It’s May 15th at 10 pm and I just took a look at the New Jersey MLS figures. What I found is that Bergen County real estate is soaring.
Bergen County Real Estate
Right now there are 2,993 single family homes for sale and 1,531 under contract in the entire NJMLS. That’s an astounding 2 to 1 ratio. Let’s do the absorption rate for this.
Divide 2,993 active listings by the 801 houses that went under contract over the past month and you get a 3.74 month absorption rate. This means that the entire inventory of homes for sale will be completely sold out in 3.74 months.
These basic figures are extremely strong. While the inventory has been increasing, homes are getting snapped up quickly. As a result, it’s still a tough market for home buyers.
Let’s Dig Deeper
Let’s dig deeper now and look at price ranges in the single family home market.
For homes up through $500,000, 793 are for sale and 709 under contract. That’s an amazing 1.1 to 1 ratio. 393 went under contract in the past month for an equally amazing 2 month absorption rate.
Real estate at $500-1 million is also extremely strong: 1,291 homes for sale and 612 under contract equals a 2.1 to 1 ratio. 309 found contracts over the past month for a 4.2 month absorption rate.
Here’s Where It Changes
The market begins to change as you move up from $1 million sales. It normally does because there are fewer buyers purchasing luxury homes than there are purchasing starter homes.
At $1-1.5 million there are 419 for sale and 132 under contract (3.35 to 1 ratio). 68 went under contract within the past month for a 6.1 month absorption rate. These are very respectable figures at this level.
We begin to see changes at $1.5-2 million. Here we have 181 for sale, 37 under contract (4.9 to 1 ratio) and 11 within the past month (16.45 months). The ratio is solid but taking 16.45 month to sell out the inventory is not good. Change is underfoot.
$2 million and up becomes, frankly, a problem. We jump to a 12.5 to 1 ratio (263 for sale/21 under contract) and a 29,2 month absorption rate (9 under contract in the last month).
What Does This Mean
It’s easy to see that the action is where 1st time buyers are at – the under $500,000 price range. We continue to see excellent performance in $500-1 million sales and $1-1.5 million sales do well too.
However, we begin to see signs of change at $1-1.5 million because there’s a bit of a split. Many resale homes in this price range need to be redone. Since rates are so low, it’s less expensive to move up to new construction at $1.3-1.5 million.
The facts verify that this is the case, New construction homes have a much better 3.9 to 1 ratio.
At $2 million+ the market is in a stall. While it’s true that luxury sellers can afford to wait, it’s also true that holding a house doesn’t make sense. Appreciation is moderate so waiting for a better price won’t work plus it costs more to hold a house than any gain in value will offset.
Realistically Bergen County real estate is soaring up through $1.5 million. This is the majority of Bergen County homes. I would bet that properly valued, so would luxury homes. If you are thinking of selling or buying, call me at 201-741-8490 for a private consultation.