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Re: Is Jersey City Real Estate in a bubble?
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BobNesta wrote:
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bodhipooh wrote:
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BobNesta wrote:
There are actually a good number of foreign buyers, especially in the "luxury" high rises. They either use them as 2nd, 3rd, etc. family homes or homes that their kids can live in or rent them out.

Regarding inventory, especially downtown, I wonder how the short term rental companies impact the market: https://www.skycityapts.com/. I'd normally say it is negligible, but they seem to be expanding and have secured a sizable office space on Grand Street. I have also noticed an influx of tourists in the area.


I don't think short term rental companies like Sky City Apartments affect the market as much as people like to believe. For many buildings in the area, Sky City is a solution that allows them to fill a vacancy in a simple and quick manner. If someone needs to move out, or is evicted, a building can rent out the newly-empty unit to Sky City without letting the unit sit empty for a long while. They don't buy units, they rent units. They then turn around and offer those units as short term rentals. From what I have seen, they cater to a higher end clientele (corporate clients and European tourists) and they are mindful of their neighbors, always ensuring to tell their customers to be mindful of noise, etc.


I understand that they do not buy units, but rather rent them. If they rent 100s of units, that decreases the rental supply thereby potentially impacting the rental market. I have no idea how many units they rent, but I would imagine it's far larger than a dozen given the fact that they've invested in a fairly large office.


I suppose I could agree with you, but then we would both be wrong. There is no need to "imagine" a number. You can look at their site (to which you yourself linked) and see that they only have 31 units in JC. Nowhere near 100s, and definitely not enough units to actually impact the market.

Posted on: 2015/8/14 19:33
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Re: Is Jersey City Real Estate in a bubble?
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bodhipooh wrote:
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BobNesta wrote:
There are actually a good number of foreign buyers, especially in the "luxury" high rises. They either use them as 2nd, 3rd, etc. family homes or homes that their kids can live in or rent them out.

Regarding inventory, especially downtown, I wonder how the short term rental companies impact the market: https://www.skycityapts.com/. I'd normally say it is negligible, but they seem to be expanding and have secured a sizable office space on Grand Street. I have also noticed an influx of tourists in the area.


I don't think short term rental companies like Sky City Apartments affect the market as much as people like to believe. For many buildings in the area, Sky City is a solution that allows them to fill a vacancy in a simple and quick manner. If someone needs to move out, or is evicted, a building can rent out the newly-empty unit to Sky City without letting the unit sit empty for a long while. They don't buy units, they rent units. They then turn around and offer those units as short term rentals. From what I have seen, they cater to a higher end clientele (corporate clients and European tourists) and they are mindful of their neighbors, always ensuring to tell their customers to be mindful of noise, etc.


I understand that they do not buy units, but rather rent them. If they rent 100s of units, that decreases the rental supply thereby potentially impacting the rental market. I have no idea how many units they rent, but I would imagine it's far larger than a dozen given the fact that they've invested in a fairly large office.

Posted on: 2015/8/14 19:14
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Re: Is Jersey City Real Estate in a bubble?
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SRhia wrote:
Given the recent shakiness of the chinese economy, it's also possible that you'll see more chinese people moving their money out of china, to other "safe havens".

At least that's what I would do if I were in china. It's history does not bode well for it's potential future.


My suspicion is that people who could move money would have moved already. Capital flight seems to have accelerated over last few years. Moreover, there is no liquidity in Chinese assets as of now, so it is hard for them to get out of there anymore

Posted on: 2015/8/14 18:03
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Re: Is Jersey City Real Estate in a bubble?
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Given the recent shakiness of the chinese economy, it's also possible that you'll see more chinese people moving their money out of china, to other "safe havens".

At least that's what I would do if I were in china. It's history does not bode well for it's potential future.

Posted on: 2015/8/14 17:57
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BobNesta wrote:
There are actually a good number of foreign buyers, especially in the "luxury" high rises. They either use them as 2nd, 3rd, etc. family homes or homes that their kids can live in or rent them out.

Regarding inventory, especially downtown, I wonder how the short term rental companies impact the market: https://www.skycityapts.com/. I'd normally say it is negligible, but they seem to be expanding and have secured a sizable office space on Grand Street. I have also noticed an influx of tourists in the area.


