How’s the Hoboken rental market?

1/13/2010:

Exodus to where?

Not sure if it’s the cold weather, the post-holiday gloom, or what – but am I the only one that seems to think that it looks like less people are around the streets these days? I even noticed somewhat less traffic this past weekend too. There were even less “moving in” trucks at the beginning of the month. Perhaps it’s just the winter, who knows.

But I thought this Yahoo article was interesting – saying how the apartment rental vacancies are at a 30-year high. Does anyone know what the real vacancy numbers are like in Hoboken? Or that maybe 3% isn’t enough to stop the vacancies?

Hoboken Apartment Vacancies

Vacancies at 30-year high, prices down 3% in 2009

“Apartment vacancies hit a 30-year high in the fourth quarter, and rents fell as landlords scrambled to retain existing tenants and attract new ones.

The vacancy rate ended the year at 8%, the highest level since Reis Inc., a New York research firm that tracks vacancies and rents in the top 79 U.S. markets, began its tally in 1980.

Rents fell 3% last year, according to Reis, led by declines in San Jose, Calif., Seattle, San Francisco and other cities that had brisk growth until the recession.

Gains in home sales have been driven by government stimulus, leading some to wonder if the nascent housing recovery needs federal assistance to sustain, Nick Timiraos reports.

In New York City, the vacancy rate improved by 0.1 percentage point for the second straight quarter, but around 60% of rental buildings dropped their rents in the fourth quarter from the previous quarter. Effective rents — which include concessions such as one month of free rent — fell 5.6% in New York last year, the worst since Reis began tracking the data in 1990.

Landlords now must entice tenants to renew leases. “We’ll shampoo their carpets. We’ll paint accent walls. We’ll add Starbucks cards,” said Richard Campo, chief executive of Camden Property Trust, a Houston-based real-estate investment trust that owns 63,000 units. He said the first half of 2010 should be “pretty ugly,” but was optimistic the sector would pick up later in the year.

Few markets have been spared. During the fourth quarter, vacancies increased in 52 markets, while they improved in 17 and stayed flat in 10. Vacancies increased most sharply for the year in Tucson, Ariz.; Charlotte, N.C.; and Lexington, Ky.

Vacancies are tied to unemployment, because many would-be renters move in with family members or double up during a downturn. Apartments have been squeezed because younger workers, who are more likely to rent, have experienced the brunt of job losses during the downturn.

Landlords were also hit last year by competition from a wave of new supply that hit the market. The 120,000 units that came onto the market last year, including some busted condo projects that had to be converted to rentals, represented the most new construction since 2003, according to Reis.

See previous updates after the jump!

(Apartment Vacancies, continued…)

Many of those developments had secured financing before credit markets seized up. The credit crunch has frozen most new development, which means that new apartment completions should fall by half in 2011. That’s one potential silver lining for apartment owners: The limited new supply should give them the ability to boost rents quickly whenever job growth returns.

“If you are renting a place, now might be a good time to renegotiate that lease,” said Victor Calanog, director of research for Reis, who added that the sector could see a recovery in the second half of the year, buoyed by either job growth or at least the perception that the economy was turning around.

Such oversupplied markets as Florida, Phoenix and Las Vegas are hurting, even though housing sales have picked up. “Landlords aren’t benefiting because jobs aren’t recovering,” said Hessam Nadji, managing director at Marcus & Millichap, a real-estate firm.

Marcus & Millichap is to release a separate report on Friday that forecasts a further 2% to 3% drop in apartment rents over the next year, most of which will be concentrated over the next six months. The report forecasts Washington, D.C., will be the healthiest rental market in 2010 for the second straight year.

Government efforts to prop up the housing market also threaten the apartment sector by making it easier for some renters to buy homes. Some landlords have reported a slight uptick in renters moving out to buy homes. Around 13% of Camden Property’s move-outs last summer left to buy homes, up from 11% at the beginning of the year. But that is still roughly half of the rate seen during the housing boom, when mortgage standards were much looser. “During the housing boom days, you had people who weren’t qualified to rent but could buy a half-million-dollar home,” said Alexander Goldfarb, an analyst at Sandler O’Neill & Partners LP.

Thanks to falling home prices and record low mortgage rates, it now costs less to own than it has in the past decade on a mortgage-payment-to-rent basis. But falling rents are expected to offset some of the recent improvement in affordability, making renting more attractive than owning in some markets.

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22 Comments on "How’s the Hoboken rental market?"

nubber
Member
nubber

moved in October. received 1 1/2 months free on a 13 month lease. no brokers fee. rent is approximately $300 cheaper/ month than identical unit last year. I know because I had a buddy who lived in building. Elevator, gym, w/d in unit, common lounge, shuttle service etc in building.

The management companies have much more flexibility than small landlords. They want the unit rented for their operating revenue.

bmoc04
Member
bmoc04

The rents may be a little lower, but probably nothing to cause widespread panic. Hoboken is still a hot market when compared to the rest of the country and within the greater NYC area. I could see rents in fringe parts of town like farther west and away from the PATH coming down a bit more. I could also see rents in places like JC or UC (“West Hoboken” as some zealous realtors call it) coming down even more since the boom is over.

But if you have a nice apartment in a convenient location, it will be desirable. Every June people graduate college and want a place to live in or close to NYC and Hoboken still offers that. You can build all of the swankiest condos you want in Jersey City, Union City and on top of Light Rail tracks, but the traditional Hoboken apartments will always be desirable. Location, location, location. It will always win.

xyzpdq
Member
xyzpdq

My experience is the Hoboken rental market comes in three parts. Part one is rent-controlled, so little changes unless tenants move out. Part two is owners in older buildings who rent at market rates despite the rent control law. These can be older condos or multi-family units. These see the biggest market fluctuations and can easily move up or down hundreds of dollars a month depending on the demand at the time of vacancy. Part three are the so called luxury rental units in newer buildings. People pay more for new even if it means less space. Parts two and three are the best barometers, and yes the rents are lower than two years ago.

MidnightRacer
Member

Dumpy town – yes

Abandoned town – noway, Ricardo Montalb├ín

Hoboken has always, and will always be the town with the most liquor licensed establishment per capita. In post college lingo, that means the anticipated luck of the one-nighter will always make Hoboken be perceived as the Fantasy Island to the natural cycle of graduates, mecca to the suburbarian subhumans, Escape from New Yorkers slithering out, and neo-hedomism for the uber-narly Sergios and Kellys of today’s upchuckyups.

Besides, if prices ever return to 90’s pricing, I’d be all over it. And if buildings ever go for 80’s pricing, just call me Mr. Roper.

HobokenRes
Member
HobokenRes

I used a local realtor to rent my place as of 1/1/2010 and had no problems whatsoever. The realtor showed it nearly a dozen times over the course of two days and had it rented on the third. The rental market seems strong to me.

lonnie1wsj
Member
lonnie1wsj

I think you have things twisted a bit.
A couple of years ago there would have been a dozen interested tenant applicants the very first day an apt was advertised.
It would then rent the first day within hours…There were also “Bidding Wars” by 2 or more applicants for the very same unit.
Trust me this rental market is the weakest its been in years..
Never before have Realtors used MLS to advertise and co-broke a rental….Now, that’s the new game in town….!

In response to HobokenRes who said:
I used a local realtor to rent my place as of 1/1/2010 and had no problems whatsoever. The realtor showed it nearly a dozen times over the course of two days and had it rented on the third. The rental market seems strong to me.

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