Sunday, January 12, 2014

2013- Jersey City, Downtown Real Estate Review - Where is the Market Going?

The Year in Review is here. Here is the first installment of the numbers for 2013. There were 752 closings in 2013 which is 37% higher than the previous year (2012). This includes condos and 1-4 families sales. This indicates a positive trend of the property market. People are more willing to buy properties this year. Huge inventory in the market is good for buyers.

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 the above chart, The price per square foot for a 3 bedroom condo started from $472 in the month of January, went lowest in April at $377 and highest in Dec at $648. During last quarter, the Price per square foot for a 3 bedroom condo went from $509 to $541 to $648 in October, November and December respectively. The average 2 bedroom over the period was 1,174 square feet sold at the average Price Per Square Foot (PPSQFT) of $504 which is higher than $57 of 2012 Price Per Square Foot (PPSQFT). In October, the average bedroom went for $572,409, $640,160 and $616,586 in November and December respectively. Year high for 2 Bedroom was at $652,235 in March. 

Overall, prices have ticked up and this is not surprising given low inventory levels.  We started the year at 111 houses for sales in January listings in Jersey City, went high in June at 180 active listings, now back down to 124.  

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 August at 81 properties sold and the least sales in the month of Feburary with 29 properties. There was a normal decreasing pattern found in the sales of 1 and 2 bedroom condos in this quarter.

200 total condo units sold in 4th quarter, 84 were 2 bedrooms comprising 42% 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 43 days, to 47 days to 35 days during Q4.

The duration for 1 bedrooms went from 42, 50 to 23. This is significant and is a correlate with increasing prices. 

Here is the price per square foot chart that shows how prices have ticked up ever so slightly. Overall prices have increased during this period.  Year started from $434 for 2 bedroom/ Sqft and end at $521 which is significant for Jersey city, NJ.

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 2013 was 2.50 months with a high of 3.24 and low of 2.08 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.

56 properties were sold in December which constituted the most for the Quarter in a given month. 6 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. 

More to come on this so stay tuned for the Hoboken Real Estate Year Review.