Hudson County heavyweights Hoboken and Downtown Jersey City have historically led the marketplace but haven’t seen any significant rise in property appreciation for some time, and that reality could be what’s driving a shift toward more rentals closing in the waterfront neighborhoods.
The latest market report from Pure Properties shows that homeowners in Downtown Jersey City haven’t witnessed much of a change in their values year-on-year, with the average sale price of a 1-4 family home retreating 1% to $1.416 million during this year’s first quarter. However, that might be somewhat welcome news after the real estate conversation last year focused around a citywide revaluation that walloped Downtown homeowners particularly hard.
The calendar change to 2019 marked one year since new tax assessments were issued and home price volatility has certainly been less pronounced than anticipated. In terms of 2019’s first quarter, sale prices for 1-4 family homes actually rose 9% from Q4 of 2018, while condo sales settled in at $700,000, a 3% dip both since 2018’s Q4 and year-on-year.
2018 saw an influx of inventory for sale in Downtown, but sales in the neighborhood have slowed this year. Both 1-4 family homes and condo sales volumes have fallen 14.7% from the corresponding period last year, with only 15 transactions involving 1-4 family homes taking place over 2019’s Q1. Condo transactions also fell from 127 last quarter to just 109 during this one.
It seems likely that an influx of rentals might be driving the lower transaction numbers. In 2019’s Q1, Downtown saw 313 total leases signed for rentals, up 16% in the quarter and rising a pretty significant 28% year-on-year. Anecdotally, agents in the area have opined that their clients are pausing on buying in part due to the tax revaluation, and it may be causing potential sales to be diverted to the leasing market. But even with an influx of rental units coming to market, Downtown median rents clocked in at $2,700/month, the exact same level since the Pure Quarterly Reports began in 2016.
Since Downtown Jersey City started encroaching on their territory in 2016, Hoboken has established itself as the market leader and achieved the highest single-family sale of 2019’s Q1 with a $2,380,000 property on leafy Bloomfield Street. The average 1-4 family home in the city sold for $1.715 million during 2019’s Q1, up 2% in the quarter but off 1% year-on-year.
The condo market in Hoboken saw sales prices drop a modest 3% year-on-year to $745,000, while the average days on market increased 18% year-on-year to a total of 43 days. Total transactions in the Mile Square City are also down a bit, as only seven 1-4 family homes closed during Q1 compared to 17 last quarter. Condo sales in the quarter totaled 137, down from 180 in Q4 and off 17% year-to-year.
Rents in the Mile Square City clocked in at an average of $2,598/month, and total rental transactions here are also more plentiful than in the recent past. 2019’s Q1 saw 416 total rentals close, which is up 8% over the quarter and 11% year-on-year. There appears to be a shift towards renting instead of buying here as well, demonstrating that Hoboken and Downtown Jersey City are starting to mirror each other a bit in terms of their trends.
The sales volume drops in both neighborhoods may be concerning, but they are mostly in line with national economic trends, as nationwide real estate sales volumes are down 8.5%. A slight decrease in the average mortgage rate since the new year in combination with a rebound in the equity markets brings hope that 2019’s slow real estate start could be short-lived, but it remains to be seen if those factors contribute to an uptick in sales activity.