Higher income households relocating
A recent rise in luxury residential real estate is the result of a socioeconomic shift as higher income households are relocating nearer to urban centers. The highest average rental rates in New Jersey are reported in Hudson County this month. The average rent rose by 7.2 percent this year, with luxury buildings seeing increases closer to 16 percent, bringing us back toward peak levels of 2008 according to a market report published by Cushman & Wakefield.
Hoboken began as a predominantly blue-collar community, a major manufacturing and shipping port, home to Maxwell Coffee and Lipton Tea; both plants since replaced with luxury residential condominiums selling for well over $1000 per square foot. Although sales in Hudson County have remained fairly high, the nationwide housing and mortgage crisis forced many to downsize and rent. Earlier this month, developers broke ground for three more rental buildings, one in Fort Lee, the second in Jersey City’s historic Paulus Hook neighborhood, and a third at Port Imperial in West New York, with each developer expressing tremendous confidence in the market.
“With average rental rates on the rise, most college students and recent grads are now forced into surrounding communities like Jersey City and Union City, while Hoboken is attracting young families of corporate executives, professional athletes, and successful entrepreneurs,” says Kristin Ehrgott, luxury residential specialist for Prudential Castle Point Realty. “There’s an increased demand for 3 bedroom residences and single family homes. While demand is high, inventory is low, causing values to rise exponentially.” Ehrgott caters to the demanding lifestyles of high net worth individuals. Her most recent celebrity clients signed a contract this month on an Edgewater home worth over $2 Million. She has also listed and leased the highest priced residential home in Hoboken history. At $12,000 per month, the tenant, a prominent corporate CEO, is renting the three-bedroom W Hotel Residence as a second home, reflecting a developing trend as traveling professionals prefer the close proximity to Newark Airport and New York City. “I have three more listings coming on the market in Hoboken,” Ehrgott says, “listing between $9000 to $10,000 per month, modern, designer-furnished residences that offer a luxury lifestyle without the commitment of a long term investment.”
An increase in rents has also resulted in an increase for sales. On November 18th, congress passed a bill to allow conforming FHA loans at amounts up to $729,750. Many renters can now afford to buy and reduce their monthly payments, while building long-term equity.
Ehrgott co-hosted an event on November 9th in the $2.6 Million penthouse of 77 Hudson, a K. Hovnanian luxury high rise on the Jersey City waterfront. Scott Waldman, Broker of Record at 77 Hudson says, “we’ve seen a tremendous increase in sales; we’ve sold 46 homes since September, with many of those sales to investors, proving the market is coming back. Investors usually buy when they believe we’ve hit bottom.” Brian Whitmer, the director of Cushman & Wakefield’s metropolitan area Capital Markets Group agrees, “we could be on pace to revisit pre-recession conditions in the near term.”