Market Conditions in 07307>Question Details

Rich, Other/Just Looking in New Jersey

Is this a good time to buy in Jersey City/ JC Heights? or will prices still descend in the next few months?

Asked by Rich, New Jersey Mon May 19, 2008

is the mortgage crisis over?

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I agree. Wait a little longer. Massive layoffs on Wall Street will cause further layoffs in ancillary industries. None of this will be good for the housing market in Jersey City. I think prices will continue to drop for the short term.

-Marc
Web Reference: http://www.marcpaolella.com
1 vote Thank Flag Link Mon Sep 15, 2008
I'm in the same situation. I'm thinking to but but I'm taking a look and see were the trend is going.
With all the layoff in Wall Street and the bigger ones still to come I still don't understand how prices can still be so high. My perception is that we should see at least a 15/20% decrease from what people is asking now just in few months. I was in Hamilton Park this week end and OMG most of the places are for sale. Prices are still high but when the offer is so big , shouldn't they come down ? Hey that's just my opinion, I boud be wrong but I definitely will not pay more than 320/350xsqft on a 2 bedroom apt condo, and for now prices are more around 400.
1 vote Thank Flag Link Mon Sep 15, 2008
No the mortgage crisis is not over. Far from it. It is still very difficult for people without down payments to get mortgages. As to values, nobody can predict. If the necessity of price appreciation is a vital factor in your purchase decision, it is a bad time to buy. If you simply want a home and plan to live in it for 5 years or more, it is a good time to buy.
Web Reference: http://www.marcpaolella.com
1 vote Thank Flag Link Mon May 19, 2008
I sell in JC Heights and rent here, and have been doing it 10 years through everything --911, recession etc.
I do put "Wall Streeters" here, but I think we also get a fair number of entertainers, conglomerate employees,
airlines, chefs, artists, commodity traders and medical students. The Heights sale prices are not usually what
the properties finally sell at now. But it is not so off as to be evidence of further significant decreases. Because the Heights has so many houses as opposed to condos, the real estate stays much more steady in its value.
Condos on the waterfront and elsewhere are always more volatile because they are not on any real land, are not freestanding, and other reasons. Because of the low interest rates, your prices are effectively very low now. I think it is the best time since 1996 to buy here, and the neighborhood is much improved.
The Heights is the lowest crime police district in the whole city. It is a large city, 2nd highest population in Jersey, so the incidence of crime appears greater in Jersey City as a portion of Hudson County. It covers much of the County in land mass. Ask a policeman where most cops and teachers live in JC.
The McNair High School in JC consistently ranks #2 in quality in the NJ State Board of Education reports.
0 votes Thank Flag Link Mon Feb 28, 2011
Alex - forget the fact that this question was asked in May, 2008 - over 2 1/2 years ago, and Rich is probably long gone........ you have now responded to it 3 times in 2 days!!! ............seriously - why?
0 votes Thank Flag Link Tue Jan 18, 2011
Normal market conditions are that houses grow in value at about 3%-4% per year. They double like we've been seeing between 2001-2006 and they don't drastically fall either, by nearly 30% in one year in some cases, in some neighborhoods. So all things being equal, think of buying a home as a built-in-savings account against inflation. By you paying down your principal, over time, and accumulating equity you are bying a built-in savings account of something you will eventually own free-and-clear. Furthermore, the house acts as a tax shelter for your income, depending on the tax bracket you are in. Furthermore, it's a leveraged investement. By that I mean, a an example, a $30,000 downpayment (10%) controls a financial instrument worth $300,000. That means, that $300,000 is experiencing growth at 3% to 4% per year, not $30,000. So it has a "multiplication" effect so to speak.

If you were to deposit $30,000 into a CD at the bank these days, you would earn less than 1% rate of return on your money, with no tax shelter benefits either. So real estate simply makes pure sense: (a) provides you with a place to live, (b) accumulates equity over time by paying down debt, (c) provides you with a leveraged investment growing at least at the rate of inflation as a rate of return.

Overall, it makes sense to buy if you are buying for the long term: 5 to 10 year time horizon. The price drop is irrelvant if interest rates rise, which in my opinion, they wil, because we have lost manufacturing jobs so to increase our stake in the global economy, our currency must rise in value relative to other currencies or to curb creeping inflation and that means higher interest rates. So don't wait for another 3% or 4% price drop, as an intererest rate rise is just around the corner in my opinion. Buy now, while you have both low prices and low interest rates.
0 votes Thank Flag Link Tue Jan 18, 2011
The market is good right now: low interest rates and low prices. It would be worse if prices go lower, but interest rates rise, because overall, you're looking at your monthly payment, not simply price.

