2013 Mar 7th

The February Hoboken Condo Sales Results

Some Observations On the February Hoboken Condo Sales Results

Yep, February was a slow month, relatively speaking.  And a short one.  I remember not too long ago telling Hoboken buyers that finding a 1 Bedroom for under $300,000 was difficult.  Then all that changed in 2008.  Now I think I’ll be telling buyers that finding a 1 Bedroom for under $400,000 is becoming difficult.  Even with tight credit and a strong 20 downpayment requirement, the demand continues to outpace supply.

Nowadays, there is no discount off list price.  If you want it (and it’s decent) you better be willing to pay full price.  Days on market has shrunk to a new low of 29.  Maybe buyers are finally “getting” that they have to act quickly or they miss out.

So is it all good news?  Of course not.  February took a dip in activity (number of units sold down 47% from last year) and if you look at the bottom chart for 6 month moving sales price average, there seems to be a slight downward trend.  My suspicion is that prices will rise again with the Spring temperatures ahead.

6 mo

  1. Gilby

    I’m seeing some good signs here, including a little bit more inventory – my one concern is investment purchases, i.e. investors buying to rent out the unit instead of owners buying. If too many condos are becoming rentals it’s not a good thing for the existing owners or even potential owners.

  2. JC

    Why isnt it a good thing Gilby? Because potential purchasers in the building will have a harder time getting a mortgage if the building is mostly investor units?

  3. Gilby

    Exactly JC and many people, including myself, prefer condo buildings to be largely owner/occupied rather than chock full of transient renters that don’t have as much concern for the overall condition of the property.

  4. Lori Turoff

    I’ve been trying to convince a certain condo association, of which I am the President, to enact a rule prohibiting more than 49% renters. It is a huge problem due to Fannie Mae requirements and I agree with the sentiment that tenants are more transient and less caring than owner occupiers. I spend all day, almost every day looking into people’s homes. I would be $100 per view as to whether a unit is owner-occupied or rented and be right every time. The difference is glaring.

  5. Gilby

    Thanks Lori – this is exactly my sentiments. I have no data to back up anything, but I get the feeling that more investors are purchasing condos to rent out these days than in the past and, there are also more people that are renting out their units rather than selling them. Just my feeling but I’d prefer the bulk of the sales being buy to live in, not buy to rent out, which I also think helps the market sustain the recovery that we are currently seeing ripples of.

  6. hoboken

    what’s the deal with 1100 Maxwell place. Have any units sold yet? What are they asking?

  7. JC

    Gilby..sure real homeowners rather than investors would make for a nicer living environment and easier time for building mates to finance…but we cant say we dont want these investors buying properties, because they are helping the rebound. Any buyers are good buyers for the market, not necessarily for living standards and upkeep. With out these investors the demand may not be there for many units. These investors also enable the seller to buy somewhere else and hopefully upgrade from a starter 1BR to a nicer unit in town.

  8. Lori Turoff

    @JC – I have to disagree with you about your analysis. The reason there are so many tenant-occupied units is NOT because investors are buying in droves. The reason is because the owners moved on and rather than sell their property (often at a loss), they rented them out.

  9. JC

    yeah…that makes sense. Its not like this is Las Vegas where investors make up for more than half the sales. I’m sure its a fraction of a fraction. Rents are so healthy it makes sense…I wonder if there is any rental data out there and where we are now relative to the peak?

  10. Gilby

    I’ve stopped in at a few open houses and the first question I’m always asked is: Are you buying for yourself or for investment? The other thing that I hear consistently is that there are tons of buyers but not enough product for sale. JC – I think you’re wrong, I think there is plenty of demand and we don’t need any investors for the recovery to continue But, Lori – you have a better pulse on the market than me and that is good news that the uptick in condos being rented is more because of people that were ready to move, but not ready to sell than from investors. If the prices continue their current trend, maybe that trend will end as well.

  11. Lori Turoff

    You are probably asked that question so the agent knows how to pitch you (“Oh, such a lovely, quiet building and awesome kitchen” vs. “you can get great rent for this place”). There are more buyers than inventory and most of them are looking to live in the property. The Hoboken market has for the decade I’ve been doing this, at least, really been driven by the neighborhood, it’s continuing improvement, the proximity to NYC and similar. Sure, a few buildings (like the SkyClub) were investor heavy when first sold but no more. The current owners will be more likely to sell rather then rent when they get to pull a chunk of change out of the deal and use that towards the down payment on the house in the burbs. It’s coming.

  12. hans

    Starting to sell in 1100 maxwell place. Studios starting in high 400s and 1 bedrooms in high 500s. Seems a little high to me.

  13. Lori

    Seems high until you consider that a small 1br in a similar building in Manhattan would go for $800k or more.

  14. Andy

    Makes me happy to think some of my equity is finally coming back. In for the long haul so long as taxes stay flat or keep going down. Our building (22 units) is a mix of rent v owner. I’m not sure I would buy into restricting to 49% renter limits. You would have a nightmare situation determining who gets to rent. People’s situations are fluid and its not fair to as an association penalize them because someone else beat you to the opportunity. Its kind of the risk you run as a condo owner vs buying into a Co-Op.

