28% more single-family Rumson homes sold in 2013 than in 2012, and yet the median price was down 11%. What does that mean for anyone planning to buy or sell a home in Rumson this year?
First some background: if you’ve been reading my monthly Rumson real estate updates you know that I focus on four key, objective indicators of what’s happening to our local real estate market: sales (i.e., demand), listings (i.e., supply), price and absorption rate. When sales increase, prices tend to increase; when listings increase, prices tend to decrease. The real estate absorption rate takes into account both supply and demand.
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The absorption rate is a calculation of how long it would take to sell all of the homes currently listed, if homes continue to sell at the rate they have in the past 12 months. In a “normal market” the absorption rate is between 5 and 7 months; greater than 7 months is considered a “buyer’s market” and less than 5 months is considered a “seller’s market”.
Let’s look at what these four key indicators told us at the end of 2013:
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2012 2013 Comment
Sales (Demand) 101 129 28% more sales
Listings (Supply) 50 60 20% more listings.
Months' Supply 7.6 5.4 Stronger Demand vs
Note: based on the past 12 months Supply
Median Sale $1,200,000 $1,070,000 11% lower median.
The indicators are mixed: the 28% increase in sales and the 2.2 month improvement in the absorption rate predict higher prices in 2014. However, the 20% increase in the listings and the 11% decrease in the median sales price predict lower prices. Remember that the median is the price at which 50% of the homes sell for higher prices and 50% sell for lower prices.
Let’s look at some more statistical information:
2012 2013 Comment
Average Sale $1,267,543 $1,280,255 1% higher avg sale.
Average Listing $1,401,474 $1,356,437 3% lower listing price.
Avg Sale/List % 90.4% 94.4% Higher Sale/List %.
Avg Cum DOMarket 133 86 Much shorter CDOM
The average Rumson sales price actually increased 1% in 2013, even in the wake of super storm Sandy, and that’s a good sign. Note that for Rumson the mathematical average was lower than the median price (indicating that more lower-priced homes sold last year vs. the higher-priced ones). Another good sign is that the average percentage of sales price vs. listing price increased from 90% to 94%. A third good sign is that the average home sold much more quickly (86 days, vs. 133 days in 2012).
In light of these 3 positive signs, the balance between the 2 positive key indicators and the 2 negative key indicators tips to the positive side. In addition, Fair Haven and Little Silver have already seen their absorption rates move below 5 months (i.e., into “seller’s markets”). While Rumson's 5.6 months is currently a "normal market", it doesn't have far to go to move below 5 months.
For potential Rumson home sellers, this means their homes will sell faster, and those priced below $1.3 million will probably sell at higher prices than they would have a year ago. If you're thinking of selling, please let me be one of the REALTORS® you interview to list your home.
For potential Rumson home buyers (especially those looking at higher-end homes), it gives them a chance to buy at a favorable price as long as the inventory of listings remains high. However, buyers who’ll need mortgages should keep a close watch on interest rates, which are predicted to rise considerably by the 4th quarter.
Want to talk more about the Rumson statistics? Please give me a call!
- Len
Leonard “Len” Dunikoski, GRI
REALTOR® Associate
Diane Turton Realtors – Rumson Office
8 West River Road
Rumson, NJ 07760
(732) 239-0739 (cell) (732) 530-6686 (office)
