It’s 2012 and Summit, NJ is Selling!
The Number of Homes Under Contract in Summit New Jersey for January and February in 2009, 2010, 2011 and 2012.
Good news!! In February 2012 more homes in Summit New Jersey have gone under contract year-to-date in 2012 than in the past four years. In fact, 44.8% more than last year, 55.6% more than in 2010, and a whopping 200% more than in 2009! In the chart above, it can be easily seen that the real estate market in Summit each February for the last several years has been progressively stronger.
For more statistics on the Summit Real Estate market go to: www.SummitTrends.com. If you are considering buying or selling a home, having a perspective on what direction the market is heading will help you to make informed decisions. I look forward to being of service to you, or to your friends, co-workers or family members in the coming year. It is my goal to help you steer with confidence through this complex and changing market. If you are thinking about moving, contact Judi for a free consultation and a market analysis of your home.
SUMMIT, NEW JERSEY: 2011- A YEAR IN REVIEW
Summit inventory in January of 2012 was at the lowest level it has been at any given time in Summit in the last six years. This is noteworthy, since the inventory last January was the lowest it had been in any January since 2007. Looking back at 2011 as a whole, the Summit market was strongest in the first quarter, with relatively high demand and low supply. As can be seen in the chart above, starting in April 2011, the inventory in Summit rose above the level it had been in 2010, and remained at just above the 2010 levels through the remainder of the year (but still lower than the inventory levels in 2009).
2008-2011 Year-over-year view of Active Inventory in Summit, NJ
We can see that in the chart above and below, the Summit market was weaker with higher inventory and fewer accepted offers through most of Q2-Q4 in 2011 than it had been in the same time period in 2010. In fact, there were a total of 25% fewer closed sales in Summit in all of 2011 than there were in 2010. Most analysts, however, are predicting the overall national real estate market to pick up beginning this Spring, and that more homes will sell in 2012 than in 2011. We can see that this improvement in market strength has already begun in Summit, with not only fewer homes on the market, but at least as many accepted offers on homes in both December 2011 and January 2012 year-over-year, than in the past several years.
2008-2011 Year-over-year View of Accepted Offers in Summit, NJ
The Final Tally
Yes, it appears we may have turned the corner in Summit, and that we are entering into a stronger market. As previously mentioned, for the past 2 months, 1) inventory is lower than it has been, and 2) the number of homes going under contract is up year-over-year. Absorption Rate (AR) is a metric that measures these two tracking points, and shows the relative strength of the Real Estate market. By tracking AR over time, we can see where the market may be heading. This metric can be viewed as the theoretical number of months it will take to sell off the existing inventory of homes in a specific market. The lower the AR, the stronger the market, and an AR of around 6 months can be considered to be a neutral market. From the chart below, we can see that since this past December, the Summit market is the strongest it has been since 2009. In January 2012 the Absorption Rate in Summit was 6.2 months, compared to 13.7 months last January, and 34.5 months in January of 2009! For more statistics on the Summit Real Estate market go to: www.SummitTrends.com.
Number of Months of Inventory in Summit, NJ January 2009-January 2012
If you are considering buying or selling a home, having a perspective on what direction the market is heading will help you to make informed decisions. I look forward to being of service to you, or to your friends, co-workers or family members in the coming year, to help you to steer with confidence through this complex and changing market. If you are thinking about moving, contact Judi for a free consultation and a market analysis of your home.
Pleased to Announce My New Affiliation
Welcome 2012! I am excited to start this year with an announcement that I have just affiliated myself with Keller Williams Realty in Summit, the 2011 Garden State MLS office market leader. I believe that Keller Williams as a company is poised to dominate not just the local market, but the national Real Estate market as well, given it’s leading edge educational focus to support it’s agents to be nimble and keep ahead in best practices in these changing times. This new affiliation will help me to best provide for you the type of innovative service that this 21st Century new Information Age is demanding.
SUMMIT, NEW JERSEY: 2010- Real Estate, A YEAR IN REVIEW
In the beginning of every year, I like to look back at many of the details of how the real estate market behaved during the course of the previous year(s), to look for patterns, which may offer insight on the market from the past year, and perhaps even shed some light on what to expect in the coming year.
