Hoboken Real Estate Market Update With Homes By Bonk

What Are The Current Market Trends And How We Should Be Advising Clients Both On The Buy, Sell, Rent, And Invest Side To Make Decisions In The Real Estate Market.

Expert Realtors in Hoboken NJ - Homes By Bonk - https://www.homesbybonk.com/

First quarter of the Hoboken real estate market of 2021 is in the books. Im Jeff. I'm Red.

And we're with Homes by Bonk and EXP Realty here in Hoboken.

And we're going to give you a Hoboken real estate market update in five slides to give you a little idea of where we stand today and where we've come from over the past few years with all the craziness that we've seen in the real estate market in the world in general.

So this is a little opportunity to take a breath, take a step back and take a look at what we've seen so far. All right?

All right. So first, before we get into the actual slides and some of the supporting data that drove some of those talking points, why is it important to really take a look at the real estate market at such a wide breadth and go really deep on some of the numbers?

And the reason is a lot of people out there, a lot of real estate agents out there will take a look at what's on the market now, they'll take a look at what has sold maybe in the last few months and try and make a decision on how to price a property or what kind of offers to make on a property based on that snapshot. And that's good. It's not bad. It's a good place to start.

But what we really need to do is take a look at trends. And trends, you have to open up a little bit wider. You have to go a little bit deeper on some of the numbers and really understand what's driving those decisions. What kind of market trends, what type of decisions buyers, and sellers and renters are making.

Otherwise, we're kind of working with incomplete information. So every week we go through our numbers very specifically, every quarter we take a little bit of a broader look and then we try to match it up against years past and see what that really is telling us and how we should be advising clients both on the buy, sell, rent, and invest side to make decisions in the real estate market.

A lot of data. It's a lot of analysis. But it's worth doing. [crosstalk] So we're going to share the five biggest takeaways that we found after quarter one with you guys right here today. The number one thing that we noticed is the ratio of how quickly property is going under contract versus how quickly they're coming on the market has jumped up pretty significantly this spring versus a years 2020 and 2019.

2019 was a good year for real estate, it was coming off of the highs in 2018. We had a buyer fatigue event in Hoboken where buyers just had enough of the high prices. Year over year prices were going up, bidding wars. We saw pullback. So 2019 was a calmer year and 2020 really was ramping up to be a great spring.

The first quarter before mid-March we were seeing all time highs coming back. We were seeing really good pricing coming back into the market, almost back to that 2018. But then we saw the pull back, obviously, as everything shut down in early to mid-March.

We were seeing properties come on the market and go off about 50% as quickly. So if 100 properties came on the market, 50 were going off in that given sector of the market. This year, we're seeing properties go off the market about 70%, 75% ratio versus what's coming on the market.

So the ratio and the speed at which the market's moving has just jumped up pretty precipitously. And what that's doing is driving prices up. We've been hearing about price bidding wars and prices going over asking all over the country during COVID.

Urban areas didn't see that as much. We have more condensed living. New York City's right behind us. Hoboken's a commuting town to New York City, so as things got shut down in the urban areas, things got shut down a little bit more in the Hoboken real estate markets.

Things stayed calm, they stayed steady, but they weren't these crazy numbers we were seeing out in the suburbs. So we're starting to see what they've been seeing for last year back here in the urban area. So that's stat number one is the ratio has definitely gone up and how quickly places are going under contract versus on the market.

All right. Stat number two or slide number two is inventory is now under three months. Quick primer on inventory. I could talk about this stuff all day.

She's here for the fun stuff, for the little comments, because I'll just go deep on numbers and talk your ear off about data and stats and things driven by numbers. Inventory means if no new listings came on the market, how long would it take, given our current pace of sales, for everything to be gone?

And it's an indicator because it looks back three months, typically. It doesn't just take a snapshot of what happened last week or a couple of days ago. And you can take a look at what that was last year and what that was the year before, and once you get under three months, it's considered a seller's market. So we were there in 2019. We were right at three months, 3.5 months, 2020, right before COVID really shut everything down, we were under two months, almost, of inventory.

