It seems everyone knows a realtor… or two, or three or four… and in the pre-Covid-19 days was able to gain insight into the current market along field sidelines, at a book group meeting, attending a cocktail party, etc. But now that we are in quarantine mode and staying safe by staying home, I’m guessing many existing, or potential, buyers and sellers are uninformed as to what is currently happening in Ridgewood’s residential real estate market.
Let me try to shed some light on Where We Were, Where We Are, and Where We May Be Headed.
EARLY 2020 HAD THE MAKINGS OF A STELLAR YEAR
Although the week after Super Bowl Sunday has historically been the kick-off to the spring market, we haven’t seen that familiar trend get underway until March in recent years. This year was unique in Ridgewood, as we witnessed higher traffic levels at open houses in the first several months and increased willingness among buyers to commit to offers. We saw an almost identical number of new listings hit the market in January and February this year as compared to last (78 in ’20 vs. 81 in ’19), but 72% of the homes for sale in the first two months of this year went Under Contract compared to just 52% last year. A mild winter played a small part in the activity we experienced, but historically low interest rates and unemployment rates were the large drivers. In mid-February, I predicted a strong spring market characterized by inventory shortages across all price-points, except for the very high-end, and a notable increase in multiple offer situations.
QUARANTINE HASN'T KEPT BUYERS HOME
Gov. Murphy signed the first stay at home order on March 21, and the Ridgewood real estate market grinded to a halt. Open houses were prohibited and showings limited to one-on-one. Realtors took a few weeks to adjust to the new restrictions and turned to virtual showings, virtual tours, and Zoom open houses to market their listings. In addition, measures were implemented to keep sellers and buyers safe. i.e. mandatory masks, gloves, booties and Covid-19 Hold Harmless and Release Agreements. This turn towards technology has proven successful in a challenging climate as we saw 39 homes go Under Contract from March 21st- May 11ththis year, compared to 75 for the same period last year. While this statistic represents a 40% decline in Under Contract homes, one needs to take into account our current inventory of 71 homes on the market as of May 11thcompared to 130 homes last year, which is a more dramatic 46% year-over-year reduction in inventory levels. I had predicted inventory shortages in Ridgewood, but certainly not to the extremes we are experiencing due to fears of the coronavirus.
We look to absorption rates (the time it will take to sell the current number of homes on the market based on the past 12 month sales rate) as an indication of the type of market we are in… a “Buyers Market”, a “Sellers Market” or a “Balanced/Neutral Market”. Absorption rates around 6 months indicate a Balanced Market, while rates below indicate a Sellers Market and rates above a Buyers Market.I suspect one’s most optimistic guess would be that we are in a balanced market considering the economic shutdown and uncertainty. However, the graph below shows that we are in a strong sellers market across almost all price points. It’s even more interesting to compare current absorption rates to last year. Only the $1.5-$1.75 million and $2-2.5 million price ranges have higher year-over-year monthly absorption rates.