The Passaic County housing market started off 2016 with an increase in sales coupled with mixed results in pricing. Most indicators, though, signal that Passaic continues to develop as a classic “seller’s market” that will likely drive sales and prices up through the rest of the year.
Sales. Passaic sales were up again in the first quarter of 2016, rising over 8% from last year and finishing the rolling year up almost 11%. Indeed, we’ve now seen sustained increases in buyer demand for almost five years, with quarterly sales up in 18 out of the last 20 quarters. As a result, the almost 3,000 sales over the past rolling year approaches the kinds of sales totals we last saw during the last seller’s market. Demand in Passaic shows no signs of abating.
Prices. Prices were mixed, with the average price falling while the median price was up a tick. We would normally expect sustained increases in buyer demand to have a stronger impact on driving prices up, but Passaic pricing has been bouncing around a bit over the past few years. Looking at the longer term trend, the rolling year prices are up more convincingly, with the average rising almost 2% and the median up over 3%. Those are sustainable levels of price appreciation, so we expect that to continue through 2016.
Inventory. The “months of inventory” indicator measures how long it would take to sell out the existing inventory of homes at the current rate of home sales. In the industry, we generally consider anything below six months as a signal for a seller’s market, where tight inventory leads to multiple-offer situations, bidding wars, and ultimately appreciating prices. Passaic County is approaching that level, and inventory is clearly tightening quarter by quarter.
Negotiability. The negotiability indicators both showed that sellers are gaining leverage with buyers. The days on market were down slightly for the quarter, signaling that homes were selling a little more quickly. And the listing retention rate was also up, indicating that sellers were getting closer to their asking price. Together, they show that sellers are slowly gaining some bargaining power with buyers.
Going forward, we believe that Passaic’s fundamentals are sound, with homes priced at relatively attractive levels, rates near historic lows, and a stable economy. Accordingly, we expect that Passaic County will continue to flower into a fully realized seller’s market in 2016, marked by sustainable increases in both sales and prices.