Overall, I'm a firm believer that real estate will recover. I think it works in 12 year cycles: A 12 year rise followed by a bust, and then it has to bottom out to get healthy again and start rising again.
We have seen the S&L scandal of the 1980's. It took until 1992 to recover from 1980. Then from 1992-2001 things were moving along nicely. We then had the DOT com bust of 2001 and massive job layoffs. However, because the real estate market was hot, if fueled consumer spending and from 2001 until 2007 we saw meteriotic growth, doubling, sometimes tripling in values. So if you do the math, 1992-2007 was also about 12 years as well, 15 to be exact, but around that magic 12 year number I mentioned.

So essentially: 1981-1992 First Cycle. 1992-2005 next cycle. 2007-2019 next cycle. So I predict if the peak was 2007 then 5 years from that is 2012 is the year of stabilization and 2012-2019 is the year of fantastic growth.
0 votes Thank Flag Link Mon Jan 17, 2011
the market has already gotten as soft as it can get. The reason to buy a home is not for future appreciation, but for a place to live. Let's not forget why you buy a house: not as an investment, but as a place to have a roof over your head. If you plan to keep the house for 5 or more years, buy now. If there is even a 3% price drop in one year, it doesn't equal to the .25 basis points that interest rates will rise by. So as prices drop, banks need to make money on lending you money. Right now, our currency is very low because the Fed is essentially charing 0% interest the banks and they turn around give it to you at 4%. However, to keep our currency from further falling down in relationship to foreign currency, if the Fed raises the prime rate by 1% and interest rates creep up to 5% or 6% or even 7% in the next two years, why do you care if the mortgage is smaller, but the rate is higher? Your buying power is weaker with higher interest rates.

In fact, hoping for prices to go even lower is not a good thing for you as a buyer, despite what you think. You see, as prices go lower and lower, homeowners that sell to you have negative equity, and are only selling because they have to, not because they want to. those that are not in trouble will hold out. Those that sell now have no place to buy because they have no equit to buy with. It erodes our overall economy, this housing market. We had a crash in the 1980s'. We picked up again by 2000-2005. We had a dot-com bust in 2001, we picked up again by 2007. We ha drecessions before.But over time, real estate holds is value. It doesn't drop to zero value.


Don't listen to the media hype. If you can afford it and can buy, buy now! Buy to live in it, not taking into account all this media hype and as long as you can hld on to it, you'll be fine in 5 to 12 years from now in terms of aprecition.
0 votes Thank Flag Link Mon Jan 17, 2011
Rich - since you asked this question over 1 1/2 years ago, and it's been reactivated.......please tell us....what did you decide to do?
0 votes Thank Flag Link Thu Dec 24, 2009
A real estate housing forecast site for the whole nation.
http://www.housingpredictor.com/better.html
For just New Jersey
http://www.housingpredictor.com/newjersey.html

Jersey City is expected to drop by 9.3% next year according to this forecast. Look and see why they think this.

Be very careful when you buy. Taxes are killers in NJ. I saw one respected realtor say on a $200k house you would pay over $6k in taxes. Different cities will have different rates, (so compare taxes by city) but that is moving time when I see that amount of taxes on a place.
0 votes Thank Flag Link Wed Dec 23, 2009
The market is eventually going to become stable, prices on homes will rise , interest rates will rise, we will get back to normal. The heights is good to invest in . I am a buyer of property as well as a developer and i know the heights. Everyone is making the problem bigger than what it is
0 votes Thank Flag Link Wed Dec 23, 2009
If you want to buy a home in jersey city,
maybe you can contact me at 646-309-2062
I am selling my house now.
warm welcome to come by.
0 votes Thank Flag Link Fri Sep 11, 2009
Jcres,

Completely wrong. Wall St layoffs affect higher end buyers. Once they stop buying, all the industries that support them turn down. People who buy in the Heights or Journal Square work in those industries and start losing their jobs. That will kill values in the rest of Jersey City. For the immediate future, there's really nowhere to go but down.

Low mortgage rates will slow the descent, but will not stop it. Condo prices in Jersey City will probably continue to drop throughout 2009. Nobody knows for sure, but predicting any rise in view of the bad job outlook, difficult lending environment, and general economic malaise makes no sense.

