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Re: Downtown, downturn?
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Say it isn't so, does that mean I can't sell my one bedroom on Mercer street for a million dollars?

Posted on: 2006/7/19 20:09
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Downtown, downturn?
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Throughout Downtown, a slowdown?
Experts fear slowdown in real estate market
Wednesday, July 19, 2006
By JARRETT RENSHAW
JOURNAL STAFF WRITER

Rising federal interest rates combined with growing concern among the nation's lenders over how much supply Jersey City's Downtown can handle has some experts and local officials predicting a significant slowdown in the city's bullish residential market.

The apparent shift in momentum comes at a time when Jersey City planning officials are bracing for upwards of 20,000 new units - from rentals to condos - in the Downtown region alone over the next decade, and it's now unclear whether the city will hit that target as the market emerges from its borrower-friendly epoch.

The perception of a flooded market has already slowed down one major Downtown project, and one of its high-profile developers - mega mogul Donald Trump - recently told The Jersey Journal the second phase of his Trump Jersey City project "may or may not get built, depending on market conditions."

The attorney for Metro Homes, James McCann, defended a postponement of a payment to the city saying that the lenders for the project have become jittery about the prospects of selling out the second of two towers.

"The banks are a little more skeptical of condo developments, because of the supply," said Dave Barry, of Applied Development.

Downtown Councilman Steve Fulop, who also works in Manhattan's financial district, says the city should consider the market slowdown when banking on revenue from proposed projects.

"I believe there will be a lot of projects that now may not come to fruition in the near term, so I think we need to revisit the abatement process, such as sunset provisions, to make sure that the city gets a return on its commitment," said Fulop.

"Look at the Trump project. It's an approved project, but we're not getting the revenue we expected, and I thinks it's representative of the climate."

The U.S. Federal Reserve Board recently made the decision to raise interest rates for the 17th consecutive time, to 5.25 percent, increasing long-term mortgage rates - as well as the cost for developers who want to borrow money to build the multimillion projects that dominate Downtown.

"Developers are now being asked to put more money up front because of the rate increase, and they are asking whether it's worth it," Barry said.

Jamie LeFrak, of LeFrak Organization Inc., said Jersey City has protection from the bursting of the real estate bubble because of its close proximity to New York City and its colossal job market.

"The job market in New York City is healthy, and people want to live close to their jobs, and they have found Jersey City a great place to live, so that won't change," LeFrak said.


Supply is giving buyers the edge
Wednesday, July 19, 2006

The swelling residential market supply has taken the negotiating power out of the hands of the developers and put it into the hands of buyers for the first time in years.

"Buyers now have more negotiating power and more selection as the market gets flooded with units," said Mike Berney, regional director with Liberty Realty.

Home sales in Hudson County are down 10 percent from this time last year, while the average price of a home has shot up 21 percent from last year to $475,000, Berney said.

"The market may no longer support the price (but) homeowners are stubborn when they are selling," said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. "Units are staying on the market for much longer."

Hughes said Hudson County's home sales statistics are typical indications of a market slowdown - which usually happens when the federal interest rate goes up.

"We have yet to invent a way to make booms last forever," Hughes said.

JARRETT RENSHAW

Posted on: 2006/7/19 20:00
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