Brian McCabe

Sales of single-family (fee simple) homes in the nine West Essex towns of Caldwell, West Caldwell, North Caldwell, Essex Fells, Roseland, Verona, Cedar Grove, Fairfield, and Montclair fell 13 percent between 2009 and 2010.

Essex Fells experienced the sharpest sales decline (-45%); while Fairfield dropped 39%; Verona, 27%; and North Caldwell, 19%. The gainers were Caldwell (+14%) and West Caldwell (+3%).

In commenting on 2010 sales, Brian McCabe, north Jersey Realtor and developer of hyperlocal market analysis, which was used to prepare the 2010 Market Report, notes that numbers like these contribute to the belief that houses are difficult to sell. Yet, he said, they tell only part of the story. "Markets do not move uniformly up or down. There are big differences between towns and between price points within towns. Hyperlocal market analysis identifies those differences, and they tell a very different story."

For example, from 2007 to 2010 median home prices in all nine West Essex towns declined, however the amount of decline varied greatly from town to town: Verona and Roseland pretty much held their own, losing only 3 percent and 4 percent, respectively, while Essex Fells' median home value lost 25 percent. On the other hand, from 2009 to 2010 six of the nine West Essex towns posted gains in their median home values. The biggest gainer was Essex Fells (+34%) followed by Verona (+8%), Caldwell (+6%) and Montclair (+5).

Another market measure is how quickly buyers go under contract to purchase a home. When looking at all West Essex sales, 57% of the homes sold in 2010 went under contract in two months or less. When hyperlocal market analysis dug deeper into the numbers, it was found that 72% of Verona's sales went under contract in two months or less. Montclair came in at 68%; West Caldwell, 64%; and Cedar Grove, 61%. For those buyers, the shopping was over and they were ready to pull the trigger on deals.

So, while overall sales might have dropped, median home prices rose, and the houses that sold did so quickly. "That's a big difference from the common perception of what this market is about," notes McCabe, "and an even bigger difference emerged when hyperlocal market analysis looked at price points."

Every town has both weak and strong price points. A strong price point is one where the likelihood of a listing being sold...rather than expiring or remaining active...is high. An example of strongest price point information follows, and it answers this question: What would have happened to a house in Montclair that was fairly valued between $600,000 - $650,000 if it had been listed for sale in 2010?

Town................................ Montclair
Price Point........................ $600,000 - $650,000
Listings in Price Point....... 25
Sales in Price Point........... 21

A list of the five strongest price points in each West Essex town, plus more information about hyperlocal market analysis and what it means to you, can be found at http://www.wessex-homes.com/.

Game Changer^® is an MLS-based, price-point focused, market information system.
It uses the flow of money, time and inventory to analyze residential real estate markets, uncover opportunities for buyers and sellers, and meet client objectives. Use the links on the right to see more Game Changer examples, and be sure to subscribe to my blog in order to watch the game change.

Everyone knows the odds on a coin-toss. It's 50% forheads, and 50% for tails. But what if there was a third possibility? Like the coin landing on it's edge. That would change the odds, for sure! So it is with active listings and sold listings...two sides of the same coin...except in this case there is a third possibility: expired listings.

The chart to the right shows just how significant expired listings were in West Caldwell in 2009. The first figure in the value label is the number of listings and the second is the percent of all listings.

With there being so many expired listings, it's interesting that some Realtors argue that they don't really reflect what's going on in the market, because the homeowners aren't sufficiently motivated.

My belief is that not only do expired listing reflect the current state of the market, they also inform how best to sell houses in the market. Take the following table, for example. On both the West Caldwell and Montclair sides of the ledger, the number of expired listings is consistently distributed across the price points that the towns have in common, irrespective of price point sales volume.

However, the one huge difference between the towns is the ratio of expired listings to sold listings. For West Caldwell it's about 60/40 (sold vs. expire), and it's about 75/25 for Montclair. That variance is directly related to buyer demand. One of the things it means is that a listing which sold in Montclair might very well have expired in West Caldwell.

But I think the most telling and useful information about expired listings comes from the following 2 charts, and their accompanying discount tables. They compare the differences between Original List Prices and List Prices for listings that sold and for those that expired. The following chart notes will walk you through the charts:

• The two charts compare original list prices to list prices for both sold and expired listings.
• Market price range is on the vertical axis: All listings that sold or expired in the 24 months ending June 30, 2010 had prices that fell into a range from ranged between $380,000 - $730,000.
• The horizontal axis shows price points as defined by percentiles: For example, houses priced at the 80^th percentile are higher in price than 80% of the other sold or expired listings. A house at the 20^th percentile is lower in price than 80% of the sold or expired listings.

