Last week, we showed one of our clients around to some buildings that were totally different from what he originally looked at only a couple days earlier.  On Monday, we planned on visiting 534 Bloomfield, 159 9th St, and 232 Garden St.  On Wednesday morning we had to make new arrangements.  534 and 159 had executed contracts and 232 Garden had 11 offers with 9 of them exceeding the listed price.  We agreed to still visit 232 Garden as our client loved it.  If he wants it, he will have to pony up a good offer.  I think it should trade at a 5% Cap Rate.

As of 4/16/2012, there are 12 buildings for sale in Hoboken.  Five of them are only 2 family.  Three are 3-family, and Four are 4-family.  The 4′s are most popular but the 2′s and 3′s are just as popular right now.  Investors are just looking for unit quantity and at this point they don’t really care about having different addresses.

What is the reason for the boom?  Well, speculation is some.  The economy is picking up steam, consumer confidence has improved and Hoboken showed an 11% increase in average rents from 2011-2012 with bidding wars which seem normal right now.

If you are in the market for a multi-family building in Hoboken, don’t bother trying to do it yourself.  Call a professional and you can start right here with us!  This is where experience and popularity is important.  We can save a lot of time and get you to the game faster.  Everything must be economic.  No need to overpay, just be aggressive.  Low ball buyers are getting drowned out in this market.

Call Scott Allan at 877-688-7582 or e-mail me at Scott@NewJerseyRealEstateGuys.com. 

The first quarter of 2012 showed improvements in a few categories when comparing YOY details.  What is most glaring is the current level of inventory on the market.  The average number of condos on the market during Q1 2011 was 379 per month.  During Q1 2012, the average amount of units for sale was 228, a 40% reduction in condos for sale.  Additionally, there were more sales in 2012 YTD then there were in 2011′s first quarter.  This has significantly improved the Absorption Rate in Hoboken to staggeringly favorable numbers for sellers.

March 2012 had 37 sales, down from 51 in February.  We predicted March sales to be around 35.  We took into consideration the pending sales since December.  The last February through March showed a high increase in pending sales and we expect April to exceed 50 sales and May to exceed 60 sales.  By summer, don’t be surprised to see close to 90 sales during the peak months.  I predict a 15% improvent in YOY inventory sales.  As a result, average sales price and cost per square foot will increase.  This is what is creating the buying frenzy right now.  Buyers understand that if they don’t act quick, they will miss the bottom of the market, and the recovery is happening now.  If you think Short Sale listings offer a significant discount, not really.  We have most of Hoboken’s short sale listings and I can say with confidence that banks are not offering a much better deal  on them since the market is picking up steam.

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Noticeably, the available inventory is way down since last year.  My prediction is that active inventory will slightly increase throughout the spring and summer with closed sales increasing as well.  Rate of absorption should remain at about 5.5 months for Hoboken which is considered as a healthy market.  Currently, it is a seller’s market, but sales will have to improve throughout the next few months to keep up with upcoming inventory levels.

Residential real estate is defined in short as 1-4 units.  So a single family home, condo, 2-4 unit building…these all qualify for residential investing.  Anything more then 5 residential units in a building is considered Commercial Real Estate.  Lending guidelines change among other factors, for instance a mortgage lender will look more for personal investor qualifications on residential whereas on Commercial banks are more interested in the strength of the deal and how much cash flow is involved.

Most investors in Northern NJ prefer multi-family or multi-unit buildings.  The reason is that if one unit goes vacant, you still have other units paying to provide cash flow which could be for operating expenses or debt service to your lender if you have a mortgage.  Some investor prefer single family homes.  Most of those investors like the long term value growth more then cash flow.  Bigger investors look for multi-family, favorable Capitalization Rates, and Cash Flow combined with a location favorable for upside potential.

Your most important component to today’s fundamentals of owning rental property is MANAGEMENT.  Be sure to have a “post-closing” plan, something we love creating with you.  Without good management, accounting, accountability, your investment will never maximize its full potential.  Your long term goal is to add value to your asset.  This is easier then most people think.  It just requires work.  If you are buying a million dollar building, I would hope you put your own efforts into improving the value or at the very least, have competent management to do this for you.  Either way, you can win big, but planning is key.

