Middlesex County NJ Market Commentary - November 2012
Reporting period: November 2012
Source data is from the prof. Middlesex County Multiple Listing System database.
Calculated on Thurday 12/13/2012.
Only includes residential homes within Middlesex County NJ (do not include condos, townhouses, adult commun., commerc. ...).
Please read our Disclaimer.
Most experts are now agreeing that 2012 has become the bottom year for the years long down trend and we are clearly now on the road to Real Estate recovery. Real estate is local and not all local markets are reacting and trending identically over the same period of time. Also various segments of the market typically behave differently (i.e rentals versus purchase, new construction versus existing homes, single family versus multiple dwellings, etc…). We will soon be able to report for the entire 2012 year and updated our graphs at the bottom of this page (Yearly graphs).
The Active Inventory also called current supply or unsold homes as tracked in the Middlesex County Multiple Listing System (MLS).
The Active Inventory as we follow it (Active homes for sale not under contract and not under attorney reviews) in November has decreased -9.5 % versus last month to 2100 homes for sale in Middlesex County NJ and keeps on decreasing from the previous high (decreased last 6 months in a row). It has also decreased drastically versus last year -23%. This number is only for residential single family homes in Middlesex County NJ and does not include condos, townhouses, multi dwellings, adult community, commercial real estate, etc…Also it does not include for sale by owners. It does not include either any type of Shadow Inventory. The inventory is 23% smaller than last year which is good news and has been the trend for the last few months. The extra inventory/supply that we have been carrying over in the last few years is now shrinking to set the game for a more balanced market between Buyers and Sellers.
Please note that we have changed the stand of the Real Estate Barometer based on the trend of those statistics and how they typically affect the market from a Strong Buyer’s Market to a Buyer’s Market.
From a seasonal Inventory perspective, typically winter months have a lower inventory due to the seasonal effect and holidays (i.e many home sellers take their homes off the market during the winter/holiday season and wait for the spring market to relist, etc…) and the inventory rising with the spring market.
The shadow inventory is mostly made of foreclosed homes not yet listed on the market and also includes more subtle different types such as the “Accidental Landlords” and the folks who put their plans to move (retirement, etc…) on a temporary hold waiting for the market to rise again to their price target.…
Number of homes under contract, not including homes under Attorney Review. Pending Sales because they are captured 1 to 2 months in average prior the final Sold time stamp they do offer a more timely view of the market.
For the month of November we had 188 homes coming under contract (as tracked in the Middlesex County MLS). It is a lower than last month and also a bit lower versus last year (-31.9% and -2.6% respectively). There is typically a correlation between home prices and number of sales. This year has shown a substantial increase in pending sales showing that buyers who have been on the fence for the last few years are starting to pull the trigger. More sales are as well helping in decreasing the current inventory. However there is a seasonal effect in our industry and in this part of the country. Typically during winter months especially around the holidays we are seeing a decrease in overall market activity.
Buyers per 100 Sellers
This represents the number of buyers per 100 sellers. It is calculated using the Active Inventory and the Pending Sales. For the reported period (November 2012) we had 9 buyers for every 100 home sellers in Middlesex County, NJ which is a decrease versus the previous month but an increase versus last year. Buyers are back and are now willing to pull the trigger. Month over Month decrease is expected due to the industry seasonal effect. Year over Year increase is telling us in harmony with most other statistics we track that 2012 is likely to be a pivotal year for our local real estate markets.
New Homes Listed
For Middlesex County NJ, the number of new homes listed in November has decreased versus new homes listed in October (-34.1%) (290 new homes listed in Middlesex County). Year over year it has also decreased -26.6%. This decrease in new homes listed is helping as well to decrease the overall active Inventory, creating a more balanced market. This Year over Year decrease has been the trend for 2012.
