The purpose of this report is to see if the general sense of optimism sweeping Newark is apparent in the single-family-owned-home market, which represents 22% of the city’s housing units. This market requires that individuals and families become financial stakeholders in the city. As we drill down into this small but important market, the report will disclose strong, objective indicators of demand for single family homes in Newark.
As a lifelong resident of Essex County, and a residential and commercial realtor specializing in north Jersey, it pays to be attuned to what’s going on in New Jersey’s largest city, Newark. As the following recent headlines attest, there’s plenty going on:
- A $1 Billion Real Estate Boost for Battered Newark
- 5 Newark Development Projects to Watch in 2019
- Gateway Center investment: the latest sign of revival in Newark
- This may be the biggest single development project in the history of Newark
- …Newark might be N.J.’s next hot neighborhood
While the press has been on this story for some time, it’s also clear to people who work on the ground…people like real estate professionals…that Newark is in the midst of a rebirth. With respect to commercial real estate, where change is most visible, rents and occupancy rates have been on a relentless climb. And capitalization rates (data not shown), which not long ago tended to reflect higher risk levels for investment real estate, are now more consistent with stabilized and predictable markets.
Data from Costar, the world’s leading source of market- and property-based information of commercial real estate.
The following data excludes condos. It was sourced from the Garden State Multiple Listing Service, and it was processed on the Game Changer data platform, which enables a deep dive into the demand indicators that explain past market performance and which inform tomorrows’.
Since 2015, single-family owned home sales have increased 63%
Strong sales trends, as depicted below, reflect sustaining interest among buyers in becoming homeowners in a revitalized Newark. In fact, sales of single-family owned homes have risen every year since 2012 when only 145 sales took place.
Buyers are paying more at all price points
Low-, medium- and high-priced homes all posted solid, double-digit increases over the past two years. The largest increase (79.8%) was at the low end of the price range (25th percentile) where real estate investors competed aggressively to acquire upgradable housing stock.
Price point analysis shows where buyers are spending their money
In order to get a more complete picture of the market, Game Changer divides sales into 20 price point ranges. A key takeaway is that sale prices are moving higher:
- In 2017, there were 98 sales (26% of total for the year) where prices exceeded $210,000
- In 2018, there were 166 such sales (39% of total) where prices exceeded $210,000
When examining those higher priced listings as they appeared on the MLS, most had been updated to include amenities such as new baths and kitchens.
Demand indicator 1: More buyers are paying more than original list prices
Original List Price (OLP) is the first published asking price for a home. It is the price upon which a home’s marketing plan is based. Buyers pay more than original list prices for houses when they believe that they are in competition with other buyers; if they don’t make an aggressive offer they will lose out to someone who will. When steadily increasing numbers of buyers pay more than original list price, it is a clear signal that the perception of demand is changing in a very significant way.
Demand indicator 2: Buyers are buying faster
The same factors that cause buyers to make aggressive offers (more than original list price) also causes them to make offers quickly; there is a greater sense of urgency now than there was a few years ago.
- Sales are up
- Prices are up
- More buyers are making aggressive offers
- More buyers are buying faster
The goal of this report was to see if the general sense of optimism sweeping Newark has spilled over into the single-family owned home market. In that regard the data speaks for itself and the implications can be felt in dollars and cents.
Houses that took more than 60 days to sell had sale prices that averaged $14,527 LESS than their original list prices. Houses that sold in 60 or fewer days had sale prices that averaged only a few dollars less their original list prices ($569 less to be exact). This dollars and cents nugget of gold is the best reason to hire a knowledgeable realtor who knows how to take advantage of what the market offers. Use the following chart/table to drill deeper into the relationship between time and price.
This is a seller’s market. A seller’s market is one where sales/per month are sufficient to “absorb” a current inventory within 6 months. Based on the numbers (see below), the rate of monthly sales is 35 and the inventory is 140 so it will take 4 months for the entire inventory to be sold. Based strictly on the numbers, then, a homeowner of a single-family owned home stands a 50/50 chance of selling a within 2 months or 60 days. That doesn’t mean it will happen, but it does mean that there is a strong probability that it could.
Another way to think about the probability that a seller’s market will continue is to compare sold homes AND active listings by price point. Remember, though, that this is just a snapshot in time. Tomorrow might be quite different. Then again, I think the overarching message in this chart is that there is lot more demand than there are houses to buy.
So, if I’m a seller I’m feeling optimistic. If I’m a buyer, I’m prepared to move quickly when I see what I want, and I make sure that I have a mortgage approval in hand to attach to my offer. Oh yeah. I can help. I’m a REALTOR.
The views and opinions expressed here are those of the author, and do not necessarily reflect those of United Real Estate – North Jersey or it’s management. Contact Brian McCabe at 973-865-1863 or email to email@example.com with comments or questions.
|Date: March 13, 2019
Author: Brian McCabe, REALTORUnited Real Estate – North Jersey
18-19 River Road, Fair Lawn, NJ 07410
|The views and opinions expressed here are those of the author, and do not necessarily reflect those of United Real Estate – North Jersey or it’s management. Contact Brian McCabe at 973-865-1863 or email to firstname.lastname@example.org with comments or questions.|