Most home buyers and sellers consider themselves to be knowledgeable about real estate market trends because of what the media reports. However, because the media reports reflect nationwide home sales, their analysis is based on severely deficient data. In addition, the news can often be contradictory, giving us headlines such as the ones we saw this week: “Housing Report Disappoints as Sales Dip in February” and “Home Sales Show Strength, Prices Rise” and “Home Prices to Rebound in 2012”.
Where does this leave someone who’s specifically interested in the Rumson-Fair Haven housing market? In my opinion, the only way for a buyer or seller to make an informed decision is to talk to a Realtor who knows the local market and tracks local market activity. That way you can make a data-driven decision, rather than one based on emotions or an irrational response.
Even if you’re not currently thinking of buying or selling, you should be interested in local real estate trends because they impact your personal financial security. You track your stocks and 401(k) retirement savings, right? Doesn’t it make sense then to also track home values?
Well, how do you do that? To make it easy, I’ve done some extensive research and I’m going to share the information with you. Today I’ll give you the annual statistics for 2011 vs. 2010, and in a subsequent post I’ll update you for the first quarter in 2012. And the information I’ll share with you will be local data for Rumson and Fair Haven. I want you to have objective information about the 4 key real estate indicators:
1. Sales Activity (Demand) – How many properties sold last year as compared to the year before (or the 2012 quarter to the same quarter in 2011). If sales are increasing, prices are likely to increase as well; if sales are declining, prices may continue to decline.
2. Listing Activity (Supply) – The number of homes for sale in your area. If the number is increasing using the same year-over-year comparison as above, prices are likely to drop to absorb the additional inventory; if the inventory is dropping, it may not be long before prices increase.
3. Months’ Supply of Homes for Sale (Absorption Rate) – A calculation of the number of months it would take to sell the current supply of homes if home sales continue at the present rate. A “normal market” is usually 5 – 7 months for average priced homes, and tends to increase as you move into the higher price ranges. We’ve been in a “buyer’s market” (greater than 7 months) for the past few years. If the supply is trending back to the 5 -7 months average, home prices may be increasing.
4. Average or Median Sales Price (Value) – The prices of homes sold last year/quarter compared with the previous year/quarter. If prices have dropped, they may continue to drop in the future. If prices have stabilized or have started to increase, an increase in the future may be at hand.
Be warned, however, that sometimes the 4 indicators may send conflicting signals. I’d be glad to talk with you when this happens. Today let’s look at the 2011 annual data:
Town Year Sales Active Listings Months’ Supply Average Price Median Price
Rumson 2011 99 69 8.4 months $1,450,026 $1,110,000
Rumson 2010 88 65 8.9 months $1,283,040 $1,165,000
Fair 2011 76 44 9.0 months $ 734,091 $ 641,250
Haven 2010 58 55 11.4 months $ 799,174 $ 669,200
Monmouth2011 3,929 3,851 11.8 months $ 482,057 $ 375,500
County 2010 3,970 4,124 12.5 months $ 503,955 $ 393,250
So for Rumson, Fair Haven and Monmouth County as a whole there were both positive signals (indicated in bold font) and negative signals (indicated in italic font).