It was a good year for the Rumson real estate market, both for home buyers and for home sellers. Why do I say that? If you’ve been following my posts you know that there are 4 key indicators for real estate; all 4 are objective and all are measurable. Let’s take a look at them.
There were more home sales, fewer listings, the median selling price was higher, and the real estate absorption rate was lower. More sales and fewer homes on the market normally result in higher sales prices, and that’s exactly what we saw. The median price (the price at which 50% of the homes sold for more money and 50% for less) was up 8% compared to 2011. So far it sounds like good news for home sellers, but what about home buyers?
The real estate absorption rate is so important because it’s really an indicator of demand for houses compared to the supply of houses. It’s a calculated value, in months, of the time it would take to sell all of the homes currently on the market, assuming that homes continue to sell at the rate they have in the past 12 months. In a so-called “normal market”, the real estate absorption rate is between 5 and 7 months; numbers higher than 7 months indicate a “buyer’s market” and rates lower than 5 months indicate a “seller’s market”.
The present real estate absorption rate is 8.1 months, and it was 8.5 months a year ago. The lower number shows that there’s been an increase in demand when compared to supply. True, the current rate is still above 7 months, so technically we’re still in a “buyer’s market” in Rumson. That’s why I’m saying that it was a good year both for buyers and for sellers. Home sellers are happy because prices have gone up, and home buyers are happy because there’s still a relatively large inventory of homes for sale, keeping prices at reasonable levels. If the present trend continues and the absorption rate falls below 7 months, I expect that buyers will have to pay significantly higher prices. Here are all of the year-end numbers:
|Rumson Home Sales, January 1 – December 31|
|Sales (Demand)||99||101||2% more homes sold this year.|
|Listings (Supply)||69||61||12% fewer homes on market.|
|Months’ Supply (Absorption Rate)||8.5||8.1||Demand vs. supply stonger.|
|Median Sale $ (Value)||$1,110,000||$1,200,000||8% higher median sales price.|
However, there’s a new factor that has to be considered. No one knows what effect “Super Storm” Sandy will have on the real estate market over the next 6 – 9 months. One possibility is that home prices in flood-prone areas will decline as demand slips, but home prices will rise for homes in areas that weren’t affected by Sandy. Although most of Rumson is not in a flood zone, some very nice waterfront homes did have significant water damage. It will be interesting to see what happens in 2013, especially during the first half of the year.
Leonard “Len” Dunikoski, GRI
Diane Turton Realtors – Rumson Office
8 West River Road
Rumson, NJ 07760
(732) 239-0739 (cell) (732) 530-6686 (office)