I don't think short term rental companies like Sky City Apartments affect the market as much as people like to believe. For many buildings in the area, Sky City is a solution that allows them to fill a vacancy in a simple and quick manner. If someone needs to move out, or is evicted, a building can rent out the newly-empty unit to Sky City without letting the unit sit empty for a long while. They don't buy units, they rent units. They then turn around and offer those units as short term rentals. From what I have seen, they cater to a higher end clientele (corporate clients and European tourists) and they are mindful of their neighbors, always ensuring to tell their customers to be mindful of noise, etc.

Posted on: 2015/8/14 16:55
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Re: Is Jersey City Real Estate in a bubble?
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How much of the buying over last 3-5 years in NYC metro area is by foreigners, especially China, Brazil, Australia, Canada and Middle East? If it is significant then I think the price raises aren’t going to be happening anymore. These countries seem to be going into pretty bad economic cycle.


The problem with this assessment is that you fail to account for the fact that, despite worsening economic conditions, those at the top (corrupt bureaucrats, corporate titans, or the massively rich) are not as affected by their local economies going down. In fact, often times, they are completely immune or actually benefit from those situations. Real estate is used by many foreigners as a safe way to "park" their money in what most people consider a safe investment: US real estate. So, if someone with money to spare thinks their local economy is tanking, they would be more inclined to move their money here now by buying or investing in local real estate.

Posted on: 2015/8/14 15:49
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Re: Is Jersey City Real Estate in a bubble?
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There are actually a good number of foreign buyers, especially in the "luxury" high rises. They either use them as 2nd, 3rd, etc. family homes or homes that their kids can live in or rent them out.

Regarding inventory, especially downtown, I wonder how the short term rental companies impact the market: https://www.skycityapts.com/. I'd normally say it is negligible, but they seem to be expanding and have secured a sizable office space on Grand Street. I have also noticed an influx of tourists in the area.

Posted on: 2015/8/14 15:28
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Re: Is Jersey City Real Estate in a bubble?
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there are some statistics available online, here are some links

Foreign buyers prefer urban/city areas. Last year, 30-40% of the Manhattan market was foreign buyers. I would expect some spillover to JC and places like Princeton (parents buying properties for kids etc).

The median Chinese buyer purchase price across the US is ~500k.


http://fivethirtyeight.com/datalab/wh ... p-real-estate-in-the-u-s/

http://www.bloomberg.com/news/article ... ve-u-s-foreign-sales-jump

http://www.realtor.org/sites/default/ ... e%20Buying%20Activity.pdf

Posted on: 2015/8/14 13:53
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Re: Is Jersey City Real Estate in a bubble?
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kvreddy wrote:
How much of the buying over last 3-5 years in NYC metro area is by foreigners, especially China, Brazil, Australia, Canada and Middle East? If it is significant then I think the price raises aren’t going to be happening anymore. These countries seem to be going into pretty bad economic cycle.


People from these countries are buying at the high end of the market, $10M+ properties. The effect on the JC RE prices are minimal to non existent. Prices in the regional NYC market have pulled prices up in JC.

Posted on: 2015/8/14 13:08
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Re: Is Jersey City Real Estate in a bubble?
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How much of the buying over last 3-5 years in NYC metro area is by foreigners, especially China, Brazil, Australia, Canada and Middle East? If it is significant then I think the price raises aren’t going to be happening anymore. These countries seem to be going into pretty bad economic cycle.

Posted on: 2015/8/14 12:42
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I was at Razza over the WE and saw light and furnitures in a few units at Charles. Yes they are filing. As for incentives, just a reminder that new constructions often come with this deal to fill up at first.

Posted on: 2015/8/12 22:19
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SRhia wrote:
Are people already moving into Charles & Co by City Hall - I saw some moving trucks over the weekend.

Does anyone know how well/fast the rentals are going?



I think move in's for Charles & Co began about two weeks ago, they had a welcome party for tenants on the rooftop on Aug 4. Seems like rentals are going well, they only had about 10-12 apartments available at that time.

Posted on: 2015/8/12 21:41
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Are people already moving into Charles & Co by City Hall - I saw some moving trucks over the weekend.

