2012 Nov 13th

The October Hoboken Condo Sales Results – Welcome to the New Normal

Hurricane Sandy Changes the Hoboken Real Estate Market

We’ve had floods in Hoboken before and many buyers ask about flooding when going out looking at properties but we have now entered a whole new universe when it comes to Hoboken real estate.  Deals that were scheduled to close have been postponed, banks are pulling approvals and buyers are having second thoughts.

Few smart agents are going to recommend that their clients list their place for sale when the lobby of the building is under construction, there are guys walking around in hazmat suits and there is debris piled up along the streets.  Inventory is likely to stay low as a result for at least the rest of the year.

How many new buyers, especially those from out of town, do you think are headed to look in Hoboken after the recent media coverage?  Will buyers be enticed to purchase in buildings that were partially submerged and, even if they can overlook the damage and have faith that repairs will be made, do you think they will be willing to pay the same price they would have paid pre-Sandy?  I’m already seeing buyer re-negotiate purchase prices based on storm damage to common areas and fear of special assessments.  Homeowners and condo boards are surprised to find that flood insurance doesn’t cover all that much, especially in basements, garages and lower levels.

Questions are plentiful and answers few.  Now, more than ever, it’s so important to use an extremely qualified, knowledgable, experienced, local agent to help you through the process regardless if you are buying or selling.  If you’d like to speak with us about how and why we can best help you navigate these treacherous waters (no pun intended) please give us a call.

Market Still Shows Strength Due to Lack of Inventory

Some important points to note:

Check back tomorrow for some interesting graphs.

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  1. Hoboken Resident

    Hi Lori,

    Thank you for the thorough analysis – always a pleasure to read!

    Like many Hoboken residents, I am interest in how the Hoboken real estate values play out after Sandy. Given that Hoboken has many desirable characteristics that other towns do not offer, I am particularly interested if you think there will be a depreciation of properties in the areas of Hoboken that did flood and an appreciation of properties in the areas that had no flooding at all. For instance, many areas of Hudson and Washington St did not have any flooding during Sandy. Do you forsee an increase in buyers interest / demand for these properties?

  2. Zach Turner

    I look forward to Lori’s response to ‘Hoboken Resident’, but in the meantime, I will say that–as a Hoboken renter with aspirations to home ownership–it took just one walk through the west end of town in the days following the storm to convince me that my area of interest will be confined to “high ground” properties. Where is the fiscal sense in making the single largest investment of my financial life in a property subject to the kind of destructive, paralyzing flooding we saw last week?

    The “experts” tell us that major storms will be of increasing frequency in coming years. The appalling political paralysis that is the legacy of generations of corrupt, self-interested politicians give me little hope that the difficult decisions necessary to fix Hoboken’s infrastructure problems–Civil War-era sewers???–will be made and acted upon any time soon.

    In the weeks and months following the 9/11 attacks, people feared that NYC real estate values would be permanently depressed as the area emerged as a prime terrorism target, and that “simple common sense” dictated that people would choose to invest in safer areas. Anyone with any familiarity with the current sales figures in NYC knows how accurate those predictions proved to be.

    Once the piles of sewage-soaked garbage have been cleared away and the lobbies re-carpeted and re-painted, I’m sure many buyers who did not see Hoboken in the days immediately after the storm will not place the same value on “high ground” properties as those of us who did. It will be interesting to see if appraisers and lenders have similarly short-term memories.

  3. Lori Turoff

    I can’t imagine that the negative press we have received and damages certain buildings have clearly suffered will help their value. I do believe sellers are obligated to disclose material facts about the property and flooding is such a fact. Of course, just like in New Orleans, areas that didn’t flood, like Hudson Street and upper Washington, are going to be more valuable as a result. That’s just common sense.

    I think this storm was also a big wake-up call to people with no insurance and condo associations with inadequate insurance. Finally, when the next one is predicted, why would anyone west of Washington leave their car in a ground floor garage when free parking is offered in a multi-level lot? That’s just plain foolish.

  4. Mike

    Appreciate all the thoughts and analysis. I am hopeful the overall Hoboken market will rebound – both due to the popularity of our town and (not to sound cynical) people’s tendency to forget.

