The Passaic County housing market surged in the first quarter of 2017, with sales spiking and prices showing their first signs of meaningful appreciation in years.
Sales. Passaic started the year dramatically, with sales spiking almost 30% from the first quarter of last year. We’ve now seen sustained increases in buyer demand for over five years, with quarterly sales up in 21 out of the last 23 quarters. As a result, Passaic closed almost 3,500 homes for the calendar year, the highest total we’ve seen in over 10 years, since the height of the last seller’s market
Prices. More importantly, we’re starting to see these sustained levels of buyer demand have their first impact on pricing. Prices were up across the board, rising almost 2% on average and 6% at the median. Prices are still down for the year, due to the lackluster performance in most of 2016, but they seem to be finally heading in a positive direction. With buyer demand strong, and inventory falling, we would expect prices to be going up.
Inventory. The Passaic inventory of available homes for sale fell again, down almost 38% from last year. 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 Passaic is now down to just over six months of inventory is important, since it presages the possibility of price appreciation for the rest of 2017.
Negotiability. Sellers gained significant negotiating leverage in the first quarter, with homes selling far more quickly and for closer to the asking price. The days-on-market fell dramatically, dropping almost 15%–almost a full month!–and now down to about five months on the market. And the listing price retention rate jumped almost a full percentage point, and is now up to 97%.
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 these levels of buyer demand, coupled with declining inventory, to continue to drive price appreciation in a robust Spring market and throughout 2017.