Does anyone know how well/fast the rentals are going?

Posted on: 2015/8/11 17:30
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Qiu001 wrote:
With so many rentals coming up offering a lower rent price might just be a strategy to get people in faster, they can always raise the rent after the yearly lease is up. But like some others have posted there are various types of incentives that are offered when you go talk to and ask the right questions.


The common misunderstanding of the laws of supply and demand: Just because supply increases, it does not mean that the market price of something is going to go down. It only goes down if the demand remains constant. But, as we all know, the demand part of the JC RE equation is matching, and often exceeding, the supply side. As much as some think we are reaching a saturation point in apartment building, that is simply not supported by the facts and numbers available. Entire buildings are getting leased in their entirety within months of opening to the public. Warren @ York was 100% leased within two months or so. The ArtHouse JC took a little longer, but their price point was higher, and they opened during a traditionally "slower" season (late fall to winter) and it still managed to be 100% leased by January (four months after first move ins). I have no doubts that The Morgan will be fully leased as units come on the market, but theirs will be a slower process, as they are only making available a few floors at a time. JC The One already has some residents. The reality is that, much to the chagrin of many people, JC is seeing a fast and serious growth in higher earning residents with money to spare and they are snapping up all of the rental units coming to the market and with that bringing a lot of change.

Posted on: 2015/8/11 14:49
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With so many rentals coming up offering a lower rent price might just be a strategy to get people in faster, they can always raise the rent after the yearly lease is up. But like some others have posted there are various types of incentives that are offered when you go talk to and ask the right questions.

Posted on: 2015/8/11 10:42
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bodhipooh wrote:
Total BS. I often wonder if people that make fake claims do so out of some misplaced hope to see things turn out the way they wish, or some willing obliviousness to actual facts.

Warren at York: one free month with a 1-year lease contract.
The ArtHouse JC: one free month with a 1-year lease contract.

I'm 90% certain it was the same with 18 Park.

As for rents going down, go ask the residents of ArtHouse JC. first residents are starting to get renewal notices, and they are seeing a modest increase. Asking rents at The Morgan are below The ArtHouse, but their finishes are nowhere near as nice.


Whoa! Well Art House & Warren@York certainly didn't advertise on their websites that there was a free month of rent on a 12- or 13- month lease, while 50 Regent is doing so. As for the rents at 50 Columbus, I remember seeing them on their website a year ago...studios were starting around $2200/month. Maybe the studios there are larger than at other buildings, but still...

As for the cancellation of condo towers, just you wait and see. Don't look for any condo tower ground breakings for awhile.


Tons of places don't advertise what their incentives are, but every place has incentives, or you can negotiate them during the viewing and leasing process. My friend renting a studio at the ArtHouse is paying about 2600, so compare that to other buildings.

As for comparing one building to another, you can't just say "well, the rents here are lower, so the market must be down". You have to take into consideration the finishes, amenities, and other such things. To compare a building laden with amenities against another with average finishes, and still under construction, is useless.

Just so other people understand what is being talked about, The Morgan is very much still under construction: first move ins will not happen until early October. The builder is only releasing a few floors at first, and then one additional floor every two weeks, as they complete the finishing touches in each unit and get the floors ready for move in. Anyone moving into that building early on will be dealing with construction noise and nuisances for the foreseeable future. That alone should/will put pressure on asking rents, as they have to entice people to want to put up with that. Also surprising, or disappointing, is that just as it is the case with most buildings under construction in JC, availability of three bedrooms is very limited. In the case of The Morgan, 3BD units are only available on floors 2-7. At least at The ArtHouse they had those units in the upper floors. I don't have details on JC The One yet, but I'll be visiting it soon. I believe they do not offer 3BD units at all.

Lastly, to assume anything, just because it is not published on a website, is a silly thing to do. I am pretty sure these buildings don't advertise having elevators, but you know they do. Real Estate and Leasing offices are like gyms: they want you to come in and talk to you face to face. You can't even stop by and ask for spec sheets and price sheets. They want to show you around and do the sales routine thing. Personally, I find the whole thing annoying and too time consuming, but that's the way it works. If you want to get the full details, or if you have any interest in informing yourself, pick up the phone, or swing by a building, and make an appointment. You can then learn the details of any incentives and offers they may have.

