From the Record:
From new luxury homes in Saddle River to town houses in Garfield to rentals in Fort Lee, Elmwood Park, Hackensack and Wood-Ridge, North Jersey is seeing small signs of life in the deeply troubled housing construction industry.
After bumping along at near 40-year lows for several years, homebuilding is nowhere near a real recovery yet. But builders are feeling, if not exactly optimistic, a little less pessimistic. While national housing indicators — housing starts, new home sales and builders’ outlook — remain below the levels seen in a healthy market, they’ve risen from their recent lows. And the Standard & Poor’s home builders stock index is up about 70 percent from last fall.
“It’s the first time in four or five years that we’re generating job growth, which is always a driver of housing,” said Carl Goldberg of Roseland Property in Short Hills, which is building the Estuary, a 583-unit luxury rental building in Weehawken, among other projects.
“New Jersey’s homebuilders are off to their best start since 2008,” said Patrick O’Keefe, an economist with J. H. Cohn in Roseland. Building permits rose almost 24 percent in January and February compared with the same period last year. If that pace continues, builders will construct more than 16,000 housing units in New Jersey this year, O’Keefe estimated. Though still only about half of the long-term averages, that’s an increase from recent levels in the 13,000 range, which were the lowest levels since World War II.
Multifamily units are expected to make up a record 55 percent of the state’s new construction this year, according to O’Keefe. And rentals are especially popular. With mortgages hard to come by, and people feeling skittish about home values and the employment market, fewer builders are constructing homes for sale.
“We stopped doing for-sale housing about three years ago,” said Andrew Abramson, chief executive of the Value Companies of Clifton, a 60-year-old builder and apartment owner. “We honestly got tired of beating our heads against the wall.”
“The homeownership rate continues to drop,” said Ron Ladell of AvalonBay, a Northern Virginia-based company that has new apartment complexes recently finished or under construction in North Bergen, Wood-Ridge and Hackensack, and plans to start more projects in New Jersey later this year and next year. “Rentals are the place to be, let me tell you.”
And BNE Real Estate Group of Livingston, which once planned to build condos on a Fort Lee site, is instead constructing a 12-story, 194-unit apartment building because of the strong market for rentals.
“The demand for rental housing has been growing at a quicker pace than the underlying economy,” Goldberg said. “The level of demand and kind of production you’re seeing on the rental side is not yet matched in the for-sale market. … There continues to be a real demand for high-quality housing adjacent to mass transit in our urban core.”
Other builders are also betting on for-sale properties, especially in niche markets.
“It’s got to be the right product at the right price at the right site,” said Paul Schneier, Northeast division president for the Pulte Group, which is building 184 town houses in Garfield and 750 age-restricted condos at Wanaque Reserve in Wanaque.
“It’s a very unforgiving market,” Schneier said. “There’s no margin for error. You can’t just push prices higher to make up for your mistakes.”
Toll Brothers, for example, said sales have been picking up at its high-end Hoboken developments, which include Maxwell Place, at the old Maxwell House coffee site on the Hudson River and the Hudson Tea redevelopment. nearby.
“Our buyers have kept their jobs. They still have cash. They’re looking around and realizing they can get mortgage loans for around 4 percent,” said John McCullough, assistant vice president at Toll Brothers City Living. “A lot of them have been sitting on the sidelines for a few years and have come to the feeling that this is the time to get on with their lives.”
Hovnanian Enterprises of Red Bank has seen sales pick up significantly at its 420-unit 77 Hudson high-rise in Jersey City, according to Randy Brosseau, metro area president. And sales are also improving at its 55-and-up communities in Woodland Park and Montvale, he said.
Whatever the timetable for a housing recovery, builders and analysts say the nation is unlikely to see the kind of construction experienced in the mid-2000s boom, when new-home sales topped a million a year for several years.
“Everything in moderation,” said Witmondt of Woodmont Properties. “In the go-go days of the mid-2000s, the exuberance was too great, and everyone got ahead of themselves. Hopefully, we’ve all learned a lesson. When things get good, don’t floor the accelerator. Go nice and slow and steady.”