The national news media is buzzing about a resurgence in the real estate market; and, if we use Rumson as an example, it looks like it's true.
We’re half way through the year, and sales of single-family Rumson homes have surged from 40 last year to 52 this year — a 25 percent increase. In addition, there are fewer months of inventory available, and the average sales price is closer to the average listing price.
On the other hand, the average sales price has decreased significantly since one year ago:
|Sales (Demand)||40||52||25 percent more homes sold this year.|
|Listings (Supply)||74||72||slightly fewer homes on market|
|Months' Supply (Absorption Rate)||11.4||7.9||homes selling faster|
|Average Sale $ (Value)||$1,687,071||$1,251,940||25.8 percent lower sales price.|
|Average Listing $||$1,994,990||$1,339,503||32.9 percent lower listing price.|
|Avg Sale/List %|| 84.6 percent
|| 93.5 percent
||sale $ closer to listing $.|
At first glance the average price numbers seem confusing. After all, when demand increases, average sales prices tend to go up, not down. So don’t be mislead. Let me talk you through it.
Whenever you find information that doesn’t seem to make sense, you have to drill down and take a closer look at the data. In this example, we know that average prices can be distorted by a handful of outliers. In fact, if we look at each of the 40 homes that sold in 2011, we find that the average listing and selling prices were distorted by two very high home sales numbers in June — one for $5 million and the other for $12 million.
In situations like this, the median sales price is a better indicator of what’s really going on (the median is the price at which 50 percent of homes sold for a higher price and 50 percent sold for a lower price).
The median Rumson sales price in the first six months of 2011 was $1,167,500 and in 2012 it was $1,200,000. So instead of looking at a big decrease in the average selling price, we should be focusing on a slight increase in the median selling price. The 3 percent increase in the median selling price correlates much better with the sales, supply and absorption rate information.
The take home message is that Rumson home sales are doing well this year. And have you noticed the increase in new construction?
If builders are more confident that the market is recovering, it sends a good signal that this might be a good time to buy. If you’re thinking of buying a home in Rumson, get to know what’s available in your price range so you’ll know a good value when you find it. I’d be glad to share a detailed breakdown of June home sales with you. Just send me an email and ask for it.
Have a great 4th of July!