Imagine if you will, a hot summer evening. You hear the ice cream truck coming a few miles down the road. The unmistakable chimes are enough to get you excited for ice cream.
You gather your wallet, put your shoes on and set out to intercept the frozen treat purveyor. You get to the curb, the truck is in sight, you're dreaming about a 'push-up' or your favorite creamy confection and just then, the truck flies by. No more ice cream says the loud speaker. See you tomorrow, we hope.
The next night, same thing. Only this time, you're waiting two stops ahead. The next night, you find the truck at the first stop and there's a mob of other folks like you clamoring around the portal. It doesn't have to be a 'push-up', you'd take anything. But alas, there's just not enough ice cream in the truck to supply the voracious crowds.
That, in a candied nut-shell, is the Jamaica Plain real estate market. Since the middle of last year, the conditions for making a purchase have been excellent. Jamaica Plain, as many of the readers here at the Patch would attest, is a great place to live. So many buyers are focusing on JP and the inventory is literally flying off the shelves. The problem is that there appears to be less and less available to replace it.
Over these past two months, Jamaica Plain's residential real estate market has literally gone through the roof. For example, in September 2005 there were 245 properties for sale in JP. The rate of absorption was about 25% (that means that during that time span (one month in this case), 1 property sold for every 4 active listings.
Since 2004, in Jamaica Plain the AVERAGE rate of absorption for ALL residential sales has been just under 20%. We saw good times when that rate jumped (35% in Sept-2004 and 30% in Sept-2009) and bad times when it dipped as low as 8%. On average, we're pretty steadily around the 20% mark. Until now.
Okay, ready for this? The past two months in Jamaica Plain the rate of absorption for all residential properties has been 64%. That's compared to 38% for all Suffolk County (which is also twice the rate of its last quarter) or just 29% for Middlesex County. Anywhere else coming close? Yes, Somerville is just under 60%.
What does this mean? It means that properties can't come to market fast enough and the demand is becoming increasingly more...well...demanding while the inventory goes into hiding. How is this effecting pricing?
Interestingly, the effect has been different for each type of property:
Single families in JP reported an average sale price of $584K (over 7 sales) for this past quarter, while averaging about $607K over the previous 8 quarters. In fact the average price dropped slightly by 4%.
Condominiums saw a tick or two up (7%) from $335K over 8 quarters to $361K this quarter.
But the big news would be multi-families. Averaging the past 12 quarters, the sale price is pretty consistently in the $500K's and averages $542K. This quarter? $722K over 4 sales for a 25% increase!
It's really hard to predict how or when things will cool off this winter, but if the mortgage rates stay reasonably low through the winter, I would expect the floodgates on new listings to open up to 2003-04 inventory levels. Sellers always seem to be the last ones to feel it when the winds of change blow into a given market. If that's true, prices will flatten out a bit as the competition vies for the attention of the burgeoning buyer pool.
At any rate, right now, the Jamaica Plain real estate market is as hot as it's been in 10 years. For the sellers out there still on the fence about whether now is the right time. This party is in full swing.
One interesting note: in spite of the blazing rates of apsorption, over-priced and under-marketed properties are still sitting on the market while their more aptly priced and photogenic cousins are moving quickly. Just becuase the market is hot, it doesn't mean that selling successfully is any easier. But that's a topic for another time.
Anyone care to make a prediction for next year's market?