Posted: 10 Jun 2011 04:00 AM PDT
We attempt to keep you abreast of the housing market. When will demand for housing return to historic averages? What impact will foreclosures continue to have? Where are interest rates headed? There are no simple answers to any of these questions. However, the most difficult question to answer seems to be: Where are home prices headed? Yesterday, we read two vastly different opinions on this issue.
“The latest Market Report results through May suggest that home prices are starting to ease back from the heavy declines seen over the winter. We are still far away from the strong demand needed to fully turn things around for the housing market; however, it is clear from the initial spring sales data that prices are softening, suggesting stabilization in the market.”
At the same time, Housing Wire reported that Robert Shiller, the Yale University professor and co-founder of the S&P Case-Shiller Home Price Indices, believes home prices still have a major correction ahead.
KCM’s Bottom Line
As we said before, there are no easy answers to the tough questions facing the current housing market. We will try our best to keep you abreast of what reputable sources are reporting and at the same time try to explain the indicators they use to formulate their opinions.
MAPLEWOOD’S SALES THIS YEAR:
If you are thinking of selling your home or buying one, i can’t imagine the stress you may be experiencing if you are hooked into all the news sources that provide housing data. Just like recent mortgage rate activity, the news appears to have more up and down’s in it than a rollercoaster ride at 6 Flags. When reviewing all the data, you can draw a line through it to truly see the trends, but what trends are you using to base any possible decision making on?
The key to statistics (as an Economics Major) is to make sure they are RELEVANT to your specific needs and concerns.
So if you live or want to live in Maplewood, NJ, here are the vital statistics you need to know:
As of this morning, here are your local market statistics:
CLOSED SALES: Maplewood has had 83 closed sales this year since 1/1/2011 vs. 91 closings for the same time frame in 2010. CONCLUSION: Closed Sales are currently off by approximately 9%. At the same time, there are another 69 homes under contract that should close and will significantly add to the closings this year.
PRICES LISTED: in 2011 the average List Price (as last recorded–does not take Original List Price into consideration unless house sold while still being featured at Original List Price, therefore, some price reductions may have been taken) is $500.1. Last year, the average List Price was $500.2. CONCLUSION: This is a dead heat for the “List Price” analysis.
PRICES PAID FOR HOMES: in 2011, the average price paid for a home was $488.6. In 2010, the average price paid for a home was $491.1. CONCLUSION: a. Average Price paid is off about 1/2 of 1%, and therefore a negligible difference. However, if you compare the price paid to the price listed, it shows that buyers are gaining a little ground on sellers since last year buyers paid 98.2% of final List Price and this year buyers are paying 97.7% of final list price.
DAYS ON MARKET: This is the measure of how long it takes to get a contract on your home from its first listing day to signed contract. in 2011, our average DOM, as we abbreviate it, is 64.6 days. In 2010, the DOM was only 51.9 days. CONCLUSION: we are seeing that buyers are taking about 24% more time to negotiate their purchases of closed homes. Keep this in mind when you are thinking about selling your home and plan accordingly.
PRICE VS. SIZE: While Price paid is fairly level with last year, it is my opinion that Price is actually a representation of Value and I take that to mean that we need to analyze the size of homes being sold. In 2010, the average home sold from 1/1/2010 to 6/09/2010 wass about 8.41 total rooms. In 2010, the average home that has sold from 1/1/2011 to 6/09/2011 is trending at 8.78 total rooms. Statistically, this means that the average # of total rooms has increased by 4.4%. CONCLUSION: if the average number of total rooms has increased by 4.4% and the average price paid has decreased by 1/2 of 1%, it could be taken to mean that closed sales are approximately 5% lower for the Price/Size/Value measure.
Now if this is upsetting in any way, I have to let you know that AVERAGES and MEDIAN Measures, while the best and easiest to evaluate, don’t necessarily tell you all that is happening in the market and this is where I feel badly for my buyer clients that are listening to national statistics and aware of our local market statistics, but are missing a measure that has always made Maplewood a Destination and a better Place to Buy and Own a home.
So, here goes: of the 83 homes sold this year, can you guess how many sold for asking price? In what so many deem a “challenging” market, can you guess how many homes have sold this year for more than asking price? Well, i’m proud to say that 13.3% of the homes sold this year sold for ASKING PRICE! Even more proudly, another 23% of the homes sold this year sold for ABOVE ASKING PRICE!! Does this sound like the market is weak? Downtrending?
THE KEY, as anyone who has taken Economics 101 knows, is that there is a Supply of housing available for sale and there is a Demand from buyers to buy homes. Where Supply and Demand intersect is where transactions occur, so pricing your home within the trends could easily–at least 1.8 out of every 5 homes–qualify you as a “winner” in getting asking price or more for your home, if you have to sell.