Can you get the big picture by looking at the big picture?

People that follow real estate trends by studying media reports and surfing diligently certainly can get a feel for the general state of a market. Unfortunately that general overview is only helpful if one is interested in macroeconomics. People that are looking at real estate in a given community are very likely to miss both the really big picture, and that special house.

What does that even mean? The real estate market nationally is a mess. There are areas that won’t recover for many many years. We hear about that daily and that’s certainly one reality and one of the big pictures.

Looking at New Jersey specifically there is roughly a nine month inventory of houses, which suggests a pretty decent market that ever so slightly favors buyers. We could stop right there and conclude that the national scene and the state scene are very different but there is way more story to tell (you knew that).

If we were to look at homes over $2.5MM in New Jersey, we would find 95 months of inventory. Homes in the more mainstream $600K-$1MM would find 13 months of inventory.

Not only is the state market on average way better than nationally, but within the state by price point there is a huge difference between healthy and get the crash cart.

Where is the big picture so far? Clearly at the specific detail level.

How about if we were looking for a home in Maplewood? There is a three month inventory of homes. Going in with a buyer’s mindset is a recipe for disappointment.

Last year this month there was a nine month inventory. In October more than double the number of homes sold than last October. Try justifying a strong buyer’s market on that one. Essex County as a whole has almost a 7 month inventory (a neutral market).

Let’s look at another town in Essex County; Millburn, which is next door to Maplewood.

Millburn has a four and a half month supply of inventory as opposed to a nine month supply a year ago. If we looked further to homes that have been on the market for more than four and a half months, we would find that only four of them are under $1MM and twenty two of them are over $1MM.

National Market: Big Ugly Mess?
New Jersey: 9 months of inventory (slight buyer’s market)
Essex County: 7 months of inventory (neutral market)
Maplewood: 3 months of inventory (strong seller’s market)
Millburn: 4.5 months of inventory (strong seller’s market)

I’m pretty sure that neither Maplewood nor Millburn changed locations since last year or that either of these adjoining desirable bedroom communities are so unique.

The big picture of value is specific and focused. Everything else is macro informational. That is the big picture.

Here are the latest figures for some of my favorite towns:




Figures courtesy of The Otteau Valuation Group.