience in the field, sales prices are down because buyers are so incredibly price sensitive. They still have enough inventory to choose from so that if they don’t perceive that they are getting good value, with value being defined both in terms of absolute price and the condition of the property, they simply will not make an offer. If you have a fruit store overloaded with piles of fruit, it takes a huge markdown to get someone to be willing to buy the bruised banana.
The good news is that I do see a healthier level of activity in the market. The complete fear and paralysis of a few years ago has subsided and people, both buyers and sellers, are making decisions to move for the right reasons – due to their life circumstances. Every neighborhood is unique and Hoboken, especially, has a short life cycle. New young people moving here all the time to start their careers and find the combination of low prices and low interest rates attractive. Hoboken still has the best transportation into Manhattan, bar none. Some families move out as they outgrow their space and choose to head for the ‘burbs. Furthermore, we’ve still experienced very few short sales in Hoboken and even fewer foreclosures. My conclusion is that we are more like Manhattan and our market will continue to move along on a pretty even keel.