The Real Estate market has generally been very stable leaving 2019 while entering 2020. For now, the market is still holding strong in spite of the COVID19 pandemic. Here are some interesting market stats showing continued strength in the market.
When analyzing Real Estate for sellers/buyers, projects, or investors, I often refer to the use of the absorption rate. I consider the absorption rate a Real Estate Backbone, especially for residential investors. The absorption rate is the rate at which homes sell in a given area during a given period of time.
Let's take a look at the flow of the absorption rate from 2019 into 2020. Below you will find stats for the last 12 months, in list and graph form.
2019 (# of Months/Rate)
March: 4.77
April: 5.07
May: 5.30
June: 5.29
July: 5.38
Aug: 5.24
Sept: 5.06
Oct: 4.92
Nov: 4.62
Dec: 4.07
2020
Jan: 3.67
Feb: 3.62
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Monmouth County, NJ
Residential Real Estate
March 2019 - January 2020
Absorption rate
(Chart LV1)
(The Numbers on the left vertical represents # of months)
These numbers and this chart (LV1) represents the number of months in which residential homes sell in Monmouth County NJ, in those specified months. This is based on the number of sales in a given month vs. the number of homes for sale, available inventory.
According to chart LV1, during the majority of the second half of 2019, it would take about 5+ months for a home to sell. As we closed out 2019, those months declined. As we enter 2020, we hit a 12 month low. Meaning, either more houses are selling, or less inventory. Instead of guessing, let's determine which is the case?
The chart below (LV2), shows you the activity in the same time-frame for sold listings & active listings (available inventory). You will notice, the sold listings have been somewhat streamlined, while the active listings show a hump spreading over May, June, July, & August, then declining. If you go back to chart LV1, you will likely see the absorption rate at it's highest during that "hump".
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Monmouth County, NJ
Residential Real Estate
March 2019 - January 2020
Sold Listings
- Active Listings/Inventory
(Chart LV2)
So according to this data, we know the absorption rate has declined, which is a benefit to a seller and/or investor. We also know what caused this absorption rate decline; the inventory has declined while sold listings have generally remained the same. IF the sold listings declined WITH the decline in inventory, the absorption rate would NOT have declined as we see in chart LV1.
The analytics for the movement in these numbers is another blog post, in more detail. For now, know what data to obtain and use it to analyze the market. It is extremely important for buyers/sellers & investors.
All in all, this data shows sold listings are holding strong. While inventory declines with a strong sales presence, the market is going to hold it's strength. Not to mention, mortgage rates at historic lows, will certainly pump the market like a steroid! What will tomorrow bring? No one knows. We can only work with the data we have up to the moment, and let that also indicate future probabilities, while also utilizing past trends.
As I mentioned earlier, do not guess when it comes to the Real Estate market. The true professionals evaluate the market. Keep in mind, NO ONE can tell the future in ANY market, however proper educated evaluation is worth any commission ten-fold.
If you would like any assistance in what data you should be researching, or just where to start, please feel free to email me with any questions.
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Stay Healthy & Safe!
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Louis Ventre
New Jersey Broker/Realtor
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Source: NJ Monmouth/Ocean County MLS System 3/2020
Information deemed reliable, but not guaranteed
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