I have a message to International Investors:  We love you and I enjoy all of the relationships that I have with all of my foreign buyers, but if you are reading into media that tells you to look into areas achieving Cap Rates exceeding 15%, this is not the market for you.  I would be leary or anyone selling me 15%+ anyway.  Here is where the NYC Metropolitan area of NJ is trading for.  I classify my properties as A, B, and C Class.  A is your new construction… B is your buildings built over the last 20 years that have improvement potential to reach A Class….and C Class is your older buildings which could be rehabbed or non-rehabbed.  Most of us looking for cash flow much prefer our C Class assets.  Cap Rates are always higher and upside exists in areas with proximity to NYC.  Think Jersey City, Union City, and even in the suburbs of Bergen and Essex County.

Again, below is where the current market is trading at:

Class A:  4-6% Cap Rate.  You will find Class A type buildings generating these cap rates in Hoboken, Downtown Jersey City, and urban suburban areas like downtown Montclair.

Class B:  6-8% Cap Rate.  8% is being generous.  Most are trading between 6-7%.  You will find a lot of B-Class assets in Weehawken, Jersey City, etc.

Class C:  8-12% Cap Rate.  Most are trading between 8-10% with the occassional 12%’ers.  The most favorable market for C-Class / High Cap Rate buildings are Jersey City and Union City.

If you are looking to throw an offer suggesting a 15% Cap Rate at the seller, they will not even look at it, I promise.  Don’t get me wrong, there is the occassional seller to dump a property, but not very often today.  Most commercial agents know what assets are trading at and it’s only a matter of time before they get it.  Not only that, but you will get constantly beat up by the competition, something very frustrating.

Your main competition these days?  Australians investors.  As of today I think their currency was $1.06 to the USD.  Their theory makes logical sense.  If the currency markets even come CLOSE to historic levels, which it should in the next few years, Australians are poised to make over 30% in return JUST off of their currency exchange rate alone.  And they are betting their lives on it happening.  This return does not including cash flow and not including any added value through the years.  Australians are used to NEGATIVE CASH FLOWS in their country.  Tell them they can buy a 3% Cap Rate property in Australia and you will have 10000000 offers in a day.  Positive Cap Rates are very hard to find in Australia.  These Capitalization Rates here intrigue them and they are buying like crazy.

If you are looking at investing in residential or commercial real estate in the NY Metro markets, we ask for an opportunity to share our thoughts with you.  Let’s work with your goals to see what fits you as a real estate investor.  I have personal investments aside from being just a realtor.  Let’s get creative and innovative and put together a portfolio to guide you toward financial freedom.

Scott Allan – Commercial Specialist

(877) 688-7582 Direct

Scott@NewJerseyRealEstateGuys.com

83 Monroe St -  Wow, was this one a nightmare.  This mortgage was held by a private lender, non-Fannie Mae.  Not only did this not fit into the HAFA guidelines, but the third party servicing company, CARTUS FINANCIAL, was a disgrace and dropped the ball almost a dozen times.  To further complicate things, our sellers were in Hong Kong and had all of their financials in Hong Kong currency, something we had to convert for the servicer.  As much as I want to vent about Cartus, I will say that at the end of this process, we were able to achieve very favorable closing terms.  The deficiency was nearly $250,000.  Our seller made a $7,600 cash contribution at closing in exchange for a full deficiency waiver.  That in itself is a big deal.  95% of agents out there don’t know how to negotiate a deficiency waiver which can hurt the seller big time.  A deficiency waiver is very hard to accomplish on non-Fannie Mae loans.  We did it!

150 14th St – After being attempted by 3 real estate agents prior to hiring us, this seller was 30 days from foreclosure.  We were able to postpone the foreclosure to sort things out with their lender.  We quickly geared this file for HAFA approval and gained approval in 35 days.  Due to time constraints, this one required a lot of team effort with us working tirelessly with our attorneys and seller.  This one was HAFA approved.  Our seller received $3,000 cash at closing from the bank as a “relocation allowance” and was offered a full deficiency waiver.  The seller didn’t make a payment for 2 years, had the entire deficiency waived, and received $3k from the bank.  Now that’s a deal.

