If you’re thinking of buying a home in Fair Haven in 2017, it might be helpful to look back and see what happened to Fair Haven real estate last year. To help you do this, I’ve listed 4 key statistics below. The first one – the number of sales – shows that 24% fewer homes sold in 2016 than in 2015. This is good news for you; it shows there was less demand for Fair Haven homes, and lower demand for homes usually results in lower home prices. The second statistic – the number of listings – shows more Fair Haven homes were on the market in 2016 than in the year before. The number I use is the 12 month average, because the number of homes on the market varies from month to month. More homes on the market means there’s a greater supply, and as supply increases prices also tend to go down, so that’s the second bit of good news for you.
The 3rd statistic is called the Real Estate Absorption Rate, and we’re going to spend a lot of time talking about it, because it takes into account both supply and demand. This is a calculation of how long it would take to sell all the homes on the market if home sales continue at the present rate. There are different ways of calculating this number: some people use the current month compared to the same month a year ago; others use the past 6 months compared to the same period last year; I, like many Realtors, use the past 12 months. The 2016 Real Estate Absorption Rate was 5.5 months. In other words, it would take 5.5 months to sell ALL the Fair Haven homes on the market in a typical month, assuming homes sold at the rate they did in all of 2016.
In a “normal” real estate market, he Real Estate Absorption Rate tends to be between 5 and 7 months. When the absorption rate falls below 5 months we’re in a “seller’s market”, indicating that demand is exceeding supply; when it rises above 7 months we’re in a “buyer’s market”, indicating that supply is exceeding demand. In 2015 the absorption rate was 3.6 months, consistent with a “seller’s market”. 2016 saw the rate rise above 5 months, showing a return to a “normal market”. Although a normal market is neither good news nor bad news for home buyers, it’s good news that Fair Haven is no longer the “seller’s market” that it was in 2015.
The final statistic is the median sales price. Note this isn’t the average sales price; the average is calculated by adding up all the selling prices and dividing by the number of homes sold. The average price can be misleading, because an average value can be distorted by homes that have sold at either very high or very low prices. The median sales price is the price at which 50% of the homes sold for a higher value and 50% sold for a lower value. The median sales price for a home in Fair Haven rose from $745,000 in 2015 to $795,000 in 2016. A higher sales price obviously is bad news for home buyers.
Here are the numbers in tabular form; positive news for home buyers is highlighted in underlined italic font:
Fair Haven Single-Family Home Sales, January 1 – December 31
2015 2016 Comment
Sales 119 90 24% fewer homes were sold.
Listings/Month* 36 41 11% more homes on market.
Months Supply* 3.6 5.5 Weaker demand vs. supply.
Median Sale $ $745,000 $795,000 7% higher median sales price.
*based on the previous 12 months of listings
The bottom line: if you’re a Fair Haven home buyer, 2 of the numbers are good news, 1 is bad news and 1 is neutral.
Tomorrow we’ll drill down and look at various segments of the 2016 Fair Haven residential real estate market.
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