January ’22 Market Watch

January, 2022

 2021 Bridgewater Review

     There were 671 homes sold in Bridgewater during 2021. The large majority, 471 or 70.2 percent were single family units. The remaining 200, or 29.8 percent were condos or town homes. Homes sold last year represented approximately 4.4 percent of the total households in the Township.

56.8 percent of the homes sold (381) last year, sold during the July to December time period. The remaining 43.2 percent (290) sold during the first half of the year. Interestingly, the percentages were nearly identical for town homes and single family homes. During the first half of 2021, 42.5 percent (85) of all town homes were sold, compared to 43.5 (205) percent of single family homes. From July through December, 56.5 percent (266) of all single family homes were sold, while 57.5 percent (115) of town homes sold during the same time frame.

For the year 2021, the average selling price for a home (condo, town home, single family) was $546,830. That is an increase of approximately 11.4 percent from the 2020 figure of $491,041. Similarly, the median selling price for 2021 jumped 12.8 percent, going from $470,000 in 2020 to $530,000 this past year. During just December 2021, the average selling price for a home was $555,718 and the median price was $543,500. The average price was a 13.1 percent increase over the 2020 December price of $491,480 while the median price jumped 15.6 percent over the prior December median price of $470,000.

The biggest yearly gains came in the larger room sized homes. For homes with five plus bedrooms, the average price for the year jumped 15.2 percent, going from $720,881 in 2020 to $830,339 for 2021. The median price showed even a bigger leap, increasing 20.8 percent from $662,500 in 2020 to $800,000 in 2021. During December 2021, the average and median price for a five plus bedroom home was $842,250 and $860,000. That is a jump from the December 2020 average and median price of $703,683 (19.7percent) and $613,550 (40.2 percent, yep correct).

     Homes with four bedrooms also showed yearly gains. The average selling price for a four bedroom home during 2021 was $658,381 an increase of 13.4 percent from the average 2020 price of $580,732. The median price jumped 15.1 percent, going from $564,941 during 2020 to $650,000 during 2021. During just December 2021, a four bedroom home had an average selling price of $735,471 and a mean selling price of $715,000. That is a 22.6 percent increase from the December 2020 average selling price of $599,920 and a 24.3 percent jump in the median selling price of $575,000.

    Three bedroom homes continued the trend with an average selling price of $470,463 during 2021, a 10.7 percent increase from the 2020 average selling price of $425,109, while the median price increased 11.9 percent, going from $420,000 during 2020 to $469,900 this past year. In the month of December 2021, the average selling price was $486,675 compared to $442,245 the year prior, a 10.0 percent increase. The median price in December increased 12.9 percent, from $426,000 in 2020 to $481,000 in 2021.

For two bedroom homes (mostly condos and town homes) the average selling price in 2021 was $314,971, an increase of 5.2 percent over the 2020 figure of $299,467. The median selling price showed a 4.2 percent rise, going from $298,000 during 2020 to $310,500 during 2021. At the end of 2021, the average price for a two bedroom home in Bridgewater was $322,353 increasing 6.0 percent from $304,009 in December 2020. The median price stayed the same. The December 2021 median price was $310,500 while the 2020 price was $311,450.

The time homes stayed on market, or days on market (DOM), dropped considerably from 2020 to 2021. DOM refers to the time a home is first listed till it finishes the attorney review period. It does not mean till the closing date. During 2020, the average days on market was 47. This average dropped to 31 during 2021. Days on market for five plus bedroom homes decreased from 61 in 2020 to 37 in 2021. Four bedroom homes saw a similar drop going from 49 to 30 days. Days on market for three bedroom homes decreased from 38 in 2020 to 29, while two bedroom homes saw its time on market go from 47 days down to 31 days. At the end of the 2021, DOM for all homes stood at 33, a decrease from the 2020 DOM of 39.

Sale price to list price (SP/LP) and sale price to original list price (SP/OLP) also showed gains between 2020 and 2021. Homes sold at 102 percent of final list price (SP/LP) during 2021, compared to 99 percent during 2020. Similarly, homes sold at 101 percent of SP/OLP in 2021, up from 98 percent during the year prior. Although all bedroom groups saw an increase in SP/LP, three bedroom homes sold at the highest,103 percent in 2021 versus 99 percent in 2020. Four bedroom homes followed going from 99 percent in 2020 to102 percent in 2021. Two bedroom homes went from 99 percent in 2020 to 101 percent, while five plus bedroom homes jumped from 97 percent to 100 percent. SP/OLP in each bedroom group showed similar gains.

During the last month of 2021, SP/LP was 101 percent while SP/OLP was at 100 percent looking at all homes sold. Again, three bedroom homes sold at the highest SP/LP and SP/OLP ratio at 104 percent for both. Two and four bedroom homes sold at 101 percent for SP/LP while five bedroom homes sold at 97 percent. For SP/OLP, two bedroom homes sold at 100 percent, four bedrooms at 99 percent and five bedrooms at 95 percent.

At the end of 2021 the supply of available homes was at its lowest point during the year. There was only a .43 month’s supply. This compares to .73 month’s supply at the end of 2020 and 2.68 month’s supply at the end of 2019. The importance of month’s supply of available homes has been discussed at length in Market Watch. Month’s supply is a key contributor to the seller’s market that has characterized the housing market for the past 18 months. And it will continue to overshadow the market unless a significant amount of homes are made available for resale or built. Remember, a balanced market where supply matches demand has a five to six month’s worth of available homes. Right now we are far from balancing that equation.

Mortgage Rate Update

    Average long term mortgage rates rose during the first days of 2022. Rates reached their highest level since May 2020, at the height of the coronavirus pandemic. Yet they remain historically low.

Mortgage buyer Freddie Mac reported on January 6 that the average rate on the 30 year loan increased to 3.22 percent from 3.11 a week earlier. A year ago, the 30 year rate was 2.65 percent.

Many economist expect mortgage rates to rise this year after the Federal Reserve announced last month that it would begin dialing back its monthly bond purchases, which was intended to lower long term rates to help slow accelerating inflation. In addition, experts expect continuing economic growth and the tight labor market to continue to push rates higher. Many expect rates to reach 3.5 percent by the third quarter and up to 3.7 percent by end of the year.

Why is this trend important to both buyers and sellers? The obvious answer is affordability. It is important to emphasize that for each one percentage point rise in mortgage rates, borrowing power for buyers decreases by 10 percent. Likewise, a .5 percent rise reduces borrowing power by 5 percent. So buyers who could afford a $500,000 home at a 3 percent mortgage can now only afford a $475,000 home at 3.5 percent. For sellers, a rise could reduce expectations when marketing their home.