I came across “Housing Inventories on the Rise” this morning and thought it sounded a bit familiar. Sure enough, the same story was published in the New York Times nearly 18 years ago, when the last real estate bubble burst. The scenarios are a little different, but while history doesn’t always repeat, it sure does rhyme. Real estate bubbles aren’t fairy tales, and home prices can fall, even in Hoboken. There is a reason these things take 20 years to repeat, because that is about the time it takes for the collective wisdom to forget about the last bubble. You know, doomed to repeat it and all.
From the New York Times:
Jersey’s ‘Gold Coast’ Losing Its Glitter
By THOMAS J. LUECK
Published: March 24, 1991 <--- Look at the date
THE New Jersey shore of the Hudson River, which emerged in the mid-80’s as a powerful new magnet for high-rise office development, is struggling with high vacancy rates, canceled projects and nagging doubts about the capacity of its roads, parking and public transportation.
No area better symbolized the 80’s real estate boom in the New York region. An 18-mile corridor of gritty piers, derelict warehouses and abandoned railroad yards, the New Jersey riverfront became a patchwork of huge development sites.
It also became the focus of a feisty battle for New York City tenants and the centerpiece of an urban renaissance so sweeping that some began calling the area the “Gold Coast” of New Jersey.
For now, the renaissance has slowed. With 15 million square feet of space — more than half of it built in the last five years — developers on the New Jersey shore are beset by the highest vacancy rates in the New York area.
“When the Manhattan market became soft, it really hurt the New Jersey waterfront,” said Peter Eppie, managing director of Edward S. Gordon Company of New Jersey, a commercial brokerage, based in Jersey City. In an analysis this month, it found office vacancies in New Jersey’s Hudson River cities running at more than 30 percent, nearly double those in Manhattan.
For home builders and office developers alike, the immediate problem is something far from unique to the Hudson riverfront — the economics of a deep real estate recession. Since most of the office developers in the area have designed their buildings to appeal to banks, securities firms and other financial-services companies in Manhattan, they are now trying to sell to companies that are eliminating workers and shedding office space.
Some proposed developments are being stalled by public opposition. In Hoboken, an on-again, off-again plan to develop idle riverfront land and piers that are owned by the city and leased to the Port Authority of New York and New Jersey was sent back to the drawing boards in October. The plan, involving a huge development of 1.3 million square feet of offices, hundreds of condominiums, a hotel and a marina, was defeated by only four votes in a municipal referendum. Now, Hoboken and Port Authority officials say they are preparing a plan for a smaller development.
From the New York Times:
Housing Inventories on the Rise
By ANTOINETTE MARTIN
Published: December 26, 2008
ON the eve of a new year, it is becoming clear that the real estate market in Hudson County, the “Gold Coast” zone just across the river from Manhattan, will have to wait at least two years to celebrate a more prosperous era.
Once New Jersey’s hottest market for high-end condominiums — drawing streams of Manhattanites — Hudson now finds itself with 24.1 months’ worth of unsold inventory.
This is a much bigger backlog than exists in Brooklyn, which has a 13.8-month supply, and it exceeds unsold inventory levels in Queens; in Orange, Rockland and Westchester counties in New York; and in Fairfield County in Connecticut.
On Long Island, the unsold inventory is also swollen. It would take 20.9 months for all the houses and condos currently on the market there to find buyers, given the current pace of sales.
A new assessment of the region prepared by the Otteau Valuation Group presents a generally unlovely picture of residential sales markets:
Manhattan now has an 11.8-month supply of unsold inventory, said Jeffrey G. Otteau, whose Old Bridge, N.J., company analyzes contract sales figures and advises real estate brokers. “This is not terribly big,” he said, “but it is significantly bigger than a year ago — and much bigger than the days when multiple bidders were circling around every available unit on the market.”
In Hudson County, home to Hoboken and Jersey City — an area known as “Wall Street West” — sales were 26 percent fewer in November than the month before, and 47 percent fewer than in November 2007.
Looking further ahead, Mr. Otteau has recently raised the issue of potential overbuilding in Hudson County — in addition to his contention that outer-ring suburbs already have a surfeit of single-family housing on large lots that will not appeal to buyers of the next decade.
One large developer in Hoboken, the Applied Development Company, stopped building anything other than rentals as of nearly two years ago, said its president, David Barry. “We saw the condo market getting ahead of itself, and becoming temporarily overbuilt, for sure,” he said.