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RSS FeedFranklin Township (Somerset County) Market Report |
Mar. 30, 2009
Categorized in: Franklin (Somerset) NJ Homes
MARKET REPORT FOR FRANKLIN TOWNSHIP
March, 2009
PEAK TO TROUGH HISTORY
The real estate market in Franklin Township (Somerset) over the past five years has seen some significant changes. The peak average sale price occurred in 2006 - $361,315 (median also the highest - $325,000). In terms of absorption rate (the number of months necessary to sell current inventory at current rate of sale) was the lowest in 2005 – 3.1 months (a strong market for sellers). In 2005, 947 properties closed, according to the Garden State Multiple Listing Service. By 2008 the average sale price had fallen to $338,905, the median to $306,000, with just 606 closed sales, a 6.2% drop in average sale price, 5.8% drop in median, but a 35% drop in number of sales over the peak of 2005.
CURRENT MARKET
As of March 1, 2009, there were 344 properties on the market, with an average list price of $374,457. That is the lowest inventory since February 2006 (also 344), when the average list price was $417,142. In the first two months of this year 189 new listings were taken, and 55 sales were made, for a supply/demand ratio of 29%, not much different from the first two months of 2008 (28%), when 291 listings were taken and 82 sales were made. The difference in volume is huge, however – nearly 100 additional listings taken last year, but 27 more sales made. With 344 properties currently on the market, and only 30 sales made in February, the absorption rate is 11.5 months at current rates of sale. That is not a healthy market. A market in balance is about 6 months. Moreover, the supply/demand ratio favors the buyer as well, since 50% is a market in balance in terms of supply/demand ratios. Last year at this time the absorption rate was 8.5 months.
A current market snapshot (taken March 3) shows 349 active listings and 56 pending listings, for a pending/active ratio of 14% (a healthy ratio is 50%). Not surprisingly, the best ratio is in the less-than-$300,000 range (the entry level), where there are 132 active listings and 32 pendings, for a ratio of 20%. Aside from the upper level ($1,000,000+), where there are no active listings, but one pending, the next strongest market seems to be in the middle range ($500,000-750,000), where there are 63 properties available and 10 pending, for a ratio of 14%. The low middle range ($300,000-500,000) has 147 actives, but just 12 pending, for a ratio of 8%. Upper middle ($750,000-1,000,000) has 7 actives and 1 pending, for a ratio of 13%.
MARKET OUTLOOK
There is not yet clear evidence that government attempts to cure the housing crisis have taken hold. However, interest rates remain low (5-5.5%), and areas that experienced much larger price drops than Somerset County are seeing increased activity as home prices reach affordable lower levels – California and Nevada, for examples. The news that those areas are recovering may very well affect the psychology of the New Jersey homebuyer. Should government measures achieve their objective, we will see the housing market recover faster than the rest of the economy.
MONTHLY NUMBERS TO WATCH
Absorption rate – number of months to sell existing inventory at current rate of sales.
Supply/Demand – ratio of listings taken to sales made in any given month.
Actives/Pendings – ratio of active listings to those under contract (not yet closed).
©Karl von Loewe (2009)
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