NJ Market Inflated Prices - Invest now or wait it out?
Member since 2020 · 10 posts · 0 votes
Hi - I am a newbie investor looking for my first property. Currently live in North Jersey and my husband and I would like to house hack for a year or so before fully renting it out. Since June or so, the prices here have shot up - from what i can tell most I look at are around $100k + over the value they were the beginning of this year.
Right now I am thinking we wait this out, but wondering what those familiar with this market are thinking about the prices and how that impacts investment opportunities? Do you think house hacking is possible in this market? Do you think the current values are sustainable or will they go back down in a few months or so?
Obviously no one knows for sure, but would love to hear some thoughts around this. I'm currently taking the approach of continuing to keep an eye on the market and analyzing investment opportunities, but thinking next year is going to be more likely for an investment timing wise.
Thanks!
The market is inflated compared to what @Lisa Alexander? I remember (yeah cause I've been at this a long time) in the 1990's when people were saying that real estate prices had hit their peak and would NEVER go higher. Looking back now how many of you would have loved to get a buy and hold in the 90's like I first did and compare it to the prices we have today? The big difference between now and then (besides market corrections and super run ups in prices) is the rate at which we can get loans for. When I started mortgage rates were in the high 7's. People would cringe at that today. Today's money is practically free with inflation. So what would you rather do, sit on the side lines hoping for the prices to drop (and risk higher interest rates) or get in and get someone else to pay off your property that you hold for 20 plus years at crazy low rates. You'll never see these rates again historically. Take advantage of them. Analyze the property. If the opportunity is good long term do regardless of where the market is. That's what we do.
I would wait at least until the spring of next year. You’ve mentioned that on average you’re seeing prices well above what they were last year, and that’s how it pretty much is across the board.
I think that once the NY exodus settles down and we see an end to our worldwide situation, prices will stabilize and correct to some degree, but don’t expect them to correct to pre-pandemic levels. I’m spitballing, but I think this will change consumer spending habits and NY’s ability to get its act together will dictate the prices of neighboring markets.
@David Czech Thank you for your response. That makes complete sense and what I was thinking. Albeit I'm a little disappointed because I wanted to start sooner, but agree the prices now make the timing not quite right.
@David Czech Thank you for your response. That makes complete sense and what I was thinking. Albeit I'm a little disappointed because I wanted to start sooner, but agree the prices now make the timing not quite right.
There are many factors involved to determine if its the right time for you. How urgently do you need to move into your own place? How would you feel if prices went up another 100K by next year? How long are you willing to wait for the "right price"? That should guide you to what you really want to do i think.
I can pretty much guarantee she wouldn’t be thrilled if prices shot up 200% over 2019 market value........
@yavuz
@Yavuz Bayram Thanks for your response and agree those are good questions. We would want to buy something within the next year really and so will have to consider what we'd do if the prices went up another $100k. We're not really on a forced timeline - we're renting now, and have a young son, and so want to be in and out of the house hack by the time my son is ready to attend school (he's 1 now), so we can settle somewhere more permanently.
Overall, if we can make the numbers work, for a cash flow positive investment we are more flexible on the price. So I am also taking that into consideration.
btw - notice you're in Hackensack. That's one of the areas we are looking!
@yavuz
@Yavuz Bayram Thanks for your response and agree those are good questions. We would want to buy something within the next year really and so will have to consider what we'd do if the prices went up another $100k. We're not really on a forced timeline - we're renting now, and have a young son, and so want to be in and out of the house hack by the time my son is ready to attend school (he's 1 now), so we can settle somewhere more permanently.
Overall, if we can make the numbers work, for a cash flow positive investment we are more flexible on the price. So I am also taking that into consideration.
btw - notice you're in Hackensack. That's one of the areas we are looking!
So it does seem like you would be disappointed if the prices went up even more and i noticed you mentioned your son is 1 so he only has another 3 years before pre-k sometimes house hunting can take a while. I have clients who we have house hacked but took some of them as long as 18 months. If that was the case for you going in and out of house hacking may take a while as well. Lot of moving gears in this machine for you. But as i mentioned, if you are patient and ready to pull the trigger there are deals out there that will come your way. Lot of great areas with positive cash flow down from Hackensack to Kearny.
@Lisa Alexander. I would Wait if I were in your shoes. Ill give you an Example. Last Summer a 2 Family (3 bedroom units) went for $550K. Fast forward to todays market. Same street unit just as updated as the previous home I mentioned. The only difference this one sold for 635K. Mind you thats waiving inspections etc. Your telling me a home in less then 12 months with rents staying the same went up over 80K??? No shot. Your dealing with NYC money coming in and wanting good schools for the kids. THese same people are taking there in laws selling there house and placing them in the other units. I would wait until After the election/ next year. Best of luck to you
I’m in Bergen County and I’m seeing inflated prices for multi family. According to all the posts on BP, I’m going to be waiting too. Waiting...but ready
@Lisa Alexander North Jersey is always an expensive area to begin with, and then factoring in current market conditions, prices are a bit inflated. However, waiting for the market to drop or trying to "time the market" is never the best strategy because you never know when you've hit the peak or the bottom until it's too late! The best advice is to just do what you're doing and keep checking inventory on a regular basis, running the numbers on properties, and staying ready to pull the trigger whenever the right deal comes along.
