While the housing market across the country is in a downturn and individuals are suffering from job losses and mortgage problems, recent articles and statistics show that home buyers and renters are still finding ways to move to Hudson County’s newer developments, sometimes into smaller spaces that are a much more economical alternative to neighboring New York City.
Potential buyers are being cautious, since securing a mortgage these days is almost as tough as landing a plane on the Hudson. In a changing market, buyers’ interests change. Boutique buildings, discounted-rate high-rises, and modestly-priced “luxury” buildings are gaining steam, not just in the usual markets of Hoboken and Jersey City, but also to areas like Union City that are luring young professionals with skyline views.
Calling the waterfront of Hudson County “The Gold Coast” was not a misnomer. Prices are high and, despite the challenges, some people still are looking to move here.
Filling the buildings
House hunters are worried now because new large developments have scores of unsold condos. Thus, a building must have half of their units under contract before any individual unit can close, according to Joe Dimone of Patina Realty in Hoboken.
Buyers are worried that new buildings, like the 15-story Altessa condominium building in Union City, whose units Dimone is currently selling, are going to be more than half empty when the time comes to close the deal. However, Altessa, which is a less expensive alternative to Manhattan, is arousing some interest. Dimone said Altessa recently opened sales on 100 condominium homes that aren’t even built yet. He said he already has five non-binding reservations and that the goal is to lock down the 50 condos needed to close before completion of the building.
“We’re starting early so we don’t have that issue,” Dimone said. “We are doing everything we can to make this a smooth transition for the buyer.”
He said a model home is scheduled to be unveiled by April, and the Altessa building itself – 809-815 22nd St. by Summit Avenue, just east of Kennedy Boulevard – is expected to be completed by the fall on 2009. Amenities will include a landscaped rooftop, an elevated outdoor pool, and a running track.
Priced from $310,000, Altessa condos range in size from 812 to over 1,400 square-feet of living space.
Another skyscraper in Union City that has been selling is the Thread Building near Route 495. The 15-story building houses 151 units close to the west entrance of the Lincoln Tunnel, and affords Manhattan views. Some cosmetic construction will be completed by April, but 30 percent of the units are already closed and residents are moved in.
A spokesman for the Thread said, “Everywhere you go you will pay for the view, but this is the best price for it.”
Ten minutes from midtown Manhattan, Union City is becoming a popular secondary housing market for those who have been priced out of Hoboken and downtown Jersey City.
Something in a smaller size
Marsha La Tessa is a principal of the New York City development firm the Vesta Group, which recently branched out to Hoboken. She said the half-filled rule of thumb may be a moving target. She said mortgagers like Fanny Mae and Freddie Mac may soon adjust the requirement to 75 percent of units under contract before closing, making it even harder for buildings with more units to even make it to closing. Empty units in already closed buildings may also force reductions to amenities and services, or may require management to sell of blocks of condos to stay solvent.
For owners who are nervous about empty units, boutique buildings are popping up around the county and providing a small-scale condo community without the risk of large-scale vacancy.
Vesta has ushered similar projects to success in the Chelsea area of New York City and is now branching out to Hoboken.
Vesta Hoboken is on Observer Highway, the main road along Hoboken’s southern border, and
Jackson Street.
La Tessa said a 16-unit building is “quicker to build,” which also allows buyers to close quickly.
The building is 80 percent complete, La Tessa said, and the newly-opened sales just booked its first buyer for a penthouse unit.
She said the two to four units per floor also allow for a “more open, more intimate” living space.
In a city that has more than 500 units for sale – considered an eight-month supply of housing – keeping things intimate may be an important selling point.
The New York Times recently reported only one-third of American families have children, compared to half in previous years, so living spaces are smaller than before. The Times said Generation Y is the next wave of homeowners, a group much less likely to have children and more likely to be cost-conscious.
Interestingly, the Times recently ran two real estate articles about Manhattan couples deciding to move to Hoboken or Jersey City instead of staying in New York, as they found that they got more space here for less money.
Trump discounting units
Larger developments are even introducing discounts to attract would-be home owners. The developers of Trump Plaza, the 55-story luxury condominium building in downtown Jersey City, are trying to entice buyers with a 10 percent discount on select homes in an attempt to fill the 15 percent of their 444 units that remain unsold.
Along with the discount, those who qualify are being offered an attractive fixed-rate mortgage, and either free garage parking for a year or one year of condominium insurance for free.
Dean Geibel, president of the development company Metro Homes, said in a release, “This incredible opportunity offers buyers the chance to buy the world-class home of their dreams at prices more in tune with these times.”
Trump Plaza is the tallest residential building in New Jersey. It boasts unobstructed views of the New York City skyline and the Statue of Liberty.
