2014 Aug 6th

The July Hoboken Condo Sales Results

Dear Two Bedroom Buyers,

I’ve got to tell you – the days of getting a nice place with parking and a washer/dryer in the low $500,00s is so over.  Get ready to pay the big bucks.  There is no end in sight.

Best,

Your Realtor

There is simply no inventory in Hoboken.  There are multiple bids on almost every decent property.  I called about a multi-family investment property just outside of Hoboken today and there were 23 offers.  Yes, 23.  This is not likely to change any time soon.  I say that not as a cheerleader for the local market (I’m not selling) but as your real estate consultant.  It’s a fact that is derived from the reality of prices in our surrounding neighborhoods.  One bedrooms in Manhattan sell for a million or more.  Families are moving to Bed-Stuy where new prices are being set.  Hoboken is still a safer, MUCH more convenient, lower-priced option than many other neighborhoods.

There has been an interesting discussion in the comments of an earlier post about whether or not Hoboken families will stay in Hoboken or, due to our less-than-stellar schools, will flee to the ‘burbs.  Dr. Scott Cowen was the President of Tulane University for the past 16 years.  He is originally from New Jersey.  For a really great, in-depth discussion of why schools are bad, the link between failing schools and poverty, how charter schools change the outlook, and what can be done to make public schools better, I highly recommend you read The Inevitable City:  The Resurgence of New Orleans and the Future of Urban America, which was just published and written by Dr. Cowen. Aside from my own personal interest in New Orleans, I found many parallels between the problems there and those we face here in Hoboken.  There are valuable lessons to be learned and this book is full of them.

I firmly believe that the future of Hoboken will be inextricably tied to the strength or failure of the Hoboken school system.  What direction Hoboken takes from here will be greatly influenced by residents participating and having a stake in the future of the community.  I believe that homeowners have a much greater interest in local affairs.  It has been said that homeowners are more likely to vote in elections than tenants.  One must ask, what effect will the addition of hundreds of new rental units popping up in Hoboken have on the future of Hoboken?  How will this shape the future of the Hoboken Housing Authority buildings, or “the projects” as they are more commonly known.  (Another fascinating subject of Dr. Cowen’s book is what happened to the projects in New Orleans after Katrina).  What will the future of the projects mean for Hoboken’s schools?  These are important questions and the answers to them will directly affect Hoboken property values.

Here are the July numbers:

 

 

 

 

Look at the 2 bedroom average sales price – it has reached over $700,000 for the first time ever.  The number of active units on the market is way down from a year ago – a 42% decline.  Similarly, the absorption rate, or how long it would take to sell current inventory at today’s pace of sales, is also down.  That right there is the story.  High demand, low supply, rising prices.

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  1. Zach Turner

    The discussion that follows last week’s wrap-up IS very interesting, Lori, as are your comments above.

    As a relatively recent (3 years) resident of Hoboken, I am perplexed and frustrated by the apparent political apathy of the people who own property, pay taxes and live in Hoboken.

    In the past, it seems, a significant number of people were willing to trade most/all political oversight for cheap housing. In exchange for a subsidized apartment, many Hoboken residents apparently agreed to look the other way as politicians robbed the city blind. The folks who weren’t dug in for life in a subsidized apartment, meanwhile, didn’t seem to think of Hoboken as “home”–they were transients, on their way to Manhattan or the suburbs.

    As the cost/square foot increases and people commit to raising families here, I wonder if we are approaching that threshold where people will have spent enough money to live in Hoboken that they feel invested in the city and pay attention to what is done with their tax dollars.

    As of the last rent control vote, it would seem, the answer was still “no”, but the market has changed fairly dramatically, even since then.

  2. Lori Turoff

    One can only hope!

  3. Craig

    That $700k average for 2 bedrooms is skewed by the outliers at places such as Maxwell Place, The W Residences, and 1450 Washington. The median is a better number to rely on in telling us where the market is, because that number is unaffected by such outliers.

