If you’ve been following my posts you know that there are four (4) key, objective indicators for real estate: number of sales (demand), number of listings (supply), price and absorption rate.
Let’s start with the number of sales. At the end of the 3rd quarter, Little Silver home sales increased by 42% compared to last year. The number of sales is an indicator of demand: more sales tend to drive prices higher, whereas fewer sales typically predict lower future sales prices.
Next is the number of listings. Little Silve has had a low inventory (i.e., supply) of homes on the market for every month this year. As of the end of September there were 18% fewer listings than a year ago. Fewer listings normally result in increased prices, while more listings tend to push prices down as would-be buyers have more houses to choose from.
Find out what's happening in Little Silver-Oceanportwith free, real-time updates from Patch.
The 3rd key indicator is price. To me, the median price is the best way to look at sales prices, but some REALTORS® use the average sales price instead. As of the end of September, the median Little Silver home price was 15% higher than it was a year ago, and the average price was up 13%.
Finally, the 4th indicator is the real estate absorption rate. This is a calculation of how long it would take to sell all the houses that are currently listed for sale, assuming that homes continue to sell at the same rate as they have during the past 12 months. The absorption rate is important because it takes into account both demand (#1 above) and supply (#2 above). If you remember my previous posts you know that REALTORS® consider an absorption rate of between 5 and 7 months to be a “normal market”, whereas more than 7 months is a “buyer’s market” and less than 5 months is a “seller’s market”. A year ago the Little Silver absorption rate was 7.0 months (a “normal market”) and now it’s 3.7 months (a “seller’s market”). The absorption rate has been less than 5 months for the past 3 months.
Find out what's happening in Little Silver-Oceanportwith free, real-time updates from Patch.
Here are Little Silver’s September 30th year-to-date numbers in a table:
Sales: 55 in 2012, 78 in 2013 (+42%)
Listings: 38 in 2012, 31 at the end of September 2013 (-18%)
Median Sales Price: $495,000 in 2012, $568,450 in 2013 (+15%)
Average Sales Price: $595,805 in 2012, $674,446 in 2013 (+13%)
Absorption Rate: 7.0 months in 2012, 3.6 months now (much stronger Demand vs. Supply)
The bottom line is that 4 of the 4 objective indicators are predicting higher prices in the near future.
Real estate is fairly quiet from November until February, with fewer homes on the market and fewer buyers actively looking. However, serious buyers and sellers tend to be more motivated during this time of the year, so don’t assume that the market’s not worth while at this time. Remember, a sale takes place when an informed seller and an informed buyer agree on a price. I’ll keep giving you monthly updates on Little Silver real estate.
Note: I wrote this article; these are my personal views and do not necessarily reflect the views of Diane Turton, Realtors.
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)
