What a difference one month makes! From January 1st through the end of April, 28 homes had sold in Rumson, and the median year-to-date price was 2% lower than it was a year ago. As of May 31st, 38 homes have sold, and the year-to-date median selling price has increased 14% compared to the same period in 2013. This is a great example of why it’s hard to reach conclusions when statistical information is based on a small number of sales (and why I don’t even calculate percentage changes until at least 20 homes have sold in both years). Increased sales prices tend to predict higher prices in the near future.
If you’ve been following my posts, you know that I use 4 key, objective real estate indicators to predict what’s happening to the market. The 2nd indicator is the number of homes that have sold. More home sales tend to predict higher prices (due to higher demand) and fewer home sales tend to predict lower prices (due to lower demand). 5% fewer homes sold in Rumson in the first 5 months of 2014 than in the same period in 2013, so this indicator is predicting lower prices to come.
The 3rd indicator is the number of homes that are on the market (based on the past 12 months): higher inventory tends to predict lower sales prices (based on more choices) and lower inventory tends to predict higher sales prices (based on fewer choices). As of May 31st, 2% more Rumson homes were listed for sale than there were a year ago, so this indicator is also predicting lower prices to come.
The 4th indicator is the real estate absorption rate, which takes into account both supply and demand. It’s a calculation of how long it would take to sell all the homes listed for sale, if homes continue to sell at the same rate as they have in the previous 12 months. An absorption rate of 5 – 7 months is considered a “normal market”, greater than 7 months is considered a “buyer’s market”, and less than 5 months is considered a “seller’s market”. Rumson’s real estate latest absorption rate is 5.3 months, and was 6.7 months at this time last year; the “normal market” is growing stronger, but Rumson hasn’t become a “seller’s market” like Fair Haven and Little Silver have.
Here are the year-to-date numbers in tabular form:
|Rumson Home Sales, Jan 1 – May 31|
|Sales (Demand)||40||38||5% fewer sales.|
|Listings* (Supply)||55||56||2% more listings|
|Months’ Supply* (Absorption Rate)||6.7||5.3||Stronger Demand vs Supply|
|*based on the past 12 months|
|Median Sale $||$920,000||$1,050,000||14% higher median sales price.|
The bottom line: the 4 key, objective indicators are evenly split. Two are predicting higher prices for homes in Rumson, and two are predicting lower prices. If you’re thinking of buying a home in Rumson, I’d be glad to show you all the homes that meet your criteria and are within your budget. In addition, I’ll set up a password-protected search engine for you so you can see all the listings online and look through the photos attached to each listing. Remember, if you see something you like online, DON’T CALL THE LISTING AGENT(even if it’s me). The listing agent works for the Seller, and has a fiduciary duty to negotiate the highest selling price. I’d be glad to serve as your Buyer’s Agent, and negotiate the lowest possible selling price. Call, text or email me.
(732) 239-0739 (cell) (732) 530-6686 (office)