Monday, January 19, 2015

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

Welcome back, here is the second set of numbers and analysis for Hudson real estate monitor viewers for year 2014. This article contains the bird eye's view of 2014 Real Estate Market performance in Jersey city, Downtown area. 

There were 690 closings in 2014 which is 8% lower than previous year (2013). This includes condos and 1-4 families sales. Market has maintained positive trend this year as well with minor difference in the numbers. Real estate market is also showing the positive trend, which is similar to overall market trends and country's economy with small increase in the prices of properties over last year period. Small price hike is good for both buyers and seller looking to buy or sell property this year. 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 $759 in the month of January, went lowest in July at $394 and highest in June at $775. During last quarter, the Price per square foot for a 3 bedroom condo went from $470 to $516 to $583 in October, November and December respectively. The average 2 bedroom over the period was 1,161 square feet sold at the average Price Per Square Foot (PPSQFT) of $591 which is higher than $87 of 2013 Price Per Square Foot (PPSQFT). In October, the average 2 bedroom went for $695,316, $790,545 in November and $631,611 in December. Year high for 2 Bedroom was at $790,545 in November. 

Overall, prices have ticked up and this is not surprising given low inventory levels.  We started the year at 124 houses for sales in January listings in Jersey City, went high in October at 163 active listings, now back down to 105.

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 73 properties sold and the least sales in the month of March with 43 properties. There was a normal decreasing pattern found in the sales of 1 and 2 bedroom condos in this quarter, which is same as last year due to holidays and winters during this period. 

167 total condo units sold in 4th quarter, 65 were 2 bedrooms comprising 39% 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 41, 37 to 42. 

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 $524 for 2 bedroom/ Sqft and end at $595 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 2014 was 2.75 months with a high of 3.64 and low of 2.20 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.

69 properties were sold in October which constituted the most for the Quarter in a given month. June has the year highest numbers with 73 properties sold during that 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 more "Year in Review - 2014" Articles.