2012 Feb 28th

Homes Are Selling Like Hot Cakes in Hoboken!

hotcakesI’ve said it before but I am going to keep repeating myself – well priced Hoboken condos in good locations are in great demand. So great, in fact, that there have been multiple offers on 5 out of the last 5 units on which my buyers have made offers.  There just isn’t enough inventory out there, and hungry buyers are competing for nice, new listings.  Our last listing had 3 offers and went under contract in 6 days.  Despite what you might read in the national media, the housing market in Hoboken is unlike the rest of the country and the bidding wars are back!

If you are a Hoboken condo buyer in competing for a desirable unit, here is what you need to know.

I had an interesting (I’m being kind) experience with a buyer recently.  He bid on a really nice, new listing and bid too low, despite my advice to the contrary.  In fact, the buyer was angry that I told him he needed to bid higher, but I was just telling him what I thought was necessary if he wanted to reach an agreement.  He did not offer enough, and someone else got it.

The same buyer then decided to make an offer on another property he had seen with me.  This time, he was the only bidder and after some negotiation, his offer was accepted.  He then changed his mind and wouldn’t sign the contract.  Sort of embarrassing for me but he has that right.

He  then made an offer on a third unit which was also a new listing.  The property was listed on Friday and by Monday there were multiple offers.  The listing agent told me the property was going to go for over asking, implying that they already had a full price offer.  If the seller wants the other bidders to know this, the seller’s agent will tell us.  When I informed my buyer that he would have to go over asking to win the bid, he (wrongly and insultingly) accused me of working for the seller and a bunch of other nasty things.  Believe it or not, he actually won that bidding war but then, again, refused to sign the contract.  Needless to say, I told him to take a hike.  Working with unprincipled people damages my reputation, and I’ve worked too hard for too long to allow that to happen.

The lesson here is twofold. When your agent tells you something but it’s not what you want to hear, it does not mean they are being pushy or that they work for the seller.  It is my role to provide buyers with truthful information in order that they can make informed decisions.  I’m going to tell it like I see it.  Secondly, I’m seeing the market really heat up. Inventory has been close to 200 for months.  That is one third what is was after the mortgage debacle of 2008.  If a nice property hits the MLS, you better be the first one to pull the trigger.  There will be a line of others right behind you who want the same condo!

One last thought for sellers.  I emphasized the adjectives “nice”, “well priced” and “good location” several times above.  Not every new listing results in a bidding war.  Delusional sellers who think they can get what they paid in 2006 plus a profit are, well, delusional.  The key to selling your place quickly and for the most money is to price it right, right from the start.

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  1. whynot

    Lori –

    I have more than one friend who thinks this is a good market to sell in, but are not ready to move out of Hoboken at this time.

    They were thinking of listing their desirable units on the higher side (not outrageous) for three months to see what happens. If the unit does not sell, re-list in a year or so later when they are really ready to move at a price 30K or so lower.

    What are your thoughts on this strategy? What would you say to a seller about this?

    Whynot

  2. Lexi

    How much value does private, deeded outdoor space – a small deck leading down to a nice pavered patio with room for a table and 4 chairs plus large grill and room for storage- add to a unit?

  3. Lori Turoff

    Listing a property high to “see what happens” is just plain dumb. Properties get the most attention when they first come on the market and are new listings. Overpricing a unit is simply squandering that opportunity. If it doesn’t sell, the listing becomes stale.

    Interest rates are not headed down – there is no more room to go down. What if a year from now they are up a point or two? Is your friend ready to confront that possibility?

    If anything, your friends should list on the low end of the range indicated by the comps and get multiple offers which would result in a fast sale for a potentially higher price.

    (Note that I say the price should be driven by the comps – not what the seller paid or hopes to get.)

  4. Lori Turoff

    Lexi – that is like asking how long is a piece of string. It depends. Without seeing the property I could not give you a good answer. But – in general – a balcony is worth 10 to 20k, a terrace 15 to 25k and a yard 25 to 50k.

    What you need to consider is: is sunny, landscaped, private, what kind of plantings, trees, who are the neighbors, how is it accessed (thru living room or bedroom?), how big is it, what does it look at, where is it located, is there lighting, water, drainage, privacy, etc. etc.

  5. Lee

    This is good to hear. However, I think the problem that many of us face is that we can’t afford to list our condos at a “good price” as you say, because a “good price” would mean coming to the closing with tens of thousands of dollars or so that we just don’t have. Having bought in May 2007, we have just seen someone in our building with a very similar condo as ours sell for $400,000, $25,000 less than what they asked – when we paid $475,000 five years ago. We don’t want to make a profit — we just want to be able to move on and break even.

    This is why I think there is a lack of inventory — people like us literally can not afford to sell at what is considered by a realtor or a buyer as a “good price.” My only hope is that over time as what we owe goes down, the prices will start to come up again so at some point we actually can sell.

  6. Lori Turoff

    Lee, I hear stories like yours frequently, often from people who are my own clients. I typically advise them to rent. Many of those same people are now making money on their units as landlords.

