Rent Drop In Jersey City! What It Means For Buyers & Investors

Welcome to New Jersey Living. For those of you all who are joining for the first time, my name is Corey Jones. I'm a licensed real estate agent here in New Jersey. And my job has been and continues to be to help hundreds of people just like yourself buy, sell, and in some cases, rent real estate right here in the Garden State. So today, we are diving back into our Jersey City Spotlight, specifically Investor Series. Again, not just for those who are investing in terms of properties that they're going to just rent out. But if you are someone that's looking for a residential opportunity, this is something that you will want to pay attention to, because the numbers are relevant. The market condition and trends are also very relevant. We've seen very interesting activity in our analysis of this particular data set for this episode with what gives us indications that there may be a leveling out of the market in Jersey City when we consider declining rent rates coming off of the month of May, when we're looking at the list price to sale price ratio being very, very close to that 100% mark, meaning right there at list price. Almost half, not quite, but almost half of properties on market going under list price. And again, we're talking more specifically condo, but that's the biggest volume of sales in this market. In this episode in Journal Square, we are obviously not in the center of Journal Square right now. Journal Square at the heart of it is right there at the Journal Square Path Station, just about a mile, a little over a mile, from where we are right now. And that station is the hub of activity, because it basically connects both New York and Newark and all places in between. That area obviously has had a significant boom with the Kushner Towers, Journal Square. There's the Lowe's Theater that's coming up. There's been activity recently with the new county courthouse right there, a few blocks from Journal Square, the path station that is. So here we see activity, one of those key spots outside of Journal Square, but still happening, that is showing activity in areas right along this path line, which is directly to my right, where it's projected that there may be, hopefully soon to be. And I say hopefully because it would significantly benefit this neighborhood to have direct access to a path station because they don't have a direct walking route that's really convenient to get to Journal Square from right here. So with that path station, this development that has residential units and of course retail right on the ground level is going to be an impact on the local market right here with those who already own or those who are even renting. And we're gonna have a continued conversation on that as well with what's happening with rental prices right here in Jersey City. Now that we're back in studio, let's take a quick overview of Journal Square, a little history of Journal Square, similar to what we did with Bergen Lafayette. Journal Square definitely was like that historical, cultural entertainment hub of Jersey City. So from the 20s to the 60s, you had the Stanley Theater, the Lowe's Theater, you have obviously the train station, right? So you had a Hudson and Manhattan Railroad if you go back historically, and this is going back to 1912. This was definitely the heart of the city at one point in time, historically. So the golden age was considered from the 20s all the way up into the 60s. So there's now from really the past, I'd say at least 15 years, you might be able to stretch that out to 20, that there's just been major revitalization and there's still more to come. It's just in the midst of it right now. So there's more to come of it. The path, again, direct access to Midtown, 33rd Street, you probably can get there. And once you get on train, that is, you're probably about 25, provided there's no delays. Those who ride the path, you know the story. So yeah, without delays, 25 minutes, half hour, you'll be there in Midtown. So this is certainly something that a lot of investors, big investors have invested heavily in into that area of the city. So we were right on site at Westside Square, but some other projects, 425 Summit Ave, which is a 26 story residential tower, 390 rental units. We have Journal Squared, phase three. All right, so this is the third tower. And this one is one of the three towers. We always, I often reference to Kushner family because they're those who are basically orchestrating and facilitating that project. And one Journal Squared is another. So it's not as big, but still a 64 story structures there. Let's take a look into some of the numbers that I referenced a little earlier in the intro from being on site. And we're gonna jump right into some numbers that I think are very, very interesting for where we are in this market. Still a very strong seller's market, still this very significant activity in terms of above asking price performance and select suburban locations. But Jersey City is telling us something based on our most recent analysis of Bergen-Lafayette and now Journal Square. So here