Here is what our 14th St sellers had to say:

The short sale market is filled with many fast talking advocates who advertise quick solutions.  After hiring three other services over a 2.5 year period, both ending in disaster, I finally came across Scott Allan.  Scott is well grounded, logically sound, and great person to negotiate with the banks on your behalf.  When there are so few opportunities to reduce debt — a challenging transcation to clear away hundreds of thousands of dollars - selecting a short sale negotiator is not something to take lightly.  I finally settled on Scott Allan and after only a few months on board, the short sale was complete.  My wife and I are glad we discovered Scott.  He made it possible to “start from a clean slate”.

Thanks Scott,

leo and luda

Here is what our sellers on Monroe had to say:

Scott Allan and Marie Gomer gave us the best experience in short selling our Hoboken Condo. Not only did this team have the expertise but provided guidance to ensure the process was executed. The challenges of residing in Hong Kong were without a doubt was a strategic disadvantage; however, Scott was able to provide best in class service. This would have not been possible if it was not in the hands of this great team.

Many thanks!

Todd and Kimberly

As indicated, most short sales are a pain in the you know what.  They really are and it takes tireless efforts to make this happen.  While most agents are fearful of short sales, we invite them.  We have experience with over 100 short sales dating back to 2005.  If you are looking for information as to how to apply for a short sale, all it will take is one phone call to ease your mind.  It’s not the end of the world.  We have the solution for the full disposition of your home and debt.  Call Scott Allan today at 877-688-7582 for a free consultation.  You can also e-mail him at Scott@NewJerseyRealEstateGuys.com

Month to date (3/19), we have seen 15 condos closed in Hoboken.  We are looking for a strong push during the last 10 days to compete with the previous months of January and February sales volume.  Due to 149 condos being in PENDING status, we believe this is going to happen.  Buyers are out in droves.  We announced last month that 8 of our 9 Hoboken listings were in “multiple offer” situations.  Today we just accepted an offer after reviewing 4 of them on the same property just from this weekend.

Things are looking up and nobody can dispute the dwindling inventory (44% less then a year ago) and high sales volume.  Prices are going up, rental rates are going up, and interest rates remain down.  Combine that with Spring fever, and we are looking to post solid Q2 numbers.

Hoboken, NJ has shown immense resiliency in the market and has gained steam month over month for almost 2 consecutive years.  The shape of the trends remain the same in terms of sales volume, DABO’s, etc, however the line of the trend is well above the 2010-2011 trend.  This indicates a significant improvement in consumer confidence and a cautiously optimistic thought that the housing market is on the rebound.

Blame it on the warm weather if you want, but buyers are out in droves in Hoboken.  There were 67 condos put under contract in Hoboken during February.  That is a month over month increase of almost 33%.  Year over year, February 2012 improved from February 2011 by 21% a huge sign that market is clearly rebounding where buyers are taking advantage of what appears to be a balanced market in Hoboken.  In other words, the disconnection that used to exist between buyers and sellers is dissipating quickly and noticeably.

Of my team’s 9 Hoboken listings, 8 of them are under contract where we experienced multiple offers on all of them.  We haven’t seen this type of activity in a couple of years.

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With the exception of the Price Per Square foot in this chart above, every statistic has shown incredible YoY improvements.  The YoY Price Per Square Foot is a little skewed because of only 24 sales in February 2011 where one unit on Willow sold for an abnormally high amount.  Regardless, it is part of the statistic process.

Inventory is down 40% since a year ago and the rate of absorption has improved by a 6 month scale.  The rate of absorption is calculated by taking the amount of Available Inventory (227) and dividing it by the number of sales during the previous month (51), making the current Hoboken condo rate of absorption 4.45 months.  The rate of absorption is the amount of time in months it would take Hoboken to sell out of its current inventory at its current rate of sales, assuming no other units came on the market.  A year ago today, the rate of absorption was over 10 months.  Builders typically use a 6 month criteria.  If there is less then 6 months of inventory, new construction is favorable.  Any more then 6 months is considered higher risk.

