Friday, January 4, 2013

2012- Hoboken Real Estate Review - Where is the Market Going?

The Year in Review is here. Here is the first installment of the numbers for 2012. There were 803 closings in 2012. This includes condos and 1-4 families sales. 

I like to look at price per square foot by contract date. The price per square foot by contract date is a more accurate depiction of pricing because it's the contract date where the buyer and the seller have come together and agreed on a price of a specific property. It takes 4 to 8 weeks to close depending on whether it's a cash deal and how unique the property is. That is, a 1-4 family, generally, takes more due diligence than a condo.

There are a variety of reasons why a closing may take longer than this. One typical reason why the time from contract to closing takes longer than this 6-8 week period is because the unit goes under contract in pre-construction. A property sold in pre-construction can remain under contract for 6-8 months or even more. Because the decision point to buy and the agreed upon price were made so far in advance of the closing, the price is not necessarily a reflection of pricing at that time of the closing.

As shown in above chart, The price per square foot for a 3 bedroom condo started from $407 in the month of January was lowest and highest in Nov at $633. During last quarter, the Price per square foot for a 3 bedroom condo went from $489 to $473 to $633 to $420 in September, October, November and December respectively. The average 2 bedroom over the period was 1,199 square feet sold at the average Price Per Square Foot (PPSQFT) of $505.  In September, the average 2 bedroom went for $539,860, $503,963, in October, and $630,440 and $581,317 in November and December respectively. Year high for 2 Bedroom was at $630,440 in November.

Overall, prices have ticked up and this is not surprising given low inventory levels.  We started the year at 200 houses for sales in January listings in Hoboken now back down to an unbelievable 124.  Low inventory is one of the reasons we are seeing slightly increasing prices. 

The demand for investment properties still continues to climb.  Anecdotally, investors seem to think this is the sweet spot between prices, financing and upside potential for rents.  All shapes and sizes are looking for investments - large property owners, individuals who want just one or two units for supplemental income. 

The Highest sales volume was recorded in the month of June at 100 properties sold and the least sales in the month of January with 32 properties. There was normal up and down pattern found in the sales of 1 and 2 bedroom condos in this quarter.

236 total condo units sold in 4th quarter (September - December), 120 were 2 bedrooms comprising 60% of the total volume.  The 2 bedroom continues to be the most sought after unit size..

3 and 4 bedrooms are too low in terms of units to determine any meaningful trend here but there is enough volume in the one and 2 bedrooms in terms of number of closings.  The duration measures the time the listing went up to the time the unit went under contract.   Duration for 2 bedrooms went from 46 days, to 33 days to 46 days, to 43 days , during September to December period.  

Some of the elongation in duration can be attributed to Super Storm Sandy.  Most, if not all, properties under contract at the time of the storm had to be reinspected by the buyer and the bank.   

I conducted an informal survey of my colleagues both at Prudential Castle Point and other agencies in town  and out of 82 deals under contract only 3 exercised the 'force major' clause and back out of a deal because of the storm.  

The duration for 1 bedrooms went from 58, 62,83 to 50.  This is significant and is a correlate with increasing prices.  Increasing prices means buyers want to get through contract negotiations and attorney review quickly.  There is likely less quibbling about inspection items. 

Here is the price per square foot chart that shows how prices have ticked up ever so slightly.

All and all the market needs listings.  If you are ready to move and you have waiting for a good time to list, this is it.   

The average absorption rate during 2012 was 32 week with highest of 148 and lowest of 7.53 for Jersey City, Downtown. The absorption rate is a number that describes how many weeks it will take to see off the current inventory at the current rate of sales.

71  properties were sold in December which constituted the most for the Quarter in a given month. 12 properties other than condos/coops were also sold During this period. 

All and all the market needs listings.  If you are ready to move and you have waiting for a good time to list, this is it. 
Stay tuned for JC results on Monday......

Information Provided by Donna Antonucc
Prudential Castle Point Realty