we go. First, we're looking at some key indicators I've referenced in the intro, but we were looking at specifically condo transactions and multifamily. They were the most numerous. Single family is, as you would imagine, if you know Journal Square and in Jersey City in general, but definitely Journal Square, there's a very limited inventory when it comes to single family. So 18 sales in total, 15 of those 18 being condo. Overall, list to sale price ratio 101.7, which means on average, properties were selling at 1.7% above list price. Now think back to some of the previous episodes we've been talking about. A lower end list price to sale price ratio would be high three, right around 4%. Think about our recent Camden County. Thinking about some of those other episodes where we see numbers around 7%, 8%. This section of Jersey City, which is relatively high demand because Journal Square has Journal Square Path Station. It's a absolute commuter hub for the city. And there's a ton of development happening right now and still more to come for Journal Square. So it's a solid demand location for that month, 1.7 above asking price. Average days on market, 23 days. So things are moving. It's just a matter of how much above asking price. So let's flash up this table. We're gonna take a look at this table and we're gonna flash this up a couple of times because we're gonna look at a few metrics up here and throughout our discussion. We're looking at this Journal Square condo market. You see a total 15 transactions, because again, we're just talking condos right here. Let's look at the price distribution by range. Under 300,000, there are opportunities to be had. Entry-level opportunities for Journal Square under 300,000. These are often studio or one bedroom. Many of them are in a building right there at St. Paul's a few blocks down from the Path Station. Opportunities to be in a location where you have an ease of convenience getting wherever you need to get, right? Whether it's in Jersey City or whether it is into New York City. But imagine looking for something under 300K in Manhattan or in Brooklyn, all right, or maybe even Astoria. All right, so it's not very easy. So this six of the sales were in that range. We see two in the 300 to 500, five in 500 to 750. We're gonna take a look at one of those very shortly. And above 750 were two sales. Looking at sales below asking price, eight units, eight out of 15 properties, averaging 4.8% below on average and 31 days on market. The largest discount and by discount, the largest percentage under asking price was 15.3. And then you have those that went above. It's only three, so that means several were right there at asking price. So three above, average 5.4% above, 22 days, nine days faster in terms of how quickly they moved and the largest top performer, 6.7%. Again, but we're talking condo. Just keep that particular data point in mind. All right, continuing with some other metrics that we see right here on the table. Average sale at 498, median at 375. And the list to sale price ratio just for the condos. So we've screened out the three multifamilies. If we were looking at just condos, 98.3%. On average, the overall average list price, sale price ratio was something below list price on these condos. We got the price per square foot, average days on market, we see those as well. So with that being said, let's flash up this article, just came out on Jersey Digs, just showing us that there is a trend on the rental side of the market. And most of the rental property in Jersey City in general are going to be units, whether they be in a larger high-rise building, a building with several apartments, or even a multifamily with individual apartments. So as we reference this recent article, we see that Jersey City is experiencing a drop in rent as we enter into the spring. So specifically, Jersey City's year-over-year decline in asking rent was even more significant and is showing rents fell about 12% for one bedrooms and over 16% for two bedrooms. And the paragraph just before that one is showing us that the timeframe is in May in reference to April. And as we scroll down just a little bit in this article, you see that despite the decreases, Jersey City is still standing only behind New York and San Francisco nationwide in terms of rent. But clearly there is a ongoing trend with some leveling off, definitely on purchase side, because when we talk about Bergen-Lafayette, that particular episode where we analyze some data, very similar in that there were significant numbers of transactions, and that was for the month of April, if I'm recalling correctly. A significant amount of transactions were properties sold below list price. Now we see not as many going below as Bergen-Lafayette, but in Journal Square, similar trending, right? So even if it's not going below, it's not going significantly above either, all right? So that's something to just keep in mind. We see rental activity where there's a decrease, there's a drawback in some of the rents. So what does that mean? It's a giant, big picture. We're gonna discuss that in just a few minutes. I want to make