2010 Sep 22nd

The Weekly Wednesday Wrap Up – Hoboken Condo Sales & Activity for the Week of September 22nd

Hoboken Condos Sales & Activity – Week of September 22nd

When new listings hit the market the listing agent typically hosts a “broker’s open house” during the day just for other agents. In addition to a free lunch, it gives us a chance to see the new inventory. I always find it interesting to attend these (though not often for the lunch choices) to see how other agents approach pricing, staging and marketing their listings. I went to three today, all nice units in good, east-side, uptown locations. Two were owner occupied, one staged. All three had lovely furniture and showed well. What really shocked me, however, were the asking prices. One was in a building where I sold the unit above it at the height of the market before the crash. Granted, the current listing is one flight lower with a slightly better layout (although it has the same footprint). They are asking almost as much as my seller received in 2008. I thought the other two were also a bit on the high side.

I understand that often the agent offers pricing recommendations and the seller does not agree. I’ve had that happen many times and then, as the listing agent, I have to decide if I want to take the listing. But when a property hits the market in today’s economic climate, and it jumps out at me that it’s overpriced, it makes me wonder what some of these sellers are thinking and whether they have spent any time in the market actually looking at other active listings. My recent experience with buyers has been that they are extremely price sensitive, want to feel like they are getting if not a bargain, at least good value, and won’t even look at properties in price points that they feel are above their desired range. I don’t foresee that attitude changing any time soon.

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Disclaimer: The data relating to real estate transactions on this web site comes in part from the Hudson County MLS. While some of these listings are, in fact, our listings they are not ALL our listings nor do we hold them out as such. Century 21 Listings are identified with “C21″ after the address. Other listings are from the MLS and are identified with “MLS” after the address. Information is deemed reliable but not guaranteed.

Studio & 1 Bedroom Hoboken Condos:

13 new listings

182 active

2 Dabos

6 Sold

17 price reductions

Two Bedroom Hoboken Condos:

16 new listings

261 active listings.

191 under $600k

75 over

2 Dabos

9 sold

21 price reductions

Three Bedroom and Larger Hoboken Condos:

4 new listing

53 active listings.

1 Dabo

1 sold

2 price reductions

Hoboken Condo Open Houses

If you are in the market for a Hoboken condo, our Hoboken Open House Google Map is your best source for locating every open house in Hoboken. It is the single, most complete listing available and we were the first ones to do it. We compile the information by hand from all possible sources to provide you with all the information you need in one spot. It’s posted on Friday every week.

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.

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. Craig

    What those sellers are thinking is “This is how much I paid for this property, this is how much I owe, and this is how much I need to sell for to cover my costs and have a down payment for my next place”. They are not seeing the market and actually looking at other active listings. They can’t see beyond their own personal situation.

    What will happen is these properties will sit for months before the sellers finally embrace reality. Those who can afford to sell at current market prices at a loss or at least break even will do so. If they can’t, they will either remove the unit from the market and continue to live in it or rent it out. A similar fate awaits the 3 units Lori just viewed.

    Last year I looked at a beautiful unit in 109 Grand that was for sale by owner. I talked to him awhile during his open house. They had 1 baby and another on the way and had already had their dream house picked out in Westfield. I was interested, but he refused to budge from his 2006 pricing (looking at what he paid, I could see he had little choice). That family never made it to Westfield. They still reside at 109 Grand.

  2. lori

    Craig, I see the same story played out over, and over, and over. It is unfortunate but sometimes the sellers simply cannot afford to take the hit. I have had several of my sellers rent rather than sell at a big loss. What is interesting, is that they all found tenants immediately and at very good rents.

  3. morally_right

    When the renting-out option is chosen instead of selling-at-a-loss option, the loss is monetized month-by-month instead of in one fell swoop.

    Bottom line is the losses exist, irrespective of the method of monetization.

  4. Lori Turoff

    How so? Doesn’t it depend on what the owner gets in rent? Given a choice of a one-time $50,000 loss versus breaking even every month, which do you think most people would choose?

  5. morally_right

    Money has a cost. A homeowner who sells can use that money to buy a high quality corporate or municipal bond and receive interest of somewhere between say 4.5% and 6.5% pretax. By renting out the unit and breaking-even (i.e. earning nothing), the owner is actually losing money because of opportunity cost. Even if the owner bought a U.S. Treasury bond his/her money could earn close to 4%. The point is that there is some relatively safe asset that he/she could buy that would earn more than zero. One might counter that there is risk in holding a high quality bond, etc. But there is also a risk in holding the property.

    And I would be surprised if most who bought apartments during the heyday are breaking even because that would defy logic.

    It’s not surprising that owners choose to rent out their apartments (and incur death-by-a-thousand cuts) instead of selling (upfront pain). That’s just human nature.

