John Kelly and his partner, Joseph Grieco, had watched for the past few years as their rent continued to climb at The Sheffield at Englewood South.
“After several years you start asking yourself, ‘How much am I paying in rent? What would that down payment look like after all? What would a mortgage look like?’ It started to make more and more sense to buy,” Kelly said.
Kelly and Grieco took the plunge from longtime renters to first-time buyers in 2015, when they bought a one-bedroom, 1 1/2-bath condo at The M in Englewood in September. Even compared to their old two-bedroom rental, Kelly said, their new condo has about the same amount of space overall because of the larger master bedroom and larger living spaces.
Kelly declined to say what they paid for the condo, but he did say their monthly mortgage payments are less than what they were spending in rent.
“We’re excited to own our home now,” Kelly said. “We’re building equity, and when you own, you can make the improvements you want to make that you can’t do in a rental.”
Opinions like Kelly’s seem to be driving the condo market to a better place than it has been in a while, real estate agents and developers say, as demand for rentals has pushed prices too high for some people.
“Rents just keep going up,” said Martin Brady, executive vice president of sales and leasing for the Marketing Directors, which handles marketing for The M and other properties, including Trio in Palisades Park. “It’s happening in Bergen County, and of course in Manhattan. It’s definitely pushing people towards buying, and often they want to buy condos.”
The National Low Income Housing Coalition finds that the average fair market rent for a three-bedroom in Bergen County is $1,776, although most of the high-prominent properties — naturally — run much higher. At Fort Lee’s The Modern, a three-bedroom-unit runs $6,800 a month; at Avalon at Edgewater, three bedrooms start at $2,700.
In Manhattan. it’s even worse. Real estate observers there recently crowed after a report by Douglas Elliman, a New York real estate analysis firm, showed rents dipped 1 percent from February to March. But by April, rents had increased 3.5 percent over the previous month, landing the median Manhattan rent for all sizes of apartments at $3,415.
Meanwhile, the number of closed condo sales in Bergen County in March was up 25 percent compared to March 2015, according to reports from New Jersey Realtors, while new condo listings were up 7 percent in that period.
Compare that to March’s statistics from 2012-13, when condo sales were up 3 percent and new listings declined by 1 percent.
Median sales prices have continued to climb, but slowly. In March 2012, the year-to-date median sales price was $282,250 according to New Jersey Realtors. That figure rose about 2 1/2 percent to 3 1/2 percent a year after that, but in the past year it jumped from $306,000 to $325,000, more than 6 percent.
“Prices are strong,” said Marketing Director’s Brady. “They’re not doubling or anything like that, but they’re inching up, and that makes people feel good because they see they’re getting equity.”
Brady said deals are moving more quickly than they have in the past. In previous years, it might have taken about six months from first visit to closing. Starting in the beginning of this year, he said, that time frame is now just weeks.
“People are not staying on the fence anymore,” he said.
At The M, Brady said, some buyers are able to purchase condos with low down payments, in some cases with 95 percent financing. But he said the difference between those deals and the ones that got the market into trouble is that they are fixed-rate mortgages with 10- to 30-year terms, instead of short-term adjustable rate mortgages. In addition, he said, banks’ lending standards are much tighter.
The strength of the condo market in places like Jersey City and Hoboken is pushing potential buyers into Bergen County, said real estate agent Scott Selleck of Keller Williams City Views in Fort Lee.
“It’s a good, stable market,” he said. “And it’s a good market for sellers. If you price it right, it will sell quickly.”
Rentals rule
New construction is still dominated by rentals, with projects like The Modern in Fort Lee, which just broke ground for its second tower and several new projects in Jersey City and Hoboken.
“But that means that the new condos that are there are getting a lot of attention.” said Craig Klingensmith, division president of the Urban Division of Lennar Homes.
About half of Lennar’s 60 available units at 1200 Avenue at Port Imperial, in Weehawken, are sold. Lennar also is breaking ground on Henley on Hudson, where sales will begin after the 1200 project is done.
“Most of our buyers were renting here or in the city, but what they want in their price range there is impossible to find,” Klingensmith said. “We’re seeing more New York brokers come to our events without even us having to go hard to the hoop to get them, because they have customers who can spend even $1 million or $2 million but can’t find anything to show them.”
Andy Emory, an agent with Coldwell Banker in Allendale, said demand for condos has grown to the point that some are selling even before they hit the market. He recalled the case of a woman who wanted to buy into Birchwood Hills in Mahwah. She sold her existing condo and moved in with family while waiting for something to go on the market. Emory learned of someone who was looking to sell in Birchwood Hills, and connected the two.
“In certain communities you can almost call it a waiting list,” he said.
From the seller’s perspective, as always, it’s all about setting the right price.
“We’re in a market where if you start at a price that’s 20 percent lower than asking, you will get outbid,” said Emilia Freitag, broker associate of Keller Williams City Views in Fort Lee. “If it’s priced where the market will bear, you have to come in or close to asking or someone else will.”
