We read about it. We hear about it. We talk about it. No matter where you live, just about everyone got the message: The 2021 real estate market is sizzling hot.
If you’ve been sitting on the sidelines and wondering whether this is truly what’s happening in your neighborhood, you’ll want to keep reading. Buckle up!
You see, I was curious. As a long-time realtor, I wanted to better understand the market dynamics on a hyper-local level. Many of my clients, both home sellers and buyers, wanted to know whether every town was experiencing the same thing. And more importantly, where is that “window of opportunity” in the housing market?
So I conducted a deep dive into the numbers. Not just what was happening right now, or even compared to last year. I wanted to gain insight to how the housing market behaved prior to the pandemic. The results are fascinating!
I surveyed 14 top towns in northern New Jersey. I compared market activity over a 3-year period (2019, 2020, and 2021). With the MLS data as my source, I reviewed the inventory of single family homes (including townhomes and condos) that sold during the first 6 months of each year. Here are the key findings of the 2021 Half-Time Real Estate Market Report.
Average Price of Homes Sold – 2021 vs. 2019
The data shows that some towns are “hotter” than others. All 14 towns saw, on average, a double-digit percentage increase in the price of homes sold since 2019. Among the towns surveyed in Essex, Morris and Union counties, Montclair ranked number 1 at 29.9%. Other towns that saw a major percentage change in average home prices in 2021 compared to 2019 include Maplewood (28.5%), South Orange (26.9%), Chatham Boro (25.6%) and Millburn/Short Hills (23.4%).
Such an impressive growth in sales price was fueled by widespread multiple offers. And when you consider that there can be upwards of 20 buyers competing for the same house, the winning bid will far out-pace all the other offers.
So how much above the list price are buyers offering in Montclair? Here’s a brief glimpse of 4 recent home sales in Montclair which range from 38.2% to 52.5% above the list price.
Inventory Levels: Total Number of Homes Sold – 2021 vs. 2019
Let’s look at the market activity from another perspective. Is the available inventory of homes dramatically less in 2021 than in the prior two years?
The total number of homes sold in 2021, compared to the pre-pandemic market of 2019, varies significantly across the 14 New Jersey towns surveyed. The top ranking town, expressed as a percentage growth in the number of homes sold, is Chatham Boro at 89%. Not all towns saw positive growth, however. Three of the 14 towns actually saw a decrease in inventory of sold homes from the 2019 levels – and one of these towns is Montclair.
With a decrease of -2% in the total number of homes sold in Montclair during the first-half of 2021, it is not surprising that homes sold, on average, 29.9% higher than 2019 levels. There simply wasn’t a lot of inventory!
But what about the towns that saw incredible growth in the number of homes sold during 2021, such as Chatham Boro? Surely, we would expect prices to be more “normal”. This is where the housing market gets interesting.
While Chatham Boro saw an 89% growth in the number of homes sold, the average price of homes sold during the first half of 2021 was 25.6%, just slightly less than Montclair which had a decrease in the number of sold homes. Even with the high growth in inventory, Chatham Boro’s home prices on average were super hot in 2021, reflecting an insatiable level of buyer demand.
Days on Market (DOM) – The Factor that Says It All
If some towns have a significant increase in inventory, why is it that we hear that there is simply no inventory? Looking at the 2021 Half-Time Real Estate Market Report, we can uncover the story behind the lack of inventory. A multi-year comparison of the Days on Market (DOM), reveals something quite atypical about the 2021 housing market. The report shows that the DOM in 2021 is approximately one-half of what it was in each of the two prior years.
In 2021, the median days on market (DOM) before a property went Under Contract was just 14 days in many of the towns surveyed. This number is actually less if we consider that an offer on a property is accepted days earlier, before it goes Under Contract. For potential buyers, this means that they need to see a property as soon as it comes onto the market, otherwise it will be gone at lightening speed.
Adding to the sense of urgency of would-be buyers to see homes when they are fresh on the market, is that the seasonality of the housing market has been diminished. Pre-pandemic, there were cycles throughout the year that would be considered “peak” selling times.
However, with so many people moving out to the suburbs or simply re-shuffling across the country as a result of employment relocation, the level of buyer demand in 2021 is consistently high all year-round. And for sellers, this translates to “any time is a good time to list” since the buyers are out there. And what does this mean for potential buyers? There is no concentration of homes on the market at any particular time, giving rise to the popular belief, “there is no inventory”. For the buyer who blinks, the house of their dreams could vanish in a flash.
What’s the Take-away for Sellers?
For homeowners considering putting their home on the market, the findings are abundantly clear. Home prices can be wickedly high, regardless of the supply level of homes on the market. The buyers are actively looking on a consistent basis all year long. Many buyers are “waiting in the wings” for that right property to come onto the market. And as the buyer pool continues to grow, now is the time for would-be sellers to prepare their home for sale. The 2021 housing market is unprecedented, making it an ideal time for home sellers to achieve lucrative appreciation.
Let’s Move Forward
Have questions? Want more information? Thinking of selling your home? To arrange a complimentary 20 minute phone or Zoom call, contact me. Whether you are located in New Jersey or in another state, as a top producing realtor at Compass, I can help you with your next move. Simply email me at [email protected] or reach out to me on my cell at 908-239-9261.
My Bird’s-eye View – September 2021. Why the 2021 Real Estate Market is an “Unprecedented” Time to Sell Your Home. All Rights Reserved.