  6. Tana

    Craig – If we are thinking of the same people they did move and rented out their place for I believe $3200-$3400/mo. I can’t remember exactly because 2 other units rented there as well not long after. But one of those owners did move to Westfield, and they had purchased it in 2006.

    I could be wrong, but I think they decided to keep it long term anyways as an investment propety.

  7. homeboken

    There is an oft quoted phrase thar is used in my office regarding commercial real estate and I think it applies well to the above conversation. Everyday that you do not sell, you are making a decision to reinvest.

  8. stan

    I was watching the 730- adams unit to see what it closed at. Small two bedroom. sold for 284k, last purchased for 365k in 2007.

    some places are starting to get interesting as far as rentals are concerned. Put down 60k, carrying costs are 1400 or so. I would imagine you can rent that out for 2k or so, no?

  9. Craig

    Lori – Renting out a unit if you can’t sell it is the way to go because Hoboken’s rental market will always be strong. Hopefully your sellers at least gave you the listing for the units as rentals as well!

    Tana – We are talking about the same people. I saw them on the street after they had taken the unit off the market so I assumed they stayed. I hadn’t realized they eventually made it to the burbs. But given the over $700k purchase price and the high taxes on that place, I doubt they’re covering their monthly costs at a rent of $3200-$3400. Still, it beats the much bigger hit they would have taken trying to sell it.

  10. L&S

    Craig/Morraly Right – The math does make sense.
    I cover tax, condo fees, interest and principal amnt from my rental property plus a little more. I get a 2.7% return (Principal pd each month)/(Mkt value of house -Mtg). I realize its not a great return and given that house prices are down 20% in 3 years, my net rate of return is around -11%. Not happy about making negative 11% but I would have probably lost more since in 2007 i woould taken the money and bought stocks!!! ouch

  11. Andy

    L&S, if you financed correclty, you have an asset that may someday recoup its value or at very least earn equity which you can leverage in the future. Selling at a loss crystalizes that loss and you loose the asset. In this case you have time on your side. Every month you earn additional equity in your rented apartment is equity you can pull out with tax breaks attached at some date in the future. Just a thought.

  12. L&S

    Andy – I rent my old place and given what i knew then i am happy with the decision.
    I do not rent it because it could recoup its value or becaue i don’t want to realize the loss.
    In my mind, I have already realized the loss

    In hindsight I should have done something else but i dont invest as “could have/should have” Back then i underestimated how much house prices would drop and today I get a 2.7% return on my place if house prices stay flat..

  13. homeboken

    Every Rent by Owner situation is different. Financing terms, taxes, insurance, maintenance, HOA fees all vary greatly from unit to unit.

    What I find interesting is that the owner who doesn’t sell and decides to rent, seems to be willing to accept a loss (albeit smaller) every month. Why is that they are reasonable about setting rental prices and not selling prices.

    And back to my point above, the owner that turns to the rent option beleives that at some point they will be able to recover their original investment.

    If they bought during the heady bubble days with option ARM financing, I am not sure they ever will.
    Being a landlord is also not for everyone. I agree that Hoboken is a great rental market, but all it takes is for one tenant to trash your unit or cause damage above the security deposit and you will be hurting. Coming out of pocket for repairs and paying the monthly carry while waiting to release can be a real eye-opner.

  14. Bill

    why would buying with an ARM hurt them?

    When rates reset their payment should have gone down

  15. patk14

    Implicit in the decision to take a unit off the market and rent it is the feeling that real estate prices have to go up in the future at a faster rate than inflation. Renting at break-even to delay realizing a loss can hurt you if prices decline. Clearly, if you rent a place that would sell for $500K and completely cover your carrying costs but the market declines by 5% means that you have lost $25K over the year ($2,083/month). But none of us truly knows where prices will be in one year. I think those who rent their units out and have purchased surburban homes are probably overexposed to the NJ real estate market and are probably making a mistake. But maybe prices will rally and they will look like real estate gurus.

  16. L&S

    I do not get this concept “willing to accept a loss every month rather then taking it up front”
    – As said before I am cash flow positive after paying down all interest, principal, insurance condo fees etc. The only paper loss I have taken is that prices dropped 10-20% over the last 3 years. I chose to rent my place because I thought it would be a good long term investment and it has actually outperformed stocks in that time frame. That said, it was the wrong investment choice, I should have sold (had a bid 3% below my ask) but chose to rent it out. Back then if I knew prices would drop 10-20%, I would smacked that bid. Conversly I dont know what prices will do in the future but I like the idea of equity build up and maybe 10yr from my now..it should pay for my kids college!!

