Middlesex County NJ Market Commentary - June 2011
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) keeps on increasing at 3401 homes for sale in Middlesex County NJ and keeps on increasing as per seasonal effect. This number is only for residential single family homes in Middlesex County NJ and does not include condos, townhouses, multi dwellings, adult community, etc...Also it may not include for sale by owners. It does not include either any type of Shadow Inventory. The inventory is 9.7% higher than last month and 9.6% higher vs. last year. Typically winter months have a lower inventory due to the seasonal effect and holidays (i.e some 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 "Accidental Landlords", etc...The shadow inventory especially in New Jersey is one of the concern leading many experts to expect a continuity of the leg down this year which has already started in Q1.
The Active Inventory for this month is one of the highest we have seen.
Pending Sales
Number of homes under contract, not including homes under Attorney Review. This is a new 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 May we had 286 homes coming under contract (as tracked in the Middlesex County MLS). It represents an increase versus April (9.2%). 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 new Real Estate Stat 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 we had 9 buyers for every 100 home sellers in Middlesex County, NJ which is an increase versus April.
New Homes Listed
For Middlesex County NJ, the number of new homes listed in May has increased versus new homes listed in April (3.6%) (853 new homes listed in Middlesex County). Year over year it has also increased at 11.4% keeping on adding to the already extremely high supply.
Number of Sold Homes
In May, the number of sold homes was 265 and has increased 11.3% MoM which is expected due to our market yearly cyclical behavior (seasonal effect). However it is down versus last year (305 or -13.1%) and this is concerning as in most free markets "increase in supply + decrease in demand = downward pressure on prices". 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. If this year's general trends continue we are likely to see in Home prices and Sales a sizeable decrease YoY which would create this leg down or double dip many experts have forecasted for 2011. The next questions obviously would be the depth and length (time wise) of this leg down and the direction of the interest rates.
Median Sold Price and Average Sold price
The average (mean) sold price ($331,329) has increased versus last month 9% but year over year the average sold price has decreased 3%.
The median sold price ($304,000) has also increased 14.7% versus last month but decreased 3.5% versus last year. If you remember last month we mentioned that the median sold prices had reached a new low. Last month drastic MoM decline was mostly due to the expiration of last year government incentive which artificially increased sales and prices.
Sold Price / Asking Price (SP/AP) Ratio
SP/AP ratio is 94.51% which is essentially flat versus April but decreased versus last year. In average, sellers are negotiating and accepting offers at 94.51% 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 to get there if pricing is not properly set from the beginning. At the end the Sale of a home should really be considered as 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.
Days on Market (DOM)
Another real estate statistic is Days on Market or DOM which decreased to 94 days versus last month and increased versus last year. Meaning that it takes about 3 months in average to go under contract. 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. 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 is staying at the same level. At 398 days, it means it would take about 13 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, Wednesday 06/15/2011
P.S.
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