The charts uncovered 3 significant things:

1. Expired listings are more likely to be higher priced.
2. The spread between OLP and LP for expired listings is more than for sold listings. This is the 800-pound gorilla in the closet, because the greatest amount of buyer interest and activity takes place during the first couple of weeks of marketing. If a house's OLP is too high, buyers and agents will not show up and the homeowner, along with his or her agent, will be on the slippery slope to expired-ville.
3. Regarding the idea that homeowners of expired listings weren't sufficiently motivated to sell, the chart of expired listings dispels it. The reason is that unmotivated sellers wouldn't bother with serious adjustments to their OLPs if they were content to let their listings expire. My personal belief is that what starts out as a trial balloon pricing...let's see if someone will pay more than market value...takes on a life of its own. And, by the time adjustments are made, the market has moved on.

One last thought about expired listings. As it is with most all Game Changer^© calculations, real estate markets behave differently. Those differences have a way of becoming opportunities. Finding them is what Game Changer is all about.

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Interested in west Essex County, NJ, or surrounding towns in Morris and Passaic Counties? Game Changer knows things you should know...things like where deals are, and how to get asking price. But there's a risk? The risk is that you don't reach out to me because you think Game Change is a bunch of hype. If that's you, subscribe to my blog right now so you can see for yourself that Game Changer is the real and that I am, too. Then contact me.

However, if time isn't on your side then drop the dime and let's talk. It's important.

It all started innocently enough. As a newly licensed Realtor^® I knew that I had to come up with some kind of unique product difference that would become my personal brand. Without it I'd just be floating around in a sea of indistinguishable Realtors looking for listings. Kill me!

So, I did my homework...much of it on ActiveRain...and a lot of it by just talking to people. In the process I discovered that anyone who had any interest in real estate wanted to know how the market was doing. Not the U.S. market, or the NJ market or the Essex County market. Their market, their town, where they live, where they own property.

Introducing Brian McCabe, Local Market Expert!

It all made so much sense. I'll give people the information they want, and pick up a listing or two in the process. It was then that I made my second discovery: The information that I needed, that everybody wanted, didn't exist. Oh, the data was there alright, but the data processing wasn't.

Thus began the year-long development of a new way to use the MLS. The result is a price-point focused marketing system called Game Changer. It uses the flow of money, time and inventory to paint a complete picture of how a market works. And using Game Changer is like peeling an onion. As you peel back the layers, more information becomes available. The next two images provide a basis example of that, and the 3 links in the column to the right will let you in on some serious Game Changer muscle flexing.

In contrast to the above, top-line table, Game Changer divides market activity into 20 price points. In the following example, which shows sales in West Caldwell, it's easy to see how money flowed into and out of the market over a span of 4 years. Information like this really comes alive when it's paired with active listings, days on market and expired listings. The result is an appreciation for the fact that price points are markets unto themselves, each one possessing its own supply and demand profile.

As a Realtor^®, I couldn't be happier that Game Changer makes the claim of being a Local Market Expert more than just words. But I also realize that Game Changer can leverage the success of other Realtors. So, I invite you to contact me to discuss how Game Changer can work for you.

Game Changer works! See how by using the links in the column to the right.
Subscribe to my blog to see more!

Game Changer^® is an MLS-based, price-point focused, market information system.
It uses the flow of money, time and inventory to analyze residential real estate markets, uncover opportunities for buyers and sellers, and meet client objectives. Use the links on the right to see more Game Changer examples, and be sure to subscribe to my blog in order to watch the game change.

Everyone who sells or buys a house comes face-to-face with Original List Price (OLP)...the price that's floated by sellers to start the marketing process. Sellers hope to get it, and buyers hope they don't. So, why are OLPs important? Well, standing alone they aren't, but when paired with sales prices (SPs), they tell us a lot about how much buyer activity there is in a market. Consider the following table, which reports sales that took place at original list price or more (OLP+) in West Caldwell from 2006 to 2009.

The highest percent of OLP+ sales (25% and 26%) took place when there were more buyers in the market than there are now (great days, weren't they?), many of whom sought to purchase the same properties. When that happened, sellers had little reason to discount their prices, and multiple buyers led to higher percentages of sales at OLP+. Despite the fact that there are fewer buyers in the market now, OLP+ sales don't go away, they just become less frequent, as is evidenced by 2009, when 20% of sales were at OLP+. We'll revisit this information when we compare it to Montclair's OLP+ sales, but, before we do, take a look at the following table. It uses price-points to analyze homes sold in both West Caldwell and Montclair in 2009.

The table includes all single-family detached homes in both markets and it divides the prices paid into 20 price points.

It was no surprise that the Montclair market was far more active than the West Caldwell market; after all, Montclair is a larger town. What was surprising, however, was that while there was virtually no market in West Caldwell for homes priced above $680,000, Montclair had 96 sales above $680,000, 38 of which took place at $920,000 or more!

Okay, here comes the first test of whether Montclair's mystique influences how buyers spent their money. The West Caldwell table (below) is a reprise of the one you just saw. The second table is new and it details Montclair.

