December 2021 Real Estate Data Is In! Where Do We Stand?
Closed sales down year-over-year. Compared to the previous December, last month saw a decline in total sales of single-family homes. Ocean County experienced a 22.9% decline and Monmouth County saw a 27.9% decline. That sounds like a lot, and it is significant, but the prior December’s closed sales numbers were so eye-popping and out of the ordinary that they were simply unsustainable. There are still plenty of buyers in this marketplace, but as I’ve been telling clients for a few months: much of the buying pressure from people leaving north Jersey and New York has lessened, especially in the primary home market — people who are not looking for a second home. For the most part, anyone who wanted to get out of the nearby urban environments during the virus/lockdowns and buy something in Ocean or Monmouth County has already done so.
Average sale price up. Home values continue to rise at the Jersey Shore with December 2021 seeing year-over-year gains of 8.9% in Monmouth County and 16.6% in Ocean County. Home owners continue to sit on unprecedented levels of home equity as sellers remain firmly in control of this market and buyers drive prices up. That bodes well for home owners but not so well for buyers. Of course, those same home owners who are would-be sellers find themselves reluctant to list their home for sale when it’s so hard to find something else to buy. That perpetuates the low inventory cycle.
Inventory way down. This is the real story behind all the other numbers. Closed sales, prices going up, “bidding wars” etc. are factors of the massive inventory shortage we are facing. Simply stated, there are not enough homes for sale. In fact, the number of properties for sale is at such historically unprecedented low levels that some are beginning to consider it a crisis.
This lack of inventory is best demonstrated by reviewing the “absorption rate.” That’s the amount of time it would take for ALL homes on the market to be sold if home sales kept up at the current pace and no new listings were added. The absorption rate in December 2021, measured in months, in Ocean/Monmouth Counties was less than approximately 1.2 months. Compare that with an absorption rate in December 2019 of approximately 4 months! That’s an astronomical fall and a flashing red signal for the housing market. Extremely low inventory is the story right now.
The spring market is on the horizon so we could see an influx of homes coming up for sale, but currently any inventory that comes online is gobbled up and bid up quickly by buyers. People literally cannot list their homes fast enough to keep up with all the buyers in the marketplace.
What does it all mean? Fingers are crossed for a robust spring market with lots of homes coming up for sale. That will help the inventory issues we’re experiencing right now. That will also slow the pace of home prices, a healthy shift that will serve to help reset the market, allow more people to buy and give prices enough of a pause to begin another ascent . Yes, interest rates will rise this year, and that may slow re-financing, but I don’t expect those hikes to be a meaningful deterrent to home buyers.
Bottom line: this market is unlike anything ever seen before. As long as there are an extremely limited number of homes for people to buy, current homeowners will hesitate to list their homes for sale, exasperating an already challenging environment for buyers. For homeowners who are content staying where they are for now, they can continue to enjoy rising home valuation and be confident in the fact that they will be continue to be solicited by real estate agents who want to sell their home. ;-)
Home sellers choose to work with me not because I’m the only real estate agent who can sell their house. They choose to work with me because when it comes to a large transaction like a home sale, it’s beneficial to have an experienced team of real estate professionals in their corner. From impactful marketing and advertising to navigating offers and negotiating a deal, my team and I will be there with you and for you every step of the way. You can take the first step here by finding out what your home is worth in today’s marketplace. I can always be reached directly via call or text at 732–965–7990.
