brown wooden happy happy happy new year text
It is perplexing to understand what is happening within this real estate market. But one thing for sure, we cannot rely upon the current reportage since they are using old benchmarks for a brand new market. The media’s assessment of the market is based upon an old obsolete framework. For the last 15 months, the media has not understood how to characterize such metrics as pending sales and inventory.

Clearly inventories have been falling for over 2 years; in many and most cases, those numbers have been declining by 50% year-over-year. In addition the median price for homes has been increasing, often by double digits and in 2020 by as much as 25% year-over-year.

The traditional pending sales index may no longer be an accurate barometer for judging the trajectory and health of the market. Since inventory has fallen so dramatically, making a home purchase is no longer a matter of just looking around for a home. Homes need to be pursued and strategically hunted.
As the contract signings have dropped by 10.6% in February, the signings based upon inventory have increased. Buyer demand is clearly stripping seller supply. This points to a very strong market trajectory until inventory and mortgage rates find a more reasonable balance.
In order to properly gauge this new normal, we will come out with a new metric and ratio: the pending sales quotient and the closed sales quotient. These will be metrics that accurately reflect the buyer demand within the real estate market.
For instance, with respect to the pending sale quotient: in 2020 there were 6,340 pending sales in relation to 29,940 homes for sale. This translated into a .23 ratio.
In 2021 this increased dramatically from 6,552 with 14,423 homes in inventory producing a.45 ratio. The pending sale quotient increased by over 100%.
           February Pending Sales Quotient  PSQ
                         Feb 2020          Feb 2021
Pending Sales    6,374                   6,552
Inventory          29,940                  14,423
PSQ                    .21                       .45      +1.14%
           February Closed Sales Quotient  PSQ
                         Feb 2020          Feb 2021
Pending Sales    4,841                   5,431
Inventory          29,940                  14,423
PSQ                    .16                       .38      +1.38%
Anything above a 50% change points to a market change in trajectory usually in favor of the sellers. A negative percentage would reflect a benefit to buyers.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Counsellors Title Agency,www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.

LET’S CONNECT ONLINE!

Connect with Ralph on Facebook: https://www.facebook.com/CounsellorsTitleAgency/

Connect with Ralph on LinkedIn: https://www.linkedin.com/in/ralphaponte/