In 2009, 31% of Montclair buyers paid sellers their OLP or more, compared with 20% in West Caldwell. And back in the rarified air of 2006/2007, more than half of Montclair's buyers did so. Hmmm, sure looks like something "mystique-ish" is going on, doesn't it?

You probably saw this coming...the following table combines the OLP+ information with the price points of sold houses. Specifically, the table shows the percentage of sales in a price point that took place at OLP+. This is a really big deal, because a higher percentage of OLP+ sales in a price point means that there are more buyers seeking to buy homes in that price point, and that sellers are more likely to sell at OLP+.

Yellow highlights indicate that 25% or more of a price point's sales took place at OLP+.

Take note of Montclair's $600,000 - $640,000 price point. Isn't it remarkable that 69% of sales took place at OLP or more?

The nice thing about all this is that it makes sense. More buyers means more demand, and more demand means firmer prices. The same logic works on the flip side, as well. Fewer buyers means weaker prices. Clearly, information like this...broken out by price point...has great currency for both sellers who don't want to leave money on the table, and buyers who want a deal.

Those are other matters, however, and we have one more fact that confirms Montclair's very special attraction to home buyers. In fact, it's something that both West Caldwell and Montclair have in common, and it has to do with the speed with which deals get done...specifically, sales that took place in 60 or fewer days.

In West Caldwell's case, all the sales that took place at OLP+ did so in 60 or fewer days (only the percent is shown). The figure is 88% for Montclair. However, the differences between the towns are noteworthy: because Montclair is a larger town than West Caldwell, the tendency of buyers in Montclair to pay more is confirmed by volume; and, the willingness to pay more is spread across an incredibly wide range of price points...from under $200,000 to many millions of dollars.

So, is Montclair's mystique justified? I sure think so, and so does our skeptic. So, for all you Montclair enthusiasts out there, isn't it nice to know that your beliefs are supported by the facts?

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Interested in west Essex County, NJ, or surrounding towns in Morris and Passaic Counties? Game Changer knows things you should know...things like where deals are, and how to get asking price. But there's a risk? The risk is that you don't reach out to me because you think Game Change is a bunch of hype. If that's you, subscribe to my blog right now so you can see for yourself that Game Changer is the real and that I am, too. Then contact me.

However, if time isn't on your side then drop the dime and let's talk. It's important.

Game Changer^® is an MLS-based, price-point focused, market information system.
It uses the flow of money, time and inventory to analyze residential real estate markets, uncover opportunities for buyers and sellers, and meet client objectives. Use the links on the right to see more Game Changer examples, and be sure to subscribe to my blog in order to watch the game change.

You have 100 cases of Pampers in the back room, and sales volume is 10 cases per week. Einstein you don't have to be to figure that it will take about 10 weeks to use up the inventory. Similar math is used in the real estate business: 10 houses are for sale and the market absorbs one house per month. Therefore, it will take 10 months to sell the inventory of houses. Data like this is useful when comparing markets.

What it isn't useful for is giving homeowners reasonable estimates on how long it will take to sell their homes. This is because the data fails to include essential information...information that the Game Changer model is built on.

The first two items to get entered into the Game Changer system are the price point of the seller's house and the seller's desired time to sale. The next entry is an appropriate date range that will identify sales in the seller's price point. A date range should be selected that is broad enough to find a reasonable number of sales in the price point and, at the same time, is reflective of current market conditions. For demonstration purposes the second half of 2009 was selected. Once those three items have been entered, the estimate is prepared.

Seven houses in the seller's price point sold during the 6 months ending 12/31/2010. Rather than being interested in all 7 houses, our focus will be on that sold in 3 months or less; there were 6. Finally, there were 6 active listings (plus the seller's listing) in the seller's price point; they represent the competition. Put it all together and a sale within 3 months is a mathematical certainty (100%). This is because there were 6 benchmark houses in the seller's price point...all of which sold in 3 months or less...and there are 6 active listings in the same price point. It's reasonable, then, that the market should be able to absorb the active listings, as it did the benchmark houses.

This above example lays out very favorable market conditions for a seller. Obviously, not all price points are so favorable, as the following example shows:

In this case, there is only a 40% chance of meeting the 3 month sales goal, because of a high inventory of competitive houses. The math works like this: there were 4 benchmark houses that sold in 3 months or less. Because of that recent history, the assumption is that the market will absorb 4 of the 10 listings (40%). So, for our seller to meet his sale objective of 3 months, his house must be one of those 4. With that understanding, a solid plan can be developed that will give the seller a good chance to get her house sold within 3 months.

__________________________________________________________

Interested in west Essex County, NJ, or surrounding towns in Morris and Passaic Counties? Game Changer knows things you should know...things like where deals are, and how to get asking price. But there's a risk? The risk is that you don't reach out to me because you think Game Change is a bunch of hype. If that's you, subscribe to my blog right now so you can see for yourself that Game Changer is the real and that I am, too. Then contact me.

However, if time isn't on your side then drop the dime and let's talk. It's important.