We’re seeing an interesting trend after 5 months of Rumson home sales. Although the short-term (year-to-date) volume and median price are showing strong increases, the longer-term (past 12 months) indicators are showing signs of weakness. So where does that leave you if you’re thinking of buying or selling a home in Rumson?
Every month I track 4 key objective real estate indicators (Sales, Listings, Absorption Rate and Median Sale Price). Let’s take a look at them together:
|Rumson Home Sales, January 1 – May 31|
|Sales (Demand)||31||42||36% more sales|
|Listings* (Supply)||73||87||19% more listings|
|Months’ Supply* (Absorption Rate)||7.1||9.0||Weaker Demand vs Supply|
|*based on the past 12 months|
|Median Sale Price||$1,050,000||$1,398,750||33% Higher median sales price.|
(Good news for Rumson home buyers indicated in bold italicized underlined font)
42 homes sold in Rumson this year between January 1st and May 31st, a 36% increase compared to the same period last year. An increase in the number of sales indicates an increased demand, and increased demand usually means higher prices (good news for home sellers, but bad news for home buyers). In fact, at the end of May the median sales price of a home in Rumson was up 33% compared to a year ago.
However, we see a different picture if we look at the past 12 months: the number of homes listed for sale (i.e., supply) has increased by 19%, and more homes available to choose from means home buyers have more opportunities to negotiate lower sales prices; this is good news for home buyers, but bad news for home sellers.
Many people feel the best indicator of the real estate market is the real estate absorption rate. That’s a calculated value which takes into account both supply and demand. It’’s defined as the number of months it would take to sell ALL the homes listed for sale, if homes were to sell at the rate as they’ve sold in the past 12 months. When the absorption rate is between 5 and 7 months we’re in a “normal market”, and when it’ greater than 7 months, we’re in a “buyer’s market”, and sale prices tend to decrease. The real estate absorption rate was 7.1 months at the end of May, 2015 and it’s now 9.0 months, clearly pointing towards a “buyer’s market”.
The bottom line is this: even though year-to-date sales are higher and the median price is higher, 2 of the 4 key indicators are warning of weakness in the Rumson real estate market, and they’re predicting that sales prices will be going down this year.
If you’re thinking of buying a home in Rumson, my recommendation is to proceed very cautiously, and not be in a hurry to make quick decisions. If you’re relocating to this area you might want to consider renting a home for the first year so you have time to become familiar with the area. Rumson, Fair Haven, Little Silver and the surrounding towns have lots of great neighborhoods to consider, and you should consider all of them before making a commitment. Make a decision to buy with your head and not just with your heart.
It would be my pleasure to work with you and spend as long as it takes until we find what you feel is the right house for you at the right price. 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 goal is to build a relationship with you, and not just to make a fast sale.
If for some reason you need to move quickly and you’re not in the area, I’d be glad to preview several homes for you and walk through with my video camera so you can see what a house is really like, and not just look at a few carefully-selected photos that show the house at its best.
One last bit of advice: if you’re looking for homes online and find something you like, don’t call the listing agent (even if it’s me). The listing agent works for the seller, and has a fiduciary responsibility to the seller to negotiate the highest sales price; you want to work with a Realtor who works only for you, and who will negotiate the lowest sales price. When’s the last time a Realtor gave you that kind of practical advice?
(732) 239-0739 (cell) (732) 530-6686 (office)