Hoboken Condo Sales Prices Hold Steady in April
Categories: Finance, For Buyers, For Sellers, Hoboken Condos, Market Analysis
Hoboken Condos Lure Buyers in April
April was a pretty good month for Hoboken condo sales. The end of month numbers are in and Hoboken condo sales remain fairly strong. I know, there are stories in the press every day about the collapse of the housing market and we all have witnessed prices skyrocket at the gas pump and grocery store. While our country has some significant economic woes that are likely to get worse before they get better but, for various reasons, people want to live in Hoboken and continue to be willing to pay top dollar for Hoboken real estate.
Average Sales Price of Hoboken Condos is Up 8%
April sales figures represent a 8% increase in average sales price for a Hoboken condos compared to last month. The average price of condo is now just over $560,000. That’s 5% over the same period last year but 3% less than April 2006.
Price per Square Foot Down Slightly
Last month the average price per square foot for a Hoboken condo was $520 and in April it was $517. Of course, that is just an average and the real number varies depending on the usual factors - location, condition, and promotion. The mix of units sold each month also has an impact on this figure. Smaller units tend to sell for more per square foot than large ones. So if more large units sell in a given month it may tend to pull down the average. This may have been the case here since the average size jumped from 1000 square feet in March to 1087 in April.
Hoboken Property Is Selling Briskly - 72 Days on Market is Average
The standard measure of sales activity is “days on market”. This number dropped from 90 days in March to 72 days in April. Of course, the nice weather has an impact on how many buyers are willing to go out condo shopping. We are in the midst of prime selling season.
Here is a Chart View of Monthly Hoboken Condo Sales To Date:
So How Much is My Condo Worth?
This is the question I’m most frequently asked. Here is the best answer: If your condo is in average condition, in an average location, and shows decently it is worth about $515 to $520 per square foot. If it is better than average with respect to condition and location you may get a bit more. If worse, a bit less. The best way to know where your property falls is to go out and look at similar units currently on the market. Even better, bring a friend with you to give you an objective point of view. Owners are usually skewed towards overvaluing their property because of their emotional attachment to it. So get a second opinion as a reality check. Is there a real estate agent who will tell you your property is worth more than it really is just to get your listing? Absolutely, more than one. Remember, they can tell you it’s worth a lot more than it really is and you can ask for anything but that doesn’t mean you’re necessarily going to get that price. What you will get is determined by the market so the better you know the market, the better you will be able to price your property when time comes to sell.
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Fed Drops Rates - 30 Year Fixed at 5.74%
Categories: Finance, For Buyers, For Sellers
Good News For Buyers - Real Estate Rates Tumble
Inman News has just reported that real estate rates tumble.
The 30-year fixed rate is at 5.74%;
10-year Treasury yield at 3.31%
Read the full interest rate story here.
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Where NOT to Learn About the Real Estate Market
Categories: Finance, Market Analysis
There is no Wall Street In Hoboken
There was a recent article in the NY Daily News by Peter Siris, the “Guerilla Investor” to which I take exception. In the interest of full disclosure I will tell you that I know Peter because many years ago, I worked for his wife. I am sure he doesn’t remember me. Peter wrote about the difference between investing in stocks and real estate e. He starts out by saying that “there are big differences between investing in stocks and buying and selling in real estate” and then completely ignores his own statement. Peter’s argument, as I understand it, is that real estate is riskier than stocks because margin requirements force an investor to maintain a greater equity stake in stock purchases. Housing prices may continue to drop and a large number of homes may be worth less than their equity. (I take it he means that the mortgage obligation on these properties will be greater than the market value of the property). According to Peter, that may precipitate a crisis.
