Oct 20, 2014
Nine months into the year we can take a look at the overall health of the market. The volume of the market looks great. The TREAD index increased to 136%, showing that the overall amount spent on real estate over the past year continues to outpace prior periods. 65 homes have closed this year versus 69 all of last year and only 52 in 2012. With a normal fourth quarter we will between 75-80 homes sold in Mountain Lakes, which approaches the range of the boom years.
But what about home prices???? That’s where we need to look carefully. So far in 2014 the average home purchase price is $911,000, up from $849,000 last year. That’s great! Life is good and home prices are accelerating, aren’t they? That’s where we take a step back and parse the data a bit to see what is really going on.
First, while the average sales price is up since 2013, the average is still down $121,000 since its peak in 2004. Second, and most importantly, in a town like Mountain Lakes with so many different types, sizes, conditions and locations of homes, and where even in boom years we are only selling 80 homes, “average” is a useful but wildly imperfect term. Small data sizes lead to swings in average prices each year, quarter and month. Third, if you take out the three homes purchased over $2M this year (none in 2013), the average sale price is only up 2% from last year. This is in line with the State-wide trends for the year.