sure I extend an opportunity for those who are in the market right now. I'm gonna flash a QR code for you. You can reach out to me directly. You can also always contact me. My contact information's right here, and you can book a Calendly appointment with me as well for a phone call. For buyers who are looking for some insights, I have a home buyer's guide for you. For the relocation guide, just give you some insights of the Garden State. For homeowners, we have resources for you as well. I have a QR code for a CMA. Absolutely know your value, even if you are not looking to sell. It may not be a year, five years, 10 years, 20 years. Know your value year to year. You are living in a major investment of yours. So know the value. We offer those. No strings attached. Just give me a few days to prepare, and we'll send that to you just for your review. Obviously, you can reach out for me with any questions. And also for homeowners, those who are cash curious, you'd like to know what would an investor offer me on my property right now, right here today, we have that as well for those who are just cash curious. So here's a QR code for you. Feel free to reach out just to get some resources and understanding of your market and your property. So before we go into a deeper dive with the implications of those numbers, quick look at multifamily. We don't have a chart for this one because it was only three properties, but the average sale price, 1.179 million. List price to sale price ratio for these, 10% above, right? 110%, 10% above list price on average for the multifamilies. And six days on market prices range from 984 up to 1.353. Different levels of demand for multifamilies in general than what you find in condo, but condo again makes up the biggest volume, which is why we're focusing so much attention on condo for this particular snapshot. Okay, so we're gonna take a look at a couple of our recent sales in a closer analysis. Looking at our list, we see that there's a total, as I referenced before, 15 properties that sold in the month of May. I picked one that was somewhat in the middle. I wanted to take a closer look at one of these that went below asking price. I picked a property at 50 Day Street because for one, that building does have pretty steady demand. It's a more recent renovated building, was a factory at one point in time, was converted. You're gonna see some photos here just to show what the amenities look like, but this was a property, as we can see, listed at 679, two bedroom, two bath, 1,300 square feet. So that's a really, really considerable size unit, 63 days on market, sold at 670. So we're gonna take a look at some of these photos. I am going to blow up some of these so we can see a bigger feature of these. So here you see front of the building, as you can see, as I referenced, this was once more of a factory building that had been totally refurbished. If you go back, I wanna say it's that fourth building. If you go further down, it's still in kind of like that factory mode. It hasn't been refurbished yet, but this gives you a sample of the exterior. And on the interior, you see these tall ceilings, these very tall windows, a lot of natural lighting. This might be digital staging. It's so good now, you can't tell the difference really. So another image of the living area. Here we have image of the bedroom. Let's browse through a few other photos so that we can see a kitchen here. This probably is the primary bathroom with the dual vanity. You see entrance here, and here you can get a sense of the floor plan, right? So you have a entry point, open area, the living dining room. It looks like they have a little dining area over here and two bedroom suites. Each has his own bathroom, but then this one has his own bathroom, but it has an entry right off of the hallway. So that kind of gives you a feel of what the layout looks like for this property. And then some of the amenities. I mean, that building is an impressive building. I've had several showings in there. So this is the gym that they have here. Here is a, not literally rooftop, but an enclosed lounge area, exterior that is. Game room, there's a mail room that's not featured in one of the photos I'm showing. Anyway, here we have the fitness center right here, and you have the theater, which most often you can have a reserved event of your own for company or an event or what have you. So this just gives you an idea that day is certainly a building that has a lot of features, a lot of amenity. We see another day unit that was 1475 penthouse unit, 76 days on market that went eventually just slightly above list price, 735 compared to 729. So that just gives you an idea that even with some of the more high end units, there still is the potential that you can have somewhat of a bargain. Now that's all relative to where it was listed to begin with. So you can always make the argument that it was listed high anyway. So that's the reason why it underperformed. But again, look at that square footage, 1300 square feet. Go back to any of my episodes where I featured Hoboken and I even have some with Hoboken versus downtown Jersey City. 