While there is light at the end of the tunnel on the national RE picture, the effect of the credit crisis on investment banking activities has just begun; Lehman being the latest employer to expunge jobs quietly.The affluent in Hoboken's demographics differ widely from that of our leading metropolis. Ours is totally employee-driven (or new money) wealth while the big city has a diversity of well-established (or old money) sources that originate nationally and internationally.
This core however is often marketed as a similar source for Hoboken's buying power in issues such as RE - and is frankly, a joke.
There is no such correlation except in a marketer's imagination on stroking the west bank consumer's ego.
Unfortunately, the drawbacks of the city impact us exponentially since it is the sole source of that employee-driven wealth - namely Wall Street and it's investment banking activities.
As the city council ponders layoffs, consider the EXTENT of the impact from the credit crisis on Hoboken's so-called affluent demographic.
As I write this, RE brokers and flippers are proudly celebrating closings at the second MP building at 1125.
Firstly, I'm not sure who those owners are that they would be so comfortable in closing their piece of an unfinished puzzle. Secondly, they should ponder the combined impact on valuations from the already dormant units at 1025. Their defiant approach to this crisis is only denial.
Buyers will continue to wait it out until they can see the whites of their (sellers) eyes. While I don't expect the recent economic optimism on the inflation and growth front to ease interest rates, I don't see it helping the reduction of inventory either. The combined effects of the above-mentioned employment hit (focused on Hoboken's upper echelon) and continued growth in RE inventory extends this valuation cycle much further than Hobokenites think. My current thinking on 2-3 years will likely extend to 3-5 years as prospects here worsen despite any national optimism.
No comments:
Post a Comment