Hoboken Mom Condo Living
Planning the long-term & juggling the everyday

1) how is hoboken for a new mom?
Awesome. Everything is walking distance and there are a lot of classes and other new moms around. I belong to an excellent Yahoo! Group called “HobokenMoms” that you should join to find out about all things baby.

2) how long is the commute to Soho (i’ve heard 15 mins, but i’ve also heard 45 mins…)
Depends on whether you are driving or taking the PATH. Also depends on how close you live to the PATH. Driving is very fast if there is no traffic (that’s probably where the 15 mins comes from), but 45 mins is more realistic via the PATH since it doesn’t go exactly there (you would probably goto World Trade Center and walk or take the subway uptown).

3) you mention in your blog that $500 per square foot seems to be the average.  i’m currenlty love with a condo that is about $700 per square foot, but has a back yard patio.  any thoughts?  over priced?  it is on clinton street.
$500 PSF is only a ballpark # for about a 1200SF 2BR. Smaller units tend to be more PSF, although $700 PSF does seem high for this market. There are some very nice units that are skewing the market high (think Hudson Tea, Maxwell Place, Garden Street Lofts) but none of them are on Clinton St. Clinton is a nice midtown area very near Church Square Park (great for kids!) but does not command the highest prices. I would check out the estimated value on Zillow.com to get a sense of the current market value.

4) we’ve never been to Hoboken (yes, gasp!), but will be visiting this Saturday to check it out.  meanwhile, i’m curious…is it the type of place where everything is within walking distance?  this is what we are looking for - a place with a “city feel” where we can walk to the grocery store, dog park and restaurants, etc.
We moved to hoboken from Bklyn Heights after only one visit, so you’re not the only one! Yes, everything is pretty much within walking distance. Add in the PATH and lower taxes (10% less than we paid in NYC) and we were sold. Plus we feel that Hoboken values are more insulated than, say, Jersey City, because it is only a mile square and there is a finite limit to the amount of development.

5) how do you generally like hoboken for young families?
I like it. There are a lot of young families here. I do get the occasional dirty look from older childless couples at cafes, but by and large people are very friendly and helpful with holding doors for my stroller.

6) with respect to children, how are the public schools?  is it like Manhattan where everyone sends their kids to private school or moves to the suburbs when the kids are school aged?
There is free pre-k here starting at age 3, and the public schools are pretty decent up until junior high (7th grade). Parents started staying in Hoboken about 10 years ago and have been improving the schools as their kids age up into each grade, so I am hopeful K-12 will be decent by the time my kids need it. The city certainly spends enough money on each kid (about $25k) -if the money is there, then it shouldn’t be too hard to have good schools. And the private schools are really affordable, $13k for high school, and are pretty good (Stevens Cooperative & the Hudson School). A lot of people do leave for the suburbs when they get squeezed for space in their 2BRs, but developers have been building large units lately (ours is 2,111 SF) so staying long-term is becoming an option.

I generally promote selling FSBO on this site because I have had such mixed experiences with realtors. Because of my marketing background and detail-oriented personality, I knew I could do a better job selling my property than any realtor could. However, not everyone has either the time or the technical ability to do so. For starters, getting your property online is an incredible amount of work. I had to clear out all the rooms to take photographs, redraw the floorplan, setup a website with content and graphics, and fill out endless paperwork to get our unit listed on the MLS. I figure I spent about $600 upfront, and that was without paying for anything except the basics. Not everyone can take good photos, setup websites or layout marketing flyers, so that expense could easily double. And all that without any guarantee that your unit will sell.

However, this CNBC article does a great job of weighing the pros and cons of selling FSBO. It is definitely not for everyone, but the gist of it is that realtors tend to sell properties faster while FSBO units had “significantly enhanced net sale price.”

Six of one, half of a dozen of another, you ultimately have to decide what is the best fit for you. If you have the patience to wait until a buyer comes along, FSBO is a great option. But if you don’t have time to show your home and don’t know where to begin in terms of marketing it, then ask friends for realtor recommendations. If you can negotiate a discounted commission (we wound up with a 4% commission and the right to continue to sell on our own in exchange for a $2,000 fee to the realtor), then that is really the best of both worlds.

