According to the most recent (February) S&P/Case-Shiller home price index, nationwide home prices are 12.9% higher than a year ago, and in my last post I reported that Fair Haven home prices are up 19%. In Rumson, however, the median home price is actually 2% lower than it was one year ago. That comes on the heels of 2013’s 11% decline in the median Rumson sales price.
The median sales price is one of 4 key, objective indicators I use to assess the local real estate market. When the median price goes down, it’s good news for home buyers but bad news for home sellers. The 2nd key indicator is the number of sales. Year-to-date, 13% fewer Rumson homes had sold compared to the same period in 2013. Fewer sales normally predict lower prices in the near future.
The number of homes listed for sale remained constant at 57, so that indicator is neutral (fewer listings normally predict higher prices and more listings normally predict lower prices).
The only good news for Rumson home sellers is that the real estate absorption rate is 5.5 months now, compared to 6.7 months a year ago. The real estate absorption rate is a calculation of how many months it would take to sell ALL of the homes currently listed for sale, assuming that homes continue to sell at the same rate that they have in the past 12 months. It takes into account both supply (i.e., inventory) and demand (i.e., sales). An absorption rate of 5 – 7 months is considered a “normal market”, whereas greater than 7 months is considered a “buyer’s market” and less than 5 months is considered a “seller’s market”. The absorption rate tells us that Rumson has been in a “normal market” for the past year.
Here are the 4 objective real estate indicators in tabular form:
|Rumson Home Sales, Jan 1 – Apr 30|
|Sales (Demand)||32||28||13% fewer sales.|
|Listings* (Supply)||57||57||Same number of listings.|
|Months’ Supply* (Absorption Rate)||6.7||5.5||Stronger Demand vs Supply|
|*based on the past 12 months|
|Median Sale $||$1,112,500||$1,092,500||2% lower median sales price.|
If you’ve been thinking of buying a home in Rumson, the decline in the median sales price may represent a buying opportunity. Continue using the internet to search for homes in your price range. Drive by houses that look interesting, and get an idea of what the neighborhood is like. However, if you find a house you’d like to visit, I strongly recommend that you DON’T CALL THE LISTING AGENT (even if it’s me). The Listing Agent works for the Seller, and has a fiduciary responsibility to negotiate the highest sales price for the owner. You want to be represented by a Buyer’s Agent who will work only for you, and who will have a fiduciary responsibility to negotiate the lowest sales price for you.
The first time you meet with a real estate agent in New Jersey, he/she should give you a copy of a “New Jersey Consumer Information Statement” and explain its contents to you. Read it carefully- if you have any questions about it give me a call. It would be my pleasure to be your Buyer’s Agent, whether you’re a first-time home buyer or one who’s owned several homes.
(732) 239-0739 (cell) (732) 530-6686 (office