    I would imagine specific properties such as ground level condos or buildings that were severly damaged may rebound most slowly.

    As an owner, in the months ahead I will be interested in properties, like mine that have been unaffected before (ie Irene etc.) but experienced damage with Sandy that is repairable at a cost, but perhaps not quite as devastating as other parts of town.

    Thanks..

  5. Lori Turoff

    I agree, Mike. Hoboken will always be an amazing place to live and seeing how our community has come together in the midst of this disaster only makes it more appealing to me. Yes, people do have short memories.

    New Orleans suffered over 1,833 deaths from Katrina. There is a neighborhood between the French Quarter and the Lower Ninth Ward (where the levees broke and there was mass devastation) called Bywater. It is relatively high ground and did not flood that badly. Since Katrina, Bywater has seen a renaissance and is called the Williamsburg of NOLA. The rebirth that’s taken place there is astonishing. Our problems were thankfully fewer and Hoboken will be rebuilt and recover. My hope is that it comes back stronger than before, as NOLA did. People appreciate when a city has something special about it. That didn’t leave New Orleans and it’s not going to leave Hoboken. Both cities remain interesting, vibrant, diverse communities and both will remain attractive places to live in the long run.

  6. Paul

    I agree with the last comment about Hoboken being a highly attractive place to live in the long term. It’s also possible that Sandy will add further allure to the down-on-your-luck Hoboken vibe from the past that has given the community such character. I’m very interested to see the effect on pricing in the coming months. Many potential sellers will likely delay their plans to sell putting further downward pressure on supply, but I also expect fewer buyers as well as you all have pointed out. One thing is for sure: Hoboken will continue to be a revolving door of young folks spending a few years here until their own exodus to NYC or the suburbs, meaning short term memories will prevail and we’ll be in a bull market again before too long.

  7. cathy

    Blog is very informative. I have couple questions that maybe you answered in an earlier blog
    1) When determine the price per square foot should you look at the average or the median in your neighborhood?
    2) How much more per square foot would you put property that was not impacted by flooding…Washington, Hudson,Castle? I always thought the rule of thumb was 100k more for Hudson street but prices in past have not shown that to be true. Wondering if things will change now? I am still seeing places on Adams listed for same as Washington/Hudson or in some cases even more.
    3) How much is a parking space? Though I wonder now a parking space if it is in “dry” spot?

  8. Lori

    Cathy,

    You should look at both average price per square foot and median. That’s why I calculate both.

    The price for “high ground” is subjective. I can’t give you a dollar amount. It’s set by the market. Once a homeowner has been through a flood and destruction, I would be they would be willing to pay quite a bit for reduced risk. Saying that a place on Adams is listed for the same price as a place on Washington is meaningless. Property is unique. You can’t look at a single unit and compare it to another because they are not the same.

    Parking is typically sold for anywhere from 20 to 30k. Depends on the location and the building.

  9. Susana

    Hi Lori! Why do you say upper Washington? Did mid-lower Washington flood? We didn’t (wash/7th). Just wondering.

  10. Lori Turoff

    Hi Susana – upper as in above 1st, I should say. I wasn’t down there at the time but I was told it flooded down by Observer. That could be inaccurate. Absolutely no flooding around 7th – I did make it there – or as far down as City Hall.

  11. Russ

    It’ll be interesting to see what people consider “higher ground.” There were properties in the Southwest that came out fine like the Sky Club, which is up on a hill. The Cliffs as well and I believe Hoboken Grande? Certain high rises could gain more appeal now.

  12. Lori Turoff

    @Russ – I don’t think “higher ground” means high floors when residents need to be evacuated from the building by boat.

  13. Russ

    Fair enough, Lori. But from a property standpoint, the flood was only a temporary “inconvenience” for residents of buildings and units that saw no structural damage. Many owners of ground floor apartments, or damaged lobbies are, unfortunately, still living with the aftermath.

    On the other hand, I would certainly recommend handicap or the elderly stay away from high-floored buildings in the most flood-prone areas.

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