1300 square feet under 700,000 is a very, very attractive price point for Jersey City or for Hoboken. We took a look at that. Look at one of those entry level situations where it performed under list price. And this is where bargains, as I mentioned before, can still be had. Okay, as I mentioned, we're going to take a look now at one of these entry level bargain options. I had mentioned St. Paul's because of the proximity to the PATH station. And so we're going to take this 201 St. Paul's Ave. This is, you see zero for bedroom. So it is a studio and it is showing 560 square feet, which isn't honestly not bad for a studio. There are one bedroom units that are like just at 600, if not a little below. So not bad at all. So what we see right here is 295 list price, 250 is where it's sold at, 47 days on market. And we see that the HOA on this one, 440. Looking at photos, we take a peek, you get a closer look at the building itself is a little bit of an older building. And that's all relative honestly, because there are buildings that are a lot older than this quite honestly. But when we look at here, this is a really straightforward, basic layout of building. The amenities are not high end. The building is older, but still relatively well maintained. I've had several showings. There is a pool for the building and outside a lounge area. Here, as you can see, no interior photos because that most likely meant there was not really any amenities that were really that upgraded. So you can't expect at that price point, think about a 250,000, there's not going to be a newly renovated bathroom. Likewise with kitchen. I've seen units here where there are updated kitchens and bathrooms and even with a studio where they may even have like a partition wall, if you will. But when you don't see photos, it probably because none were upgraded. But again, it's about that price point that's very attractive for the location. Whenever you see laundry like this, it's just giving you an understanding that there is no in-unit laundry. There is a laundry room and this is at the basement level for this building. And you see they have a fitness room for the building as well. This is again, giving you an idea of what can be had in relative to, in proximity to Manhattan specifically and Midtown Manhattan and being able to walk to a path and be in Midtown Manhattan in a matter of probably 25 minutes. That says a lot because you're not going to find a similar option at that kind of price point in Brooklyn. You're not going to find it in Queens. I challenge anybody, I mean, if you had something different, please drop a comment right in here and show, let me know. This is a case in point where Jersey City still has value. And some of these are investors. Keep in mind, some people would say, hey, look, I know long game and real estate is 100% a long game. I know the big picture is that there's still more development to come. In General Square, investor may have decided, hey, let me buy one now, do a few upgrades on it. Nothing super heavy, but some light upgrades, kitchen and bath. And I've got a long-term prospect to rent out. And these studios, I've seen these studios renting, most of them are, they're not quite, but you can reasonably expect somewhere, depending on size of the unit, depending on the amenities and the upgrades in the unit, 14 to 16 is very reasonable to get a studio given the location, right? So again, we're talking about how rents have been starting to kind of plateau. And even in some cases in this past month of May, drop in Jersey City. So you're not looking at anything astronomical, but for a $250,000 purchase, and even if you were renting it at 1,400 with a solid tenant with the potential down the road of continued growth rent-wise, because of the development that's going to happen in that area, you know, we don't see it right now, but it's still continuing to develop. So it's something to keep in mind. And our conclusion of this analysis, we want to ascertain what does this data mean for you? We're gonna start with those who are looking for primary residence. You're looking primary residence, this is a good indicator. It's a good indicator if you're on the buy side, because you know that there is some drawback in the market. You've known it from the time you've watched, and if you haven't watched, go back and watch, but from the time you watched my Bergen-Lafayette episode, you see that there is some trending, there's some pullback where buyers can negotiate on some properties, and those were multifamilies in Bergen-Lafayette. So the condo market and Journal Square, very similar. You have some room to negotiate. You can get relatively close to and even below list price. So it's just a matter of does Journal Square meet your needs in terms of your commute, or what you need in terms of location, right? You're obviously a condo shopper if you're looking there, and maybe you're that multifamily, but I'm talking about those who are looking at entry prices. So entry prices from about 250 up to 600 is really kind of entry. When you're shopping multifamily, you really need to be, in Journal Square, you