2012 Jan 30th

What’s Really Happening in Hoboken Real Estate? Absorption Rate Tells All

We have a bunch of year end statistics I’ve been periodically posting.  There is one, however, with which I have real-life, day-to-day experience.  I work with a lot of buyers.  More than almost any other agent in Hoboken.  The problem I’ve seen at every price point and every bedroom size is this – there is simply no inventory out there.  My buyers request to see a particular unit, I make the call for the appointment and find out it’s already under contract.  They make offers only to learn that there are 2 and 3 other offers on the same property.  It is happening more and more frequently.  The chart below will help to explain why:

Basically, we don’t have enough inventory.  Let me break it down a bit further.  Other than the seasonal 4th quarter “holiday respite” the number of properties being listed has dropped steadily.  Take a look:

Not many listings at all.  We’ve gone from a high of  513 new listings in the 1st quarter of 2010 to a low of 153 new listings this past quarter.  That is a huge, 70% decrease.  Why, you might wonder?  Well, those people who bought at the last market peak (yes, I do believe eventually there will be another) aren’t selling at a loss.  They are either staying put or renting out their properties.  So we don’t have many units for sale.

And what has happened to sales activity during that same time frame?

There has been a drop recently but not nearly as great.  The high was 284 units sold in the 4th quarter of 09 and the low 139 units last quarter.  That is a 50% decrease.    Going back to the first chart of absorption rate, if listings and sales continue at this pace, it would take only 4 months to sell all the inventory currently on the market.  What that doesn’t take into account is that some of those units are real duds.  They are never going to sell either because they are drastically overpriced or they are in terrible condition.

Which brings me back to my work with my buyers.  I simply have nothing nice to show them.  So I show them the duds with the hope that when a really good property does hit the market, they will feel confident enough to be able to make a strong offer before the other buyers out there do.

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  1. Brian

    In your opinion, at what point with the law of supply and demand push prices high enough to get those owners off the sidelines and selling? If there’s so little inventory, why aren’t prices rising?

    We bought our place in 2008; a little past the peak, but not by much. We need more space, but won’t sell at a loss.

  2. JC

    IMO: Its different for everybody. Lori can answer 10% higher and yet you are saying you wont sell for a loss, so really there is no magic number price as far as I’m concerned and you are waiting for break even to sell. Once the hoboken market actually posts YOY gains then greed will kick in and many may keep their properties hoping to ride another year over year positive year. The rental market seems very hot and helps cover the monthly nut of many who are keeping properties and renting them out. When somebody NEEDS to sell they will.

  3. Lori Turoff

    Average sales prices in Hoboken have been up for the last 4 quarters:

    1st Q was 471,586

    2nd Q was 493,015 (4.4% increase)

    3rd Q was 511,706 (3.7% increase)

    4th Q was 523,369 (2.3% increase)

    This may not be enough of a gain to bring a seller a profit but we’re moving in the right direction.

    We’ve had a year-over-year gain as well:

    2008 – 800 units avg. price $528,354
    2009 – 654 units avg. price $501,993
    2010 – 744 units avg. price $495,798
    2011 – 687 units avg. price $500,195

    So now it’s just a question of whether prices will continue to rise and at what pace.

  4. Chili Agee

    In whole dollars prices have risen, but has price per square foot risen as well?

    Thanks Lori. The info you give is invaluable. Any buyer or seller that reads this blog would be nuts not to use you as their realtor. You’re the BEST!

  5. homeboken

    Brian sadi “We need more space, but won’t sell at a loss.”

    This is the mantra that millions of would be sellers across the country tout. The other favorite is “I’m not giving my house away!” What you don’t seem to understand is that your outstanding debt or desire to make a profit has zero impact on your property’s valuation. You say that you won’t sell at a loss, then be prepared to get comfy in that space that you describe as too small.

  6. teaorcoffee

    There are still plenty of units available at 1450 Washington, and I understand Toll has some units available in 1125 Maxwell and even Hudson Tea. When you say “really good property”, Lori, are you referring to units somewhere between the uptown highrises and the “duds” that may be on the market? Is that “middle” level of apartments the one that is missing?

  7. homeboken

    Per the tax records, there are 40 unsold units at 1125 Maxwell, add at least another 100 at 1450 Wash + other units held off market by developers and the actual inventory is easily greater than 300 units and will climb in the next few months.

    Spring selling season begins after Superbowl Sunday! Lets see when “buying” season starts up.

  8. Lori Turoff

    Toll does not list the bulk of those units on the MLS. They want to sell them themselves through the sales office and pocket the extra 8% in commission (they pay agents who bring buyers 4%).

    To me, and most of my buyers, a “really good property” is one in good condition, with a nice layout, east of Willow. If it’s a walk-up, it is 1st or 2nd floor. If it is a newer style building, for those buyers like new construction and who want parking, an elevator, central air, and a washer/dryer, it’s something like the 1br at 812 Grand listed at $375, which got 5 offers in a week, and just went under contract in 7 days. Interestingly, the listing agent’s own buyer won the bid.

  9. homeboken

    “Toll does not list the bulk of those units on the MLS.”

    Just because they aren’t on the MLS, doesn’t mean they aren’t for sale.

  10. Lori

    If you paid attention, for the 9 years I’ve been providing this detailed analysis I’ve clearly indicated that my source of data is the MLS. I’m too busy too pull every transaction from the tax records. So I’d the units are not on the MLS they’re not included in the analysis. Toll is notorious for dribbling units onto the market to artificially limit the supply & support higher prices. Sid you ever try calling the sales office when Maxwell first went up? I can’t account for warehouses units and I don’t believe their affect on the market is that significant either.

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