Tag Archives: jersey city

Bergen County Luxury Home Sales Continue Death Spiral

If you currently own one of those $2+ million Bergen County luxury homes you’re not going to be happy with this news.

Plain and simple…the luxury market in the Bergen County suburbs sucks.  And it’s been sucking wind even prior to the market crash.  That’s a long time to not even see a whisper of a turnaround.

Towns like Alpine, Saddle River, Franklin Lakes, Englewood and Tenafly are going to take another huge hit on this.

For a multitude of reasons, like the hotter than hot New York City market (future post), this price range was hit hard and 6 years later it still hasn’t recovered.

Proof In The Numbers:

Luxury Home Sales: $2.0m-$2.999m

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Luxury Home Sales: $3.0m+

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Don’t get too excited that the number of homes sold for over $3 million remain even with 2013 home sales, because the next few slides highlight the problems:

Luxury Homes For Sale

Homes for sale priced:

  • $2.0m-$2.999: a staggering 113 homes are for sale and as of Sept 20th. Only 31 homes in this price range have sold thus far in 2014.  The supply far exceeds the demand.

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The worst news is for homes priced above $3.0 million

  • 106 homes are currently for sale priced above $3,0 million.
  • ONLY 16 homes have sold in this price range as of Sept 20th

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Who’s going to buy all of these home so the market can stabilize?  Unfortunately the buyers aren’t there.  They’re parking their money in Manhattan real estate

Some good signs from this:

  • NYC real estate is still a great investment if you can afford it
  • Towns like Hoboken and Jersey City will flourish with a great rental market
  • And lower priced homes will be at a premium

LG protesters: A bogus argument and a dreadful aftermath?

The title was included with the photo on flicker as reported by Business Insider
The title was included with the photo on flicker as reported by Business Insider

Someone who is protesting the height of the LG building in Englewood Cliffs that sits beyond the limits of the Palisades was accusing me on twitter of posting an unrealistic photo angle of a view of Saint Peter’s University from across the Hudson River in Manhattan…a set of buildings that sits within boundaries of the Palisades.

My concern is why the local local media outlets haven’t fact-checked the protesters claims and they haven’t reported on the ramifications to the environment if LG spreads out their building or worse…what happens if LG leaves

The protesters are against anyone anywhere along the backdrop of the Palisades from being able to build anything that peeks above the tree-line for as long as the eye can see, north of Fort Lee.  They are stating that their view would be spoiled if they can see any part of a structure from across the Hudson River. Those protesters want an unchanged view.

My question is how would any view be any less majestic of the Palisades if a building were in sight…beyond the Palisades.

This photo which was not taken by me or altered in any way by me (photo by Steve Guttman NYC/Flicker) clearly shows that several building at Saint Peter’s University in Englewood Cliffs, New Jersey are clearly visible to people in New York.  These buildings have been here and visible since 1975.

Saint Peter’s University is a magnificent view from across the Hudson River

The main building which is the tallest structure is magnificent and does nothing to detract from the beauty of the Palisades…nor do any of the other buildings at this location.

Additionally there are many more structures of various types and sizes that are equally visible from across the Hudson as you go further north into New York approaching the Tappan Zee Bridge and beyond.

40 million people visit Central Park every year...and wouldn't give up this view for anything.  One partially seen building in NJ won't affect anyone's view of New jersey
40 million people visit Central Park every year…and wouldn’t give up this view for anything. One partially seen building in NJ won’t affect anyone’s view of New jersey

The land and zoning that the protesters want to control is owned by hundreds of thousands of residents, investors and companies and is located in a handful of towns. Their mission is to control what you can do with your land.

I do not profess to understand the real motives of the protesters but when they resort to twisting the facts and maliciously altering their photos to show incredibly unrealistic scenarios, their sincerity has to be questioned.

