The New York Post ran an article this weekend which got a lot of attention in Monmouth County as it was highlighting the higher end of the market, specifically in Rumson, NJ. If you'd like to read the full article you can do so on the NY Post website.
Ultimately I don’t think this is a new story… basically they’re saying “prices are down and there’s a lot of inventory” but that’s basically been the story for about three years now. All they’ve done is make it very specific to one part of the market and made it a bit more colorful by including some interesting quotes from locals and colorful descriptions (I’m not sure exactly how the atmosphere is “surreal” around here but I suppose it sounds good.)
There is one significant inaccuracy in the story, that there are currently 100 homes for sale over $1mil, it's actually 68 (an overstatement of 47%). This number is not that surprising in that the median home price is well above $1 million (meaning half are above that price point and half below).
As a side note, this is a clear example of why people should not believe everything they read on the internet…(present author excepted, of course) I did the same search on Trulia and found that yes there were 100 properties listed above $1million as stated in the article… too bad quite that many were homes & condos & at least one commercial property that are actually in different towns including Sea Bright and at least one in Middletown. So much for fact-checking.
The bottom line is the market is always driven by supply & demand – when supply is up and demand is down prices fall and inventory increases. When supply is low and demand is up prices rise and inventory decreases. It’s highly likely that when all of the referenced property owners bought their current homes, they had sold another property which yielded them some decent gains because of where the market was at. Now the market has changed and those gains have to be averaged out. Everyone seems to understand how that works when dealing with the stock market but somehow think the same market forces don’t apply when it comes to real estate. Like I said, not a new story.
A few things to consider to put this all into perspective and offer some clarity:
- Of the 17 homes currently under contract, over half are above $1million.
- In comparison with the previous 12 months, the $1million+ home sales are the part of the market showing the greatest gains: $1-1.5 million is up $128%, $1.5-$2 is up 300%, and the above $2mil is up 80% in number of homes sold.
- For all of Rumson across all price points unit sales are up 61%. An encouraging figure in itself but clearly this shows the higher end is doing better than the lower end.
- The median sale price in Rumson for the past 12 months is $1,165,000 (up from $900,000 the previous 12 months… an increase of over 29%... you’d have to go back 3 years to beat that.)
- Likewise the inventory numbers on average for the previous 12 months are the lowest they’ve in three years.
If anything, I think this highlights a buying opportunity in Rumson for those who previously may have thought it was out of reach. Hopefully it will attract some new buyers to the market. The primary focus for us is to encourage people to see things from a less hysterical perspective than this article presents and simply see that there is tremendous value currently available.
Rather than painting such a negative picture, the Post could have easily told the opposite story which is that sales are up, prices are up and inventory is down. But that, surely, wouldn't have gotten the same rise out of everyone, and chances are you never would have visited the Post's website.
Resources Real Estate | 112 E River Rd | Rumson, NJ 07760
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