Rental Property Investor · Jersey City, NJ · Member since 2015 · 19 posts · 1 vote
Hello folks,
I live in the NY/NJ metro area. I keep hearing that the real estate bubble is around the corner and unable to proceed to make big investments.
Some background : During 2008-2009,the metro NY didn't really tank .It probably saw a correction of 10-15% based on neighborhood. I lost out couple of bids back in 2013-2014 due to soaring home prices in Jersey City and low inventory. Fast forward to 2017---the prices have still skyrocketed, multiple bids on houses, almost 10-15+ bids per multifamily houses in this area.
One another main reason is builders like Kushner and co are really pumping lot of money into the real estate around Journal Square, Jersey City and there is a lot of new development. So not really sure when the bubble will burst or how cautious we can be when bidding for houses.
Looks like the builders are not slowing down on fears of a bubble.
Question to the pros is how aggressive can we really be in this area to grab a house ?
(Or )we just wait for the dust to settle and buy once there is a correction?
Thank you in advance to all the pros who answer these questions.
A bubble implies that there is an excess of inventory or an unsupported increase in prices.
Right now, there is a shortage of housing based on the demand for living in the tri-state area...
It would take a lot of building to meet that demand, which means we aren't anywhere near a bubble.
It would take a shock to the system to curtail demand. Like a sudden loss of jobs in the area, a sudden increase in taxes, or an excess of speculation building, which can't happen over night.
Yes. If properties aren't cash-flowing, then that means that the appreciation in property values is rising faster than rents. But, eventually, as leases and units turn over, rents will start to rise due to the demand.
A bubble implies that there is an excess of inventory or an unsupported increase in prices.
Right now, there is a shortage of housing based on the demand for living in the tri-state area...
It would take a lot of building to meet that demand, which means we aren't anywhere near a bubble.
It would take a shock to the system to curtail demand. Like a sudden loss of jobs in the area, a sudden increase in taxes, or an excess of speculation building, which can't happen over night.
Yes. If properties aren't cash-flowing, then that means that the appreciation in property values is rising faster than rents. But, eventually, as leases and units turn over, rents will start to rise due to the demand.
Rent to purchase price should be your biggest concern not whether there will be a bubble. Overpriced properties are always going to be a bad investment for cash flow.
If on the other hand your speculating on appreciation that is a entirely different animal best left to high rollers and gamblers..
There have been some signs of that market slowing down from a rental perspective. There's a ton of inventory available right now in areas like Hoboken and Downtown Jersey City. On the sales side, however, there is still a lack of inventory and most properties that are well priced are still receiving multiple offers. I work with a number of investors in the area and would be happy to discuss questions you may have in any areas of Northern NJ.