2013 Nov 22nd

Friday Finance – Hoboken Real Estate News

I had the pleasure of attending the National Association of Realtors annual convention recently and one of the headline speakers was Lawrence Yun, the NAR chief economist.  One statement he made which I found interesting was this – he said the Wall Street Journal asked 50 economists, each with their own models, for their predictions on the housing market.

By averaging their individual predictions, the consensus was for a 5% increase in housing prices for 2014.  Yun cleverly pointed out that if each individual in the auditorium full of people to whom he was speaking tried to guess his weight, many would be wrong but that when you looked at the average of all those guesses, the answer was statistically likely to be very close to his actual weight.  Crowdsourcing does serve a purpose.  So the idea is that the average of all these different economists’ opinions is going to be pretty close to the real outcome.

The mortgage giant, Freddie Mac, is in agreement that 2014 is going to be a strong year for housing.  Even with the expectation of a 30-year fixed rate mortgage creeping into the 5% range, prices are expected to rise and housing in most areas is still considered affordable.  While Manhattan prices may seem stratospheric to some, that only makes Hoboken that much more attractive.

The big driver of pricing is inventory and we have certainly seen in Hoboken how a longstanding lack of new condo inventory has caused prices to rise as demand outpaces supply.  Both NAR and Freddie Mac agree that housing starts are not at the level they would need to be to exert any sort of downward pressure on prices.  The problem in Hoboken is that there is simply no open space available for new construction – until, of course, those 54 acres at the NJ Transit yards get developed.

hudsonyards

 

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  1. Craig

    Even the development of the NJ Transit yards won’t affect residential inventory much. A lot of that development will be commercial buildings. The 3 or 4 hundred residential units they plan to build in the residential section of the plan will fill up quickly within the first year or 2 after construction. And then the status quo of limited inventory is right back where it started – along with far worse traffic congestion on the southern border and an even more overtaxed infrastructure.

    Most of Hoboken’s housing development future will be the replacement of existing inventory, not adding additional inventory. Many of the older decrepit rowhouses will be replaced with newer small boutique buildings like when 128 Park Ave was built to replace fire-damaged row houses. The last big additions to inventory in the pipeline will be the NJ transit area, the completion of Maxwell Place, the building at the Park on Park site, and the replacement of the projects – if that ends up condos instead of so-called mixed-income rentals as I suspect. Willow14 is big but will be rentals.

  2. Mike D

    Groupthink is not the same as crowdsourcing

  3. Lori Turoff

    @mikeD you are 100% correct – thank you for that! I’ve changed the text to reflect your more appropriate language.

    @Craig – the Park on Park monstrosity will also be rentals. You know those remaining empty lots uptown around Jefferson & Madison? Those will all be under construction before you know it, too.

    Enjoy the weekend, folks.

  4. Craig

    I forgot about the development of those empty lots in the northwest near Shop-Rite. Are they slated for all condos or are some rentals in the mix? I was under the impression the new housing stock built in that area tended to be a mix of both.

  5. Lori Turoff

    I don’t believe they themselves know – it will depend on what the market will bear at the time they are built. You know the SkyClub towers were supposed to be rentals until the market soared and the developer realized they could make more money selling them as condos. So condos they became.

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