Middlesex County NJ Market Commentary - December 2011
Reporting period: November 2011
Source data is from the prof. Middlesex County Multiple Listing System database.
Calculated on Saturday 12/10/2011.
Only includes residential homes within Middlesex County NJ (do not include condos, townhouses, adult commun., commerc. ...).
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Active Inventory
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 to 2728 homes for sale in Middlesex County NJ after keeping on increasing following the industry seasonal effect and the local and national current trends. 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 may not include for sale by owners. It does not include either any type of Shadow Inventory. The inventory is 3.4% smaller than last month. 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 this 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 an indefinite temporary hold.…The oversupply and the shadow inventory especially in New Jersey is one of the concern leading many experts to expect a continuity of the down trend this year. Another month and we will be able to release the stats for 2011. We expect a price decrease between 5-10% in average versus 2010 in most local markets in Middlesex County NJ. We will release the 2011 yearly stats and visual trends by the end of January 2012.
Pending Sales
Number of homes under contract, not including homes under Attorney Review. This is a newer statistic we are including in our monthly reports. Until now we always have been focused on Sold Homes data to calculate the average/median home prices, SP/AP, DOM and DOI. However Pending Sales because they are captured 1 to 2 month in average prior the Sold time stamp they do offer a more timely view of the market.
For the month of November we had 193 homes coming under contract (as tracked in the Middlesex County MLS). It represents a decrease versus October (-20.2%). We are not able to compare it YoY as we have not tracked this specific Middlesex County stat until recently.
Buyers per 100 Sellers
This represents the number of buyers per 100 sellers. It is calculated using the Active Inventory and the Pending Sales. This is also a newer Real Estate statistic we are introducing in our monthly Middlesex County market report. As time goes we will be able to trend it and better compare it. For the reported period (November 2011) we had 7 buyers for every 100 home sellers in Middlesex County, NJ which is a decrease versus the previous month (8 buyers for every 100 sellers). This statistic also confirms our current soft market conditions and also reflects the industry seasonal effect. November, December, January and February are typically slower month in our industry.
New Homes Listed
For Middlesex County NJ, the number of new homes listed in November has decreased versus new homes listed in October (-29.3%) (395 new homes listed in Middlesex County). Year over year it has also decreased -22.5%. New homes listed keep on adding to the already extremely high supply. This decrease in new homes listed is positive news contributing to the decrease of the Active Inventory. Unfortunately the current Shadow Inventory in New Jersey is placing a potential threat on the current Inventory. Per the Otteau Group, NJ has the second largest Shadow Inventory in the US mostly due to the foreclosures backlog.
Number of Sold Homes
In November, the number of sold homes was 241 and has decreased -15.1% versus October. It is up versus last year (203 or +18.7%). The monthly number of sold homes since the beginning of 2011 remains historically low and reflects the overall local slower market with very few “willing and able” buyers ready to “pull the trigger”.
Median Sold Price and Average Sold price
The average (mean) sold price ($312,016) has increased versus last month (1.4%) and year over year the average sold price has decreased -2.4%.
The median sold price ($280,000) has also increased versus last month but decreased versus last year (-3.4).
Sold Price / Asking Price (SP/AP) Ratio
SP/AP ratio is 92.96% which also decreased versus October and versus last year. We can see very clearly the direction of the pressure on home prices. In average, sellers are negotiating and accepting offers at 92.96% of 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 there if pricing is not properly set from the start.
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.
Days on Market (DOM)
Another real estate statistic is Days on Market or DOM which increased to 117 days versus last month and increased versus last year. A word of caution with this indicator as it is NOT a cumulative DOM. 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.
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 351 days, it means it would take over 11 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 shadow inventory.
That’s the end of our local market commentary based on Middlesex County NJ real estate statistics. As always, contact me if any questions.
Cathy Chaudemanche Team, Saturday 12/10/2011
P.S.
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Catherine "Cathy" Chaudemanche Team
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