Last week we looked at the status of real estate in 25 Monmouth County towns as of the end of the 2nd quarter: the median price of a single-family home in each town, and the percentage change from a year ago in 20 of the 25 towns. I didn’t calculate the percentage changes for 5 towns that had fewer than 20 home sales in the first 6 months of either year. Lots of numbers, but do they help us identify any buying opportunities?
Let’s take a closer look at Aberdeen. As of June 30th the median price of a single-family home in Aberdeen is down 5% compared to what it was a year ago. A decrease in the median price is usually a good sign for home buyers and a bad sign for home sellers, but it’s only one of the 4 key, objective real estate indicators that I monitor on a monthly basis to predict what’s happening to the local real estate market.
The 2nd indicator is the number of homes that have sold so far year-to-date. For Aberdeen, the same number of homes sold this year compared to the same 6 month period in 2013, so this indicator is neutral.
The 3rd indicator is the number of homes that are listed for sale. Here I look at an average of the past 12 months, and I find that we’ve had 18% fewer listings in Aberdeen than we did one year ago. Fewer listings indicates a decrease in supply, and less supply usually results in higher prices in the near future because buyers have fewer choices.
The last indicator is an important one: it’s the real estate absorption rate. This is a calculation of how long it would take to sell ALL of the homes currently listed for sale, assuming that homes continue to sell at the same rate as they have in the past 12 months. The reason that it’s so important is that it takes into account both supply and demand. For this indicator, it’s important to look at both the number itself and the change from one year ago. An absorption rate of 5 – 7 months is considered a “normal market”, more than 7 months is a “buyer’s market” and less than 5 months is a “seller’s market”. One year ago the Aberdeen absorption rate was 7.9 months, and currently it’s 5.6 months, so we’ve moved from a “buyer’s market” into a “normal market”. The big drop in the absorption rate is predicting higher prices in the near future.
Here are the 4 objective indicators in tabular form:
|Aberdeen Home Sales, January 1 – June 30|
|Sales (Demand)||57||57||Same number of homes sold.|
|Listings* (Supply)||85||70||18% fewer homes on market.|
|Months’ Supply* (Absorption Rate)||7.9||5.6||Much stronger demand vs. supply.|
|*based on the past 12 months|
|Median Sale $||$300,000||$284,900||5% lower median sales price.|
The bottom line is that 2 of the 4 key real estate indicators are predicting higher prices for Aberdeen homes, 1 is predicting lower prices and one is neutral. If you’re considering buying a home in Aberdeen, this may represent a buying opportunity. For at least a short period of time, you may be able to pay less for an Aberdeen home than you would have a year ago. So use Trulia to look for a home you might like, and I’ll be glad to help you find the right house within your price range. I’ll also negotiate as low as purchase price as possible. This is one reason why I always advise home buyers not to call the Listing Agent (even if it’s me). The Listing Agent has a fiduciary responsibility to the Seller to negotiate the highest possible selling price. I’d be glad to act as your Buyer’s Agent, where I’ll be working only for you, and not for the seller.
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