    I just had my 1300 sq. ft. 2 bed, 2 bath in a newer elevator building appraised. And while it came in more than I thought, let’s just say I wouldn’t expect to get anywhere near $700k for it right now. Maybe by this time next year if the market continues at the current pace. As for the schools, they are definitely headed in the right direction. More and more people who care are staying with their kids, so I expect that trend will continue.

    It’s a great time to be in Hoboken if you already own – but if you’re looking to buy, not so much. I don’t envy the task ahead for those shopping for the better properties.

  4. Lori

    There were no sales at either the W or 1450 Wash. in July. There were at Maxwell but where do you draw the line? The assortment of properties in Hoboken are a bell curve – some nice, some terrible, most in the middle. If you throw out the high end shouldn’t you throw out the low end? And why throw out any? What defines an “outlier”? The luxury properties are part of the Hoboken market and should be considered like any other property. Do you also eliminate all the smaller new construction that is hitting the market in the million dollar range? That approach skews the picture, imho. I’ve consistently published statistics comparing like properties to like properties, as much as that concept is possible in that property is innately unique. That shows trends. Yes, median is a different picture than average but the trends are similar. Prices are rising.

  5. Jezebel

    Lori,

    Correct me if I’m wrong, but no one said anything about throwing out the so-called outliers. The point of looking at the median is that one or two big sales – like a 2mm 2bd sale in the W – can really skew the picture if we compare it to another month where no such sales occurred.

  6. Lori

    Craig said outliers skew the average. I pointed out that there were no sales of “big” properties at the W or Garden Street Lofts included in this months results. A few at Maxwell but why ignore those? If you ignore those, shouldn’t you ignore the low end units as well? The numbers are what they are. I provide you with both average and median. They tell the a similar story.

  7. Craig

    No one is saying throw out the outliers, high or low. I was just suggesting we include them in a way that precludes their inclusion from skewing the overall numbers. That’s what the median is for. As to what defines an outlier, here’s my take: If a 1500 sq. ft. 2 bed 2 bath in Maxwell goes for $1.5m, while in the same city the majority of similar-sized condos with similar finishes are going for half that, then it’s an outlier that is not representative of the majority of the marketplace. There are no low outliers in that example. If you find a similarly finished 1500 sq. ft. 2br condo on sale for $400k in Hoboken, it’s probably currently on fire.

    As for the median and mean telling a similar story about sales, c’mon. The average sold for a 2 BR according your own numbers is $700k. Meanwhile the median is $615k. That $85k difference is not telling a similar story about transaction prices. And it’s no coincidence $615k is much closer to the reality of the price you’ll find a 2br condo listed for in this town than $700k is. Of the 75 2br condos actively listed, just 18 are $700k or more (and most of those are in Maxwell, 1450 Washington, Hudson Tea, etc.). Of the 15 new 2br listings, just 1 was $700k or more.

    Most decent two bedrooms in town are listed in the low to mid $600s. The inclusion of a few condos commanding double or more than that in the average is making it seem like the city-wide norm is $700k (the crappy 2br properties likewise keep that $700k from being even higher). But that is not the case. Using median eliminates this effect and gives us a truer sense of where the market is for most inventory.

  8. Lori Turoff

    I’ve always provided both median and average stats. You can interpret the results as you see fit.

    If you look at all 2 brs between 1000 and 1400 sq ft., listed on the MLS since 1/1/2014, with cac, parking, elevator, d/w and in-unit w/d, these 59 units sold for an average of $670,989 which was over the average ask price of $658,294. Only 1 was at Maxwell. None at Garden St. or Harborside. Median $659k.

  9. Manny

    Hi Lori,

    Love your website. Could you please re-post the July numbers? Something seemed to have happened to the chart… Also, when are the August numbers coming out?… Thanks and regards, M.

  10. Manny

    Ohh, and BTW, please keep providing this great level of analysis… We can debate about medians and averages forever…. Like you say, everyone can draw their own conclusions of what to use (or not use)… But showing the overall picture truly enhances one’s view of the market… Thanks.

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