velocity hoboken auction - a trickle not a downpour
Reports are beginning to trickle in re: the auction yesterday, and it seems it was not all that positive of an experience. Word is the auction was stopped earlier than anticipated and only some of the 40 units were actually put up for auction. The available condos went for surprisingly lower prices than anticipated.
I'm sure those who bid and won are very happy and excited today because they got a great deal. And I'm sure those who paid near the asking price for their units oh so long ago, are not feeling so hot today.
Here's to hoping this whole experience turns into a more positive one for everyone involved. More info to come as the day unfolds...
UPDATE: There have been conflicting reports, but from what I can gather, 9 units were officially auctioned off. Each unit went for above what the opening price was, which means there were multiple bids on each unit. And from the emails I've been receiving from those who attended the auction and have strong mathematical skills, it seems those units went for roughly $400 - $450 per square foot.
Many would say that is a great deal, considering many properties in the vicinity go for $500 - $550 per square foot. I tend to agree.
Like many who are witnessing a transformation of this neighborhood that has no plans of stopping anytime soon, I am placing my bets that with patience and a little forward thinking, those who bid and won will eventually have the last laugh. I'm not talking about flipping in a year or two. I'm talking five years. Velocity is LITERALLY a block away from one of the most expensive and most luxurious mixed use condo develops going up in our area - Metrostop. Word is it's selling well, as are other properties in the area. If that doesn't have a positive effect on Velocity Hoboken, than call me crazy too. And with the eventual development of The Monroe Center mixed use development, which is next door to Velocity, that will seal the deal on any doubts. Question is, when will Monroe Center start work on their project?
Someone made a comment in the HH comments section for this post to this effect and I happen to agree. Time will tell.
Someone else made a great point asking the question of why the developer didn't just sell the property to a company that converts to rentals? Also a great point.
I guess the next thing to focus on is how REMI is going to unload the rest of the units without the time lag eating away at their overall business plan. What are the next options?
Thanks to everyone for their emails, comments and opinions. Let's keep on moving forward...
39 comments:
What a sham! Went there expecting 40 units to bid on. They handed me a sheet with 20 on it. Then they cut the thing after 9 went off. They totally panicked, it was hilarious!
To the Previous poster,
Did the one bedroom's really go for 390,000? I was seriously considering bidding on two of them until I drove out and found that I had to drive through the projects to get out.
HH,
Once agin your enthusiasm for Velocity is impairing your judgment. How did the auction buyers get a good deal if they won't be able to resell their units 2 years from now for what they paid? The one guy who bought a 2 bedroom will get hit the hardest since there was very little interest in 2 bedroom units at the auction.
Why didn't they do what the dev of thoses lofts up on the hill by the second street light rail station did....sell the building to a reit and operate it as a rental...if velocity doesn't sell at a discount now...it will never sell once the three buildings around Fileds crossing go up.
You raise a very interesting point. I believe you are referring to The Cliffs building that is going up near 2nd Street in Jersey City Heights.
HH
One guy got a steal on a 2 bedroom at 407k. That's when they hit the panic button. I think he'll def be able to make a nice profit on that if he swings it after the other buildings go up in that area.
Nobody bought a 2 bedroom for $407k. The starting prices for them were $502k.
I was at the auction. The second 2 bedroom went for 391/ square foot. Every unit sold for less per square foot than the one before it.
Considered purchasing in the Velocity a few months back. Very glad i did not by the looks of these comments. (Purchased in Harborside Lofts) My gut told me there was something wrong w/ the project (ie: $$$$ problems and the projects are prob there for good)Still believe there is a ton of upside in the NW area w/ metro stop, 1000 Jeff, and 800 madison all underway. Good luck to All
Does anyone have the ACTUAL prices the (9) units traded at?
Here's the situation from my point of view.
there's about 250 condo's for sale in the area right now. they are selling at about the rate of 15 per month. looks like over supply? wrong. most of those sales are flippers who will just wait until they get what they want. how do i know. i bid on several of them and they held firm on their prices. so that told me the market is NOT weak. it's not super strong because interest rates are up.
the location. ok it's next to the projects. ever been to new york city? high rise 1.5 million condos ($1200 per foot) where i live are next door to projects. that's NEXT door. and what about you do-gooders who wanted diversity in your neighborhood. silly. the projccts will be no issue in 5 years when the entire city is fully built up.
did i win an auction? yes i did. i paid the highest price out there for the 2BR/2BA. but at $404 per foot for premium finish out, it's a bargain. most sales in hoboken in similar developments are going for $500-800 per foot depending on view, location etc. but with a 5 min light rail trip to the PATH station, what's the difference?
think i am crazy? crazy like a fox. the 1BR/1BA's went for $478 or so per foot. now who's crazy.
the projects? i live next to one right now. they blend in just like the rich new yorkers that are my neighbors.
call me crazy.
