Unlike most municipalities in New Jersey, Princeton Borough has managed to sidestep the Great Recession. The downtown, with its main shopping drag directly across the street from Princeton University’s 5,100 undergraduate students, has seen few businesses close. In fact, the borough has even managed to grow a healthy boutique economy, replete with specialty shops, markets, and high-end restaurants, and the housing market has stayed level and calm.
So it should be no surprise that a lot of people want to live downtown. But if you are one of those people, you should know that there are two important considerations: there are far more people looking for a place to live downtown than there are places for sale, and if you do manage to find a place to live, it’s going to cost you.
As far as housing prices go, it will not cost you as much as it would have a few years ago, when the real estate bubble stretched to its limit. That bubble has receded some. But though it never popped downtown, the Princeton market in the first decade of the 21st century was as wild a ride as any other real estate market.
A good barometer of the downtown market is a three-bedroom duplex at 3 Madison Street that is considered a “pre-MLS” listing by Hendrson Sotheby’s International Real Estate at 34 Chambers Street, the listing agent. The property is currently valued for sale at $495,000. The property sold in 2000 for $182,500. Three years later it sold for $368,000.
The property went up for sale again in 2007, originally listed for $535,000, leading some to conclude that the bubble had reached its breaking point (U.S. 1., July 18, 2007) By July the price had been reduced to $499,000. Ultimately, 3 Madison Street sold that November for $477,500 — not too bad for a house that has a shared driveway with the neighbors.
According to Martha Stockton, owner of Stockton Real Estate at 32 Chambers Street, there were as of August 22 a mere 12 houses for sale in the borough (and only 37 in the borough and township combined) between the $400,000 and $600,000 range. And your minimum entry price to the heart of downtown Princeton is around $250,000 for a 600-square-foot studio condo in Palmer Square.
Currently, 43 Palmer Square West, a studio condo built in 1938, is available for $249,000, through Gloria Nilson. The residence, which was rehabbed in 2008, features one full bath, access to a balcony, original oak flooring, a fireplace with a decorative mantel, built-in bookshelves, a Pullman kitchen, a basement-level laundry room, and a dedicated storage unit.
It also features the two things that Stockton says hang people up from buying homes in the borough — there is no parking included in the sale, and the taxes are high. Annual taxes for 43 Palmer Square West are $4,003. And without a parking space included, borough residents need to consider where to leave their cars. There are parking garages dotting the borough, but you will pay at least $1,000 a year for one with a guaranteed space and 24-hour parking. Or you could take your chances with the borough’s on-street parking regulations, provided you are aware of the $70 ticket you will get each time you are caught parking illegally. The borough does offer parking passes for $40 a month in some cases, which adds almost $500 a year to your living expenses in town.
The taxes are the main thing, though. According to the borough’s latest budget, the average assessed property in Princeton Borough is valued at a little more than $747,000. For every $100 of that, homeowners can expect to pay about $1.92 in combined municipal, county, and school taxes, meaning that the owner of that average borough property will pay about $14,300 a year in property taxes. That’s almost $1,200 per month, on top of a mortgage toward which you likely will contribute about $4,000 a month.
Such an expensive proposition has rewritten the client base for homes downtown, Stockton says. “You either need cash or very tight assets, and a good credit report,” she says. Mortgage companies are still smarting from the fallout of 2008, and long gone are the days when lenders would hand out checks to prospective home buyers. Documents are triple-checked, minimum income requirements are strictly adhered to, and real estate agents want to see sizable down payments.
Agents, however, have a tremendous ally in Princeton borough’s marquee attraction. Qualified university workers are able to get 40-year mortgages directly through the school. For the real estate agent, Stockton says, “this is gold.”
University backing has little to do with prestige for the buyer. It has to do with stability and verifiable income. “The university knows how much it pays people,” Stockton says. “And the person has to be somebody they want to keep. They don’t allow just anybody.”
