The Morris County housing market finished 2017 with strong signs of meaningful price appreciation, even while low levels of inventory continued to stifle sales growth.
Sales. Reduced inventory continued to hold back Morris sales growth, with transactions down almost 3% for the quarter, breaking a streak of 12 straight quarters of year‑on‑year sales growth. That said, sales were still up almost 2% for the year, and are now up almost 70% from the bottom of the market in 2011. More significantly, sales are falling not because of a lack of buyer demand, but a lack of available homes for eager buyers to purchase.
Prices. These sustained levels of buyer demand are finally having some modest impact on pricing. Prices were up again in the fourth quarter, rising almost 5% on average and 3% at the median. And we are starting to see long‑term price appreciation, with the 2017 full‑year average price up almost 3% and the median up almost 4%. Sustained levels of buyer demand coupled with falling inventory is likely to continue to drive prices up in 2018.
Inventory. Morris inventory fell again, dropping almost 39% from last year’s fourth quarter and now down to 4.5 months. We measure “months of inventory” by calculating the number of months it would take to sell all the available homes at the current rate of absorption, and generally consider anything below six months to signal a seller’s market that would normally drive prices up. So, the fact that Morris inventory is now well below that six‑month mark indicates that we could be in for some meaningful price appreciation throughout 2018.
Negotiability. The negotiability indicators showed that sellers are continuing to gain negotiating leverage with buyers. For the year, the days‑on‑market were down almost 8%, falling by about 10 days, and the listing retention rate was up almost a full point, now up to almost 98% of the last listed price.
Going forward, we expect that Morris County’s sales activity and low levels of inventory will continue to have a meaningful impact on pricing. With homes still at historically affordable prices, interest rates low, and a generally improving economy, we believe that Morris will enjoy a robust seller’s market in 2018.