You are crazy for buying in Velocity because you will not be able to re-sell your condo anytime soon for what you paid. Nice try comparing Velocity to high end buildings in Manhattan. Totally different!
I would have to agree that the product would be selling for $650/sf in a better location, so at low $400s/sf. Forget about comparing to new york. The location discount needs to apply to other Hoboken sales prices per sf., and it definitely works at the low $400s. In reality, the developer could have gone with lower end finishes and sold the units in the $300s/sf given the location....
Hi HH
Sorry to get off topic--
Was wondering if you might cover the Club KO Kickboxing place on Madison Street, right above the Shop Rite. I live in the area and am a regular there. They have a 10 week fitness program and it really is a great gym, with terrific staff (and i do not work there or have any other affiliation with them). Thought it might be a good idea to cover it since it is in the neighborhood.
Thanks!
If you are a regular there already, why do you care if he covers it?
i was one of the original buyers in velocity and i feel bummed that the auction bidders who won got their units at a better price/sq.ft. than what i paid for 3 years ago. building is nice though.. and commute isn't too bad.
oh well.. c'est la vie!
Anyone who bought in this auction is likely going to lose money. Have you guys seen this building? It's in the middle of the projects, people have already thrown rocks at the building and broken a bunch of windows. The light rail is right next to it and a train goes by there less than every 10 minutes which you hear from the apartments. It's over half a mile from Washington St which means it's essentially on the outside of where the yuppie crowd wants to live. The building is going to be almost completely vacant, these buyers will either be living in an empty building or trying to rent out apartments in an empty building. I don't see them having much luck. So let's say you spent $407K for a 2-bedroom unit. Your mortgage, tax, and maintenance payments are going to be close to $3K a month. So every year you hold it you're adding 10% to your cost basis, that's in a market that is declining. Considering when you sell you'll pay another 6% to a broker, you need that apartment to sell for around $550K just to break even. That's assuming you don't rent it out which considering the current market for that building looks very likely.
The Hoboken/Jersey City real estate market is in a slow crash. Expect to see another 30%-40% drop in prices before the bottom is reached.
The biggest red flag is the cash flow issue. People are paying somewhere in the area of 15X expected rental income. Real estate markets will find equilibrium at 8-9-10X cash flow.
The Velocity just set the new 2bed/2bath comparison price at $502,000. Everyone will know the number in time and you can watch the offer prices on 2/2s fall to $500,000 and below.
The Hoboken/Jersey City condo market will be a disaster in time. It reminds me of Japan in 80s and that real estate market is only now getting back to the 80s prices.
The prices in Toyko dropped by 70% from the top. Owners have had to wait over 20 years to get their money back.
Look for Hoboken 2/2s to go for $350,000-$400,000 at the bottom. A long way to go. It will not be pretty.
Very few people in the area will share my opinion because they have some sort of interest in stabilizing the market. Be very careful.
velocity condo auction update.
the comment that comparing NYC condos to hoboken condos is right. no comparison. but the comparison wasn't to the condo but to the complaint about the neighborhood. projects in nyc are not different than projects in hoboken. so living next to one whether in nyc or hoboken IS the same thing. the overall impact of living next to a project housing: not much. maybe some more diversity but that's about it. past history of the area shows a high crime rate. but crime in the area is on it's way down as police are patrolling the area much more than in the past.
and don't forget metrostop. it's a golf shot away. it's still near the same projects and i don't hear complaining about them from those property developers/customers. (toll brother's spin control?)
sales at velocity are going strong and people are moving in.
it's happening.
and for the comment about selling in 2 years to make money. maybe this is unheard of, but people actually buy real estate to live in, not just make money. the stock market is the place for money. real estate is a happenstance money maker except for the developers. that "flippers" made money from 2001-2005 was just a short term blip. taking a long term view, say 10 years, flipping is not the way to make money. way too much risk.
Thanks for article!
Thanks for interesting article.
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Looks like they are testing out the rental market:
http://www.forrent.com/apartment-community-profile/1000051569.php
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