    Prices are coming up. We’ve had increases, albeit small ones, for the past 4 quarters. I am extremely optimistic about the overall economy and our market. If you can wait it out, you may recoup your investment. Remember, had you rented for all the years you lived in your condo, you would have been paying considerable rent. You don’t always get to live somewhere for free.

  7. JC

    But Lori, as you say interest rates cant go down. When they go up, everything else being equal, folks can only afford a lower price property if monthly mortgage payments go up. Isnt that a major headwind for the market?

  8. Lori Turoff

    If and when rates go up, possibly. But higher rates mean my savings and investments are back at work for me, too.

  9. bz

    If interest rates go up, housing sales market probably will slow. Then people will have to rent. This will push up the rent until a point that buying, even with increased cost, will make more sense than renting. Then, increased buying activities will drive the home price up until a point that renting is more attractive. The cycles repeat themselves again and again. The length of each cycle varies depending on all sorts of economic changes. But the main course remains the same, especially for areas like NY metro where almost everything is diverse. If we were in a little town depending on one factory, then there would be a different story.

  10. Justin Venneri

    Hi. I find this commentary interesting but misleading. Sure, the data are the data and your experience in the market is real. However, also real is the fact that when you combine turnover and the number of people stuck at around break-even we are left with a very real head-wind for the Hoboken market. Wages aren’t growing, they are deteriorating in REAL terms, and that hurts too. Any place that sells is perceived to be a value and priced right…”right” in this context DOES NOT mean at a premium to recent transactions. That’s critical to seeing home prices stabilize and RISE. If this pattern persists, the mediocre numbers/ tepid volumes will continue as the only price someone can list a place at is LOWER than or in-line with comps. If a potential seller is sitting at break even, that’s not that compelling if you have to then rent or come out of pocket for a down payment.

    Take renting for example: if someone chooses to rent their property because they can’t sell. Sure, the rental market has, as you pointed out, been tight (hot), you’re going to end up paying for it as there’s no way to get MORE for your money unless you want to sacrifice/ eat into your rental income. This makes renting a basically a zero-sum game (only you had to move). This is another reason people are staying put OR leaving town…if the latter, that rental property isn’t going up for sale any time soon (this helps keep inventory levels down).

    The bottom line seems to be that all the metrics in this unique market have either deteriorated and flat-lined, or are still deteriorating. Welcome your thoughts of course but I just feel that this and some other pieces I have read by other agents recently citing strength in a market struggling to stay relatively FLAT to down ignore WHY the data looks the way it does and focuses on the few transactions that are occurring (and thus, what many people are dealing with).

  11. l&s

    I could not really understand the point that Justin was trying to make. Speaking from personal experience (realize that means nothing for the mkt), it has been much easier to sell my place in Hoboken then find a house in Jersey burbs. The lack of inventory is very apparent in all markets and the so called spring mkt listings have just not happened. I have raised my budget but conversely i had multiple offers for my Hoboken place and am getting significantly more than what i anticipated 6 months ago. That is a price increase in my mind and it is time buyers just wake to the fact that it is no longer a buyers market, in Hoboken or Jersey Burbs.

  12. stan

    Thanks as always lori.

    I agree with lee’s sentiments above. Looking at this weeks closings, it appears to me that the sales pace has increaed, especially with two bedrooms, mainly because sellers have started to throw in the towel. They planned on a temporary spot, have the first kid and when the market went south, they were stuck. Now they have out grown their place and decide to take a loss.

    of the two bedrooms:
    1034 Clinton St 416 no sales hist
    1034 Clinton St 106 no sales hist
    1500 Garden St., 2F paid 1411990 sold for 1.215 Mil
    84 Bloomfield St., 14 bought for 570 sold for 498k
    919 Park Ave., paid 422k sold for 351k
    814 Washington St., no sales hist
    464 Newark St., 2A paid 419k in 2004, sold for 423k
    123-125 no sales hist
    1125 Maxwell Ln 1114 paid 1.39 sold for 1.123
    1125 Maxwell Ln toll bros
    636 5th St bought for 525 sold for 427
    257 12th St bought for 429 sold rfor 346

    I have noticed a lot more of this…just my two cents

  13. stan

    I think Lori basically stated this some time ago, the three bedroom and up market is really moving, because more families are staying and they need the space. Not a lot of them around in town….

  14. Lori Turoff

    I’m curious what Justin means by “turnover” and how he assesses “the number of people stuck at around break-even”. I would think one would have to analyze the entire tax record data base and cross reference it to an estimate of current market value for each particular property to reasonably know who is stuck at break-even. I’ve certainly never seen those numbers anywhere. Is that just a gut feeling?

    As for wages, they may not be growing for the nation as a whole but what about for Hoboken? Given our demographic profile of young, highly-educated professionals, I would suspect most of them are looking at growing income based on the point they are at in their career paths, no?

    Mediocre numbers? The MLS data has shown sales price increases for the past 4 quarters and I have posted that data here. What numbers are you using, Justin? Did I miss something that you saw?

    Tepid volume? Again, I’d be curious to know what Justin bases that evaluation on. Our absorption rate is under 4 months. That indicates a seller’s market.

