NEW YORK, Dec 31 (Reuters) - The Wall Street upheaval that has depressed New York City’s high-flying real estate market is also slowing property sales and lowering prices right across the river in the state of New Jersey.
Long known as the city’s “sixth borough” due to its proximity to New York, Hudson County, New Jersey, basked in Wall Street’s boom as financial firms relocated back office operations there to avoid skyscraping Manhattan rents, said Derrick Gross of the house-hunting website StreetEasy.com.
Now Hudson, home to two of New Jersey’s highest-profile cities, Jersey City and Hoboken, is feeling the pain of the bust. Sales have slowed to a crawl and homes for sale are piling up.
“New York is one of the epicenters of the accelerated recession — or the potential depression — because of how important the financial industry is,” said Bill Staniford, chief executive of real estate research website PropertyShark.com. “There is going to be a softening affecting anyone in the vicinity.”
At the current pace of sales, which in November was down 47 percent from last year, it would take 24.1 months for all the properties on the market in Hudson County to sell, said Jeffrey Otteau, president of Otteau Valuation Group, a real estate consultancy and appraisal service.
“The weakness that’s been gripping everyone else has just come home to roost in Manhattan, and that’s affecting Hudson County,” Otteau said.
Job losses in the financial sector are reducing housing demand in Manhattan and related markets such as Jersey City and Hoboken, he said.
Also, Hudson County is now sitting on excess supply because New York City’s formerly healthy economy and the resulting high cost of housing fueled a construction boom there to meet the demand from those priced out of Manhattan who still wanted a carless commute.
The situation is exacerbated by Manhattan’s falling prices, which are drawing demand away from its secondary markets as more buyers find they can afford the city again.
The slowdown has forced sellers in Hudson to drop their prices.
In the past two months, sellers of 16 percent of Hudson County’s listings have cut their prices by an average of 8.7 percent, according to StreetEasy.com’s data.
In Hoboken, prices have dropped on 43 percent of the listings during the time the properties have been on the market; in Jersey City, that is true for 34 percent of the listings, Gross said.
The homes that are selling tend to be in the lower price ranges, around $350,000, said Hoboken broker Norma De Ruggiero.
“Three years ago you couldn’t buy anything for $350,000,” she said. “It just wasn’t there.”
As unemployment numbers climb, a pervasive lack of job security is keeping buyers out of the market, De Ruggiero said.
“We’ve certainly seen buyers that were ready to go who are holding off because they’re worried about job security,” said Marco Tartaglia, a sales manager at Canco Lofts in Jersey City.
The project is selling slightly more slowly than its developer had anticipated, Tartaglia said. Of its 202 units, 70 have been sold, instead of the 50 percent projected for this date, which pushes the sell-out date into 2010 and forces a delay in the building of the next phase.
But at least Canco’s developers plan to proceed, which Tartaglia attributes in part to the relative rarity of lofts compared to condos in Hudson County.
Wall Street’s distress combined with the difficulty builders are experiencing in obtaining their own financing has caused developers to delay construction on the second tower of Trump Plaza, the Jersey City condo high-rises bearing developer Donald Trump’s brand, said George Cahn, a spokesman for several Hudson County developers.
“People whose projects aren’t out of the ground are going to hold off until things improve,” Cahn said. (Reporting by Helen Chernikoff; Editing by Brian Moss)