Posted on: 2015/8/10 12:50
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bodhipooh wrote:
Total BS. I often wonder if people that make fake claims do so out of some misplaced hope to see things turn out the way they wish, or some willing obliviousness to actual facts.

Warren at York: one free month with a 1-year lease contract.
The ArtHouse JC: one free month with a 1-year lease contract.

I'm 90% certain it was the same with 18 Park.

As for rents going down, go ask the residents of ArtHouse JC. first residents are starting to get renewal notices, and they are seeing a modest increase. Asking rents at The Morgan are below The ArtHouse, but their finishes are nowhere near as nice.


Whoa! Well Art House & Warren@York certainly didn't advertise on their websites that there was a free month of rent on a 12- or 13- month lease, while 50 Regent is doing so. As for the rents at 50 Columbus, I remember seeing them on their website a year ago...studios were starting around $2200/month. Maybe the studios there are larger than at other buildings, but still...

As for the cancellation of condo towers, just you wait and see. Don't look for any condo tower ground breakings for awhile.

Posted on: 2015/8/10 2:19
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Dolomiti wrote:
It's not like rentals are stagnant in JC, by the way. Rent has increased about 10% since January 2014. Heck, there was talk of a "rental boom" last year, and concerns of overbuilding.


There was a rental boom and now rents are dropping. For the first time since the bottom of the Great Recession, a new downtown building (50 Regent) is offering a month of free rent. Starting rents at The Morgan (Toll Bros building) are below where rents at comparable buildings in the same neighborhood (50 Columbus and Grove Pointe) were a year ago, and it's a brand new building. Besides the buildings that have opened or started leasing, you have another 1,100 units coming online with 70 Columbus and M2 opening before year-end. That's only going to put more downward pressure on rents. As I've said several times over the past few years, the owners of these new rental buildings can take quite a hit with high vacancy rates or huge concessions because they've received tens of millions of dollars in subsidies at the state and city levels (and some even at the federal level).

btw - Toll Bros were originally planning on breaking ground in Q3 of this year on a condo tower adjacent to the Morgan, but rumor is that those plans are now on indefinite hold because the downtown condo market isn't anywhere near healthy. Not surprising as 99 Hudson, the much-publicized China-funded condo project, is also on indefinite hold now (was originally supposed to break ground in June). The 99 Hudson developer had already drastically downsized the plans from the whopping 95 story icon to a building about the size of URL.


Total BS. I often wonder if people that make fake claims do so out of some misplaced hope to see things turn out the way they wish, or some willing obliviousness to actual facts.

Warren at York: one free month with a 1-year lease contract.
The ArtHouse JC: one free month with a 1-year lease contract.

I'm 90% certain it was the same with 18 Park.

As for rents going down, go ask the residents of ArtHouse JC. first residents are starting to get renewal notices, and they are seeing a modest increase. Asking rents at The Morgan are below The ArtHouse, but their finishes are nowhere near as nice.

Posted on: 2015/8/10 1:28
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to my knowledge, 50 regent is not the first. 18 park did too when they opened up.
Can you tell where you are getting the information about rents in the Morgan? A studio there is going for $2050-2300 and 1 beds for $2635 to 2900.
Anyone living in a highrise in downtown has seen rents increase by 3-5% on average the last few years, and the trend seems to be that way. The new buildings coming up are in a "luxury" category and are able to charge higher rents and as a result, even the older buildings are using this as an excuse to charge more.
It is true that more supply is coming online, but it also looks like there is a lot of demand. For example, the ONE seems to have been out of studios the day it was open for leasing.

Posted on: 2015/8/9 23:10
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It's not like rentals are stagnant in JC, by the way. Rent has increased about 10% since January 2014. Heck, there was talk of a "rental boom" last year, and concerns of overbuilding.