Fact:

  • LG will not be the only building that can be seen on the Palisades from across the Hudson.  Tens of thousands of buildings sit on, in the middle of and below the Palisades from Jersey City to the Tappan Zee Bridge
  • The LG property sit outside of the Palisades boundary
  • There are only 1 or 2 other properties (both in Englewood Cliffs) that are potentially feasible for high rise development from Englewood Cliffs to the Tappan Zee
  • Most of the other land is either deeded as parks or nature reserves, and all other land is considered worthless for such development
  • Putting an outdated 35′ height limit on future development would lower the value of all commercial real estate and would make the remaining large parcels candidates for other less desirable uses, AND Englewood Cliffs would be out of the running for future development and  investment.  The residents would feel the brunt of higher taxes
  • A New Yorkers view of the Palisades is not paramount to those in New Jersey

I’ll leave with this thought:
If LG decided to pull out of this deal and go somewhere else, will Englewood Cliffs be happier potentially with a big box retail project that could include a Wallmart and Sams Club and other retailers AND including a massive residential component because this is the only viable and vacant site that Englewood Cliffs has to meet their Mount Laural affordable housing obligations…all 1,500 units would have to be part of a high rise community on this one site.

Is this the future of the LG site in Englewood Cliffs
Is this the future of the LG site in Englewood Cliffs

Are the local residents so naive to unknowingly be brought into a blunder of a situation that will place mega tax, traffic and lifestyle ramifications on their community, by those who could care less what happens in its wake if LG leaves this location?

Whatever happens in the end will not change anyone’s lifestyle in New York.  However, what will happen to Englewood Cliffs is an entirely different story.

You won’t like what you get.

Northern New Jersey luxury market getting clobbered by NYC luxury sales

Why is New York City having a banner year(s) selling incredibly expensive ultra luxury homes (and everything else for that matter), and Bergen County, New Jersey is having another only soso year…and a another horrible year for the ultra expensive end of the market.

Usually when NYC condo sales and prices skyrocket, and rents increase, buyers start flocking out of the city to the New York suburbs. Bergen County has always reeled in a huge portion of the exodus….but that’s not happening now.

The Iconic New York by Gehry building

Sales of ultra luxury homes in Bergen County are down 47% in 2012, and 2010-2011 wasn’t any better. But sales  of ultra luxury units (trophy properties) in Manhattan have been booming the past several years.

The New York Times reported that Kiefer Sutherland recently sold NYC his townhome for $17+ million, which is just a drop in the bucket compared to all of the trophy sales that have been happening north of $50 million.  Yet in the affluent New Jersey suburbs, the high end of the market is gasping for air.

Even luxury home sales in the Hampton have hit the breaks.

The end effect, is that the NYC housing market is further killing the suburban market…and the effects are painful for the suburbs.  A lack of buyers leaving NYC coupled with an incredible number of rentals in the planning stages, and already under construction will make things  even more painful for areas on the other side of the Hudson River.

All these new rental projects in Jersey City, Hoboken, Edgewater and Fort Lee, and in NYC will have a devastating effect on suburban home sales.

Looking ahead, if the suburbs don’t learn real fast how to compete for buyers, then they’ll start failing.  And it will happen fast:

  • Downtown’s are already failing
  • taxes are rising and home prices aren’t
  • the market above $1 million is hurting
  • Very few single family homes are being built
  • The suburban office market isn’t recovering

These aren’t good signs. And there’s nothing pointing to things getting any better in the future.

More on this later.

Check out the Kiefer Sutherland article…Big Ticket: Sold for $17.5 million

Also check out…New York By Gehry

Local media predicts low interest rates and home prices will create turnaround for Bergen County. Are they right?

This is the first of a multi-part series looking at the housing market in Bergen County based on an article I recently came across on northjersey.com titled…Home prices coming down to earth in Bergen County, could signal turnaround. 

This article represents the typical broad based view, that historically low interest rates and decreased home prices, should automatically create affordability, and thus should translate into a housing turnaround.  This is the same assumption that the pundits have been touting since the housing bubble crashed in 2008 (really in 2006 in our area)…and yet have been left scratching their heads, wondering why their view of the market hasn’t come close to fruition.

Who in their right mind wouldn’t purchase a home with these numbers?

If only a recovery, or a turnaround was as easy as a simple math equation

Bergen County home sales 2001 – 6/30/12

As you can see by the table (data from njmls) few people have bought into this line of thinking, because as the data shows, home sales haven’t improved in Bergen County with 3+ years of record low rates and huge price declines.

Home sales have remained remarkably stable since the crash.