Number of Sold Homes
In November, the number of sold homes was 285 and has increased 15.9% versus last month and increased 18.3% versus last year. One thing to remember is that this specific statistic by its nature looks at the sales activities from 2-3 months back. The Pending Sales is a timelier statistic in term of market activity and show an increase in activity with a substantial pick up in Pending Sales (Current Sales) since January. This specific statistic is also confirming that buyers are back. However the seasonal effect on the market should lower this number on the down side in the next few months.
Median Sold Price and Average Sold price
The average (mean) sold price ($319,828) has decreased versus last month (-7.7%) and year over year the average sold price is essentially flat.
The median sold price ($315,105) has decreased versus last month and increased versus last year (-0.6% and 1.0% respectively). Will this year be the bottom year from a home price perspective? Many experts are saying so. Do not forget that real estate is hyper local and we are currently seeing specific neighborhoods and zip codes with an average price YTD higher than last year. Only time will tell but it is a possibility that those specific neighborhoods/zip codes will end up with home prices in 2012 being higher than in 2011.
See below for the number of Homes Sold per price range. Which provides further insight in understanding changes in the Average Sold price:
|$1 - $99,999||4|
|$100,000 - $199,999||57|
|$200,000 - $299,999||99|
|$300,000 - $399,999||61|
|$400,000 - $499,999||32|
|$500,000 - $599,999||16|
|$600,000 - $699,999||10|
|$700,000 - $799,999||4|
|$800,000 - $899,999||1|
|$900,000 - $999,999||0|
|$1,000,000 - $1,999,999||0|
|$2,000,000 - $2,999,999||1|
|$3,000,000 - $3,999,999||0|
|$4,000,000 - $4,999,999||0|
|$5,000,000 or over||0|
Sold Price / Asking Price (SP/AP) Ratio
SP/AP ratio is 95.15% which increased versus October and very substantially versus last year. This statistic is very important to understand the dominant forces (ie Buyers & Sellers) within the markets and who is getting the upper hand. In average, sellers are negotiating and accepting offers at 95.15% off their last asking price. Please note that I mentioned "last asking price" and not "original asking price" which is very different and could take a few price reductions for sellers to get to a correct market price level generating Showings if pricing is not properly set from the start.
To put this number in perspective, the 92% range is one of the lowest ranges we have witnessed since the beginning of the down trend in 2006/2007. The increase also shows the current trend reversal to a more balanced market between buyers and sellers.
At the end the Sale of a home should really be considered a business transaction and as such the various business decisions such as pricing be made in a knowledgeable fashion based on current and local data and not emotions or unreliable data.
Days on Market (DOM)
Another real estate statistic is Days on Market or DOM which has increased at 99 days versus last month and decreased versus last year. A word of caution with this indicator as it is NOT a cumulative DOM within the Middlesex County MLS. Meaning the clock re-starts with any new listing contract for the same home. Thus this statistic does not indicate to home sellers the average time on the market before going under contract. This is a good example of the better value of looking at those statistics, which is more in the trend analysis and local markets comparison than in a specific number at a specific given time taken for face value. I hope I am making sense here.
Days of Inventory (DOI) or Absorption Rate
Days of Inventory (DOI) which is a derived number of the Active Inventory and Sold Homes has increased. At 228 days, it means it would take over 7 months to sell all existing inventory with no additional inventory coming on the market. A market with over 6 months supply would usually qualify as a buyer's market. A market with less than 6 months of supply would usually qualify as a seller's market. DOI does not take into consideration the NJ shadow inventory. This is one of the lowest DOI in the last few years and also confirms the trend direction to a more neutral/balanced market.
That’s the end of our local market commentary based on Middlesex County NJ real estate statistics. As always, contact me if any questions or if you are thinking about buying or selling your house.
Cathy Chaudemanche Team, Thursday 12/13/2012
In real estate as in business, what you don’t know can cost you! Whether you are selling your home, a first time home buyer or a seasoned investor, I can help you by providing you with the knowledge and facts you need to make sound decisions in our current and local markets. Read what others have to say, then when you are ready contact me-
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Catherine "Cathy" Chaudemanche Team
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