It’s conventional wisdom that the best time to put one’s house on the market in our area is in the spring. By many its considered the time when there are most buyers in the market are actively looking for homes. Real estate brokers, mortgage brokers, and real estate lawyers know that typically, June 30th is the busiest closing day of the year because often families with school-age children will try to schedule their closing date as soon as possible after the school year ends to allow as much time as possible to settle in to a new home before the start of the new school year. With mortgage-funded closings typically taking 60 days to get from under contract date to closing date, this means that a lot of of properties go under contract in late spring in an effort to close around June 30th.
With buyer activity in May and June driven by the school year calendar and mortgage timelines, one would think that by comparison, July and August are relatively quiet. However, what’s surprising is that a look at the actual numbers tells a different story. In May and June of 2015, 15 properties went under contract, but the exact same number of properties in Tewksbury went under contract in July and August of 2015.
There are a few reasons for the disconnect between our expectation and the statistical reality. First, our instinct is that foot traffic (agent showings and visitors to open houses) is correlated to the number of contracts but in reality, there’s not necessarily a correlation between the two, i.e., just because there is more foot traffic doesn’t mean that there are more contracts written. Second, buyers who haven’t found what they need in time for an early summer close are still motivated to buy in time to close before the start of the new school year (it’s particularly important for a family changing school districts who needs to be under contract or closed on the new home in time for registration in the new district). And of course, third is that at any time of year, there are buyers without a need to move on a date convenient to school schedules.
The take-away from this is that while late spring is a good time to be on the market, 2015 numbers in Tewksbury suggest that it is just as likely for a home to go under contract if it’s on the market in July and August.
For more information about statistics and trends in different sectors of our local real estate market, contact Leaf, Realtors® at 908-975-9756.
Real Estate Market Update
According to the Garden State Multiple Listing System (GSMLS), in 2014, 84 properties in Tewksbury Township closed. On average, these homes sold at 93.7% of their final list price. The numbers regarding 2015 sales were strikingly different: 79 properties closed and the average sale price to list price ratio was 96% (in 2013, it was 88 sold properties and the ratio was 95.7%). We watch local sale to list price ratios as an indication of buyer tolerance for overpricing. In other words, if we assume that a buyer won’t buy a home for over its market value (of course, market value is nothing more than just the number where both the buyer agrees to buy and the seller agrees to sell), if we see this ratio at a lower number, it indicates that buyers are willing to make offers on houses even where there’s a large divergence between what the asking price is and market value. If the ratio is high — close, at, or over 100% — that shows that deals come together when homes are priced very close to their market value.
What this means if you’re a seller. In a market with a high sale price to list price ratio, a seller is advised to pay close attention to the interest in their home at their asking price because if there isn’t significant buyer interest at a particular asking price, it may be that the seller’s perception of the market value of their home is out of line with the perception of buyers in that market.
What this means if you’re a buyer. Buyers in a market with a high ratio should expect stiff competition from other buyers if they see a home priced close to market value and on houses priced above market value, buyers should be encouraged to make offers, despite the gap between asking price and what they think the market value of the home is, i.e., to wait for the seller to drop the price to closer to market value before making an offer could be a losing strategy because it might only mean waiting to make an offer in an environment of competition from other buyers.
Now what? If you would like an analysis of market trends more specific to your particular situation, let us know and we’d be happy to share our insights with you to give you an advantage in the market whether you’re buying or selling. Call us at 908-975-9856 or contact us through our website.
Click here to find information regarding properties in the Garden State Multiple Listing System (GSMLS) that closed in May 2013 in Tewksbury Township. If you have any questions about any of these properties or would like to know how this and other market information affects the value of your property, contact Leaf, Realtors® at 908-975-9756.
Today, we went into yet another bidding war with a buyer looking to move into Bridgewater and we also received the latest edition of Jeff Otteau‘s MarketNEWS report. All we can say is it’s simply stunning how things have rebounded so quickly this spring compared to what we’ve seen in the last few years and it’s great to have the data to explain what we’re experiencing.
We’re off to a great start in 2013! We’ve seen an unseasonably high level of activity in Tewksbury since the beginning of the year, with buyer demand high and not a lot of homes for those buyers to choose from. As a result, 11 Tewksbury properties went under contract in January. Additionally, four Tewksbury properties closed in January of 2013. For details about the closed properties, check out our market update page at our Tewksbury real estate website.
Could this be the turn-around we’ve been waiting for?
We’re a big fan of economists Karl Case and Robert Shiller and the work they do compiling data about the U.S. real estate market. Their data as of November 2012 in the S&P/Case-Shiller Home Price Indices shows interesting trends in the recovery of different metropolitan area real estate markets — in most cases, the areas that were hit the hardest in the decline of the real estate market have shown the most dramatic recovery. Overall, the real estate market in Tewksbury and surrounding towns has suffered losses less dramatic than many areas and is now showing signs of recovery.
If you’re curious about where any particular property in our area is poised relative to local market trends, let us know — we would be happy to provide you with this analysis which is invaluable if you are either buying, selling, or just trying to determine the current and projected market value of a particular property.