Monday, April 14, 2014

Q1 2014 Review - Jersey City, Downtown Real Estate Review - Where is the Market Going?

Springs are here so as the Jersey city's first quarter Review. There were 131 closings during Q1 2014. 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 $759 in the month of January was highest and lowest in Mar at $478. The average 2 bedroom over the period was 1,150 square feet sold at the average Price Per Square Foot (PPSQFT) of $561. In January, the average 2 bedroom went for $623,669, $647,900 in February, and $661,578 in March. Quarter high for 2 Bedroom was at $661,578 in March.

Although small numbers, 3 bedroom category is huge in demand among customers.  I have several clients looking for 3 bedrooms and I can tell you it's very difficult. Listings are going at highest and best within days of hitting the market like no other segment.  There just is not enough 3 bedrooms as more and more people want to stay in this area instead of taking on a long commute from the burbs. 

I also want to point out, that the durations shown here is the contract date minus the listing date, however, most agents put in the date that attorney review closes, not the date the initial contract is signed by both parties.  That is, these durations are about 7 days to 2 weeks longer than when the offer is accepted by the sellers.  In NJ, we have attorney review.  After an offer is accepted by the seller, ie he countersigns the contract, the deal goes into attorney review.  It can take the attorneys 7 days to 2 weeks to review the contract and complete an addendum signed by both the seller and the buyer.  It's at this point the deal is binding for both parties and it is this date that goes in the MLS.  I am pointing this out because even these durations are deceptively long in relation to how quickly listings are no longer available.  Prospects often don't want to see properties where an offer was already accepted and very often, if the property is Tenant occupied, the owner stops the showings.

We started this quarter at 123 houses for sales in January listings in Jersey city, downtown now gone up to a 153.  Inventory is increasing and from the beginning of March at an increasing rate.  Average 44 properties sold per month during this period.    

Pricing is very very important and it's critical to sellers to get an agent who can price your property correctly.  Once you introduce your property to the market place as  New to the Market, you can re-announce it.  It's like the premier of a movie.  You can't re-premier it.  You can only create that excitement, that frenetic emotional buying once.

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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 28 days, to 31 days, to 40 days during January to March quarter.  

The duration for 1 bedrooms went from 45, 35 to 31, which is really less from same period of last year. This also indicates the good market conditions for both buyer and seller.

Here is the price per square foot chart that shows the price changes during first quarter.

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 Q1 2014 was 3.22 months with highest of 3.62 and lowest of 3.00 for Jersey City, NJ. The absorption rate is a number that describes how many months it will take to see off the current inventory at the current rate of sales.

45  properties were sold in January which constituted the most for the Quarter in a given month.The number also including properties other than condos/coops 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. 

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