Tuesday, January 3, 2012

2011 Year in Review - What do the numbers say about the direction of the market?

Here is the break down of last year's real estate market in Hoboken.  Real estate is extremely localized and each market behaves differently.  Hoboken continues to do better relative to other areas in Hudson County.  In fact, it has had the least amount of decline in the state but it is not insulated from our sluggish economy.

The story for 2011 is one of less volume.  We had 678 condo sales through the MLS last year down from 2010 where we had 742.  Why was 2011 poorer than 2010?  Available listings were also down month over month last year.  We ended the year with 292 active listings where at the end of 2010 we had just over 500.

I believe the volume is down because there are so many home owners who bought during the peak years of 2006, 2007 and 2008 who cannot sell.  They can't sell because the mortgage + selling costs equal more than what they can get for their property today.

The cycle in Hoboken for many is they come here when they are single, meet, marry have kids and run out of space.  Either they get a bigger place in Hoboken and hold out on the burbs or they move to the suburbs where they can get a bigger space with a backyard for their money.  Many of these people who are ready to sell bought during those peak years and can't sell now.  Or, they can't qualify for a mortgage under the new stringent underwriting criteria.

Also what's interesting is the time from listing to contract is also down overall vs. last year.  It's an average of 67 days vs a little over 72 for last year.  I believe this is because those who did not buy in 2006, 2007, 2008 are pricing their properties correctly for today's market and it's hastening the process.

You may have heard that in real estate prices are sticky.  People are reluctant to take a loss and would prefer to hold rather than sell at a loss.  I think that's what's happening here.  In 2009 and 2010 more people were attempting to sell their property at the price they wanted for it rather than what it was worth and as a result the home was staying on the market longer.  I think the spread between what a home was purchased for in 2006, 2007 and 2008 and today's prices has widened and sellers can no longer hope to make up that gap.  So, instead of listing and sitting they are just sitting.

The market will move on without them.  In a transient locale such as Hoboken, those that bought prior to 2006 and after 2008 will continue to buy and sell and it will take a very long time to reach that peak pricing again.  Some experts say 10 years.  Can they wait 10 years?  Or will they have to take a loss to move on?

Anecdotally, listings are up, at least for me.  I am seeing more investors enter the market to buy condos for investment purposes - to rent them out.  This is typically an excellent sign for the supposed bottom of the market.  The rental market is hot and investors are starting to see the right relationship between purchase prices and rents.

When tracking results by month, I use contract date.  The date a home goes under contract is when the buyer and seller have come together on the price.

It's a better reflection of the market then tracking by sold date. We only review properties that sold so there will be a lag in our reporting but in the end I think it's a more accurate depiction of what's going on.

According to 2011 Yearly Market Analysis, in first quarter home sale was normal. Year took a slow start. January was lowest home sales month in first quarter and March was highest home sales month. 

2 bedroom unit homes sales were on first place in the whole quarter. In the whole first quarter 1 bedroom unit homes were having highest price per square feet and average discount. 2 bedroom units were on second place. 

Now look at the second quarter of 2011. 2nd quarter had the highest homes sale of year.
Second quarter 2 bed units got highest sales and 1 bed room unit got highest average discount. Average price per square feet was a little high in second quarter. Average homes price were having mix trend in second quarter.

In 3rd Quarter there was a little decline in sales but overall there were enough sales. Q3 was on 2nd number as compare to home sales. Third quarter 2 bed units got highest sales and there is a mix trend for average discount.

Quarter 4th was lowest and slowest homes sales period. There was some units that went under contract in October but in November transaction volume slowed for the holidays as usual.  Well, it slowed a little more than usual.   One thing is very important in this quarter. Surprisingly, There was huge discount on all property, almost highest of the year.

In my next installment you will see the unit and sales volume that will also show you that 2011 was a tough year for sellers.

Information Provided by Donna Antonucci
Prudential Castle Point Realty


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