As predicted, earlier this week the Federal Reserve raised rates by 25 basis points (0.25%) and indicated its intention to have 4 more rate increases in 2016. Chairperson Janet Yellen said next year’s rate hikes will not necessarily be the same amounts and not on a regular schedule. If you intend to buy Rumson real estate and pay with cash, this really doesn’t affect you. However, if you intend to take advantage of mortgage financing at today’s low rates before they increase significantly, you should start your house search as soon as possible.
Seven (7) Rumson homes sold in October, and with those sales one of our 4 key, objective real estate indicators turned positive for home buyers. The Rumson real estate absorption rate increased from 8.0 months at this time last year to 8.1 months now. An increase of 1/10th of a month isn’t much, but t’s an important indicator because it looks at both supply and demand. It’s a calculation of how long it would take to sell all the Rumson real estate listed for sale if home sales continue at the same rate as they have in the past year. A real estate absorption rate between 5 and 7 months is a “normal market” and anything greater than 7 months is considered a “buyer’s market”.
Here are the numbers for the 4 key objective indicators as of October 31st. Good news for home buyers is shown in italics and underlined:
Rumson Single-Family Home Sales, January 1 – October 31
2014 2015 Comment
Sales 89 96 8% more Rumson homes sold.
Listings/Month* 76 75 2% fewer homes on market.
Months Supply* 8.0 8.1 Slightly weaker demand vs. supply.
Median Sale $1,165,000 $1,222,500 5% higher median sales price.
*based on the previous 12 months of listings
In addition to the 4 key indicators, I track other indicators such as the average sales price, the average listing price, the average number of days on the market, etc. I also keep my own database of every home that sells in Rumson (and Fair Haven), using information from the tax records as well as information from the Multiple Listing Service (MLS). This information helps me in several ways: when a potential seller asks me what their home is worth, I can give them a far better estimate than any computer program can. Since I try to visit every new listing of Rumson-Fair Haven real estate, I know what the interiors of the homes really looked like and that’s information you can’t get by just looking at the listing photos.
The database helps me when I’m working with Rumson real estate buyers as well. I can give them information such as the number of Rumson homes that sold for less than assessed value, the average percentage over assessed value for homes that did sell above assessed value, the average price per square foot for differently sized homes, etc. It also gives me excellent “comps” (comparable sales) to use when a buyer asks me for the current market value of a home they liked.
If you’re thinking of buying a home in Rumson or Fair Haven, remember that finding the “perfect” house involves both subjective feelings and objective data. Subjective feelings involve the way a house makes you “feel” if you were to live there and objective considerations involve evaluating the investment you‘re making (is the house listed at, above or below market value, and will the house be easy or hard to sell when that time comes, etc.). I share some of this information in these blog posts, but I reserve some of the information for buyers and sellers who are my clients. If you’re a “customer”, I’ll deal with you fairly and honestly, but if you’re my client I have specific fiduciary responsibilities that go above and beyond fairness and honesty.
Real estate laws vary from state to state. In New Jersey, before you discuss with a Realtor® your motivation or financial ability to buy or sell a house, that Realtor® should give you and explain to you something called a “Consumer Information Statement” (CIS). The CIS outlines the 4 types of relationships you can have with a New Jersey Realtor®, and it’s important that you understand the differences before you become a Realtor®’s client. If a Realtor® doesn’t give you a CIS and explain it thoroughly to you, find a different Realtor®.
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