March 19, 2009
By ADAM BONISLAWSKI
WHAT’S one sure sign a real estate market has gone south; When developers are willing to talk publicly about price cuts. In better times, a developer would rather confess to drown ing kittens than chopping prices Today, however, lips are looser. Instead of clamming up about price reductions, some builders now seem almost eager to spread the word.
And along the western side of the Hud son River, the word is definitely spreading. Long touted as cheaper alternatives to Manhattan, Jersey City and Hoboken are becoming ever more so as the economic downturn forces many buildings to downgrade expectations.
In the summer of 2007, K. Hovnanian’s
77 Hudson sold a pair of penthouses for a Jersey City record of $6 million.
Today, though, the 48-story, 414-unit, two-tower development is just 30 percent sold, and prices are down from their peak “on the order of 20 percent,” says project manager Tom Graham.
Studios now start in the $300,000s, one-bedrooms in the $400,000s, two-bedrooms in the mid-$600,000s and three-bedrooms at $1 million.
“It’s been tough since October,” Graham says, noting that, in addition to the usual home-hunting concerns, buyers these days are also having to grapple with the question of “Will I have a job tomorrow?”
And 77 Hudson is far from alone.
At Jersey City’s Beacon development, two-bedrooms that once sold for $750,000 are now going for $550,000. During the peak of the market, the units were selling for $550. a square foot. Next month, developer George Filopoulus plans to put 25 half-and full-floor lofts on sale at about $300 a square foot. The Beacon is also offering financing at rates as low as 3.9 percent.
Developer Metro Homes, which is behind the Gull’s Cove and Trump (with one-bedrooms from $415,000 and two-bedrooms from $630,000) developments in Jersey City and the 113-unit Metro stop building in Hoboken (one-bedrooms from $393,900, two-bedrooms from $535,900), is also slashing prices and offering financing incentives. The company is making available 30-year fixed-rate mortgages at
3.99 percent and recently dropped prices on units by 5 to 20 percent.
“If you price things above where they should be, you just won’t get the traffic and things just aren’t going to sell,” says Metro Homes principal Dean Geibel.
Michael Vosika bought a two-bedroom at Gull’s Cove in January. He says the terms of his contract won’t let him reveal the original asking price, but, he notes, “comparable units in the area had been selling for more.”
“We negotiated somewhat,” Vosika says. “They were very receptive. You could tell that there was an air of “We’ve got to just sell these units.'”
Currently, Gull’s Cove has studios to three-bedrooms priced from $299,000 to $1.13 million.
When Chris D’Ambola purchased a two-bedroom last March at Jersey City’s 54-unit Crescent Court building (one-bedrooms from $310,000, two-bedrooms from $379,000), price adjustments weren’t typical. But since the building went on sale a year ago, prices have fallen 15 to 20 percent, says Glenn Ward, vice president of sales and marketing for developer Matzel & Mumford.
Asked if he regrets buying near the top of the market, D’Ambola notes that he’s “been getting that question a lot lately.” He insists, though, that he’s happy with his purchase, saying that he looks at it as more of a long-term investment.
“Who knows when things are going to bottom out?” he says. “But it’s going to pick up in the next couple of years. I think [Jersey City] still has a lot of room to grow.”
Buyers at the new W Hoboken (see story on right) could probably use a dose of D’Ambola’s optimism. The development’s 40 residential units went for an average of $1,040 per square foot, with the last one
selling in April 2007 — right in the thick of the boom.
Given the discounts seen throughout the area, it’s unlikely they’d fetch such a high price were they on the market today.
W Hoboken buyers won’t start closing on units until the end of the month, but senior vice president of construction Michael Darata says he doesn’t foresee anyone walking away from their deposit.
“For the most part, our buyers are all very excited,” he says. “I think that the uniqueness of the project and location sets it apart.”
Uniqueness hasn’t protected Jersey City’s Crystal Point development from the market forces, however.
The 269-unit building sits on a piece of land that projects out into the Hudson River, affording its future residents top views of the Manhattan skyline. It will also feature amenities like valet parking, concierge service and a spa.
Two years ago, apartments at Crystal Point would likely have gone for about $900 a square foot, says Adrienne Albert, CEO of the Marketing Directors, which represents the building. Today, they can be had for as little as $550 a square foot.
The 16-unit Vesta Hoboken (with two-bedrooms ranging from $500,000 to $1.4 million) has similarly adjusted to current conditions, selling apartments it once imagined going for around $550 per square foot for less than $500 a square foot.
“It’s certainly a different price point than what we were thinking when we began the project a few years ago,” says Marsha Latessa, a principal of developer the Vesta Group. “I think we’re being realistic about our place in the market.”‘
That realism seems to be having an effect. Since starting sales a month ago, the building has sent six contracts out for signing.
In fact, with prices falling, some builders say they’ve begun to notice an increase in buyer interest.
“Traffic is up substantially in the course of the last month,” Graham says, noting that 77 Hudson’s sales office is currently seeing about 50 potential buyers a week, compared with 20 a week in December.
Geibel says that he noticed an uptick in sales starting about six weeks ago.
However: “Don’t get me wrong,” he says. “We’re not anywhere near the levels we were a few years ago.”