2017 Jan 16th

The Hoboken Real Estate Market At a Glance

This is informative – scroll over the bars to see the numerical values.

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  1. JC

    First quarter of 2000 average sale was $219,519. Just for fun buying $219,519 worth of the asset class below end of first quarter 2000 to end of 3rd quarter 2016 as compared to Lori’s chart above and assuming you bought Hoboken RE with cash as a way to compare:

    SPY: $422,472
    VGSIX (REIT index): $1,421,037!!!!
    VEIEX (emerging market index fund) $580,174

    Yes, 3/31/2000 is a horrible time to get into stock market so lets choose the bottom after the .com bust. Bottom was around 3/31/2003 which also corresponds to Lori’s graph. Hoboken real estate was worth $344,884. This amount invested in same vehicles would be worth on 9/30/2016:

    SPY: $720,024
    VGSIX: $979,922
    VEIEX: $957,495

    Many moving parts to all types of scenarios to draw from the numbers above. Only looking at the cash ROI… investing in a REIT index fund would kill hoboken real estate, but you would need to subtract your living costs from the additional profit. Also, many are buying RE with 10%-20% down so the percentage returns may trounce. Take away…stay diversified and if you cant afford to buy a home and want to participate in Real Estate a publicly traded REIT index fund is a nice option. (VNQ) You dont have to unclog the toilet, you get paid a 4.8% dividend, it’s liquid, and doesnt have closing costs on both sides of the transaction.

  2. Meagan

    @JC Love the analysis but your math is misleading because it only applies to all-cash buyers who actually put down 100% of the purchase price. Real estate is leveraged and stocks are not (at least for the average investor not trading on margin). Banks require just 10-20% down but 100% of the appreciation belongs to the mortgagor.

    So, an owner who put down $70K on a $344,884 condo would have seen their property appreciate by $445K today, whereas that same $70K invested in the SPY would have grown by just $74K, to $144K. No small peanuts either way, but Hoboken condo owners are doing much better.

  3. JC

    Yup…I stated “Also, many are buying RE with 10%-20% down so the percentage returns may trounce”. (Trounce the markets return)

  4. Lori Turoff

    Love the analysis, people. Thank you! Not only do most RE buyers finance their purchase – they need to live somewhere and rents have also risen like mad over this time period. Plus –
    – there is a huge tax benefit to having a mortgage (i.e., write off the interest and the property taxes and possibly other expenses) that investors do not get with stocks;
    – owners can sell and shelter $250k or $500k of capital gains from the tax man (can’t do that with other assets);

    I think the smart move is to buy with 20% down, live in the place until it appreciates to the cap (250 single, 500 married), trade up, rinse, repeat. Tax free gains are a winner. But we may soon see an end to all that.

  5. JC

    Off topic..does anybody know if combining two condo’s must result in the merger of the units in terms of the tax implications etc. In other words will the city want to view this condo as one unit now or is up to homeowner?

  6. Lori Turoff

    To combine them you would probably have to amend the condo master deed – an expensive and unwieldy process. The typical process is to simply continue to treat it as two separate tax lots.

  7. JC

    Thanks Lori…I was just curious as far as the city is concerned what the treatment is normally. Especially since two units combined vs. one would have a different value.

  8. Lori Turoff

    The city just keeps it as two separate units, to my knowledge. I know a few people who have done this and tax records show as two original units both owned by same person.

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