Yesterday’s Asbury Park Press had a front-page article about the recovery in the real estate market. The article said that Monmouth County was one of 9 New Jersey counties that showed a median sales price increase. Today let’s take a closer look at home sales in one Monmouth County town, nearby Monmouth Beach.
At the end of the 3rd quarter, the number of single-family home sales in Monmouth Beach increased 65% compared to a year ago. Before we get too excited by the percentage increase, let’s remember that Monmouth Beach is a small town, and we’re talking about a relatively small number of sales (38 in 2012 vs. 23 in 2011). Most statisticians will tell you that you need at least 20 data points in order to make any conclusions, so although the numbers are small, they’re statistically significant. Condominiums aren’t included in these numbers.
With a surge in home sales, we might expect to see some healthy price increases as well, but this wasn’t the case. The median home price in Monmouth Beach rose by only 2% ($747,500 this year compared to $735,000 last year). The average home price actually declined, but the mathematical average can be skewed by a handful of very low or very high sales, so the median price is a better reflection of the market.
Monmouth Beach Home Sales, January - September (9 Months Year To Date)
65% more homes sold.
19% fewer homes on market.
Months' Supply (Absorption Rate)
Improved demand vs. supply
Note: this is the latest 12 month number
Average Sale $ (Value)
6% lower average sales price.
Median Sale $ (Value)
2% higher median sales price.
So where do we think Monmouth Beach home prices will go from here? The so-called Real Estate Absorption Rate is one of the things REALTORS® use to infer future prices based on demand vs. supply. The absorption rate is a calculation of the number of months it would take to sell all of the existing home listings, assuming homes sell at the same rate as they have in the past 12 months. There are fewer homes on the market now than there were last year, and the absorption rate has fallen from 13.4 months to 9.9 months. Falling absorption rates typically predict higher prices in the future, but you should know a bit more about the numbers. When we have a “normal” real estate market the absorption rate ranges between 5 and 7 months. An absorption rate greater than 7 months indicates a “buyer’s market”, and one less than 5 months indicates a “seller’s market”. So even though the absorption rate dropped by more than 3 months, we’re still in a “buyer’s market”.
In yesterday’s Asbury Park Press article, highly respected real estate expert Jeffrey Otteau said, “It seems like we are about to turn the corner here on house prices pretty soon. The bottom line here is that there is a recovery taking place”. Let’s see if he’s right.
Leonard “Len” Dunikoski, SRES
Diane Turton Realtors – Rumson Office
8 West River Road
Rumson, NJ 07760
(732) 239-0739 (cell) (732) 530-6686 (office)