I like looking at the December reports because we have a full year of data to make comparisons between 2016 and 2015. Here are some basic data points that you might be interested in. I find these to be the most indicative of how the market is doing.
Average Sales Prices – Obviously when home prices are appreciating this is an indication of a robust economy. If prices are up you can assume there is more demand than supply for homes in these towns, in other words it’s a seller’s market.
Days on Market (DOM) – The number of days it takes for a property to go under contract once it hits the market. Usually the longer properties sit on the market the harder it is for a seller to retain asking price. DOM is an excellent gauge of how hot the market is. If properties are going under contract quickly demand is outpacing supply. When DOM increases, demand is less than the current supply.
List to Sales Price Ratio – The percentage at which houses are selling either at, above or below asking price on average. If the list price to sales price ratio is 1.02 this means that houses in that market are selling at 2% above asking price on average. In markets where average list price is higher than average sales price we have a buyer’s market. If the reverse is true we have a seller’s market.
Absorption Rate – This tells us how many months it would take to sell off the current housing inventory if no new homes came on the market and buyer demand stayed the same. 4-5 months supply is considered average. Anything more indicates there are more sellers than buyers. Anything less indicates more buyers than sellers. This is calculated by diving the number of active listings by the number of sold listings during a given time period. If there are 25 homes on the market in December and 5 homes sold there is a 5-month supply of inventory. Appraisers look for absorption rate trends to determine if they are seeing an appreciating market or a depreciating market.
Local Market Analysis:
Overall, within my local market area, most towns saw an increase in the Average Sales Price of homes from 2015 to 2016. There was a corresponding decline in the Average Number of Days on the Market (DOM) in many towns and a relatively flat Sales Price to List Price Ratio (SP:LP). Let’s take a quick look at each market.
Both Chatham Boro and Chatham Township each saw increases in Average Sales Price, decreases in Days on Market and virtually flat Sales Price:List Price Ratios. Chatham Boro was the more active of the two areas with a higher percent increase in Sales Price and fewer days on the market.
Livingston saw a decline of -1.71% in their Average Sales Price and a significant drop of -8.76% in the number of Days on Market. The Sales Price:List Price Ratio was flat.
Madison saw a substantial increase in Average Sales Price of 8.39% along with a hefty increase of 12.51% in the number of Days on Market. The Sales Price:List Price Ratio was flat.
Maplewood did not show much change from 2015 to 2016. The Average Sales Price declined slightly (-0.2%) while the number of Days on the Market and the SP:LP Ratio stayed the same.
Millburn and Short Hills both saw increases in the Average Sales Price from 2015 to 2016, 3.92% and 2.27% respectively. Millburn saw an 18.76% drop in DOM while Short Hills saw a significant increase of 17.15%. Both towns were essentially flat in the SP:LP Ratio.
Montclair saw an almost 9.5% increase in the Average Sales Price and an increase in the DOM. The SP:LP was slightly up.
Springfield was an active market with Average Sales Price increasing a significant 13.14% and DOM declining 14.91%. SP:LP was flat year over year.
South Orange was another active market with Average Sales Price up by 6.72% and DOM down by 6.98%. Of particular note, the SP:LP Ratio was up versus year ago.
Summit saw a decline in the Average Sales Price and DOM in 2016 as compared to 2015. SP:LP was virtually flat.
Union saw higher Average Sales Prices and a noteworthy decline in DOM (-10.70%). SP:LP was up slightly.
West Orange saw an increase in Average Sales Price and no change in DOM. The SP:LP was up slightly.
Glen Ridge had an increase in the Average Sales Price ( 1.07%) and a hefty increase in DOM (21.17%). The SP:LP was also elevated.
The New York Times published two great real estate related pieces recently that I wanted to share with you.
One for buyers, an opinion piece by David Brooks, about how people make home buying decisions:
His point about paying attention to the social fabric of where you buy not just the physical features really resonated with me. I always counsel buyers to pick a community first then focus on a home.
And one for sellers about how the traditional notions of “best” times to sell are out the window and can vary market to market:
As noted in the article, the right time to sell is when it’s best for you. If your property is priced and presented well it will sell almost any time of year.