Middlesex County NJ Market Commentary - June 2012
Reporting period: May 2012
Source data is from the prof. Middlesex County Multiple Listing System database.
Calculated on Tuesday 06/12/2012.
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 May has decreased 1 % to 2728 homes for sale in Middlesex County NJ. 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 19.8% smaller than last year which is good news and has been the trend for the last few months.
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 are some of the concerns leading some experts to expect a continuity of the down trend in 2011 at worst and at best the beginning of home prices consolidation.
Pending Sales
Number of homes under contract, not including homes under Attorney Review. 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 343 homes coming under contract (as tracked in the Middlesex County MLS). It represents a significant increase versus April and an increase versus last year (19.1.3% and 19.9% respectively). There is typically a correlation between home prices and number of sales. The last 5 months have 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.
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 (May 2012) we had 13 buyers for every 100 home sellers in Middlesex County, NJ which is an increase versus the previous month and an increase versus last year.
New Homes Listed
For Middlesex County NJ, the number of new homes listed in May has decreased versus new homes listed in April (-9.3%) (690 new homes listed in Middlesex County). Year over year it has decreased -19.1%. New homes listed keep on adding to the already high supply. This significant decrease is helping to decrease the inventory.
Number of Sold Homes
In May, the number of sold homes was 323 and has increased 28.2% versus last month and increased versus last year. The monthly number of sold homes despite some improvement still remains on the lower side and reflects the overall local slower market. 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.
Median Sold Price and Average Sold price
The average (mean) sold price ($314,188) has increased versus last month (2.2%) and year over year the average sold price has decreased -4.9%.
The median sold price ($280,000) has increased versus last month and decreased versus last year (-7.6%). Of course it is too early to tell if this year from a Price perspective is going to follow the downtrend of the last 5 years or start a bottom formation. See our Yearly Trending review below.
Sold Price / Asking Price (SP/AP) Ratio
SP/AP ratio is 94.68% which is an increase versus April and an increase versus last year. In average, sellers are negotiating and accepting offers at 94.68% 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 to a correct market price level generating Showings if pricing is not properly set from the start.
The 92% range is one of the lowest ranges we have witnessed since the beginning of the down trend in 2006/2007.
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 has decreased at 96 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 consequently decreased. At 262 days, it means it would take less than 9 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.
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, Tuesday 06/12/2012
P.S.
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Catherine "Cathy" Chaudemanche Team
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