There was a rental boom and now rents are dropping. For the first time since the bottom of the Great Recession, a new downtown building (50 Regent) is offering a month of free rent. Starting rents at The Morgan (Toll Bros building) are below where rents at comparable buildings in the same neighborhood (50 Columbus and Grove Pointe) were a year ago, and it's a brand new building. Besides the buildings that have opened or started leasing, you have another 1,100 units coming online with 70 Columbus and M2 opening before year-end. That's only going to put more downward pressure on rents. As I've said several times over the past few years, the owners of these new rental buildings can take quite a hit with high vacancy rates or huge concessions because they've received tens of millions of dollars in subsidies at the state and city levels (and some even at the federal level).

btw - Toll Bros were originally planning on breaking ground in Q3 of this year on a condo tower adjacent to the Morgan, but rumor is that those plans are now on indefinite hold because the downtown condo market isn't anywhere near healthy. Not surprising as 99 Hudson, the much-publicized China-funded condo project, is also on indefinite hold now (was originally supposed to break ground in June). The 99 Hudson developer had already drastically downsized the plans from the whopping 95 story icon to a building about the size of URL.

Posted on: 2015/8/9 22:27
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Dolomiti wrote:
What, exactly, is the basis for your prediction?

I said way upthread, high GRM's.

Yes, way upthread... As in, 3 months ago -- how could I forget? :D

I'm curious as to whether you've charted out the GRM for the past 20 years running. Are you comparing it to Hoboken, or Manhattan, or parts of Brooklyn? You do realize that as DTJC becomes more gentrified, what was once an unsustainable GRM becomes more feasible? How many rental units became available since 2013?

More importantly: How you determine that a high GRM means a bubble as opposed to merely overpriced? The two are certainly not the same thing. The S&P 500 dropped 10% in November 2012; does that mean stocks were in a bubble? Does the fact that the market brushed itself off and continued to climb answer that question, or just show that stocks are still in a bubble? (See the problem yet with making such predictions, in the absence of the other factors...?)

A bubble is typically characterized by very rapid growth, irrational behavior, prices disconnected from fundamentals, substantial assets diverted, and by a spectacular crash -- one that we haven't seen in the ~3 months since this thread has started. It has a very different logic and trajectory than the normal ups and downs of a market.

GRM isn't really a great measure anyway. It is only a ratio, and is only really useful for those who want to buy a unit to rent out. At least 70% of housing units in JC are rentals, which means (among other things) that we can't compare it to national figures. We can certainly look at a high GRM to help us conclude that it's a bad time to buy a unit as a rental property, without that meaning that an area is in a bubble. GRM doesn't tell you about inventory rates, rental vacancy rates, average days on the market, what percentage of the median income is going to housing, and lots of other factors that are far more likely indicators of a bubble than GRM.

E.g. if developers build too many rental units in the next 2 years, rental prices will drop, but condo prices generally won't, and GRM will shoot up. Would it make sense on that basis to declare under those conditions that "condo prices are out of whack with reality"?

It's not like rentals are stagnant in JC, by the way. Rent has increased about 10% since January 2014. Heck, there was talk of a "rental boom" last year, and concerns of overbuilding.


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Speculation based markets cannot climb indefinitely. Just where is that point is the question.

No one is saying DTJC will climb indefinitely.

The difference is that some of us understand that markets can go up and down, without declaring that every gain is evidence of a bubble, and/or that every dip is the bursting of a bubble.

Posted on: 2015/8/5 14:21
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Dolomiti wrote:
What, exactly, is the basis for your prediction?


I said way upthread, high GRM's. GRM's above a certain point are unstable, just like high equity PE's. It indicates it's not about a place to live. Either rents will climb dramatically, or prices will fall to achieve the normal equilibrium of rent vs own. Speculation based markets cannot climb indefinitely. Just where is that point is the question.

Posted on: 2015/8/5 3:00
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It's true the previous bubble dwarfed all others, and teh next correction will likely look more like the late 80's, but don't underestimate the pain of that kind of correction. Plenty of developers went under.

Wait, what? Developers went under?!?

Resized Image


C'mon. There was a lot going on around that time, including the massive '87 stock market crash, the S&L failures, the early 90s recession. And despite that decline, Hoboken continued to gentrify, and DTCJ started warming up as well.

Better yet: What, exactly, is the basis for your prediction? Why do you think DTJC prices will slide by 15%, and stay low for 7 years? Is it because you have a gut feeling that $650/sq foot is too expensive? Is there some "correct" price for DT real estate? Is Related going to price Hudson Yards at $450/sq ft? Are people going to move to DTJC only to find out that Prato doesn't have seating yet, and be so upset they sell their homes at a loss?


