Watchung is a unique town to look at from a Real Estate point of view. With a mixture of easy access to two major transportation corridors (US Interstate Route 78 and Route 22) and a short commute to the railway hub at Summit making it ideal for the commuter set that dominates this area. The school system is very desirable and though we have no downtown proper like Westfield or Berkeley Heights the rejuvenated Lake is a beautiful and popular locale for townfolk and visitors alike. Watchung's tax rate is relatively low compared to some other surrounding towns and it seems to maintain a spot on the list of town's that are considered "highly desirable". But despite this the movement of the homes around here is at a snail's pace.
As of this writing there are 85 homes on the market in Watchung. In the last month only 2 homes have come under contract. That's a 42.5 month Absorption Rate!
A Brief Note: Absorption is a rate used to determine how fast or slow a market is moving. The lower the number the quicker homes are moving. The number is determined by dividing the current number of active homes for sale on the market by the number of homes that have gone under contract in the previous 30 days. It assumes that if the level of contracting stays the same and no new homes come on the market it will take X number of months to deplete the current inventory. It's not the end all and be all of Real Estate and there is not necessarily a correlation between absorption and pricing. What it does do is give an indication of how "hot" a town is in so far as contracts coming in and being accepted.
Generally five to six months is a normal market. Five or fewer months indicates a Seller's Market. Seven months or more is, therefore a Buyer's Market. 42.5 months is barely a market. That's not to say that Watchung is a bad town or it hasn't maintained its home values (because it has especially compared to some area municipalities) it merely means that the market is moving very slowly. When compared to towns like Scotch Plains (5.3 Months), Middlesex (4.2 Months), and Long Hill (5.5 Months) this is a jarring fact. However, compared to the 82 month absorption rate from a week ago, 42.5 months is an improvement. This reveals the weakness of the Absorption Rate in that it subject to wide swings in change from week to week depending on contracts and the amount of homes on the market. Potentially next week with a mere two contracts this number could be compressed to 21.25 months which is suddenly much more reasonable and even faster than Plainfield which is two towns over.
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