Brownstones meet condos
Some new luxury housing is going forward, despite the tough times. Henley on Hudson, a waterfront development located in Weehawken, will soon be completed and offers different options to buyers. The project includes four residential clusters consisting of 18 brownstones and 262 condominiums. Of the currently released 71 units, the development is 76 percent sold so far.
The fragmented release of units avoids closure issues, allowing these million dollar homes to avoid being stalled by contractual issues. Most importantly, it allows the builders to pace construction as the homes sell.
Penthouses at Henley on Hudson have private terraces and Manhattan views, while brownstones feature spiral staircases and some with garden terraces. Remaining units start at $1.425 million and range in size from 1,716 to 3,148 square feet, and also feature two-car garages, private elevators, and eat-in kitchens.
Michael Skea, director of operations for one of the development companies on-site, said a unit was sold recently for $2.6 million. According to Skea, that property was the most expensive unit sold on the Gold Coast in over a year.
Rising prices a concern
Sales may be plodding forward, but most Hudson county residents aren’t looking for million dollar homes.
Steven D. Marks, director of the Hudson County Division of Planning, reported a problematic trend to the county Planning Board recently.
According to statistics, the number of housing units approved by the county last year was down from previous years but the total value of those units went up. The county needs to approve any development that borders county roads or drainage systems.
The divergent trend means this: there are fewer homes being built in Hudson County, and each home costs much more on the market than it did before.
This presents a problem, as Marks points out, since the last census rated Hudson the least affluent county in New Jersey.
So with fewer homes that cost more, what happens to the people who can’t afford to live here anymore?
“Home values are going through the roof; salaries are not,” Marks said. “It’s a challenge.”
He said the recent trend is similar to the 1980s condo boom that “priced out” may longtime Hudson residents.
He said state affordable housing initiatives are one way to combat the problem, but they put developers in an “untenable” situation, Marks said.
In municipalities following the state guidelines, developers now must provide one affordable housing unit for every four market-rate units built.
In order to make it work, Marks said, developers will need buildings that “approximate New York-type densities,” but the county doesn’t have sufficient infrastructure to support such development.
Affordable housing
Meanwhile, there are still developers who are including new affordable housing units in their projects, or building affordable housing exclusively.
In West New York, a newly constructed affordable senior housing project began accepting applications last month to find qualified candidates. The 11-story Kennedy Tower II is located at 434 62nd St., not far from the 40-year-old Kennedy Tower I. The 71 units will be mostly filled by senior couples because of the rent calculation formula, said Housing Director Robert DiVincent.
“Home values are going through the roof, salaries are not.” – Steven D. Marks
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The downside
Tarragon Corporation, a heavyweight New York development company with numerous Gold Coast properties, filed for Chapter 11 bankruptcy late last year.
Much of the blame for the filing was placed on low sales in Florida and other national markets, but many of their local projects are sure to be effected by the move.
Tarragon and local partner URSA are currently owners of the Upper Grand development in Hoboken and are the intended developers for a tract of land along the western edge of the city.
While Tarragon sorts out its financial woes, some of their projects will continue forward while others are stalling in the meantime.
Many developers are using Tarragon as a cautionary tale of what could be, and hedging their bets accordingly.
Being ‘green’ in tough times
While environmental concerns are not diminishing among buyers, buying “green” may be a luxury some house hunters cannot afford.
No matter, one “green” developer is hoping the long-term investment is understood by buyers.
Larry Bijou, developer of Garden Street Lofts in Hoboken, is trying to impart on potential homeowners the importance of environmentally-friendly design. One major selling point is energy conservation, which equates to savings for homeowners in the future.
Garden Street Lofts, on 14th and Garden streets in uptown Hoboken, is the first silver-certified LEED high-rise in New Jersey. LEED certification comes from the US Green Buildings Council and ranges from standard certification to platinum contingent on adherence by a developer to countless environmentally-friendly federal regulations.
Bijou explained that the regulations are numerous and inclusive of the entire building process – from separation of materials when clearing a site to the limitations on what solvents can be used to clean the finished product.
Insulation is made from old denim jeans and floors are made from easily-replaceable bamboo.
The inane details become important and Bijou hopes it doesn’t go unnoticed, for his sake and the sake of the environment.
Redeveloping far into the future
Although sales may be slower right now, that isn’t stopping local towns from passing redevelopment plans that will see thousands of units of new housing replacing old industrial areas in the next 10 to 20 years. Hoboken has proposed at least three areas of town as redevelopment zones, and Jersey City also has several, including a much-touted plan to revitalize the Journal Square area.
Timothy J. Carroll may be reached at tcarroll@hudsonreporter.com.