There are the 4 key statistics that I track every month (Sales, Listings, Absorption Rate and Median Sale Price). Each of them is an independent indicator of the current real estate market, and when all 4 are predicting the same thing I feel very confident the market is becoming better or worse for a buyer (or a seller). I’m confident even when 3 point the same way and only 1 points the other was. However, what does it mean when the 4 key indicators are evenly split? That’s what we have now:
|Fair Haven Home Sales, January 1 – April 30|
|Sales (Demand)||28||27||4% fewer sales|
|Listings* (Supply)||36||34||7% fewer listings|
|Months’ Supply* (Absorption Rate)||4.6||3.5||Stronger Demand vs Supply|
|*based on the past 12 months|
|Median Sale Price||$727,500||$685,000||6% lower median sales price|
The two indicators shown in underlined bold italics are good news for home buyers: fewer sales means lower demand, and lower demand makes it easier for home buyers to negotiate lower prices. The year-to-date median sales price is down 6%, and lower prices in a town like Fair Haven don’t happen that often. That suggests Fair Haven is in a “buyer’s market”.
However, the other 2 indicators are bad news for home buyers. Fewer listings means home buyers have fewer choices, and that makes it easier for the seller to negotiate a higher price. The real estate absorption rate is a calculation of the number of months it would take to sell all the homes on the market, if homes continue to sell at the rate they did in the past 12 months. It takes into account both the number of sales (demand) and the number of listings (supply), and when the absorption rate decreases, homes tend to sell faster and prices increase. The absorption rate went from 4.6 months a year ago to 3.5 months now, a substantial drop. That suggests Fair Haven is in a “seller’s market”.
So which is it? Is it a good time to BUY a home in Fair Haven, or is it a good time to SELL? At the end of 4 months we’ve had enough home sales in both years to calculate percentage changes that are statistically significant: sales are down 4% and listings are up 7%.
I record every Fair Haven home sale in an extensive spreadsheet and data not just from the MLS but from Monmouth County tax records. This lets me sort the data in many ways that other REALTORS® don’t look at, e.g., selling price vs. assessed value; days on market vs. number of bedrooms; etc. When do that, I see that 5 of the Fair Haven home sales involved new construction which sold for $825,000 – $1,625,000 and were on the market the longest. I see that 14 homes sold below the median price, and 6 of those 14 sold below assessed value; they tended to be the oldest homes (1903, 1920, 1927, etc.). There was no correlation between sales price and number of days on the market for homes that weren’t new construction.
At this point of the year, my conclusion is that it’s a good time to buy or sell a home in Fair Haven if the house being sold is priced at or close to the market. If you’re thinking of selling your home in Fair Haven, this means you need to work with a REALTOR® who will give you a true estimate of market value (what your home should sell for). If the seller prices the home a little higher than market value it will sell quickly and might even have multiple buyers in a bidding war. Be careful: there are REALTORS® who tell sellers they can market a house so it sells at a price much higher than market value. That’s just a ploy for the REALTOR® to get the listing. When there are few showings and no offers, he/she’ll go back to the seller several times and ask for price reductions.
If you’re a home buyer, it means you have to work with a REALTOR® who’ll spend the time to build a relationship with you, and teach you about the local market so you’ll have the confidence to move quickly when a desirable house is listed at (or below) market value. Remember, there are other knowledgeable buyers looking for homes in Fair Haven, so listings at or below the market won’t be on the market for long.
It would be my pleasure to work with you regardless of the price range you’re considering. If you’re a first-time home buyer, be sure to read my series of posts on The 5 “P’s” of Buying a Home. Rumson and Fair Haven are wonderful towns to live in- I’ve lived here for over 40 years. My recommendation for home buyers is to take your time, get to know the local market, and make a decision with your head and not just your heart. You can find a home you love at a price that’s a good investment.
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