really need to be above eight, okay? You really do. But if you're looking at entry-level condo, you're in that 250 to, you know, you can stretch 550 up to 600 maybe. This is definitely a time where you can start shopping around and find those opportunities where something has been on the market for maybe 20 plus days, not activity, not a decision by a seller yet, definitely if it's beyond 30, there's some opportunity there, all right? So we know that the average for those that moved quickly and sold above ask, it was an average of, and to flash that table up again, it was an average of 22 days on market. So for those that are going to be competitive, you would have to move quickly. But if you're looking for the bargain, so the bargains were at averaging 31 days. So if you have time to wait and say, hey, look, I'm gonna have an opportunity, it won't be something that maybe is fully upgraded to the level that I want, or it's in a building that is upgraded like Day Street, is 679 is what that was listed for, sold at 670. That already was turnkey. So higher price point, but you get my point. You're gonna shop and see what is out there. It was on the market for, I wanna say that one was 60 plus days on market. So you're gonna pick and choose your opportunities based on how long it's been on market. So there are opportunities out there for your entry level kind of buyer. So for investment side, it is all a matter of what your intentions are long-term. If your intentions are fix and flip, this is probably not the best time fix and flip for a condo because we see the condo don't have that level of demand where they're performing super high, where buyers are competing, climbing over each other to get into one. You have to really ask, is this more of a buy and hold? And then if it's a buy and hold, making sure that it's a building where there are no HOA restrictions on or requirements for occupancy, because there are some HOAs that do require occupancy for at least a year, or in some cases, two years. From an investment standpoint, the strategy is about what is your end game? Are you looking for adding to portfolio or are you looking for flip? Because right now the environment is definitely not for flipping. And on the high end, your newer end, your new construction, there are estimated 4,400 new units eventually coming online with a lot of the new development. Rental, purchase. Again, if you're in that luxury end, on the investment side, you may wanna pause a little bit, but if you're someone who's looking for residential, there's more opportunities to come, but many of those opportunities are more luxury, all right? So there are moderate income unit availability in many of these. The towers were not, right? So the Journal Square towers were not, but there's gonna be some opportunity for newer units in terms of inventory increasing over time. So end of the day, the long-term prospect for Journal Square as a market are very solid. We are experiencing a timeframe where prices have been going up significantly. These sections of Jersey City that we've done our two spotlights on, we can see some calming down in both of those particular areas, but still the long-term prospects are good. Is it worth still considering even on the investment side if it's a whole situation? Yes, and if you're looking to buy, there's still some opportunity there and there's more development to come. So over the next five to 10 years, that core heart right along Kennedy Boulevard, running through, there's more to come in that general area and those who are still buying early are gonna reap the benefits later. And if you're looking for, as they say, when sharks smell blood in the water, I wouldn't say we're quite there yet, but there are indications that it is a more buyer-friendly environment, particularly with the condo market in locations like Journal Square right now in this market. So again, if you have any questions, if you have any thoughts to share with me directly, reach out. We have the comment, the community here for those who would like to share some insights. I value all insights, even those who don't agree, those who have a different perspective, share it, just share it respectfully. Let's keep it collaborative. Let's keep it constructive, but we can disagree up here. So definitely hop in, share some thoughts. I again wanna thank everybody who has already subscribed. We are rapidly approaching that 10,000 subscriber mark and it is much thanks to people like you who have been watching, subscribing, and even contributing a lot to the commentary right here in the community. Be sure to click like, subscribe, and notification bell. We have more content coming your way. We have an upcoming short episode that I'm looking forward to that's coming your way and some more mix of some of that South Jersey content that I have planned for some of our Jersey viewers coming your way as well. But we will be continuing our Jersey City Investor Spotlights because we've only hit Bergen Lafayette and Journal Square so far. So we have more to come. So stay in tune. And as I say always, stay safe and stay tuned to New Jersey Living.