DABO is short for saying “Deposit Accepted By Owner – Pending Deal”.  DABO’s are sky high compared to last month and last year.  Warm weather has helped but consumer confidence is the driver.  It is expected in the job report later this week that unemployment will drop to 8.5%.  Fence sitters of the past are now finding themselves in bidding wars for attractive units in Hoboken.  As I mentioned earlier, we are experiencing multiple offer situations on most of our listings and as per our office meeting the other day, most agents are experiencing the same.  If you use DABO’s instead of Sales when calculating Absorption Rates which some pro’s do, the absorption rate in Hoboken would be 3.38 months.

Folks, now is the time to buy in Hoboken.  Rental rates are not going down.  We saw an 11% YoY increase in rentals recently.  Prices are going up and multiple offer situations are tedious.  Let me earn your business by showing you what is going on in the market.  We are light years ahead of most brokers in town with our innovative analysis of the market.  We don’t update quarterly or annually.  We update Hoboken every month and have our finger on the pulse.  Come on in and talk to us about recent trends and if it is favorable for you to buy or sell.  Call Scott @ 877-688-7582 or visit us at 1 Newark St in Hoboken. LET’S GO YANKEES!!!!

As an example, over the last 30 days, buyers placed 61 condos under contract from January 22 to February 22.  Aside from a single month in 2010 during the First Time Homebuyer Tax Credit, February will see higher DABO’s or Under Contracts than any other winter month over the last 4 years.

At the moment there are only 216 condos for sale in Hoboken.  In comparison to 36 months past, we have the lowest inventory level of all of those 3 years.  Why?  Weather, low rates, increased confidence, positive NJ job growth, etc… Buyers are buying like crazy right now and sellers are expected to price their homes more aggressively then ever in 2012 then they have over the last few years.

In the suburbs, Montclair Pendings have shot up 31% Year over year.  Montclair sales volume was down in January but buyers have been going crazy putting over 35 homes under contract in the last 30 days.  Even with a 15% fallout ratio, those numbers for February or March closings would help push those months to highest levels in years.

I mentioned in my “End of Year” blog that this winter, regardless of the weather, would be stronger then recents past.  My expectations have been exceeded and I am expecting a really strong Spring season, with buyers starting to buy in droves……NOW.  Now is the time to get with us and preview some homes or get us in your house to figure out a good listing price to get you out of your house and into a new one.

During the last 3 months of 2011, the NJ economic growth was “quite robust” while NY State has seen only “minimal job gains” since August, according to William C. Dudley, the bank’s president.  “In contrast, New Jersey’s economy “has picked up noticeably.”

In 2011, NJ added over 39,000 private sector jobs, the biggest increase since 2000, however the overall unemployment rate of NJ at 9% lags that national average of 8.5%.  Scott Allan of NJ Real Estate Guys suggests that South Jersey is anchoring the unemployment rate as there are a significantly higher amount of unemployment applications in South Jersey than in areas such as the NY Metro areas.  Naturally, the housing market is improving in those metro areas.  South Jersey continues to be pressured by shadow inventory.

Jason Bram, economist for the federal bank said “Bergen, Hudson, and Passaic counties added jobs at a faster rate than the national employment increase of 0.7% from June to December 2011.  NYC also outpaced the national average.

This is one very good reason why areas such as Hoboken, Jersey City, and other urban markets are seeing much improved absorption rates.

Comparing 2011 to 2011, however is more indicative of where we are today. For instance, I’m sure everyone is aware of what shadow inventory is. If not, shadow inventory is new delinquencies, or homes that banks have foreclosed on but not put on the market for sale. Based on our research of Lis Pendens filings, short sales, regular sales, courthouse sales, etc, the shadow inventory is almost 3 times greater in South Jersey than in North Jersey. Why? Location. In fact, in 2011, quite a few sub-markets of the NY Metro area showed some stabilization. Wealthier or more affluent towns fared much better than lower income areas. Less affluent areas also have tighter lending guidelines and higher unemployment.

Hoboken has shown stability on studios, 1′s and 2′s. The 3 bedroom market has recently shown drastic improvements. Downtown Jersey City has shown similar results.