  15. Lori Turoff

    To the now-deleted-commenter who just posted a comment asking another commenter to contact her directly about possibly purchasing her home: on my site? Really? Though I don’t advertise it here, I am a realtor. I make my living helping people buy and sell homes. Maybe you could just cut me and other realtors out of the process and save a few bucks but did you really think I’d allow that right on my own site???? Seriously.

  16. whynot

    Lori-

    Now that is funny.

    How are the realtors in Hoboken doing?

    I assume:

    You lost many to other professions over the past few years?

    Those of you also handle rentals are doing okay as that is a good supplement?

  17. Lori Turoff

    How are realtors doing? We at the Turoff Team have had our 8th consecutive year of more business than the year before. The saying is that 10% of the agents do 90% of the business. I think it is now more like 5% dor 95%. Every year we have a state-wide sales recognition award called Circle of Excellence based on a realtors sales numbers. The circle is getting smaller and smaller.

    I don’t know of anyone other than 1 person who actually makes a living doing rentals. It’s a way to pick up some extra cash as a part-time job, or a way to drum up business by developing relationships with people who eventually will buy, or I do rentals solely as a service to my clients.

  18. Ron

    Lori,

    When you say “good location” where do you mean?

  19. Lori

    For the past 100 years, “good location” has meant the same thing – the closer to the river, the better. Some things never change. The East side of town has views, shopping & restaurants and transportation.

  20. Justin

    Hi Lori: Thanks for your response…sorry, I didn’t realize that you commented. By turnover, I meant the quantity of units turned over given the total stock of homes in town. It’s just a measure of sales activity which is – as you know – extremely important in Hoboken because it’s only one square mile and the stock of homes is ‘generally’ stable (not sure what the growth in stock/ total units is – you may have that or know it – of late given all the rentals being built back by ShopRite, but my gut tells me it wouldn’t change my sentiment if the total number of units in town were a few hundred more than I think it is).

    My assessment of “stuck” is based on the record low inventory levels, wait lists for kids to get into pre-k programs (3 and 4, wait getting longer every year), etc. etc… there is a lot of anecdotal evidence and when you sort of list all the “gripes” and roll them up I come to the conclusion – perhaps incorrectly – that there are a lot of people who thought “sure, let’s buy, we’ll be here for 3-5 years” and now we’re in year four or five and they are thinking, “crap, need a few more years to figure this out” (which = lots of homes not listed (shadow inventory)). Ironically, L&S, who didn’t see my point but commented below my original post, is/ was (hope they found a nice place!?) experiencing what I’m talking about in trying to find a place in the burbs. Same thing going on out there only prices have come down more so many people are relatively “more stuck.”

    Regarding income levels: No hard current data here other than 2010 US census data pegging us at ~$101k median over past few years; the average is about 45% higher (not surprising). Granted, this is “old” data. However, it’s a well-known fact at this point that salaries and bonuses, particularly in the financial industry, have been under pressure for the past two-three years. Even the various “best places to live” surveys don’t show a material change in the recorded median income in Hoboken since 2007/8 (which show us at around $74-75k; I didn’t want to mix and match census with a smart money article, for obvious reasons – the point is that neither source reflects a real increase in recent past). As long as Hoboken income levels are reliant on NYC jobs and to a large extent, the financial industry, it’s hard to make the argument that incomes are not under pressure; at least they may be stable now. Regarding your point on educated professionals expecting an increase in incomes at this point in their careers…yes, that’s a valid point. But expecting an increase and actually having your salary increase are very different. People that have kept their jobs through this cycle, particularly in finance, are lucky if they are still making roughly what they were (at least I consider myself lucky to be in this camp).

    Tepid volume and mediocre numbers… Your numbers are accurate so far as they represent the most recent transactions, but saying we’re seeing sales price increases and that volume (turnover) is robust when 1) 90% of the places you just listed/ reported this past week sold for less than the asking price (some less than reduced asks) and the week before it was 100% (!) selling below ask, and 2) the number of units sold (monthly) is incredibly weak/ low, even for where we are in the cycle/ correction, is very misleading.

    I’m not trying to be a jerk, just sayin’ the market is what it is and the statistics people are throwing around aren’t exactly representative of the whole. I probably could have summed my original post up more nicely by saying something like:
    “It is hard to say this is a sellers’ market or a strong market when every sale is occurring below the asking price and thus in-line with or lower than recent comparable transaction prices (fact). Also, the number of actual transactions and inventory levels are at very low absolute levels because many (not all, as I think we agree) home owners are stuck in an awkward limbo due to a variety of factors that result in the owner/ family not being able to take the hit to their balance sheet. Until we see places listed above recent market prices AND consistently moving (turning over), it’s not a sellers’/ strong market. “

    I hope things are getting better, but I fear we have another couple of years of this low-volume kind of churn sideways/ down slightly (which, might not be a bad thing in the end). I do enjoy your updates and think it’s great that you interact with your readers.

  21. Lori Turoff

    Justin,
    I refer you to today’s post on the February sales results. Not enough inventory + continued demand = prices are rising. You are welcome to respond but please move it over to that post.

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