Hoboken Housing Market
Here’s an interesting article about the state of the Real Estate market from Tuesday’s Trenton Times. Funny how this type of information is published in a far-away publication, and not from our local newspapers.
It goes on to note some developments in Hoboken, and describes how desperate some have become by offering wacky incentives just to get people to choose their properties over their competition’s.
William Rosato, Tarragon’s Senior Vice President: “The market was so good up until six months ago. We didn’t have to kill ourselves on incentives, but now we do.”
Sellers employ incentives to avoid cutting prices
Tuesday, December 19, 2006
BY JUDY DeHAVEN
Newhouse News Service
There was a time not so long ago when houses in Montclair would get five, 10, as many as 20 offers at prices $100,000, $200,000, even $400,000 above what the seller was asking.
McMansions in Middlesex County and high-rises in Hoboken couldn’t be built fast enough, fetching multiple offers before the shovel hit the ground. Houses sold not just before the “for sale” signs went up, but even before buyers walked through the door; offers were made based on the pictures buyers saw on the Internet.
For home sellers, those were the good old days, when multiple offers were guaranteed, bidding wars were the norm, and houses sold “as is.” There were no contingencies, no concessions, no problems.
Oh, how times have changed.
As the residential real estate market first slowed, then stalled, the ultimate seller’s market morphed into the ultimate buyer’s market.
Now, homebuyers are calling all the shots. In some cases, sellers are being forced to pay the buyer’s closing costs, or cover the first property tax bill. Lawn maintenance can be had for the asking.
In the new-construction market, buyers can expect free up grades and custom finishes, as well as six months or even a year’s worth of mortgage payments.
And how about a new car to go with your home?
Lennar is giving away Toyota Priuses at its Greenbriar at Stonebridge community in Monroe. And Tarragon recently raffled off a two- year lease to a BMW X3 sport utility vehicle to the first five firm offers it received for its building at 1100 Adams in Hoboken.
“We have a whole potpourri of incentives,” said Harry Kantor, president and chief executive of KOR Cos., who will tailor a financing package to fit a buyer’s needs.ealtors and brokers insist such incentives are essentially gimmicks — that in the end, the seller should just slash the asking price to at tract buyers.
But who wants to be the first on the block to cave? Besides, how would current owners in a new development feel if they had paid $850,000 six months ago and now the same model is going for $700,000?
“I think they use (the incentives) so they won’t have to reduce the price,” said Joseph Gorskey, president of ERA Van Syckel, Weaver & Lyte in Bridgewater.
And so the enticements continue to proliferate, whether they work or not.
During the car raffle in Hoboken, two buyers said they knew nothing of the BMW promotion until after they came to see the building. A third, Katie LeDoux, said her husband, Gary, who did all the research before they bought their unit, was attracted to the Tarragon building specifically because of the BMW.
“It was huge,” she said.
Besides the BMW promotion, Tarragon is offering up to $9,000 toward closing costs and free maintenance for two years, said William Rosato, Tarragon’s senior vice president.
Rosato acknowledged gimmicky incentives “might not get them to buy, but it brings them through the door.”
“The market was so good up until six months ago,” Rosato said. “We didn’t have to kill ourselves on incentives, but now we do.
“We have to stand out from our competition. If you offer what everyone else is, it doesn’t help to bring people through the door.”
The shift from a buyer’s to a seller’s market happened almost overnight. The overall inventory of unsold homes in New Jersey is 67 percent higher than a year ago, according to the Otteau Group, an East Brunswick consulting firm that tracks the state’s housing market. That equates to a nine- month supply of homes on the market, compared with only a four- month supply last year. As homes have gone unsold, prices have flattened and fallen.
Aside from incentives, buyers are getting a lot more bang for their bucks. A typical $1.375 million home at Red Bank-based K. Hovnanian’s Governor Estates’ development in Mendham now includes recessed lighting, a finished basement, granite countertops in the kitchen and master bathroom, and top-of-the-line stainless steel GE appliances, said company spokesman Doug Fenichel.
“Have (the incentives) ratcheted up? Sure,” Fenichel said. “But people have to understand the best incentive is getting a well-built home.”
More and more sellers of exist ing homes are playing the incentives game, too.
“Sellers are throwing in furniture, throwing in the drapes, paying for pool maintenance for a year, landscaping maintenance for a year,” said Diane Turton, president and broker-owner of Diane Turton Realtors, a major agency along the Jersey Shore.
Another common tactic: Sellers are offering to pay toward a one- or two-point reduction of the buyer’s mortgage. This way, the buyer’s monthly payments will be lower, making the home more affordable to a bigger pool of buyers.
Some agents, like Century 21 Pacesetters’ Timothy Burt, also encourage sellers to replace windows and update kitchens and bathrooms. The tactic won’t necessarily translate into a higher asking price, but it will make a home more attractive to a buyer than a similar one three blocks away, he said.
For some sellers, it has been hard to adapt to the changing market.
Christopher and Christine Waldron bought a three-bedroom ranch in Toms River for $105,000 in November 1998. Over the last several years, they completely renovated it, installing everything from central air conditioning and a new furnace to remodeling the bathroom and building a deck.
The goal was to sell the house for a hefty profit and use the proceeds to build a home. Christopher, a contractor, did most of the work.
But when the Waldrons put the house up for sale in September, they had trouble finding a buyer at $335,000. Ultimately they had to settle for $299,000, Christine said.
“They (the buyers) wanted us to pay their closing fees,” Christine said. “But we weren’t budging. We thought the house was worth more. We actually feel we didn’t get what we deserved.”
Like many agents, Barbara Lewis, a Schweppe Burgdorff ERA Realtor in Montclair, doesn’t like incentives, and always counsels homeowners against offering them. But for the first time in the 25 years she’s been in the real estate business, she recently decided to give it a try.
She had a four-bedroom home in Upper Montclair that carried unusually high taxes. Concerned the tax bill would scare off prospective buyers, the seller offered to pay a portion of the taxes.
There were no offers.
In the end, Lewis convinced the sellers to get rid of the tax incen tive and slash the price by $25,000. Two offers came in almost immediately, she said.
Incentives, Lewis said, “are tricks. They don’t really work.”
“I think if somebody buys a house because of a trip to Tahiti,” she said, “they’re probably buying the wrong house.”