What’s going on in Today’s Real Estate Market?
April 3, 2021 | Eric Beepat
You have probably seen it in the news. The current real estate market is a bit nuts. A few months ago, folks were unsure when they would go outside again, and were looking for more indoor and outdoor space in a place to live. They wanted rooms for working, exercise and home schooling. People just wanted more space! However, inventory across the country is at a near-historic low, while demand continues to grow. Its frustrating for buyers out there but on the other hand if you are thinking of selling, you shouldn’t wait.
Some Real Estate Insight:
Those that took economics 101 remembers supply and demand. Home prices depend on the law of supply and demand. When the demand for homes is high but there is no inventory, prices increase and it becomes a seller’s market. When the number of available homes increases to flood the market, prices usually drop.
When trying to measure the level of demand in a housing market, us realtors use the absorption rate. The absorption rate is the rate at which homes that are available in a particular market are sold over a specific time frame, such as over the period of a month. It’s calculated by taking the number of homes sold in the given time frame and dividing that number by the total number of available homes in the market. Essentially, it tells us how long it takes for houses to sell in a certain real estate market. So, it is an important metric to gain some insight on how hot or cool a market is.
In a normal market, there is 5 to 6 months of inventory. Over 6 months of inventory and we have buyer’s market. Less than 5 months of inventory; we have a seller’s market. The smaller the available inventory, the tighter the market is.
For example, let’s say there were 9,000 active listings last month and 1,000 closed transactions. That leaves us 9 months of inventory remaining on the market indicating we are in a buyers’ market.
Real Estate is local:
So, what are we seeing in Hudson County in terms of Absorption rate? It depends on the city (Union City, Weehawken, Jersey City, Hoboken, etc.) and the details of the home. As I alluded to earlier, folks are looking for space, but we are seeing low inventory numbers as well. See below for examples are through March 31, 2021.
- In Hoboken there were 195 active (available) condos. There were also 96 closed transactions in March 2021. That leaves us 2 months of inventory remaining on the market indicating we are in a sellers’ market.
- There were 59 active condos in Union City. There were also 14 closed transactions in March 2021. That leaves us 4 months of inventory remaining on the market indicating we are in a buyers’ market.
- There were 45 active multifamily homes in Union City. There were also 5 closed transactions in March 2021. That leaves us 4 months of inventory remaining on the market indicating we are in a sellers’ market.
- In Jersey City, there were 171 active multifamily homes available. There were also 57 closed transactions in March 2021. That leaves us 3 months of inventory remaining on the market indicating we are in a sellers’ market.
In other words, real estate is selling in Hudson County too…not just the suburbs.
Conclusion:
Record low mortgage rates, combined with low supply and high demand for housing, has the market bit wacky.
With a currently low number of homes coming to market, if you’re thinking of selling you are in a prime situation. Hudson County homes, like many markets in the country are still getting multiple offers, especially if you have space and are priced correctly. Waiting to sell could mean more competition.
If you are interested in discussing the possible sale of your home, I would love the opportunity. Check out my Sellers Page HERE for more info or call/email at 646-318-7930 or beepatre@gmail.com.
