When Union City Mayor Brian Stack first came into office in October of last year, one of his main goals was to further develop the city.
Although landlocked Union City was often overlooked for areas such as Hoboken and Jersey City which boast beautiful waterfront property and close proximity to New York City, the city is starting to get the attention it deserves.
The real estate market is showing a high demand for property in Union City, and officials believe this is the time for the city to begin its plan for new development.
“This is Union City’s opportunity to move forward,” said Union City Tax Assessor Doug Yandolino last week. “While the time is right we have to take the opportunity.”
“As Hoboken and Jersey City become more high priced, it is forcing more people up the hill [into Union City],” said Carl Muchiolo, the president of the Avanti Group, a real estate firm in Union City.
Over the past three years, Yandolino said, the property values in the city have gone up more than 20 percent. According to Yandolino, even the 26 percent tax increase that the city experienced last year did not slow down the increase of demand on property in the city.
“I don’t think [the market] is going to slow down,” said Yandolino. “The city definitely needs the influx of development to progress.”
This new interest in Union City was evident at a city auction held in May where the city auctioned off five pieces of vacant property.
One of the properties, located on Manhattan Avenue and 15th Street right on the Palisades, sold at the auction for $265,000.
“When auctioned four years ago, no one even came to look at it,” said Yandolino, adding that in May, these properties sold for higher than the minimum bid.
Steady increase
Using numbers found in the Hudson County Multiple Listings Service, which is published quarterly, Union City’s property values have risen approximately 20 to 30 percent in the past year alone.
During the 12-month period from April 1, 2000 to March 31, 2001, the largest increase has been in the sales of three- and four-family homes, whose prices rose an average of 31 percent. In the period beginning in 1999, they were selling at a median price of $160,000. In the period beginning in 2000, the median price was $210,000.
The same substantial increase can be seen with the sales of one- and two-family houses in Union City.
In the 12-month period from April 1, 1999 to March 31, 2000, single family homes in Union City sold for a median price of $109,000. From April 1, 2000 to March 31, 2001, the median price went up 23 percent to $135,000.
In 2000, two-family homes in the city sold at a median price of $150,000. In 2001, the median price was $180,000, which was an increase of 20 percent.
Yandolino further confirmed these numbers by comparing properties sold in the same areas in different years. The 21-unit apartment building next to the Yardley Building on 6th Street and Palisade Avenue sold for $1.25 million, or $60,000 a unit, he said.
“An apartment building in Union City was only selling at $15,000 or $20,000 per unit just three years ago,” said Yandolino.
Another example is a two-family house on 36th Street that sold for $279,000 in December of 1999. A two-family house in that area in May 2001 sold for $338, 000.
According to these listings, all of the homes sold in 2001, so far, have been sold in less than 90 days, which according to Muchiolo, indicates that there is a demand for housing in the city.
“The market is very strong in Union City,” said Muchiolo who is also a certified general real estate appraiser. “There has been a steady incline over the last three years, and unless something dramatic happens, it will continue at least for the next 12 months.”
Time for development
This steady rise in property value shows that there has been an increase in the interest of investors towards property in Union City.
“There is a lot of interest in Union City right now because it is so affordable,” said DeRuggiero.
However, despite the steady increase that Union City property values are experiencing, DeRuggiero said that Union City still has a long way to go before it reaches the values seen in Hoboken or Jersey City.
“Places like Hoboken and Jersey City have a lot of amenities that Union City just can’t offer,” said DeRuggiero.
“They have the waterfront and the PATH system. Union City is landlocked. That has always been a problem for them.”
“The surrounding communities are pretty much developed,” said Yandolino. “Union City was always lagging behind.”
DeRuggiero based his opinion on one of his recent sales. DeRuggiero just sold one property in Union City that was 25,000 square feet for $1.5 million, measuring $60 a square foot. However, he said that in Hoboken that same property would have run for $3.5 million.
But with the sale of a 21-unit apartment building next to the Yardley Building on Palisade Avenue, Union City is starting to market the same New York City views and close proximity to New York.
“The Palisades is our waterfront,” said Yandolino. “That is our gold coast.”
Facing a crises
With the property values on houses and vacant land going up, it is only natural that the value of an apartment for rent will also go up.
Many of these rent increases, however, are in part due to change in the Rent Control Ordinance in 1996.
These changes included the addition of the Rental Unit Preservation Allowance system. This RPA system allows tenants to take an apartment off rent control after the apartment has been renovated and has passed numerous inspections.
It has become harder for low-income Section 8 voucher holders to find available apartments in the city.
According to Yandolino, the amount of cases where a landlord cannot find a tenant is only about 1 or 2 percent, thus making it hard for Section 8 tenants to find space.
“We are facing a crisis with Section 8,” said Virgilio Cabello, the Housing Authority’s executive director adding that there are about 60 families currently looking for Section 8 housing in the city. “If we are not able to find the units, we will lose funding,” he said.
The Housing Authority receives funding from the federal department of Housing and Urban Development for Section 8 vouchers. Through this system, a family that is eligible for a Section 8 voucher will pay 30 percent of their rent, while HUD will take over the other 70 percent.
HUD allows the Housing Authority a two-month period to find these recipients housing before the funding is taken away. Recently, HUD has granted a time extension to the city, allowing four or five months in some cases.
However, even with the extension, the Housing Authority is having a hard time finding landlords to rent to Section 8 recipients.
“We are in the situation where a lot of landlords do not want to accept Section 8 recipients,” said Cabello.
Landlords are now using the RPA system to raise their rents above the fair market rate set by HUD allowable for Section 8 vouchers.
The fair market rent calculated by HUD says that a one-bedroom apartment in Union City should go for $709 and a four-bedroom apartment should rent at $1,155. However, in Union City, HUD is allowing Section 8 recipients to rent an apartment at 110 percent of the market rate, meaning that at 110 percent, a one-bedroom apartment can rent for $780 and a four-bedroom apartment can rent for $1,270.
However, not all landlords feel the same way towards Section 8 recipients.
“I think that Section 8 is a good thing because I understand it,” said ReMax Foreclosure Specialist Derby Perez, who is currently renting to 15 families that receive Section 8 funding. “I will give every apartment I can to Section 8 recipients.”