Inventory is currently at the lowest level it has been at any given time in Summit in the last four years. This, in part, is due to the fact that fewer new listings came on the market in Summit over that period. Not only were there fewer new listings in Summit in 2010 as a whole, but also in December, this past month, fewer new listings came on in Summit than in any other month over the last decade! Current inventory is also currently at a low-level because more homes had accepted offers (i.e. went ‘under contract’) in all of 2010, than in either 2008 or 2009. In other words, supply in Summit is low both because demand is up and new supply is down.
The amount of supply of homes for sale, compared to the amount of demand for those homes, gives an indication of how strong the real estate market is. This is important information to know if you are purchasing a home, or considering selling one. More specifically, looking at the ratio of the number of accepted offers to the number of new listings in a given period is a good measure of market strength. By understanding how strong the market is, and how strong it appears it will be moving forward, I can help you to have a perspective about market values; which will impact how much you choose to price your own home for sale, or how much you choose to offer on one you wish to purchase.
Comparing the total number of new listings to the number of homes with accepted offers (i.e. how many went under contract) shows that in Summit, the market was clearly stronger in 2010 than it was in 2006, 2007, 2008 or 2009.
A look at market strength on a month-to-month basis shows trends, which again is helpful in giving perspective on where market values are going. The measure ‘Months Supply of Inventory’ (MSI) is another calculation often used to track real estate market strength over time. The lower the MSI, the stronger the market, and an MSI of 5 or less is typical of a ‘Seller’s Market’. Looking at the chart on the right, in 2010 the market strength in Summit has been strong since the Spring market began in April of this year. Comparing MSI year-over-year (because the real estate market is seasonal, this is more meaningful than comparing month-to month), we can see the largest difference between 2010 and 2009 in April and May. This year in Summit, overall, there has been a ‘Seller’s Market’ since April. For more statistics on the Summit Real Estate market go to: www.SummitTrends.com
If you are considering buying or selling a home, having a perspective on what direction the market is heading will help you to make informed decisions. I look forward to being of service to you, or to your friends, co-workers or family members in the coming year, to help you to steer with confidence through this complex and changing market. Please accept my wishes to you for a happy, healthy, and successful 2011! If you are thinking about moving, contact Judi for a free consultation and a market analysis of your home.
Judith “Judi” Paris, Broker/Sales Associate
Coldwell Banker Realtors- Summit, NJ
(O) 908-522-3631 (C) 973-902-HOME
Visit me at: www.BestHomeResults.com
Follow me on Twitter: @JudiParis
Statistics from Coldwell Banker Market Action Reports for December 2010
Capital Gains Tax for Investment Properties to increase in 2011
Owners of Real Estate investments who are considering selling, should be aware of a noteworthy tax incentive to sell their investment properties in 2010, rather than afterward. The capital gains tax is expected to rise considerably in 2011. A capital gain occurs when the amount realized on the sale of the asset is greater than the taxpayer’s basis, loosely the purchase price plus any monies invested in the asset, less any fees, taxes and depreciation deductions claimed. Short-term capital gains are for investments held for a year or less before being sold, and incur a greater tax burden than Long-term capital gains, which are for investments held over a year.
American taxpayers have been on a ‘tax holiday’ since 2003, when legislation was passed which largely reduced capital gains taxes, but only through 2008. On May 17, 2006, George W. Bush signed the Tax Reconciliation Act, which extended this tax reduction through 2010, and additionally eliminated all capital gains tax for those in the tax brackets of 10 or 15%. Starting in 2011, the current maximum 15% Long-term Capital Gains Tax is scheduled to revert to 20% for those in the 25-35% tax brackets, and back to 10% and 20% respectively for those in the 10 and 20% tax brackets.
For more information about capital gains, go to www.IRS.gov and refer to Publication 550, ‘Investment Income and Expenses’, or Publication 17, ‘Your Federal Income Tax’. Please consult with your tax advisor on how the changing tax laws will affect you specifically. If you are considering selling or purchasing any residential investment properties in Union, Morris, Essex or Somerset Counties of New Jersey, you can call Judi Paris for a free, no obligation consultation.