Stability is a great thing!

First some stats for single family home sale in Bergen County:

  • the number of homes sold yearly in Bergen County, have declined by 20% since 2008 (national market crash)
  • the number of home sold from the high point of 2004 (7631 single family homes sold) decreased in Bergen County by 41%
  • The dollar volume of homes sold in Bergen County compared to 2004 decreased by the same 41%

Multi-family sales stats:

  • Again, contrary to the national crash, the multi-family market  in our area crashed in 2006…sales declined by 21%% from 2006 to 2007.  And then sales declined even further  by another 33% from 2007 to 2008.  But the market has been stable since then
  • As with the single family market in Bergen County, multi-family sales bottomed in 2008 and have remained at the same level of sales since then

Why didn’t the people who have all the up to date sales stats, see that the market crashed, and sound the alarm back in 2006?  Why did it take another 2 years for consumers to find it out the hard way. How many of us would have sold our homes or not have bought one if we had know the big crash was coming

Stability is a great thing!

Even at a low sales volume, we should be celebrating stable sales activity, and not dwell on the fact that home sales haven’t gone back to the hyper boom day volumes…that simply isn’t going to happen again.

What the industry machine and the media are all caught up on, is that history will repeat itself, and when and if things do improve, then the market will jump back to where it once was.  It’s a myopic view of reality

What everyone should start getting used to,  is that this is the “new norm” for home sales looking into the future?

Buying homes is not all about a mathematical equation of price and low rates…in fact I contend that price has very little to do with the volume of home sales…and the data proves that point.

Let’s look at a few topics:

First: the demographics of today’s home buyer is dramatically different than past buyers

  • a majority of buyers are first time buyers and investors (what happens when all of these investors can’t sell their units?).  Buyers typically take a rather large mortgage, and investors pay cash
  • people are getting married later in life…so the need to buy a home isn’t as immediate as it was in the past
  • married couples are waiting longer to have kids…so the move to the suburbs will take longer…if people do in fact move to the burbs
  • it takes longer to save for a down payment…creates less sales
  • it takes longer to sell a home in the burbs, because there are less buyers in the market for suburban homes
  • people are waiting to buy a home in the suburbs until their kids are ready to enter the school system…because of insanely high property taxes

All of this leads to a longer sales cycle, and fewer sales.

Second: the suburbs offer little in value or lifestyle needs for today’s young buyers…especially without kids. The 1950’s vision of suburban family life, doesn’t work with today’s pool of buyer…both young and old.

So who are the suburbs for?  Everyone!

  • Urban areas like Hoboken, Edgewater, Fort Lee, Jersey City and Weehawken will become boom towns for new rentals…and that will draw today’s younger buyers, because these projects offer a more attractive and exciting lifestyle…and a less costly and less risky place to spend their money for the next “x#” of years. These areas are rapidly replacing our existing suburbs
  • See MultiHousingNews.com article outlining the pending rental boom in northern New JerseyRobust New Jersey Development Buoying Optimism
  • And even with increasing rentals rates, developers can easily lower their prices to compete against the “it’s cheaper to own” formula that this article and most others point out.

Rents can come down at a moments drop to compete with lower home prices, whereas home prices can’t. But again. we’re seeing that it’s not all about price.

All of these items will lead to less home sales in Bergen County during the next decade.  And let’s not forget that New York City has proven to be a better investment for buyers, and is still the go to place to live in our region

The argument for affordability based solely on an equation (price and interest rates…and compared to increasing rental rates) is an argument that the real estate industry machine has been hammering consumers with since the market crashed.  Their sales pitch has fallen flat.

There needs to be a new message and a new zoning that will allow the suburbs to compete for buyers…and tax dollars.

It is foolish to believe that things will go back to where it once was. To do that you would have to totally ignore a dramatic shift in the demographics of who today’s buyers are, and believe that their views haven’t changed AT ALL regarding life, and possession, and risk on investments

With the exception of 3+ years of unprecedented sales activity, the Bergen County housing market is fine (with the exception of a decrease in the value of our homes).  Sales are steady, as are prices.

As all indicators point to, an increase in home sales is highly unlikely anytime soon.

To be continued…