But we ballooned. We blossomed up to five, six months of inventory in 2020 the second, third and fourth quarter of it. Now for the first month of the year, we got under three and we've stayed there. And it's due to that first slide. It's due to the ratio at which things are going under contract versus how quickly they're coming on the market.

Now why? The question is, why is this happening? A lot of people left the area in the first and second quarter of 2020 because they wanted more space. We were all locked inside, we couldn't get outside and enjoy it. And that's tough to do in a condo.

Now, as things are opening, I know a lot of people going back to work the next few months, June, July, August are big target months for people to go back to work. People are yearning for the urban environments to get back into the communities. And people took temporary places. Airbnbs, families, things like that and they left-

And they left temporarily.

Now people are coming back, they're starting to suck up some of that supply that was on the market and demand is just come back more strongly in the last quarter. So we're seeing a seller's market.

And if that continues, that will lead to price appreciation, because if there's more buyers in the market than there are sellers willing to sell, we're going to see supply dwindle, demand stay strong, and we're going to see prices continue to appreciate, which is what we've seen in the last few months here since 2021.

Let's take a look real quick, back to the last few quarters. So we pulled some numbers together here, and this is where I could spend all day talking. But I'll try to be here quickly. In 2019, we saw a price per square foot, 692 for one bedroom, 720 for two bedrooms, 755 for three bedrooms.

In the first quarter of 2021, they were down. 700 for a three bedroom, flat for a two bedroom at 719, and now 735 for one bedrooms. So they were up in some places, down in other places. That was, remember again, pre COVID, right?

So we saw things pop in that first quarter. And all those closings, these are lagging indicators. These are things that happen usually two or three months before for a 60 day contract to close.

These are a little bit of lagging data. Here, we're back. We're back to 700 a foot. This might have dipped to mid-sixes, high sixes in the middle of last year, we're back to 685 a foot. And you're only $20, $25 off of the highs that we saw in 2020. And these are, again, lagging indicators.

When we start to see second quarter numbers, we're going to start to see the things that are happening right now provide that data in 2020 in the second quarter. And we're going to see numbers come up.

Yeah, absolutely. All right, let's take a look at our third slide here. Flipping to a different part of the market, we're going to look at rentals. Unfortunately, not great news in the rental market.

Rental prices still today, from where they were pre-COVID, are down almost 14% across the board. That varies by one or 2% based on one bedroom, two bedroom, three bedrooms, based on amenity buildings, walk-ups, different things like that. But average them all out, it's 14%.

The good side's like 10, the bad side's almost 20. Yeah. Certain segments have done better than others. Three bedrooms are doing better because there's more space. People need that extra bedroom. People need the work from home space. People want outdoor space. Places with outdoor spaces are doing better. The reason for this rental... Why have rental prices come down so much, but sale prices not as much and why have we seen that?

Here's another big key, though, to why the rental market is so soft versus the purchase market. What we saw the first half of last year was a compressed seller's and landlord market. Which means people that were going to leave over the next three years, all compressed into six months. They said, "Next year looks shaky at best in Hoboken and urban areas.

We're going to go to the suburbs in two years. Let's just go now and get out there and buy that new house." Which is why the suburbs saw that crazy market. A lot of people were scared to list their home for sale in 2020, because they didn't know what the world was going to look like. They didn't know if people were going to just be making low ball offers and they were going to be no buy or support.

 Mm-hmm (affirmative), exactly. So what people decided to do was, "Let's rent the property out. Let's let a year or two go by. Yes, the price will be lower than what we thought we could get and what we used to get in the past. But we'll at least try to come back and sell this when the market comes back around, when there's no COVID, when there's no shutdowns, when there's no quarantines."

The other reason is a lot of tenants were able to break their lease early or did break their lease early. They asked their landlords, "Can we leave early?" Landlords were in a position to let them do so. Renters typically are less permanent. They're here for a year or two. That's why they're renting versus purchase. So they were more quick to leave, leaving more vacancy, more supply and the price has come down.

That makes sense. There's a lot more at stake and a lot more risk to leave when it's a rental, versus if you own it, you kind of have to make some plans.

