Category Archives: Condo’s

Will new rentals sink Bergen County home sales?

The Modern, Fort Lee NJ

A recent article on, grabbed my attention with the headline…NJ homebuilding up 39 percent over 2012 pace.

But after reading the story and analyzing the numbers, the real headline should have been…Will new rentals sink Bergen County home sales?

Let’s look at some facts:

Multi-family construction is not the same as “homebuilding”, when you’re talking sales and construction figures. Yes multi-family units are housing in a true sense, but most of the pros like Case-Shiller,  separate multi-family units form single family home sales.  Media outlets such as CNBC, the New York Times and others also separate the two different types of housing when they’re presenting market stats.

  • Multi-family rentals like the new high rise rental building shown here, is competition for single family home sales, because they take potential home buyers from the market for an extended period of time

As the Ms Lynn points out:

Through August, builders took out 15,842 building permits, compared with 11,364 in the same period last year. Multifamily construction accounted for about 59 percent of the activity.

“Multifamily construction is what’s driving the bulk of the expansion in New Jersey,” said Patrick O’Keefe, an economist with CohnReznick, an accounting and consulting firm with offices in Roseland. Multifamily rentals are in high demand as tight mortgage standards keep many households out of the purchase market. In addition, banks are much more willing to lend to builders for construction of rentals, rather than for-sale properties.

But here’s where this will most likely take a nasty turn, and cause home sales to decrease: Just under 16,000 building permits sounds great, but when you break down the type of housing, multi-family rentals accounted for almost 60% of the volume. One would have to imagine that 9,600 rental units will take a major number of would be buyers out of the marketplace. And in areas such as Tenafly and elsewhere in eastern New Jersey where large scale homes building has all by disappeared, (leaving only old and outdated homes to choose from)…the loss of buyers could have a devastating effect on future home sales for the coming years.

Will these rentals become a suburban market killer?

“People are becoming renters by choice,” said BNE Executive Vice President Jonathan Schwartz. “People want to be closer to the city, nearer commuter areas.” And many households are wary of buying a single-family home after seeing property values plummet during the housing bust, he said

BNE understands this all too well…the project mentioned in this article  because their project in Fort Lee (the 316 unit Twenty50 building) was originally slated to be a for sale building.  They obviously changed to rentals because the, for-sale-condo-market still hasn’t recovered in New Jersey, and most people are looking to rent rather than to purchase condos.

New rentals in Fort Lee:

  • Twenty50….316 units
  • The Modern….two highrise towers….900 units
  • Hudson Lights…200 units

The ripple effect:

In these three projects alone (which sit next to one another in Fort Lee) 1,416 new rental units will come on the market by the end of 2014 (Twenty50 is already leasing units).  Not only will these new rentals take buyers from the market, but it will also take renters away from the older high rise buildings in Fort Lee.  Which in turn will cause those rents to decrease.   And when you consider the thousands of new rentals that are coming on line in Edgewater, North Bergen, Weehawken, Hoboken and Jersey City the problem intensifies in the for sale market for the surrounding markets like Englewood, Tenafly, Cresskill and so on.

Recent articles

Luxury in Fort Lee

Groundbreaking marks start of Fort Lee project


Young people want to live on the Hudson River waterfront: City Place

Ex-renters sail through their first buy in Edgewater


The suburbs lose another home sale to the excitement of the NJ waterfront.  This is where younger people want to live compared to the burbs

Another condo sale at City Place in Edgewater

City Place is the most exciting project to live at…retail shopping, restaurants, movie complex and a hotel

Suneel and Kanchan Garehgrat-Basra were surprised their first home purchase was relatively painless. Two important factors that eased the process were organization — especially when it came to supplying documents for a mortgage — and finding professionals who were willing to communicate.

Kanchan works for an Internet company in Manhattan, and Suneel is a physician at a Bergen County practice. They originally settled in Jersey City. When their landlord raised the rent 13 percent, says Suneel, “that put us into the category where a mortgage would cost us the same amount.”

It was clearly time to buy.

“We could’ve bought sooner,” Suneel says, “but we wanted to make sure we were happy in New Jersey. By then I was confident that I was in a job I wanted, and I was offered a longer-term contract.”

Proximity to both of their jobs was key, so the Basras started looking in the Edgewater area. The New Jersey Multiple Listing Service provided an overview of what kinds of properties and prices were available. Stephen Braconi of Re/Max Ltd. in Oradell had a number of listings.

“We set up an appointment with him to show us around,” says Suneel. “He gave us a good feel for what was available in our price range. He also helped us with the nuances of being first-time home buyers, understanding the lingo and how the process works.”

The condo complex that most attracted them had two sections, and it turned out that although they looked the same outside, the financial arrangements were different. They looked at several units in each section and made an offer on a two-bedroom unit.

Negotiated price

As beginners, they decided to start low and see what would happen. Expecting a learning experience, they were delighted to find that, although the offer was rejected, the seller was willing to negotiate. “We came to a happy medium,” Suneel recalls.

The unit was listed at $450,000, and they settled at $425,000.

“It’s a surprise to realize how little space you end up getting for the price you’re looking for,” says Suneel, “especially in Bergen County, with taxes so high and certain areas, like Edgewater, almost recessionproof. A down payment of 10 to 20 percent is a tremendous amount of money. You have to be prepared for that.”

Obtaining a mortgage was not difficult.

“I have a steady job and a comfortable income, and we’re a dual-income family,” explains Suneel. “Our mortgage lender was recommended by our Realtor, and there were no issues. You just have to be prepared and organized when it comes down to what’s required.”

For those who own businesses and have multiple bank accounts, the process may be more complicated, he acknowledges, but for the Basras, it was fairly simple.

“We created a list and made sure we got them everything required in a timely manner,” Suneel says. “Every few days we’d call and check on our status, and they’d let us know what was needed.”

Aided by email 

Suneel advises buyers to find a lender they’re comfortable with on a personal level.

“They may offer a great rate but be impossible to get in touch with,” he says. “With rates this low, it’s very competitive, so they want to give mortgages to people who are stable financially — qualified home buyers with no issues.”

He reported that much of the communication regarding the mortgage was done electronically. He was able to scan documents and send them by email.

Overall, Suneel was surprised how easy the buying process turned out to be.

“It was a combination of how organized we were and asking the right questions, working with people who directed us. It’s important to have a lawyer who’s willing to call you back.”

The Basras are enjoying their new condo. They can easily reach friends and family in New York City, and they are close to Dumont, where Kanchan grew up.

“It’s a nice transitional area,” says Suneel. “We’re not quite ready for suburbs.”

Let us know what you think about living in the burbs