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I don't know where you're getting your numbers.

https://us.spindices.com/indices/real- ... new-york-home-price-index

Case-Shiller breaks out the individual cities of its 20-city index. If you mouse over the chart, it will give you the numbers.

Posted on: 2015/8/4 19:04
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Dolomiti wrote:
By the way, how bad was that 80s crash? Not so bad. If you look a the Case-Shiller NYC index for NYC:
• It was around 35 in the early 80s
• It rose and peaked at 85 in August '88
• It gradually fell to 72 in May '91, which we should note was a 15% drop and a recession
• By 1998 it was back to 85, and climbing

The recent bubble was a much bigger run-up and fall, peaking at 215, falling to 157 (a 26% drop)... but still not falling anywhere near pre-2000 prices.


It's true the previous bubble dwarfed all others, and teh next correction will likely look more like the late 80's, but don't underestimate the pain of that kind of correction. Plenty of developers went under.

I don't know where you're getting your numbers. I've seen this graph many times, adjusted for inflation the bottom of the market was 97. I know this because that's when we 1st bought! And no, I have no intention of selling anything, I'm an investor/landlord, not a speculator who bails at a sniff of downturn.

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Posted on: 2015/8/4 15:56
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Re: Is Jersey City Real Estate in a bubble?
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brewster wrote:
Are you too young to know which bubble I am referring to?

You referred to several bubbles. And I do know what you're talking about with the 80s.

Again: I am not, in any way shape or form, arguing that "this time it's different!" in the sense that previous valuation rules or market forces should be chucked out the window. I'm saying that condo/housing prices in DTJC are responding to normal market pressures. Inventory is short, demand is high, interest rates are cheap. These factors could change at any time. There's some inventory coming on the market, the broader economic conditions could certainly slow down, we could easily have some drops in price. I've been saying this all along.

I'm also not saying that derivatives and other market mechanisms are necessary components of a bubble. Rather, they are fuel on the fire, and indicative of the frenzied and irrational behavior people and institutions often exhibit in bubble conditions.

The mechanisms were different in the 80s -- they didn't have derivatives, or computer-driven risk assessment, and so forth. We should also note that the bubble was largely regional -- like I said, prior to 2006 it was rare to have a national (let alone global) housing crash. But they did see, per your own link....
• buying a home as an investment
• "creative financing"
• a flood of rentals converting to condos
• raffling off homes
• people buying 2nd and 3rd homes
• the rise of the adjustable mortgage, 2nd mortgages, balloon payments etc
• increases in mortgage fraud
• realtors going on a wave of hiring

We don't see a lot of frenzied activities along these lines today. There's a little bit, because inventory is very low -- e.g. buyers put in multiple bids immediately, sellers are picky. But we certainly aren't seeing everyone piling on and saying "prices will never fall!"

By the way, how bad was that 80s crash? Not so bad. If you look a the Case-Shiller NYC index for NYC:
• It was around 35 in the early 80s
• It rose and peaked at 85 in August '88
• It gradually fell to 72 in May '91, which we should note was a 15% drop and a recession
• By 1998 it was back to 85, and climbing

The recent bubble was a much bigger run-up and fall, peaking at 215, falling to 157 (a 26% drop)... but still not falling anywhere near pre-2000 prices.

In other words: It takes a lot more than "zomg DTJC is expensive!" or "it is happening again!" to declare that there's a bubble.

But hey, if you think I'm wrong, go right ahead and sell your home, cash in, rent until condo prices crash, and buy a new condo at 15% below peak value. I certainly won't stop you. :D

Posted on: 2015/8/4 14:30
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Re: Is Jersey City Real Estate in a bubble?
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I have a vivid 1989 bubble story. I lived in a Victorian (not renovated) on the water in Branford Ct (rented). It went up for sale in 1989 for one million dollars. It sat on the market for 6 years and slowly dropped it's price down to $350,000 in 1995. SOLD. Today it worth well over a million dollars again.

