The year 2011 has come to a close, and we’re going to see lots of statistics comparing 2011 to 2010. When it comes to real estate, be prepared for headlines saying that, nationwide, home prices declined by big percentages. You’ll probably see similar headlines for New Jersey home prices, or Monmouth County home prices. Just remember that the headlines are talking about average or median prices for all homes. We’re better off if we look to see how real estate prices fared town by town, and that’s why you need a local expert for the specific town you’re interested in. For Rumson specifically, did home prices go down in 2011, or did they go up? Be prepared for some surprises as we sift through the numbers.
Let’s start off with good news and bad news. The good news for Rumson is that more single-family homes sold in 2011 and were on the market for fewer days than in 2010; the bad news is that the median sales price decreased from $1,165,000 to $1,110,000 (-4.7%):
Year # Sold Avg CDOM Median Price
2010 88 110 $1,165,000
2011 99 97 $1,110,000 (-4.7%)
Where CDOM = Cumulative Days On Market. Remember, however, that the numbers above reflect all Rumson home sales, and before we draw any conclusions let’s explore this a bit further.
Even though the median 2011 Rumson home price declined, we know that there are many different kinds of houses in Rumson. Of the 99 homes that sold last year, not all were alike. For example, some were waterfront homes, but most were not; some had large properties, others were on small lots. If you’re trying to buy or sell a home in Rumson, the median sales price for all homes may not be that helpful. Let’s drill down and take a closer look.
Waterfront properties always command a premium price, so let’s first look at waterfront vs. non-waterfront homes in Rumson:
Waterfront Rumson Homes
Year No. Sold Median Price Avg CDOM
2010 9 $1,425,000 93
2011 11 $1,435,000 107
The numbers above tell us that more Rumson waterfront homes were sold in 2011, and at a slightly higher median price (but took 2 weeks longer to sell). Now for non-waterfront:
Non-Waterfront Rumson Homes
Year No. Sold Median Price Avg CDOM
2010 79 $1,165,000 113
2011 88 $1,105,000 96
Here the numbers say that even though more Rumson non-waterfront homes were sold in 2011, and were on the market for fewer days than in 2010, the median price declined by 5.2% compared to the prior year. So our conclusion is that the price of Rumson waterfront homes went up, and the price of non-waterfront homes went down, right? That might seem like the logical conclusion, but here again, there were lots of different kinds of houses that made up the total of 88 non-waterfront homes that sold last year.
Many people look at the number of bedrooms when they’re buying a home, so let’s drill down further to see whether the numbers declined more in homes with fewer bedrooms or in homes with more bedrooms. Here’s what the numbers tell us for homes that most people are interested in:
Rumson Non-Waterfront Homes by Number of Bedrooms
Year 3 BRs 4 BRs 5 BRs
2010 $570,000 (n=15) $986,250 (n=26) $1,400,000 (n=23)
2011 $690,500 (n=16) $1,100,000 (n=41) $1,565,000 (n=14)
Now, wait a minute- this is confusing! Median prices for 3 bedroom non-waterfront Rumson homes actually increased in 2011, and so did they for 4 bedroom homes and 5 bedroom homes. Yet we saw that for ALL 88 non-waterfront Rumson homes the median price declined. What’s going on? Well, if we add the number of 3 bedroom homes (16), 4 bedroom homes (41) and 5 bedroom homes (14) we get a total of 71 non-waterfront homes. This means that 88 – 71 = 17 non-waterfront homes are missing. Like me, you probably think the answer to the riddle would be found by looking at homes with greater than 5 bedrooms. After all, there are lots of big houses in Rumson. Well here they are:
Rumson Non-Waterfront Homes with Greater Than 5 Bedrooms
Year G.T. 5 BRs CDOM
2010 $1,700,000 (n=11) 137
2011 $1,875,000 (n=13) 121
The data show that for Rumson homes with greater than 5 bedrooms (just as with 3, 4, and 5 bedroom homes) prices actually increased from 2010 to 2011. So what’s left? The answer lies with two bedroom homes, which took a beating last year:
Rumson Non-Waterfront 2 Bedroom Homes
Year 2 BRs CDOM
2010 $585,000 (n=5) 74
2011 $332,500 (n=4) 85
The median price of 2 bedroom homes fell from $585,000 in 2010 to $332,500 in 2011, and even though only 4 of them were sold last year, they dramatically lowered the 2011 median selling price for all Rumson homes!
The bottom line is that single-family home prices in Rumson actually increased for 3 bedroom, 4 bedroom, 5 bedroom and >5 bedroom homes. So if you had just looked at the median selling price for (all) Rumson homes, you’d have reached the wrong conclusion about the Rumson real estate market. This is why I keep stressing that, when dealing with real estate, you need to find a local expert whom you trust. After all, real estate is an investment. You wouldn’t think of buying or selling a specific stock based on what the S&P 500 is doing, or the Dow, or any other average, would you? You’d drill down and look at the statistics for the specific stock itself. So don’t just look at the real estate headlines- find someone who will help you with a data-driven search of home values for a specific kind of house on a specific amount of property in a specific town.
If you’re thinking of selling your Rumson home in 2012, right now the market is strong. If you’re thinking of buying a home in Rumson in 2012, be prepared for the prices to be higher than you might have expected.