General Overview

The incessant media chatter about the economy, real estate, and mortgages can be confusing and overwhelming. Since most of this information is based on national or regional trends, it doesn’t accurately represent the state of things in the local area. Even within Hudson County, Hoboken is what may people refer to as an “anomaly” in real estate.
Although the nation’s economic situation does affect the Hoboken housing market, there are peculiar yet positive factors that make this town a great place in which to buy real estate.

Foremost is Hoboken’s proximity to Manhattan, which directly affects Hoboken home prices. People continue to "cross the river" to purchase more affordable homes in Hudson County, and Hoboken is typically their number-one destination. Why? With its rich history, beautiful Hudson River waterfront, easy access to New York City, strong sense of community, charming character, abundance of quality shops and restaurants, pulsing nightlife, and growing number of homes, it's no wonder why Hoboken attracts so many people who work and/or live in the New York metro area.

Moreover, with over half the city’s population (51.7% according to the most recent census) in their prime home-buying years (from 25 to 44), and with a median resident age of 30, it’s easy to see why home sales and prices remain continually strong in Hoboken. Those new to town and those who aren't quite ready to buy a home usually rent for a few years—which keeps the rental market strong (a great reason to invest). Those renters eventually turn into buyers, and this momentum helps sustain home turnover. This influx of new residents, who have relatively good incomes, spurs a healthy demand for homes, and home prices remain at a good level compared to other areas.

While the national housing market has taken a major hit, Hoboken has sustained a much lesser blow. Compared to a -16% change in home prices nationwide in the last year (S&P/Case Shiller U.S. Report), Hoboken has only suffered an -11% price change (very close to the NYC -10.2% change). On the flip side, when homes gain value on a national level, you will often see Hoboken homes at the top of the list. Strong appreciation, slow depreciation.

In short, the Hoboken housing market is a great one for qualified buyers, including those who want to sell their current homes in order to upgrade to bigger and better. There are many properties available and they’re not selling as fast as before, which makes for better buying conditions. From 2006 until early 2008, homes for sale in Hoboken were on the market for an average of 45 days*. Since July 2008 the average number of days on market grew to 82 in 2009, and has remained close 80 year to date (as of May 15, 2010). Why? Here’s where the economy factors in. Stock market drops, falling home prices, unemployment, and stricter lending guidelines have made home selling (and, therefore, buying) more difficult. Bear in mind two things, however:

1. A 80-day average is still a relatively short period of time compared to other nearby cities, and very short compared to the national average (217 days!).
2. Homes that are priced well, and/or in areas of high-demand (close to Path, waterfront), are still selling much faster than the average, sometimes in less than seven days.

Hoboken is also unique in that it’s a small city without room to grow. There simply isn’t much vacant land to build on, which results in many construction “upgrades” (renovation) of existing properties, with an occasional new building replacing an old one. For this, and many other reasons, Hoboken is considered “prime” real estate. And for the right buyer, now is also a great time to buy.

→ See our current inventory summary for more market details.

→ See our recent sales report for details on sold homes.

Mortgage Conditions

Given that most of us can’t buy a home with cash, a home mortgage is a very important factor to consider. Since January 2009 we’ve seen a significant change in mortgage conditions, and the changes continue to come.

It’s become more difficult to secure a mortgage than ever before, but some lenders have loosened their guidelines somewhat. Mortgage lenders are typically looking for credit scores of 720 or higher, whereas 620 used to be the average. A down payment of less than 20% will significantly limit your options for mortgage products. Moreover, the market for interest rates has become extremely volatile, and we have seen rates move from 6.875% to a bottom of 4.25%. This cycle has led to current rates being around 5% to 5.25%* just in the past few weeks. These rates are still historically low, and some of the lowest seen in the last 40 years.

Designing the mortgage with a sound financial plan in mind is more important than ever, and rate is not always the main issue when determining the payment. The type of mortgage, and whether mortgage insurance is an issue, can affect your monthly payment more than the interest rate. For more on mortgages, see mortgage information.

* Conventional 30-year, fixed-rate loans

Speculation: What Does the Future Hold?

Even with a crystal ball, it’s tough to predict the future, but we can make an educated guess. Home prices in Hoboken have dropped steadily since January 2008, and even more drastically since the market ‘crash’ in the fall of 2008. In most cases buyers can now purchase a home for 9-10% less than they would have paid at the same time last year – this is great value.

Have home prices stabilized? Sales and activity data from the past six months shows not just an increase in sales volume, but also an increase in the number of properties that are selling sooner and closer to asking price than late 2009. Moreover, there have been less and less price drops since then, and we've recently even seen about 15% of the properties sell for on or above final asking price. Although we definitively don’t foresee prices bouncing back up as much as they did during the boom, our data shows that prices have stabilized for the most part.

Nevertheless, it’s important to look at real estate as a mid-to long-term investment. We’re currently advising Hoboken homebuyers to think of owning for at least four to five years before selling, if they expect to break even or to turn a profit. The days of ‘flipping’ are over, and buyers should make living in their home the priority over any short-term resale value.

To find out if now is the right time for you to buy a home, please contact us. We’d be happy to discuss your options, provide you with more market data, and help you determine if, when, and what you should buy.