Rental prices are down. But going to slide number four, rental inventory is finally coming down. So the amount of rentals on the market is starting to finally come down and start looking like it's going to stabilize a little bit.

And the ratio, the amount of places that are getting rented versus how many are coming on the market is starting to stabilize and even out as well.

First, the perspective here, and to not pull you through my database and my spreadsheet again... If anybody wants to see that, call me, email me. We'll Zoom, we'll go through it line by line.

Hoboken rental market overall has about 175 to 200 active listings at any time pre-COVID. That was where we lived forever, and was a pretty stable market. It fluctuated seasonally and depending on where we were in the economy of the world, but pretty stable 175, 200. We went up to 800 active rentals at one time during mid-COVID.

It was August. June, July, August. Summertime last year was really people made their plans to leave, but people weren't coming back yet. We saw 150 coming on every week and 50 going off. 170 coming on, 25 going off.

Thank God we're back to a world now we're about 90 or 100 were coming on a week, and about 60 or 70 are going off.

And this week's active rental inventory was down to about 550. So nowhere near that 200 where we used to be, which is why we still see prices down. But at least we're seeing it down from eight. I think it was eight and a quarter was the high week, which was really tough to find tenants at a reasonable price. So bad news. It got bad. Not great news. It's still not great, but good news is it's getting better.

Yeah. Sales are back. Sales are flying back through the roof, where our numbers... Again, those lagging indicators that we looked at next quarter, we're going to see, I think, that numbers are back to where they were. Rentals, we need a little more time still.

As you look out the window behind us too, a lot of new rental buildings have been built over the last few years, adding more supply to the market versus not as many condo buildings for sale. So that has effected supply and demand as well. Just something that also plays into the numbers here.

And last but not least, days on market, this is for sales specifically first, are back to where they were or even better than where they were pre-COVID. Rentals, again, the same story.

They're still about twice. So days on market for sales are back to an average of 20, 25 days on market across the board. Some stuff moving very quickly and some sitting a little bit longer versus where they used to be 20, 25 around the same world. Rentals used to move quick. Two weeks, they were gone. Three weeks max. Now we're looking at four or five weeks on the market.

So we're still seeing it's supporting that overall trend of seeing sales... Got a little scary, a little dicey, people weren't sure what to do. A lot of people decided to rent, like we talked about, which also kept supply and low on the sales side.

If all those people decided to sell, we could have saw some more supply pressure and a little bit of pricing downward pressure on the sales side. But for whatever reason, people decided that was the right move. And it kind of stabilized the sales market as the rental market took it on the chin, unfortunately, a little bit more dramatically during COVID.

So these are the numbers we're looking at guys. Here are some of the stats we're looking at. A summary to kind of wrap everything up here, it's been a lot of changes in the market, right?

We saw buyer fatigue in 2018, a weird 2019 trying to figure itself out, early 2020 looked like the market was coming back. And obviously we had huge breaks come on the market and big stop to the market in 2020. But things are slowly turning in the right direction.

More quickly on the sales side, a little slower on the rental side. But everything is setting up for 2021. Look like it could be a very strong market. Interest rates look like they're going to stay low for the rest of the year.

Not a lot of economists are predicting any dramatic moves there. So if you're looking to purchase something, it could still be a good time. Make sure to see another year or two run if you're looking to sell. I don't think there's any urgency to hit a top of the market right now.

Things are looking very strong. But if you're looking for that move up, it could be a good time as the lower price points typically are stronger than some of the higher price points. So if you guys have any questions, we're always here to answer any of them. Reach out if you want to go line by line and really geek out over database and over spreadsheets. That's what I love doing.

But if you actually wanted to go out and see stuff, spring has sprung, and I'm happy to stroll around town with you and give you a tour.

Our team is here, our team is ready. They've been following up with all their clients. They've been following up with anybody who had any questions. So never, ever hesitate to reach out.

We're always here to help if it's a question for, "I want to move tomorrow and I got to go.", or if it's, "Something I'm thinking about in five years." If it's in Hoboken or you just need advice to talk about real estate in general what your plans are, we're here to help. So hope everybody had a great first quarter. We will see you guys with another one of these at second quarter. And everyone have a great weekend. Bye guys.

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