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Reader Mail: I’m broke. Thanks, Hoboken.
05
February
2/5/2009:
Hoboken411 reader “JP” expresses his feelings about the current state of finances in town, and what effect it’s having on residents in the same boat. Despite being conscientious and careful with his money – is on the short end of the stick.
Why can’t Hoboken be as careful as me?
“I worked two jobs for 10 years (full time and 2nd job every weekend) to save enough money for a down payment on a modest 1-bedroom in pricey Hoboken NJ, just across the river from New York City.
I spent months searching for an affordable apartment that was within my budget and after a gut renovation, hopefully would appreciate over the years.
Life was good for the first year — as a single guy with no credit card debt, it was easy making my mortgage payments each month. I lived modestly, cooked in my new kitchen instead of eating out, spent very little money on luxuries like movies or electronics. Life was good.
And then the city of Hoboken, suffering from a gigantic budget deficit after spending spending spending money they didn’t have — was taken over by the state of NJ and raised taxes 47% to cover the deficit. I saw my tax bill jump to $6500 (almost $400/month more).
The Realtor who sold me my apartment appraised it at approx. $330K. “Whoa, quite an appreciation – I did a good job on those renovations!”, I thought. I contacted my mortgage company and attempted to refinance — after paying the $400/application fee (quite an expense in these tough times), I felt pretty comfortable I could hit that $315K appraisal minimum I needed to get the amazingly low rate of 4.875.
After being appraised, I was shocked to learn my apartment was valued at $275,000. Well below the value I needed. The market is in the toilet. And apartments, even in pricey Hoboken, are not worth what they were.
No refinancing for me.
AND I’m out 400 bucks just for applying.
But I’m lucky I still have a job. Two of them, in fact. Never thought I’d feel lucky to work seven days a week.
Now when I shop – I only buy generic brands. And I do this in Jersey City where sales tax is lower. I don’t go out to eat. I don’t go out with friends if spending money is involved. I cannot support local Hoboken businesses, whose prices are usually higher. I buy in bulk. I don’t drive to see my family as much because of the cost of gas & tolls.
Today, I struggle to make my mortgage payment, now $400 more a month…even though I did everything I thought was right. I saved. I lived modestly. I bought something well within my budget.
And because my local government didn’t do the same — I’m broke.“
77 Responses to ** Reader Mail: I’m broke. Thanks, Hoboken. **
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February 6th 2009 - 11:45:38 |
if prices are permitted to fluctuate freely…
ain’t markets great?
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February 6th 2009 - 13:42:56 |
Midnight, I’m sure that at the time you bought in 1996, it looked like a peak period given the strong appreciation after the early 1990’s recession. As you pointed out, at that time, people were telling you to wait. If you had only purchased in 2004 and now it was too late type arguments. Many people, including myself, were concerned about how much longer the stock market rally would continue (it went up dramatically from that point until 2000). So, you made a great decision that has paid off handsomely. But then the rapid escalation continued almost non-stop for another decade lulling novice buyers into a false sense of security.
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February 6th 2009 - 14:45:37 |
I feel bad for the writer, was in the same boat, lived w/roommates many years, saved my money, bought in 2007, putting 20% down. Only caveat is that I did get to refinance recently and my savings offset the tax increase, and I have some extra money i’m saving a month, too.
Tough times all around.
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February 6th 2009 - 15:06:24 |
MidnightRacer wrote:
Generally that’s my understanding of peak – you can’t know it until after the fact, when prices have come down noticeably and stayed down for an extended period of time (over a year).
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February 6th 2009 - 15:41:01 |
That completely sucks but is life in the northeast and California. High-tax, high-cost states that provide little in actual services. There is a reason why people are leaving this area and I would too if I were in your shoes. Too bad the environment is like this….
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February 6th 2009 - 16:01:26 |
patk14 wrote:
Being that I am not from this area, I have been curious the entire time I have been living here – why is it so expensive now to live in Hoboken? What has dramatically changed in this town other than the city budget? I still cannot wrap my head around the fact that a 1 bedroom apartment with under 500 sq. ft. can go for almost half a million. I know that there is the whole “a lot of people live here and there is limited space” reason, but is that really the case? I just cannot accept that even with the increases throughout the years that this town has had that it justifies the amount of money that one has to pay to buy a home. There are times that I have thought about buying, but after seeing how much the mortgage plus maintenance and then the taxes are, renting is the only thing I can logically afford. And if something ever happens and I cannot pay my rent anymore, (which did almost happen because of my wonderfully great string of bad luck) then at least I know that I can break my lease and get out from under it – something I could have never done with a mortgage.