Posted on: 2015/8/4 13:29
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Re: Is Jersey City Real Estate in a bubble?
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Dolomiti wrote:
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Why could it not look like the one before that in the late 80's, or the one before that? All it takes is a big hit to the equities market to cause people to lose confidence and retrench.

Ironically, it was very likely the early 90s equities crash that was the initial spark for the subsequent real estate bubble.


Are you too young to know which bubble I am referring to? Here's a refresher course. It's all there, just without the same level of bank malfeasance. Much of your arguments amount to "this time it's different!"

http://njrereport.com/80sbubble.htm

BTW, the dotcom bust was in 99, not the early 90's.

Posted on: 2015/8/4 3:49
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brewster wrote:
You make the assumption that the next correction will look exactly like the last one.

To be precise, I'm assuming that bubbles have certain things in common. ;)

I also don't think that every drop in prices means there was a bubble that burst. E.g. prices in the area have apparently cooled a little bit; that doesn't mean prices will crater by 25% by the end of the year, 50% next year, and stay there for another 4 years.


Quote:
Why could it not look like the one before that in the late 80's, or the one before that? All it takes is a big hit to the equities market to cause people to lose confidence and retrench.

Ironically, it was very likely the early 90s equities crash that was the initial spark for the subsequent real estate bubble.

After the Dot Com implosion, investors wanted somewhere safe to put their capital, preferably a conservative asset class. They started putting money into real estate, in part because across-the-board declines in prices were very rare... prior to 2006. And then you had the development of derivatives, the low interest rates, the proliferation of corrupt mortgage originators, the insufficiently designed programs to assess risk both within the ranks of borrowers and VARs at the banks, and so on.

Or, to put it another way: If the prices of tulips goes up while supply goes down, it doesn't mean there is a bubble. If the price of tulips goes up while supply goes up, and everyone starts buying them, and people start buying them on credit, and wallpaper with tulips on them sells out in 10 minutes, and the cashier at Chipotle tells you she's investing in tulips, then I think we can say there's a tulip bubble. ;)


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Markets overheat and then correct, that's what they do. It's not an IF, it's a WHEN. Fatal last words: "this time it's different".

Yeah... not quite ;)

The bubble mentality of "this time it's different!" implies that there is some new condition that magically results in a never-ending upward spiral of prices. It's a ludicrous way of thinking, in which I do not indulge.

I am only pointing out that we don't see the kind of frenzied buying and supporting mechanisms that we usually see with a bubble. We don't have insane volumes. We don't have banks throwing money at high-risk borrowers. We don't have the kind of frenzy we see in bubbles.

What we see is a small neighborhood that is increasingly trendy, increasingly popular, that has lots of rentals and not much inventory for home buyers. Eventually prices will likely flatten a bit, maybe even come down for a bit. There's nothing special, nothing magical, nothing that will cause a perpetual spiraling of prices.

Posted on: 2015/8/3 20:56
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Re: Is Jersey City Real Estate in a bubble?
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Dolomiti wrote:
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JCMan8 wrote:
[quote]If this is how it is now I can't imagine how bad it's going to get after the 25,000+ apartments currently under construction get completed.

Daily ridership is around 240,000 trips per day. The 33rd Street line will expand to 10 cars in a few years. The PATH will be fine.


Platforms on the NWK-WTC line will be expanded to 10 cars, not the 33rd St line. We're stuck with 7-car trains.

Posted on: 2015/8/3 16:01
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Re: Is Jersey City Real Estate in a bubble?
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brewster wrote:
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Dolomiti wrote:
And of course, he fails to note how so many of the mechanisms that inflated the past bubble -- e.g. poor valuations of risk, banks willing to loan to anyone with a pulse, banks selling MBSs and RE derivatives all over the world, and so on are not active, as they were in the last bubble.


You make the assumption that the next correction will look exactly like the last one. Why could it not look like the one before that in the late 80's, or the one before that? All it takes is a big hit to the equities market to cause people to lose confidence and retrench.

Markets overheat and then correct, that's what they do. It's not an IF, it's a WHEN. Fatal last words: "this time it's different".


Very true. You can't time any market. What you can control is your time horizon - generally means buy as a long term investment. Short term you can expect to ride a few black swans.

Posted on: 2015/8/3 4:38
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