We closed on our 4BR at the end of February, and I figured we were out of luck regarding a home equity loan because the market values stink right now, and there is no point in getting a HELOC for only $40k. At our last apartment, a 2BR, we had a $175k HELOC that got cut about a year ago to $120k. We never actually used the credit for the entire time we had the loan until right before we sold our unit, when we used the line to pay the 5% initial down payment on our 4BR so we would have more cash on hand at the time of closing (through some curious formula, the $40k drawn on the line didn’t show up in our credit report), which would make us stronger applicants for our mortgage.

I really liked knowing that HELOC was there in case of emergency. Almost everyone else we knew was using theirs for vacations and home improvements, but we pretended ours didn’t exist because we didn’t want to incur more debt. And not having access to large chunks of money at a reasonable interest rate really worries me now. What if we had a medical emergency? Or just an unexpected temporary cashflow issue? I even looked into tapping our retirement money to have a stash on hand, but I am saving that option as a last resort.

Then I read a NYTimes article about, ironically, how home equity lines are drying up, and realized two things: 1) New Jersey is a great place to apply for a home equity line, and 2) we are good candidates for a home equity line. So I started poking around the internet (I googled “home equity loan rates”) and found that we could get a HELOC for up to 89.9% loan-to-value ratio. Hot dog! I filed an online application on the spot and just received word that we have been approved for our HELOC at a 4.5% rate. Assuming all goes well with the appraisal, I will soon have peace of mind again. Priceless (or $99 for the closing costs. Still not bad).

That question is actually how we got started on the transactions that ultimately led to the sale of our 2BR and the purchase of our 4BR. That is why we listed our unit FSBO; to feel out the market before committing to anything.

The prevailing wisdom right now says that “Those looking to sell their properties will have to be both bargain-hunter and bargain-provider, listing their homes at prices sensitive to their particular markets.” When we first listed our 2BR at $550k, we had no intention of taking any less than $520k. That # got adjusted down when we found the 4BR we wanted to buy. We thought about waiting the seller out because we were pretty sure the purchase price would come down, but the problem with that approach is that the sale price for our 2BR would also go down. And my sense of the market is that the value of a 2BR will drop a lot faster than a 4BR (classic supply and demand; there are 287 2BR units on the market and only 54 3BR+ ones).

The way we looked at it, we were in no rush to sell. We could hold out in our 2BR for about a year before the space was impossible for us, our two kids and dog.  Once we started getting serious offers, we began looking seriously to buy, and everything happened all at once. It’s really hard to know how the #s look until you get some concrete offers, and then you have to decide whether to accept or hold out for a better offer. There was also the risk that we wouldn’t find another 4BR later on that we liked as much for the same price.

We figure we took a hit of $50k on the sale of our 2BR, mitigated by the fact that we didn’t have to pay a realtor commission (so we really only lost out on about $30k in profit) and we bought our 4BR for $100k less than we would have expected. Since we also got a 4.5%  rate with one discount point on a 30-year fixed rate mortgage, that was a setup we could live with. And not having to move twice (once into a rental, once into a purchase) was priceless.

3.5% down payment? Lower costs than a conventional mortgage? Sounds good to me!

I am all about saving money when it comes to buying or selling real estate. That said, I am not sure how effective it is to offer a very high buyer’s agent commission on your FSBO property. Here the issues:

1. Absent the MLS, the seller is not legally obligated to pay a commission. Realtors may be understandably concerned that they will be stiffed.
2. Your typical commission is 6%. Split between a buyer’s agent and seller’s agent, that is 3% each and often less. So 3.5% is very generous, right? Except that most agents will try to steer clients toward in-house listings, which means they get both halves of the 6%.

After all, Hoboken has been called “the Sixth Borough.”

General

NYC-specific

According to Forbes, this may be the best time in a generation to buy a home.