  15. sara

    I agree with Hans that prices are high for the new Maxwell. For something that people need to buy off floor plan and wait a year, prices should have been low. The two bedrooms are in mid-800s and higher. And I see investors and possibly foreign buyers else what would explain 1450 sell out almost. Just see craigs list rentals to see hoard of advertised rentals.

  16. Lori

    “prices should have been low”. That is a very interesting way to approach economics. Prices in a free market are set by competition and sellers charge what buyers will pay. The bottom line is that buyers are more than willing to pay the prices Toll has decided to charge. They did it in the first Maxwell project, they are doing it today. Buying off a floor plan and waiting for construction to be complete is irrelevant. In fact, the earlier buyers of these projects do get lower prices than the later ones as Toll continues to increase the prices as the building approaches completion. Who is buying the units is also irrelevant. If you want one, you pay the going price or you simply cannot buy one because someone else will.

  17. sara

    Lori – I agree from the business perspective. But regular buyers should access the risk for themselves and not just buy since they are afraid of price going higher. Higher prices are also a result of lower interest rates and who knows what the future will hold. It does sound like Toll believes in the price tactic (buy now, else we are raising price tomorrow). An individual (aka regular middle class homebuyers) should be careful.

  18. Lori

    What does that mean, to asses the risk? Exactly what risk? The risk that a property might go down in value instead of up? Those trends tend to be across the entire market and would affect value on most or all potential purchases at a given point in time. It does nto depend on the current sales price of Maxwell units. Nor does it depend on ones financial position. Rich or poor, if you own property and prices go up, you make money. If they go down you lose.

  19. Gilby

    The risk is greater for an individual buyer that plans on living in a unit for a short while, say 3-5 years, than it is for a large investor buying many properties in several different locations. The large investors can hedge their bets, so to speak and, therefore, take a greater risk (i.e. pay more) hoping that, if prices decline in one location, they will make up the loss in another. (I’m not sure if this is what Sara means, but it kind of sounds like it might be.) However, Lori, you indicated that there is a very small percentage of the Hoboken RE sales being bought by investors so, whatever impact they are having on the rise and fall in values here in Hoboken should be negligible. My guess would have been that there are a lot more people that are buying properties for investment than, apparently there are, but my exposure, and others, to the profile of the buyers in Hoboken is limited.

  20. JC

    Toll is not twisting anybody’s arm to buy. These buyers are doing so based on their owns situations and analysis. If there are no buyers a x price toll will lower. If there are many buyers at x price toll will most likely raise prices. The price of any given product or service is what a buyer is willing to pay for it. Thats what makes a market.

  21. Gilby

    There might not be any arm twisting, but IF (and remember, those more knowledgeable say there isn’t) but IF there were market manipulation – i.e. toll buying back it’s own properties to create more demand – it’s NOT the market ‘working,’ it’s the market being manipulated. Anyway, Maxwell isn’t a development that interests me and I don’t pay too much attention. Suffice to say, it looks like with or without Maxwell there is a pretty healthy RE market happening in Hoboken.

  22. Lori Turoff

    Toll is a publicly traded company. I doubt they are doing that. Plus, we see who the buyers are in the MLS. They are people – not Toll.

  23. Craig

    If I’m a buyer looking at a Toll Bros. property, their pricing would be the least of my concerns. That company has an awful lot of lawsuits against them. Among them, the Hudson Tea Condo Assoc. is suing them for defects caused by shoddy construction. Additionally, Toll’s own shareholders have sued them for misleading them about the company’s future prospects. That suit recently settled with Toll agreeing to pay over $16 million. The City of East Brunswick is also suing them. There are many other examples.

    Maybe it’s just me, but given their track record, Toll Bros. is not a builder I’d choose to do business with. Especially so in light of the construction defects uncovered at Hudson Tea. But hey, if they can get their prices, they make great comps for the rest of us owners in town with comparable properties.

  24. Lori Turoff

    Toll did NOT build Hudson Tea (the original building). If you were a Hobokenite back then, you would remember first the empty shell, then a company turned it into rentals, then Toll bought it after it was a rental property. Can’t really blame them for that one.

  25. Sk

    It is for courts to decide, didn’t buy there so not sure what the warranties were. But suffice it to say no builder is perfect..and one has to make their own independent decision and unfortunately the buyers market for new construction is strong, your website is great but as a realtor would be nice to get unbiased opinion.

  26. JC

    Just for the record….Lori discloses she is a realtor, and she is providing and paying for this forum so thats the deal. Anybody who owns real estate is probably just as biased. Even in down markets realtors make money so its not all cheerleading.

  27. Craig

    I know Toll didn’t build Hudson Tea – but they did buy it, refurbish it, and turn it condo while charging exorbitant prices for what you got. I sincerely doubt Toll bought the place without their engineers going over it with a fine tooth comb. Anyone here buying the possibility that Toll’s engineers didn’t find the existing structural problems regarding the roof and windows and leaks?

    Toll Brothers ran the condo association at the Hudson Tea Building before turning it over to the owners and the problems first appeared during that time. Apparently, there were many areas on the exterior façade of the building that were in need of repair – and leaked during rain storms. From what some current residents have said – Toll failed to not only address the leaks – but also failed to make buyers aware of the problems. Toll can definitely be blamed for that one.

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