Monday, February 10, 2014

Price Per Square Foot by Bedroom from Q1 2006 to Q4 2013

This is the chart that everyone likes.  It shows the price per square foot by neighborhood for Hoboken overall. Click on the graph for a larger view.

Notice how prices for studios, one, 2 and 3 bedroom condos are all going up since Q1 2012 are steady from Q2 2013. Trend is same for 1, 2 and 3 bedroom properties. The great thing about this graph is it puts the weekly and monthly observations into a broader perspective. The trend is clear that prices were going up but now comes on saturation.  The trend line for studios and 4 bedroom is highly fluctuating due to less inventory of these kind of properties in the market. 

Will the trend continue??
Notice that the price per square foot for 3 bedrooms is trending down when you look at it from the peak in Q4 2007.   After the crash in October 2008, the trend downward was slow but steady supporting that housing prices are sticky.  People would rather try and hold on, live in a place a little longer rather than take hard earned savings then sell at a loss.  If someone has to take those savings out of stock accounts, it has the double whammy of causing a tax event where they may have to pay capital gains from selling stock.  

Keep in mind, the market crashed in October 2008 so volume after that was minimal.

There was another noticeable tick up from Q1 to Q2 2010.  Many attribute this to the halo effect of the first time home buyer tax credit.  Most 3 bedrooms were beyond the price limit allowed under the program but since the program injected hope into the market with a lift in activity, it seemed to have had an impact on 3 bedrooms as well. In Q4 2010, there is a decline in price per square feet. 

Notice that the one and 2 bedrooms largely follow the same downward slope until Q4 2011.  There is much more volume in Hoboken in one and 2 bedrooms with 2 bedrooms roughly 2/3 larger than one bedroom sales in terms of units. Q3 2010 was lowest price sale period for 2 bedrooms. Q2 2013 also maintained the same upward trend from Q1 2012.  Prices were not highly appreciated in Q4 2013 but increasing with a steady growth rate. This is good for investors and sellers.

The number of studios and 4 bedroom sales in Hoboken is small in absolute terms so even one purchase with a very high or low price per square foot can swing the average. So, I largely discount this as an indicator.