The short answer is, I don’t know. It’s safe to assume it won’t happen quickly (ie. not in a month) but how much longer could it take? 3 months? 6 months? Longer?

Most of the people I am talking to are looking to make offers on larger homes, but they can’t do that until they sell their 2BRs because the banks won’t lend to them otherwise. Some people are building a sale contingency into their contracts (we did this when we bought our 4BR), but there is usually a timeline of 30-45 days to sell your current property (read. very stressful).

The other issue is that it is taking big lenders a very long time to close (30-60 days). So say it takes you three months to find a buyer. Then you are talking about another 2-3 months before you actually close your sale. That makes it very hard to plan to buy another property.

All I can say is get the word out, and keep trying. Post your ads twice a week, tape flyers up by the PATH, and send email and postcard blasts out to realtors and prospective buyers (ie. renters).  If I show to one serious buyer a week, I consider that a success. Above all, be responsive to buyers! Check your email and voicemail at least once a day so you can respond quickly to queries, which helps build trust.

It seems like nobody knows right now what the right price is for a property. You hear stuff about units being priced right in order to sell, but what does that mean? The market is searching for a bottom, but once it finds it, what happens to prices from there?

There are several methods to determine the market price of a unit. Mortgage appraisals use the sales of comparable units over the last three months, but that is not the most reliable approach because there have not been many sales since October 2008. It’s hard to compare apples and oranges, and that is appraisers are being forced to do with the available data.

Some people like to use the PSF (Price per Square Foot) approach. Most Hoboken 2BR units sell somewhere in the neighborhood of $500 PSF.  The PSF tends to be higher for studio and 1BR units and lower for 3BRs. Another approach is the rent ratio. I like this approach since it ties the purchase price to the rental market.

I have found Zillow estimates for 2BRs to be very accurate (but way too high for studios and very low for 3BRs). Another methodology is to use 2004 prices as a yardstick for how much to spend. Coincidentally, I bought my 2BR in 2004, so I have a good sense of what the market was like that year. The problem is, what if the property you want to buy didn’t exist in 2004? Plus Hoboken has improved a lot since then. 4BR units like the one we just bought didn’t exist in southwest Hoboken back then. I found some Monroe St. townhouses that sold in the mid $600k range back in 2004, so I used that as the bottom for my pricing analysis, but they are much older construction and not all on one level (not great comparables).

I think prices will flatten out once we reach bottom, but since the dollar is weakening, that means interest rates will go up. I think it would have cost me the same to buy my 4BR in 2011 as it did in early 2009, but our payments would be higher because we wouldn’t have qualified for the 4.5% rate we got. I know we got a pretty good price, and that was good enough for us because we are not looking to move for a minimum of 5-10 years. Increased equity, here we come!

A couple of years ago, when it seemed like the sky was the limit on real estate prices, I kept saying that prices were out of control relative to incomes.  Subprime mortgages were allowing people to bid the prices up higher and higher, and unless people’s incomes in NYC were much higher than I thought, the payments were not affordable.

Just as there had to be a ceiling on prices, there has to be a floor, and that floor is related, surprise, surprise, to income. NYC has a relatively low unemployment rate. I know there seems to be a lot of pain and job losses, but over 90% of the population is still employed, and those incomes are still extremely high. My household income may not be rising right now, but it’s also not falling, and that is the reason why I gambled on buying our 4BR.

Once the economy stabilizes and people feel reasonably confident that they are not going to lose their jobs, then they will start buying properties again. And the amount of the mortgage they can afford will be directly related to their incomes. It is also not that difficult to get a mortgage, it just seems that way because lenders have returned to the old rules. It sucks for the approximately 10% of the population that doesn’t have jobs because it doesn’t look like the economy is going to expand anytime soon to the point of absorbing them again, but for those of us who are employed, life goes on. And that is why I think there is a limit to how far prices are going to fall. Without a dramatic cut in people’s incomes, the amount they can afford to spend on housing will remain pretty high.