2011 May 4th

The Weekly Wednesday Wrap Up – Hoboken Condo Sales & Activity for the Week of May 4th

So How is the Hoboken Market Doing?

Here is an interesting little tidbit that helps answer that question:

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What I find really interesting is how the 1 br market has taken such a hit while the 3br & bigger units are now selling at a premium over the others. The strollers are not a figment of my imagination – Hoboken really has changed!

Hoboken Condos Sales & Activity – Week of May 4th, 2011

I received a very interesting email from a mortgage broker yesterday.  He pointed out that more and more buyers are having problems getting a mortgage due to the condition of the condo association’s financials and related issues.  He sent along a handy “cheat sheet” to assess if there are problems with an association.  I thought it would be useful to post it here:

FANNIE MAE (FNMA) REQUIREMENTS:

  1. (valid email required)
  2. (required)
 

Studio & 1 Bedroom Hoboken Condos:

16 new listing

No dabos!  This is a first.

9 Sold

4 price reductions 155 Total Active 1BRs

Two Bedroom Hoboken Condos:

19 new listings

5 Dabos

12 sold

12 price reductions 193 Total Active 2BRs

Three Bedroom and Larger Hoboken Condos:

1 new listings

3 dabos

1 sold

5 price reduction 33 Total Active 3BRs

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 eee 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  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. BP

    Thanks for the interesting chart. Clearly the economy, job losses and increased mortgage lending standards (i.e. real downpayments) have taken a toll on pricing. The one thing I don’t hear people discussing though is that low interest rates have partially helped soften the fall so far. Rates have been at all time lows. A significant move up in rates, which is very likely to happen if the fed gains confidence in a recovery, could put serious downward pressure on pricing unless the income of the buyer pool significantly adjusts as well.

    Simple figures: $500K purchase with $100K down @ 4.75% on a 30 year mortgage is a rounded $2,100 per month before condo fees and taxes. However, at 5.75%, that payment is $2,330 and at 6.75% it’s $2,600 a month. From a mortgage qualifying standpoint a buyer using the 33% ratio would need to earn $9K more @ 5.75% and $18K more @ 6.75% to qualify at the higher interest rates. Alternatively, if the pool of buyers do not have additional income to qualify at those higher rates and the downpayment remained at $100K, the condo price would have to be reduced $45K to maintain the same $2,100 monthly payment under the 5.75% rate scenario, or reduced $80K to maintain the same $2,100 payment under the 6.75% scenario. That’s 10-20% price reductions!

    Cleary rates would be raised only in an improving economy which would suggest more people employed and a bigger potential buyer pool leading to more potential demand. But would the income levels of those buyers compensate for the rate increases? I’m not so sure. What’s your thoughts on all this?

  2. stan

    Interesting Lori thanks for posting.

    I mentioned to the councilperson in my ward that what is really needed is more three+ bedrooms. He acknowledged that its a problem and that the council minority/mayor has been pushing for some time to get more three bedrooms required with every new project by way of zoning/planning etc.

    However, more families and people staying around longer (thus equalling more voters) would hurt the old guard, so its an uphill battle. They want hobokener’s with families to move out once the first or second baby comes, so no one votes, so they can remain in power, and their base, (church towers, marine view, applied) etc does not get overpowered numbers-wise. People are transient in town, and many don’t pay attention until the little ones come (schools, taxes etc).

    I thought about that and at first thought it was far fetched, but after paying attention to the local political scene, it makes sense.

    Anywho, that’s my two cents, sorry for going political on the blog Lori but I thought it was relative.

  3. Lori Turoff

    No apology needed – I believe you’ve hit the nail on the head. It is a shame how few people “get it” even when they have half a million invested in their condos. We’ve been here over a decade and although the neighborhood had changed, the vast majority of home owners remain apathetic. I fear for a low turnout next Tuesday at the polls.

  4. Lori Turoff

    If the economy recovers (we should be so lucky) I believe that salaries in our particular area will improve – we are so tied to Wall Street that you can go by Main Street standards. The demand will be there. In fact, in my experience, it’s there now. I find the reason the 1brs have taken the hit is because lending standards have swung too far in the other direction and become too strict for first time buyers who don’t have 20% to put down. 10% plus PMI is harder and harder to obtain. That’s putting a crimp in sales at the low end.

  5. Craig

    I think Lori is exactly right: 1 bedrooms took a bigger hit because those are the more likely first home for a first-time buyer. And those buyers are the least likely to have 20% cash for a $300-$400k condo to put down unless they have help from parents. So it’s not that there’s no demand – it’s just that those who want to buy, and could afford the monthly carrying charges, can’t buy because the banks won’t lend to them. Even FHA loans mostly aren’t a viable option in Hoboken anymore because few buildings here are FHA approved and spot-approvals for indvidual units have been eliminated.

