Real estate prices in New York City have cooled but remain astronomically high, so Jennifer Tobias, a senior designer at the Studio Sofield design firm in lower Manhattan, found a nearby refuge.
Located just across the Hudson River from Manhattan’s West Side, Jersey City is being touted by some as the latest alternative to New York City’s torrid real estate market. It’s where Tobias joined a growing number of area residents who find Jersey City more affordable when compared to its more famous neighbor.
“My apartment is a 310 square foot studio in a 28-unit building,” Tobias told CNBC recently. Her unit cost $195,000 when she bought it in 2007, and she said that its current value is $312,000.
“A similar apartment in New York City would easily cost twice as much,” she added. Her residence faces Van Vorst Park, which has a farmer’s market, Shakespeare performances and outdoor movie nights. A wide range of restaurants and bars can be found within an eight-block radius, and the overall cost of living is low.
She isn’t only getting a more affordable lifestyle across the river. New York’s outer boroughs like Brooklyn and Queens, have traditionally offered lower cost housing. However, prices there have also skyrocketed in recent years, forcing residents of modest means to look elsewhere.
Enter New Jersey, which for years dwelled in the shadow of its larger-than-life counterpart across the Hudson, but has definitively come into its own. Places like Jersey City have emerged as alternatives to the Big Apple for cosmopolitan-minded residents.
‘Avoid sticker shock’
According to a real estate report from PricewaterhouseCoopers, Jersey City has established itself as the go-to for people fleeing New York City. Its growth can be attributed to an influx of “highly educated millennials,” many of whom work in Manhattan’s technology service companies, Pricewaterhouse noted.
“Renters and buyers alike are taking notice and helping to make Jersey City the fastest growing metropolitan area in the state,” said Ralph DiBugnara, vice president of retail sales at the New Jersey-based mortgage lender Residential Home Funding.
He cited an average home price of $391,000 and an average rent of $1,500 per month—substantially lower than what Zillow cites as Manhattan’s median home price of over $1.3 million, and median rent of $3400.
Agent Gina Castrorao of the New York City-based real estate company Triplemint said that Jersey City’s real estate prices depend in large part on proximity to the Hudson River.
“There are rents ranging from $1,200 to $10,000,” she said. “Typically, the closer you are to the water, the higher the prices will be.”
“It is true that high growth markets like Jersey City do often eventually become victims of their success, and are branded as ‘too expensive.'”
Scott Bierbryer, co-founder of the apartment marketplace startup VeryApt.com, said that those who work in Manhattan are well-served by transportation options that offer a short commute into the city.
Those interested in buying luxury property have many options as well. These include 99 Hudson, an 82-story condominium owned by Chinese developers that’s currently under construction. When it’s complete, the building will offer virtually every amenity residents can get east of the Hudson River, minus the high prices: Unit prices start under $1 million.
“Buyers can avoid sticker shock by saving an average of 10 percent on purchases at 99 Hudson, compared to newer properties in DUMBO, and an average of 38 percent versus Lower Manhattan,” said Edwin Blanco, a sales manager with Marketing Directors, who represents the property.
Blanco told CNBC that 99 Hudson has attracted more buyers from Manhattan than any other Jersey City property in his portfolio. They cite the easy commute and spectacular views as the biggest selling points.
David Amsterdam of the global real estate company Colliers International said that Jersey City is also a good deal when it comes to office space. He quoted an overall rent of $72.74 per square foot for Manhattan businesses, as opposed to only $38.98 per square foot in Jersey City.
All of which raises the question of whether Jersey City could soon go the way of formerly reasonably-priced New York neighborhoods like parts of Brooklyn and Long Island City. As soon as the word got out, many of those became trendy, expensive hotspots.
To some extent, that effect is already underway. In nearby Hoboken, median apartment prices are even more expensive than the Big Apple’s, data from real estate tracking firm Apartment List shows.
“It is true that high growth markets like Jersey City do often eventually become victims of their success, and are branded as ‘too expensive,'” said John Boyd, principal of the Boyd Company, a corporate site selection firm based in Princeton, New Jersey.
“The challenge for developers and politicians in Jersey City is to create a climate where new housing options remain in the pipeline, and incentives are available for re-purposing projects, [such as] converting old industrial and retail into mixed-use housing projects,” he said.
However, if Jersey City does eventually become too expensive, Boyd added that new options will always, eventually, present themselves.
“Bayonne, which is getting a new ferry service by the end of this year, is being touted the ‘new Jersey City’ by many of our clients, because of its lower cost profile and proximity to Manhattan,” he said.