2013 Apr 3rd

Is The Inventory Shortage Choking the Hoboken Condo Market?

There have been stories in the press about the Manhattan inventory shortage driving up prices.  Similar things are going on here in Hoboken, as well.  Let’s extrapolate from that article and see how Hoboken plays out:

For the 1st quarter of 2013, average sales price for a Hoboken condo was $550k, a 10% increase year-over-year.  Meanwhile median sales price jumped to $535k – an ALL TIME HIGH for Hoboken condos.  This figure represents a more than 18% year-over-year increase.

Looking at activity – there were 137 deals closed in the 1st quarter of 2013.  Exactly the same number as in the 1st quarter of 2012.

“This is what happens when you take both hands and choke off supply by the throat,” said Jonathan Miller, president of Miller Samuel and the author of the Elliman report.  He was speaking about Manhattan but Hoboken has a similar chokehold driving up prices.  Hoboken inventory fell to an all time low of 107 units for Q1 of 2013 from 345 a year ago.  That’s more than a 200% drop!

I was amused when a buyer recently told me that they weren’t going to get involved in “bidding wars”.  (We like to call them ‘multiple offer situation’).  I thought to myself, then you are not likely to purchase an apartment in Hoboken any time soon.

If you are interested, here is the link to the raw data – quarterly sales results going back to 2000.  Please note that the numbers are all pulled from the MLS but – the numbers change every time I go back and double check them.  Inaccurate reporting by agents, fudging dates, duplication, lack enforcement of reporting rules.  They are pretty good – I’d say 95+% accurate – but not perfect.  They are, however, the only source we’ve got and I do the best I can with that.

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  1. Dave

    Lori,
    Why is there a shortage? Is this a bubble that will burst when inventory picks back up, or will demand continue to outpace supply?

  2. Lori Turoff

    Dave,

    Who will win the World Series in 2013? How high will Apple go by year end? Will it rain tomorrow?

    You are asking something that can’t be answered, only guessed at. I suspect there is a shortage because many owners chose to rent rather than sell and lose money in the past 4 years. I don’t believe it is a ‘bubble’ in that the demand is not artificially driven by easy money though rates are very low. I can’t predict what will happen in the future and neither can anyone else.

  3. JC

    I dont see the future either..but I dont think this is a “bubble” and I certainly dont thin any “bursting” will happen in the hoboken RE market. These interest rates are an amazing opportunity for those that qualify! Mets will win world series, Apple will be at $525, and no rain tomorrow.

  4. Lori Turoff

    Oh, I hope Apple goes back to $700. Please, please, please.

  5. Leslie

    In short re shortage, condo owners like myself who bought at height in 2007 are waiting for the market to get to the point where we can at least break-even, if not make profit given improvements. I have confidence in Hoboken real estate for next 10-20 years. After that, will have to see what happens with global warming/flooding. Meanwhile, I will rent-out unit if residential choice changes.

  6. Matt

    Real estate bubble in a town that is competing with third world shanty-towns wrt infrastructure? Mayor cursing out previous administrations over not investing in infrastructure and all money being siphoned off?

    Ha ha. Good luck. May the suckers who buy in the bubble suffer their fate.

    The only places worth buying are the ones right by the river, and may be a block or two in.

  7. Chili

    Then why do you live in Bayonne, Matt?

  8. Gilby

    I hope all the optimists are right, but I see a lot of mixed messages in the market. On the one hand, the post says condo prices are at an all time high, on the other hand, someone comments that they won’t sell until they break even. Inventory is low – but it’s almost doubled since it was actually at an all time low – but, either way, I’d feel more comfortable if prices were rising when we have a healthy amount of housing stock on the market between 200-250 properties for sale. Then I’d feel the recovery was less precarious.

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