This Is Where We Are -- And Headed

Since many of you are too eager to jump on the inevitable bottom in Hoboken RE prices, here's some context to temper your impatience...

Three more years anyone?

Stronger Banks = Weaker Consumers

Strengthening the financial system was believed to be a necessity - but for who?

The latest FICO data show that about a QUARTER of all American consumers are now removed from any possible eligibility to buy a home. The pundits who keep preaching that household formation is creating a backlog of homebuyers better check their facts.

Of course, Uncle Sam could start giving away homes instead of tax incentives!

The accompanying chart shows that a quarter of consumers — 43.4 million — now have a credit score below 600, marking them as poor risks for lenders. They can't get credit cards, auto loans or home mortgages under the lending rules banks use.

As consumers relied on debt to fuel their spending in recent years, their inability to access credit is one reason for the slowing economic recovery.

NJ's New Governor Comes Clean On Discretionary Ownership

If Hoboken property owners are that different in their situation from others in the state, then they should separate! But the reality dictates that prices will adjust - sooner rather than later, if we want to join any eventual upcycle in prices. My unfortunate prediction is that we will stagnate because the majority of property owners in this town are professionals in the business of real estate. Their (lost) fortunes are tied to it!

So, if you can't heed the advice of the Governor himself, then consider how you are going to protect your family's future:
“They should be talking about treating people like adults and telling them the truth: we’re in huge trouble,” he said. “And it’s going to mean cutting back on a lot of things that folks either have become used to or in a perfect world would like to have.”

All you adults know what's at the top of that "like to have" list.

DEFLATION was always the trend

With the latest economic data in mind, RE.ality is beginning to take hold - yes, it took a while due to government intervention with people's minds and home prices; both of which should continue breaking down for the rest of this year.

Our general price opinion on Hoboken properties points to another decline of 20% or so, similar to the first phase of declines over the past couple years. Rentals are not holding up either as supply from the sale side continues to compete with existing lease renewals.

Household formation (in Hoboken) has always been falling in the face of rising optimism, so a mini bubble was brewing before this next leg down.

The cry from the realtor business?
"It's never been more affordable and it's a great time to buy!"
Somehow they have forgotten to justify why it won't continue to be that way - even more "affordable" - for the foreseeable future.

Today's Case-Shiller numbers were good nationally, but down for NYC. That's because the high prices of homes here benefited the least from any interest in the government stimulus.

The NAR lobbyists are screaming for the country's staple diet right about now. Any common sense on this issue would allow the inventory to flush out sooner rather than later. But that's a longer story.

New Source of Home Sellers

The growing angst in Trenton is about to create an unforeseen group of property sellers, joining the ranks of financial services employees. Figure 1 attached.

Another Slap For Political Intervention In Markets

The Commerce Department said sales dropped a record 32.7 percent to a 300,000 unit annual rate, the lowest level since record keeping started in 1963, The fall unwound two months of gains inspired by a government tax credit. Enough said!

If this is east of Manhattan, what about...

Another picture says a thousand words. Queens is on the eastern front to the big city. Income and savings demographics are very similar to those of Hoboken where the population is tiny and more sensitive to economic changes in comparison.
The western frontage onto Manhattan has more dire municipal and state consequences, so there is no good ending in store for Hoboken.