For real estate agents, this takes a huge question mark off the table. Agents know the university’s word is good, and they get to populate the town with the best and brightest, which keeps Princeton the envy of most towns, despite the taxes.
Princeton University is a large reason people want to live downtown, Stockton says. They like being in the shadow of a major institution, but most of the draw centers on Princeton being a walk-around town. The streets are clean and generally safe, there are shops and restaurants a plenty, and there is a growing movement toward self-containment.
Developers such as J. Robert Hillier, who teaches architecture at the university and owns his own architecture firm at 190 Witherspoon Street, and Jack Morrison, owner of JM Group and the Nassau Seafood Co. at 256 Nassau Street, plus parts of several restaurants in and around Palmer Square, have invested heavily in the push to make Princeton a place you never have to leave. Nor drive around in.
When everything is within walking distance, Stockton says, demand skyrockets in a housing market. And given Princeton’s legendarily militaristic parking regulations, the more reason there is to not have a car, the better. Taxes might be high, Stockton says, but the signature on the deed almost always comes down to this: If it comes with a parking space, it sells quickly. If there’s no space, it will sit.
Still, demand outweighs supply, and the borough, consequently, has crafted generous allowances for property owners looking to convert homes or buildings into condo space. “Those sell very well,” Stockton says. “There are quite a few on Park Place.”
Park Place does have its share of condo units for sale, most in converted duplexes or single homes. At 12 Park Place is a two-story condo with three bedrooms and two baths, built in a converted 1911 duplex, that is on the market for $260,000. This is comparatavely cheap for the street. At 46 Park Place, a third-story two-bedroom condo sold for $465,000 in a deal closed on August 4. A similar second-floor unit at 46 Park Place is on the market now for $455,000 and a third-floor unit at 44 Park Place is on the market for $495,000.
But the comparative affordability of 12 Park Place (listed by Coldwell Banker) belies two key facts. The unit currently selling for $260,000 originally was listed at $449,000 in March. And Martha Stockton says the property hasn’t moved because of the borough’s most common real estate bugaboo – it does not come with a parking space.
There are several condos on the market downtown (see list, next page), ranging from small studios to two-floor spaces. But even condos are not necessarily an automatic sell. In Palmer Square, Stasse Co., a realty development firm based in Pennington, has built 16 of a planned 83 condos, and 11 of a planned 17 townhouses called the Residences at Palmer Square, aimed squarely at the million-dollar market. Stasse is betting on the return of consumer confidence and the appeal of European-style living in the heart of downtown Princeton (see U.S. 1, August 25, 2010), and the units are priced between $1.5 and $2.5 million.
So far, says president Jodi Stasse, three townhouses and one condo have been sold at the Residences. She did not comment on the market downtown. Most other condos on the market right now have been there for several months, and some have come down noticeably in price. The condo at 43 Palmer Square West, for instance, has been reduced by $25,500 from its original asking price in May.
One sought-after end of the borough is the “tree streets” section. Currently, the only tree street houses for sale are a four-bedroom Victorian at 28 Maple Street ($799,000), and a one-bedroom condo at 78 1/2 Linden Lane ($310,000).
According to PrincetonRealEstate.net, which charts home sales in the borough and township, only one house in the tree streets (8 Chestnut Street) has sold in 2011. The three-bedroom, two-bath house sold for $350,000. The same data shows that there have been 11 tree street homes sold since May of 2009. Three-bedroom homes in the tree streets sold for an average of $515,000 in 2010 and for an average of $480,000 in 2009, the data shows.
Still, housing prices downtown are holding on, Stockton says, and they are higher than those in the township. For what you might get in the $400,000 to $600,000 range in the township, you would be in the $600,000-plus range for the borough. If you want a house, Stockton says, you can expect to start at $500,000, she says. Just don’t expect a single house or a yard for that price. The “mid-fives,” she says, can get you a duplex. “If you’re looking for a place in town with a parking space and a piece of yard, you’ll be in the sixes at least.”