NJ Real Estate Guys founder says “The Northern NJ housing market is showing significant signs of improvement compared to 2010. Naturally, as employment continues its upward improvements, so will the housing market.  Fence sitting buyers should strongly consider buying in 2012. This year will likely be one of those years that come up in the years 2014 or 2015 when you are sitting having coffee saying to yourself, “I should have bought in 2012″.

Bottom line is that when you look at real estate values, remember that every single market is different.  If you are shopping for a home, find out how much inventory is there.  What is the rate of absorption.  Qualified housing market analysts like ourselves can help you interpret the market in a different light which could have a direct and positive effect on your home, which is also known as one of the biggest investments of one’s life.

If you are in the market to buy or sell a home, contact Scott Allan at Scott@NewJerseyRealEstateGuys.com or call direct at 877-688-7582.  We offer free at-home or office consultations.  We want to understand your goals so we can help apply a strategy.

This article will focus on the Hoboken Condo Market.  There are many descriptive words we can use here.  Looking at the leading indicators we look at to determine the health of the Hoboken condo market, I can say with confidence that 2012 will be a positive year for Hobokenites.  I also believe that those that are on the fence about buying and make the decision not to, will look back in 2014-2015 and wonder in hindsight why they didn’t get in on a significant opportunity in 2012.

The most glaring improvement is the available inventory for sale and the depletion of inventory from 2011 to the end of 2012 as shown in the line graph below..  Without going into extreme detail, it is pretty self explanatory here:

In January 2011, there were 477 condos for sale in Hoboken.  In January 2012, there are only 187, a reduction of inventory by a staggering 60%.  The pace of sales volume, which calculates into the “rate of absorption” is along the same trends as a year ago.  Although 2011 sold about 14% less condos than in 2010, we shouldn’t forget the main reason was the First Time Homebuyer Tax Credit which expired mid-year 2010.  In June 2010, there were 134 condo sales.  In June 2011, things were normal or average with a Hoboken sales volume of 72.

If inventory is coming down and the pace of sales is consistent which happens to be the case, you can expect more significant competition amongst buyers.  Our current listings are not lasting long on the market.  Almost all of our listings, we are calling a “highest and best offer” situation, which is music to seller’s ears.

Another indication that the market is improving is the Price Per Square Foot of condos sold.  The 1 and 2 bedroom market was almost flatline since Q1 of 2011.  That was a great sign of recovery and was a clear end to the downward trend of prices.  The end of the year of 2011 showed the beginning of an upward trend in square foot prices.

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We are seeing a lot of increased interest in 3 bedroom units in Hoboken as a result of more families moving into town and preferring a more urban lifestyle with proximity.  A tradeoff we are seeing is the family with multiple vehicles moving to Hoboken and downsizing to only 1 vehicle.  Only about 4% of the marketplace consists of 3+ bedroom units.  They are in very high demand at the moment.  The price per square foot of a 3 bedroom condo shot up from $395 / SF during Q4 of 2010 to $434 during Q4 of 2011, almost a 10% increase in value.

Sales activity was almost dead even in 2011 as it was in 2009, however about 8% less than 2010.  Again, we blame that on the First Time Homebuyer Tax Credit.

The average sales price of a condo in Hoboken in 2011 was $494,723, down from $498,135 in 2010.

Expect to see a slow slow month for January.  DABO’s or pending sales are down in November and December.  Unless January shows a more active number in January, we can expect February to be equally as slow.  We expect inventory levels to creep up just a bit before the spring buying season, however just as important, we anticipate a huge buyer frenzy due to improving confidence, historically low interest rates, and lower prices.  With the Fed agreeing to hold interest rates down, buyers will increasingly confident that if they find the right deal, affordability has re-entered the market.

Check out the charts below.  What are your thoughts on predicting how the first quarter will pan out.  For readers who register on our site, I will send you our thoughts on what we think.  Comment your predictions below in the designated area.

As a testament to all of our hard work, analysis, and research, our clients have successfully achieved all of their goals whether it was to buy or sell.  We are eliminating the disconnection between buyers and sellers which is one of the quickest ways to stabilize a market.

If you or anyone you know is looking to buy or sell in Hoboken, you have come to the right place.  Give me a call direct at 877-688-7582 or e-mail me at Scott@NewJerseyRealEstateGuys.com.