I will add that the most important factor is not "will prices change from today?" - they will - but "does this deal make sense for me today?" Prices will always change, with a bias upward. Look for something with good fundamentals, in a town with a decent school system - that way you are not under pressure to move out by a deadline. If you need to stay a couple of years later, you can. Perhaps if you buy a multi with a smaller and a bigger unit mix, you can first occupy the small unit, then move to the bigger unit if you need more space, then ultimately move outward and upward when the time is right.
@John M Chludzinski Great points! I will keep this in mind as well.
Hi - I am a newbie investor looking for my first property. Currently live in North Jersey and my husband and I would like to house hack for a year or so before fully renting it out. Since June or so, the prices here have shot up - from what i can tell most I look at are around $100k + over the value they were the beginning of this year.
Right now I am thinking we wait this out, but wondering what those familiar with this market are thinking about the prices and how that impacts investment opportunities? Do you think house hacking is possible in this market? Do you think the current values are sustainable or will they go back down in a few months or so?
Obviously no one knows for sure, but would love to hear some thoughts around this. I'm currently taking the approach of continuing to keep an eye on the market and analyzing investment opportunities, but thinking next year is going to be more likely for an investment timing wise.
Thanks!
Personally, I think if you are planning to "house-hack" these properties... You are mostly going to the long-term cash-flowing strategy. My mother purchase a multi-family smack dab in the middle of Jersey City (Greenville area) at a decent price. If you plan to hold it for many many years, I don't think that you even need to care how much you are purchasing it for. Likewise, I also purchase my house-hacked house in New Brunswick and I calculated that it will cash flow $1,100+ once I leave the place. I honestly don't care where the market goes from here because I will always cash flow nonethless. I do this with confidence because guess what... My mentor who owns 90 properties here in New Jersey just added 20 of his properties this year alone because he sees that this market isn't going to go anywhere. Rents have never gone down in New Jersey and I believe this is a more important factor than the short-term movement of your property's value. The fact that you can dramatically reduce your expenses house-hacking your own property is a plus itself :D
All I'm saying is that my me and my mother are currently house-hacking two amazing properties right now because we plan to hold these properties for at LEAST 10 years. I know for sure that in 10 years property values will never be this low. This is my two-cents, I hope it helps!
I think 2021 will be a more realistic buyers market. Vaccine coming out, forcing people to go back to the office, NYers not panic buying into NJ, foreclosures will start up as well. JMO.
The market is inflated compared to what @Lisa Alexander? I remember (yeah cause I've been at this a long time) in the 1990's when people were saying that real estate prices had hit their peak and would NEVER go higher. Looking back now how many of you would have loved to get a buy and hold in the 90's like I first did and compare it to the prices we have today? The big difference between now and then (besides market corrections and super run ups in prices) is the rate at which we can get loans for. When I started mortgage rates were in the high 7's. People would cringe at that today. Today's money is practically free with inflation. So what would you rather do, sit on the side lines hoping for the prices to drop (and risk higher interest rates) or get in and get someone else to pay off your property that you hold for 20 plus years at crazy low rates. You'll never see these rates again historically. Take advantage of them. Analyze the property. If the opportunity is good long term do regardless of where the market is. That's what we do.
@Lisa Alexander As a very active investor in both Bergen and Essex County I will tell you there are still great deals out there. I have closed on a 3 during this COVID time. It all depends on your invest strategy.
If you are looking for turnkey/ shinny/ new, then you have to expect to pay top dollar. In our market that purchase would be considered a retail purchase. You will be faced with all the buyers who are in the market with emotion.
If you are looking for a fixer that maybe a diamond in a rough that will give you great cash flow, appreciation and you can BRRRR. You will be need to set your emotional hat on fire and wed yourself to you investor hat. Keep looking at deals and keep working on the numbers and you will find some great opportunities.
Do yourself a favor and ignore people that tell you to wait until the bottom falls out. The people that say that for the most part arent active investors. The have been on the sidelines forever saying the same thing.
Get your numbers together. Formulate your investing approach and execute. Opportunity is always out there weather it's a sellers market, or 7% interest rates or cheap money and covid like now. Deals are there.
Also be mindful the great BRRRR deals dont just happen out of then air. For the most they are engineered. If you have any questions I dont mind helping where I can.
Best of luck out here. Stay after it!
@Lisa Alexander You should continue your search (perhaps broaden the area that you're searching in) and scrutinize/analyze the deals you find as best you can, interest rates continue to hover near all time lows which is great for buyers though the market is still hot and prices reflect that. Good deals come around in every market but in markets like theses they are harder to find. No one knows what the next couple of months will bring for rates or the market, but that shouldn't stop you. Keep analyzing and keep searching until you find what you're looking for
Todays "inflated" prices become the new comps, making the prices the new normal. I do not think and I wouldnt bet that prices would drop.
In that respect, the competition may die off a bit and the ridiculous prices over offer will probably die down a bit, along with the waiving of inspection etc. But I do believe that the prices / asking prices will not be going down