Blog, Hudson

Hoboken Real Estate…Rent or Buy?

So now that the dust has settled….somewhat….we are able to make a more comfortable prediction regarding the rent vs. purchase market in Hoboken real estate.  There is no question that the property tax increase hurt more than the benefit of the federal tax credit available to homebuyers of Hoboken real estate. 

A problem landlords are experiencing is that their annual operating expenses are increasing and rental rates are plunging.  Over the last several months, we have seen a drop in about 20% in the rental market.  Additionally, landlords are more than ever agreeing to pay at least half of the broker fee due to real estate agents for the service. 

So for renters out there, negotiate the fee that is paid and see if the landlord is willing to pay half of the broker fee.  The realtor may ask the landlord to minimize the amount of security deposit needed based off your credentials.  Overall, this could create a win-win-win situation which is only one of the small reasons on why people should work with brokers and real estate professionals.

So, the question remains, do you rent or buy?  Well let’s use an example.  To rent a 1 bedroom 1 bath condo in the Sky Club, you are going to pay about $2,000 per month, or $24,000 per year.  If you buy the condo, your price will be around $375,000.  After a down payment of 20%, your monthly PITI (Principal, Interest, Taxes, Insurance) will come to about $2,100 per month, just $100 more than what it takes for you to rent.  Yes, you are putting down nearly $70,000 to buy, but this goes toward your equity.  If you rent and pay $24,000 annually, not only is that amount not tax deductable, but it gives you absolute zero equity in the property you’ve been paying on….because you don’t own it.

So distinguishing the difference between renting and buying has a different opinion by nearly everyone.  Right now, most of the predictions are based on pure speculation.  Will the market nosedive another 15%?  Will the market start to stagnate?  My opinion that real estate is more precise than even being local in nature.  In some parts of Hoboken, I see a 1% drop in value in every month over the next year.  On Hudson Street semi-exclusive property, I see things differently. 

Have your agent look carefully for good value in your home.  If you are going to live there for 3-5 years or more, you have more leverage knowing that the market / economy will rebound by then, which is reflective on the housing market.  There are great deals on real estate for sale right now and there are also great bargains on rental property.  Give us a call and allow us to go over your strategy so we can at least give you our thoughts on your position.

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