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

Rents are dropping and vacancies are high. Property values are continuing to drop, albeit slowly. Mortgages are difficult to get, requiring large down payments that most people don’t have, which limits the pool of potential buyers. So why on G-d’s green earth would anyone buy now?

First of all, let’s get some perspective. Right now we are looking at 6.5 months of real estate inventory and 30 year mortgage rates in the low 5% range. Compare that to the last housing bust in 1987, when the NYC housing market was left with an absorption rate of about 84 months and 30 year mortgage rates were 12%. Prices are high, but they are back down to about 2004 levels, so it’s not like you are buying at the market peak.

A NYTimes real estate article did an excellent job of addressing all the reasons why I chose to buy in 2009. The highlights were:

• It is almost impossible to “time” the market, although everyone tries to do so. Timing should not be an issue unless you are an investor looking for a quick turnover rather than a longer ownership window of 5-10 years. It makes no difference to buy on the way down as on the way up.
• The rental market is much more responsive to employment conditions than sales activity is. That means it is not predictable, and it is often counterintuitive (ie. one would expect to see rental prices trend in the opposite direction of sales activity since if people are not buying they must be renting; instead, rental and sales activity tend to move in the same direction up or down).
• Compared to 1987, there is a lot less condo overbuilding because it has been very difficult to get condo development financing.
• It is impossible to guess which neighborhoods will have the highest risk exposure since price appreciation has not been in the same neighborhoods from upturn to upturn.

There were a myriad of reasons why my husband and I chose to buy our 4BR in 2009. Ultimately, what it came down to is that you have to live somewhere, and we hate renting. It is also really difficult to rent a large apartment in Hoboken. That is why I have a new adage for myself when it comes to real estate. It is, “Put down the Zillow and back away slowly.” I have to think of it similarly to my 401k: I need to not look at the statements because it’s not like I’m going to sell anytime soon anyway, and by the time I need the money the values will be just fine.