  17. homeboken

    L&S – Not talking about you specifically. In general though, if somone can’t find a buyer at a price that coves their full investment, then they likely can’t find a renter that will cover their monthly cash outflows.

  18. Andy

    homeboken, from reading Lori’s comments I think the rental market has held up well in Hoboken much to everyones surprise. I agree being a landlord is not for everyone and yes if you get that one tennant that trashes your place it becomes a nightmare situation.

    Patk14, completely agree that anyone who bought in hoboken and rented the unit out while they moved to the suburbs is definately overexposed to NJ real estate and NJ taxes. From an investment point of view its way to correlated for my tastes to risk that much capital.

  19. lori

    First of all, whether your rental payments cover your monthly expense outlay depends on the size of your mortgage (if any) more than the amount of your original purchase price. You could have bought a 600k condo for all cash and only have to cover the taxes, maintenance and insurance. Figuring that a 600k condo should fetch close to $3,000 a month rent, that shouldn’t be difficult.

    As for why some potential sellers choose to rent at a loss rather than sell at a huge loss sometimes they simply don’t have the savings to bring the needed cash to the closing table. I’d rather see these people renting their place out and hoping for an improved market down the road than walking away from their obligations, wouldn’t you?

    Finally, 19 new listings yesterday and 21 (so far) today with 3 closings – not a great omen.

    Have a nice weekend, all!

  20. NewtoMarket

    I am one of those suckers that has purchased recently. A lot of anxiety has come with the purchase considering the news from day to day. But here was my situation…Ultimately I saw myself living in a 1 bedroom apartment that would have approximately 2000-2300 monthly rent. While I contemplated the idea of renting, I felt I would lose approximately 15-18k per year renting(2300*12-taxes and interest). I have lived in this area (hudson county) my whole life, and my entire family lives here, so I have all intentions in staying in the area. Since there was a some adjustment in the market I decided I would get more serious, coupled with my restlessness to be free and have my own place. I settled on a 1br in northwest hoboken, in a building built in 2005 that fit most of my criteria, large parking spot, outdoor space, newer building, large washer/dryer. My logic is that I saved enough money to put down a substantial downpayment to the point where it my payment would be equal to the rent on a 15 year mortgage (NOT A 30 YEAR). I figured with my purchase I am basically gambling the market will not come down more than 5% as 5% of 375 purchase price, is more or less equal to the money I would of lost renting. I felt comfortable, though not confident, as I was purchasing at what I would consider 2004 levels(preconstruction prices of the property actually). Was I wrong to pull the trigger so soon?

  21. jC

    Newtomarket-Nobody can answer that question but you. Sounds like you’ve thought it out and made an educated decision based on your own personal situation. Don’t look back and question yourself.

  22. morally_right

    Everyone has their opinion. I happen to think $265 sq/ft is forthcoming. However, I must say that I failed to anticipate how long the bubble would last.

  23. UPennAlaskan

    NewtoMarket your question is really the question of this decade. Is there going to be a double dip? Is the risk priced in already? All different ways to ask the same question.

    I personally believe the future of nyc real estate prices and nearby areas such as hoboken and jc is linked to the strength of the financial industry. High income wage earners is the main factor for the higher asset prices (higher pe ratios too) for our part of the country. If you believe the banks will continue to print profits for the next 5+ years….then I think its a great purchase.

  24. Lori Turoff

    Even if you break even or, worse, sell for a loss at the end of 5 years don’t you think there is some value in having your own place beyond the financial calculation? I certainly do!

  25. morally_right

    There is value to having your own place. The question is what is that premium worth and what is the potential loss as an owner. And if there is a loss, what is that mental anguish worth? I imagine there are some folks in Phoenix, Miami, etc. where it has caused a tremendous mental toll.

  26. Tiger

    We tend to look at things in isolation, i.e. lost 20% on the home, lost 30% of retirement account, etc… But we all know life is not like that, things are so interconnected you can’t just look at things in isolation.

    I guess the biggest eye-opener for me in the whole economy is how easy it is to loose money, whether you are a risk taker or not.

    Another (personal) eye-opener for me is how much trouble more money brings, life was so much simpler when I was a broke student… but that’s another story…

  27. boken

    Mo’ money mo problems…

  28. L&S

    You gotta love this quote from John Paulson!!

    “If you don’t own a home buy one,” Paulson recommended; ” if you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

    http://blogs.forbes.com/robertlenzner/2010/09/27/john-paulson-sell-bonds-buy-stocks-double-digit-inflation-coming/

  29. homeboken

    What a shock that the guy with the absolute larged MBS portfolio in the world (aside from the GSE’s) thinks it is a good time to purchase real estate.

    It needs to be a lot harder to talk your own book in the media, sadly, it never will be.

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