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February 6th 2009 - 16:11:15 |
To me, whether this individual bought at the peak or not is totally besides the point. His story just illustrates how most Hoboken residents have been screwed over by a government that has engaged in nepotism, obfuscation, and backroom deals, or is just plain incompetent.
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February 6th 2009 - 16:25:44 |
abred0803 — the C.O.L. is Hoboken has certainly risen over the years but I don’t think the increase is out of line with what you’d find in other decent northern NJ towns that on the train line. There are a lot of things wrong with Hoboken, but it has a lot to offer, too — it’s just a PATH ride away from the city, it’s safe, everything is within walking distance, parking is reasonably do-able compared with NYC, etc. So, you get what you pay for — there’s a definite C.O.L. premium associated with not having to schlep to work on NJT from inland Jersey (like you would be doing in South Orange, Summit, Montclair etc) , and not having to watch your back (e.g. Jersey City, Union City, North Bergen).
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February 6th 2009 - 16:27:20 |
Announcement:
Due to recent budget cuts and the rising cost of electricity, gas, and oil, and the general cost of living, The Light at the End of the Tunnel has been turned off.
We apologize for any inconvenience.
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February 6th 2009 - 16:30:42 |
I’ll call BS on this. My bank upped my tax escrow pmt by $400/month but my prop tax is way higher than JP. just did a search on Realtor.com and only 18 listings under 300k. Unless JP’s place is under 615 sf and is next to the projects he can call the bank and challenge the appraisal.
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February 6th 2009 - 16:34:22 |
one more thing. Unless you are trying to cash out the bank will lend you up to 80% of the appraised amount. The rate shouldn’t change because of the appraisal.
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February 6th 2009 - 16:35:55 |
mikey578041 wrote:
Nice. But if you’re saying that the government manages that side of existence, then do not go into that light.
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February 6th 2009 - 17:12:43 |
patk14 wrote:
I bought and sold my condo in those two years too, and right, little appreciation (I made a *little*). I bought another place in ‘93. It’s a place to live, with a family, hard to do that renting as the family grows. A few years ago the apparent value was whooppee! high, but I’d have to pay alot anywhere else in the area too. Now it’s lower but same story, tending to be lower all around the area.
As just mentioned, the real point is overspend/overtax problem in Hoboken, and the elected racketeers who keep it going, as crystalized in the 47% tax increase timed to hit just when everything else was falling apart. That’s what’s special about Hoboken.
Otherwise, why is real estate so expensive a mile from a gigantic city, one with probably more super-high paying jobs than any other in the world? same reason it’s probably going to go down some now that a lot of those jobs are being lost.
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February 6th 2009 - 17:52:39 |
Skywalker wrote:
I understand that Hoboken itself is a premium compared to other cities in NJ and to me personally, even better than living in Brooklyn due to the closeness of midtown versus being south of Manhattan. I really mean as a whole when compared to the country. I know that there is no way to truly compare, however, I just don’t see how it is possible for a place to be at the price it is in some parts of the country (specifically here.) I would love to know what the value of the land assessment is on certain places here and how they come to that conclusion and what the market mark-up is compared to that, etc, etc. I guess it is real estate 101 for the northeast that I would like to know more about.
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February 6th 2009 - 19:07:38 |
Well, the Republican senators are dancing in the streets over their 10% up-to-$15,000 home purchase tax credit. What a bunch of crock, it was just a political gimmick. Ever see a $150,000 home in this area, let alone NYC? Maybe rural ND or NC.
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February 6th 2009 - 20:27:48 |
No, but I sure have seen a lot of homes that are currently owned by people who took out mortgages they can’t afford…who are going to be bailed out with MY TAX MONEY. So while I break my neck scrimping and saving to own a home, play the game by the rules, etc. these f*cks are skating on my dime. Should I thank the Republicans for that one? Nope. This one’s on the Dems.
Both sides should be ashamed of themselves.
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February 7th 2009 - 11:59:13 |
I feel bad for him, however, I do agree that it seems that he stretched himself thin for the condo, and I don’t blame him really, it was an opportunity and everyone wanted a piece.
I follow the good old fashioned one third rule. Take your pretax income, you know uncle sam will take one third, you should put one third for your daily expenses / savings if possible, and NO MORE THAN one third for rent/mortgage and other debt.
So if you make $4500 pretax, your expenses should not exceed $1500, and your rent/mortgage plus credit card and car payments should never exceed $1500, it’s called living within means. It pays off.
If $400 extra gets you broke, then you have been ‘barely making it’ when it comes to paying mortgage, tax, and fees. That said though, I feel for the writer and I feel his pain, tough times all around!
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