-Marc

And please stop generalizing about my profession, everyone who works in it is an individual. I'm sure there are good and bad practitioners at whatever you do for a living also.
Web Reference: http://www.marcpaolella.com
0 votes Thank Flag Link Thu Dec 25, 2008
I don't know if I agree with you Jcres. I agree with the fact the Wall Street types generally do not come and buy on JC Hights, but they do affect the market. Immediately the market gos down in Exchange Place, Paulus Hook etc everything else goes down to.
I'm specifically looking into buying a condo in Paulus Hooks , Hamiltomn Park etc. and there is so much offer in the market. I just drive around and it looks like everything is for sale. prices, still are very high, that's why I believe that there is a 15/20% margin of adjustment. I don't believe so much in brokers but if you just talk with some you will feel that any offer 10/15% lower than the listing price would be accepted.
Again, this is just my perception and my opinion .
0 votes Thank Flag Link Thu Dec 25, 2008
One answer in response to Marc....Wall Street layoffs will not affect the Heights much. We never had those kinds of buyers in the heights to begin with. Wall Street types usually stick to new development in Exchange place, Paulus Hook etc. Buyers beware of real estate agents who pretend to know the market...most agents in Hudson County are little more than schuysters and lie an awful lot to push buyers into overpriced buildings. Do your own homework and skip the brokers. Just my 2 cents
0 votes Thank Flag Link Thu Dec 25, 2008
I am the president of a 52 unit condo building in the heights. I moved here in 2005 perhaps one year before the peak. There definitely were quite a few overpriced homes and condo units then, but nothing like downtown JC or Hoboken. Two months ago a unit on the ground floor identical to mine in size sold for 8% less than I paid in 2005. Two other units in my line sold for 12% less at the beginning of 2008...but they were both unrenovated and needed work. The recent sales prices of our units doesn't even remotely compare to the low prices shown on zillow and other sites.

The bottom line is you need to do your homework to make sure the home/condo asking price isn't overvalued anywhere you buy. The heights is not a 'full service' neighborhood...no starbucks, bars, restaurants, high end stores, etc. However it's a quick commute into the city or Hoboken and you'll get much more value for your money than in downtown JC or Hoboken. The Journal Square are in particular is developing rapidly and will be radically different in 5-10 years.
0 votes Thank Flag Link Thu Dec 25, 2008
no dont do it there is still at least a 10 % correction needed in jersey city
and dont even mention the hieghts i dont know what is there to command those substantial increases yes its close to nyc but the school sucks parking sucks there is nothing to do there and the dump called palisades avenue is a nightmare to drive on during rush hour do your self a favor and wait cash is gold prices will decline dont listen to some of these realtors just go to realtor.com and search jersey city there is over 3000 listings with that many houses its years for them to absorb all those units which means many foreclosures to come the wall street bail out will not change the market if you cant pay your mortgage because you dont have ajob or your house poor you will still loose the house so foreclosures will continue and prices will continue to correct
0 votes Thank Flag Link Thu Oct 2, 2008
Hi Rich,

I am a mortgage lender in NJ and I can tell you that mortgage rates came down considerably today. If rates continue to drop the home prices will begin to rise. This is the first time in history that home prices and mortgage rates are low. Hope this helps.
Fatima Tobon
Apex Mortgage Lending
732-534-5191
Web Reference: http://www.MyNJMortgage.com
0 votes Thank Flag Link Mon Sep 15, 2008
I've lived on & off in Jersey City for the past 4 years and seen the transition. Just go to Grove Street or Exchange Place in the morning (during work)) or evening (after work) and see the crowds coming out of PATH station. The crowd has definitely gotten better. It really feels different. In general the Jersey City Downtown go for 450/PPSF. You can't time the bottom, but if you're a long term buyer, there is definitley vlaue at these prices. You need to do the comps for every area in Jersey City and then compare it to the property that you 're interested...see if it makes sense for you. JSQ has a lot fo potential, but it will take a while a jersey City downtown needs to be fully developed first.
0 votes Thank Flag Link Thu Jul 3, 2008
Hi Rich, I was visiting with the manager of one of our Jersey City offices and he said the market there is moving pretty well - slow-er but active. I think you'll find that areas a path ride from the city will not drop as much, and will recover more quickly than the areas further from the city. The market tends to slow up during the summer months so you might find prices coming down a bit more. Impossible to time perfectly - just any market, stock - real estate, you can't time it. But if we aren't at the bottom, we are mighty close.

Good luck to you!

Best,
Jeannie Feenick
http://www.feenick.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Mon May 19, 2008
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