Judith “Judi” Paris, Broker/Sales Associate
Coldwell Banker Realtors- Summit, NJ
(O) 908-522-3631 (C) 973-902-HOME
Visit me at: www.BestHomeResults.com
Follow me on Twitter: @JudiParis
Clarification: Tax Relief Still in Effect for Mortgage Forgiveness
An important clarification for any homeowners facing the unfortunate possibility of a short sale or foreclosure: The Mortgage Forgiveness Debt Relief Act of 2007 was in fact extended through December 31st 2012 (before the 2008 elections, it had been due to expire December 31, 2009). Without the bill, when lenders forgave any debt on a property, homeowners were normally taxed on the sum forgiven. This bill provides tax relief to sellers whose mortgage on their primary residence was entirely or partly forgiven by their lender(s), and is limited to loan balances of $2 million or less (or $1 million for a married person filing a separate return). Also, qualifying debt is defined as that used to buy, build, or substantially improve a principal residence, or that used to refinance any qualifying debt (but only up to the amount of the mortgage principal prior to refinancing). More details can be found at http://bit.ly/21xuw3 http://bit.ly/JGuun. Please consult with an accountant for specifics.
Judi Paris, Broker/Sales Associate
Coldwell Banker Realtors- Summit, NJ
(O) 908-522-3631 (C) 973-902-HOME
Visit me at: www.BestHomeResults.com
Visit me on Twitter: @JudiParis
Absorption Rate- What’s That??
Think of a pool of buyers in a specific town as a sponge, and the number of properties available for sale as water. The absorption rate is an indicator that tells how long it will take for the ‘sponge’ to soak up the water, or really, how long it will take Real Estate Buyers to soak up the existing inventory, given the current rate of sales activity in a specific market or town. This is a theoretical number (in months). When the absorption rate is lower than 6 months, it is a Seller’s market (Sellers have the advantage, the market activity is strong, and prices are going up). Market absorption between 6 and 7 months is a neutral market, and when it is 8 or more months, it is a Buyer’s Market (Buyers have the advantage, the market activity is weak, and prices are dropping). Real Estate industry experts track this number over time to follow the trend of the market, to see if it is improving or getting weaker, as well as to read the relative strength of the market at any given time. Market Absorption can be calculated overall for a given town, or can also be narrowed to a nitch market (for example, it can be calculated for only condos or townhomes in a given town, or can be calculated in a specified market value range).
This indicator is calculated by dividing the number of homes on the market for sale in a specific location at a specific time, by the number of homes that went under contract in the 31 days prior. Again, the number calculated is only a theoretical gauge and does not represent how long it really should take to sell of the existing inventory of homes in a given town. When the number is decreasing over time, as in the current market, more homes are coming into the market than are being purchased, which results in driving values down.
Below are the current Absorption Rates of towns that I regularly track. To see the graphs of these rates tracked quarterly over several years, go to http://www.NJHomeTrends.com. If you would like to see a graph of any other towns in Morris, Essex, Union or Somerset Counties of New Jersey, don’t hesitate to email me at Judi@BestHomeResults.com.
Judi Paris, Broker/Sales Associate
Coldwell Banker Realtors- Summit, NJ
(O) 908-522-3631 (C) 973-902-HOME
Visit me at: www.BestHomeResults.com
Visit me on Twitter: @JudiParis
December Absorption Rates
| TOWN | #ACTIVE
LISTINGS |
#SALES | ABSORPTION
RATE |
| Randolph Township | 158 | 19 | 8 |
| Morris Township | 164 | 14 | 12 |
| Morristown | 119 | 12 | 10 |
| Madison Borough | 71 | 12 | 6 |
| Chatham Borough | 31 | 4 | 8 |
| Chatham Township | 86 | 9 | 10 |
| Summit City | 143 | 16 | 9 |
| Millburn Township | 112 | 14 | 8 |