You Can’t Live In Your Stock Portfolio
There is a primary, fundamental difference that Peter ignores. Stocks are an investment. Real estate, for the most part, is where people live - it is their home. Investors may buy stocks hoping they will appreciate or pay income in the form of dividends. People buy real estate to have a roof over their heads. If stocks go down and the investor takes a loss it’s still purely an investment. Real estate is different. All those homeowners whose value dropped can’t just sell their homes and not have another one. They still need a place to live. If they do sell, even at a loss, chances are other properties in their community have been similarly impacted and the new property they buy can be bought at a commensurately lower price. Some may refinance and get a mortgage more suitable for their financial situation.
Investors can Rent and Profit Rather Than Sell
What about people who purchase real estate as an investment? They, too, do not necessarily need to sell and when housing prices fall rents tend to rise. Real estate investors typically earn greater rental income even when their properties value has declined. That has certainly been the case here in Hoboken.
Sellers Can Be Greedy
I recognize that there are buyers who over-reached and now can’t make their mortgage payments and may even face forclosure. It’s true that there were innocent (typically lower income) buyers who were misled by unscrupulous mortgage lenders and have had balloon payments become due or interest rates reset. How many homeowners, however, have put their homes on the market not because they must but because they are curious to see how much they can get above what they paid? When they learn that they can’t get what they had hoped for, they decide not to sell. They wait until the market improves or don’t sell at all and just keep living in their home. Not every homeowner with a drop in value is going to sell their home.
Apples are Not Oranges
There is difference between the margin requirements for buying stock and the mortgage requirements to get a home. An investor can walk away from a stock purchase and write it off as a loss. Even if homeowners have no equity in their homes, if they don’t have to sell, they haven’t lost anything. They still need a place to live. Stocks and real estate are like apples and oranges. The comparisons Peter tries to make just don’t hold.
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Get Rid Of Condo Special Assessments Once and For All
Categories: Finance, For Buyers, Hoboken New Construction
What’s the Maintenance Fee?
It’s interesting that when shopping for condos with buyers, the buyers are always attracted to condos with low maintenance fees. What is not often considered, is that maintenance fees can be too low. What does that mean? Well, the maintenance fee should be high enough to fund the ongoing operating expenses of running the condo (things like the management fee, if professionally managed, insurance, utilities for the common area, cleaning the common areas, etc.). In addition, there should be some ‘left over’ each month to fund the condo’s capital account which is used for long term improvements and repairs. This account is for items with a long useful life, like the roof, heating system for the building, elevator, brick face and so on.
Let’s Make Up a Budget
Often times, when a condo is built, the developer, in order to make the property seem more attractive and easier to market, sets the maintenance artificially low. Since there is no history, the budget is just made up. There are no past year actual figures to use in order to have a realistic budget. The building is ‘transitioned’ to the unit owners when the developer no longer has a controlling interest in the condo. The transition is supposed to happen soon after the majority of the units are sold and a new condo board elected. At that time, the new board ought to look very carefully at the proposed budget and make adjustments where needed. Having maintenance fees set too low will usually result in a deficit in the future. Without an adequate reserve fund, special assessments are required to pay for building operations and repairs. Most owners prefer to know what their monthly obligations will be and don’t appreciate getting hit with an unexpected assessment.
Show Me The Money
When a condo is sold, the buyer has the right to see the financials of the condo association. The buyer’s attorney should review these documents on the buyers behalf to see if the building is in good financial standing. Sellers of units that are in condo associations where the numbers are good, meaning there is an adequate budget and decent reserve fund, should let potential buyers know that.
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Interest Rates Fall - Demand for Home Mortgage Surges
Categories: Finance, For Buyers, For Sellers
Mortgage Demand Hit 4 Year High Last Week
Rueters reported that according to the Mortgage Bankers Association, the seasonally adjusted index of mortgage applications, which includes both purchases and refinances, increased 28.4%. The index ended this week the hightest its been since April of 2004.
The interest on a 30 year fixed rate home mortgage for a primary residence is down to a nationwide averate of 5.62%. It has not been that low since July 1, 2005 when it was at 5.58%. A year ago, it was 6.19%.
Compared to last year, mortgage applications were up 35.9% last week.
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