    As for voter apathy, what did you expect in a town where two of the last four mayors are convicted felons and there is video footage of a councilman narrowly avoiding the same fate? The parking czar was just arrested for assaulting his employee on the street in broad daylight. In Hoboken you have just two types of politicians: those who have been caught commiting a crime – and those who haven’t been caught commiting one.

  6. Lori

    It is so sad. For a city with so much to offer and still so much more potential, we surely have not made the most of it! Personally, I just can’t understand how people who have made one of the biggest investments in their life (their home) don’t care and don’t vote. The most important thing that could happen to change the current state of affairs would be for every condo-owner in town to vote. That would be awesome.

  7. stan

    Actually Craig,

    You have a corrupt council majority right now, and an adminstration that is not corrupt.

    That’s why they are at odds. I do not believe that Zimmer has done everything right, but she is certainly on the honest end of the spectrum. I have seen more transparency and openness in the last year than in the previous decade(hospital, budget etc).

    Also Zimmer and her crew have splintered off from the hudson county democratic party. The “reformers” while flawed, are making things very uncomfortable for the cabal that has run hoboken and hudson county for years(russo, castellano et al) which is why they have tried to stop here in every attempt at good governance. All that is need is a one ward pickup, and progress can continue. It won’t be perfect, but a vast improvement from the status quo

  8. morally_right

    20% down was the norm for decades. Only in the last 10 years or so during the madness did that go out the window. Anyone with a pulse could get a loan. Lending standards aren’t tough now–they’re just going back to normal. They were just easy during the bubble. So if lending doesn’t get crazy again for awhile, 20% down seems like it’s here to stay. So market prices will gravitate to where the deposit implied by the sale price is doable for those who have saved. After all, it’s not a God-given right to own.

  9. Lori

    That’s not quite accurate – buyers could do a 10/10 HELOC. Even 10 to 15 years ago, it was pretty common. That has disappeared along with PMI. In my mind, that is the real problem for first time buyers. I agree that lending standards were a joke. But we’ve gone too far in the other direction now.

  10. Craig

    “morally right” is in fact wrong. 20% down was not the “norm” for decades to get a loan. It was (and still is) simply the threshold for avoiding having to pay for mortgage insurance. As Lori correctly points out, there were always other options for those who didn’t have 20% down in cash.

    15-20% down is not an unreasonable amount of skin in the game to ask of homebuyers in most parts of the country, where the typical home costs around $250k. But on the west coast or northeast, specifically metro NYC, a decent house or condo can run $500k or more. So for most people, having $100k or more in cash is unlikely unless they have proceeds from the sale of a prior home. I mean really, can I get a show of hands…how many people here have $100k cash in the bank? Under current lending standards, most first-time homebuyers are out of the market unless their families are willing to help with the downpayment. That’s a lot of potential buyers that have been eliminated.

  11. homeboken

    Craig – You are correct, it would seem that not many of the potential buyers have $100,000 in cash to secure financing.

    Something else to consider is of those that do have $100,000, how many of them are willing to tie up that kind of cash into a single investment? Many buyers are still nervous that we haven’t “hit bottom” yet and look at the risk of losing some of that $100,000.

    From a personal perspective, $100,000 represents a good amount of work and savings. I wouldn’t put that much money into a single stock or bond nor would I invest that much into a home. It just exposes me too much to real estate risk and I would rather be diversified.

  12. teaorcoffee

    I have had realtors tell me that “you’d be surprised” how many people do indeed have $100K+.

    I know several people who do have that kind of money (though to be honest I’d guess that most of the people I know do NOT have that kind of money). They also happen to be in their (late) 30s and have already paid off their homes and don’t have a mortgage. They don’t have crazy-high salaries – I doubt any of them make much more than $100K. They just have a different mindset where their goal was to pay down their mortgage, rather than investing elsewhere.

    I know financial planners don’t like this attitude – they would rather be “diversified.” But the bottom line is that sometimes a conservative (and some would say unsophisticated) approach works better than a highly-leveraged one. I think our recession points to that. If everyone just bought what they could afford, and were willing to put in that 20% stake, then maybe housing prices wouldn’t be so unaffordable now for so many people.

    My own parents took a more conservative approach and haven’t had a mortgage payment in decades. They now have a ton of money that they have invested elsewhere, without worrying that they wouldn’t be able to make a mortgage payment if something went wrong.

    We all know what thinking that a primary home is “an investment” got us.

  13. Lori

    Late 30’s and paid off their mortgages? That is pretty rare in my experience.

  14. teaorcoffee

    I’m actually glad it is rare. Because secretly I’m a little jealous!

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