Are Ocean County Home Prices Dropping?
There’s been a lot of confusion over whether home prices are going up or down in the U.S., N.J. and Ocean County. Here’s the scoop.
In July 2023, the median price in the United States is $406,700. Home prices in New Jersey were up 6.4% compared to last year, selling for a median price of $502,100. In Ocean County the median home price was $540,000, up 6.93%.
Median Sold Prices for Selected Communities in Ocean County Year to Date (YTD)
- Manahawkin (Stafford Twp) - $575,500 in July, $480,000 YTD
- Barnegat - $445,000 in July, $420,000 YTD
- Waretown (Ocean Twp) - $485,000 in July, $465,000 YTD
- Forked River (Lacey Twp) - $465,000 in July, $420,000 YTD
- Lanoka Harbor (Lacey Twp) - $310,000 in July (1 sold home), $480,000 YTD
- Bayville (Berkeley Twp) - $450,000 in July, $450,000 YTD
- Toms River - $351,000 in July, $350,000 YTD
- Brick - $455,000 in July, $389,000 YTD
- Note - includes 55+ communities
Here’s why there’s a misperception: The National Association of Realtors (NAR) released its most recent Existing Home Sales (EHS) report. This information on the volume of sales and price trends for homes that have previously been owned. This may seem a bit confusing, especially if you’ve been reading about a drop in home prices.
NAR reports on the median home sales price, while some other sources use repeat sales prices. Here’s how those approaches differ.
The Center for Real Estate Studies at Wichita State University explains median sales prices like this:
“The median sale price measures the ‘middle’ price of homes that sold, meaning that half of the homes sold for a higher price and half sold for less . . . For example, if more lower-priced homes have sold recently, the median sale price would decline (because the “middle” home is now a lower-priced home), even if the value of each individual home is rising.”
Investopedia helps define what a repeat sales approach means:
“Repeat-sales methods calculate changes in home prices based on sales of the same property, thereby avoiding the problem of trying to account for price differences in homes with varying characteristics.”
The Challenge with the Median Home Sales Price Today
As the quotes above say, the approaches can tell different stories. That’s why median home sales price data (like EHS) may say prices are down, even though the vast majority of the repeat sales reports show prices are appreciating again.
Bill McBride, Author of the Calculated Risk blog, sums the difference up like this:
“Median prices are distorted by the mix and repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices.”
To drive this point home, here’s a simple explanation of median value. Let’s say you have three coins in your pocket, and you decide to line them up according to their value from low to high. If you have one nickel and two dimes, the median value (the middle one) is 10 cents. If you have two nickels and one dime, the median value is now five cents.
In both cases, a nickel is still worth five cents and a dime is still worth 10 cents. The value of each coin didn’t change.
That’s why using the median home sales price as a gauge of what’s happening with home values may be confusing right now. Most buyers look at home prices as a starting point to determine if they match their budgets. But most people buy homes based on the monthly mortgage payment they can afford, not just the price of the house. When mortgage rates are higher, you may have to buy a less expensive home to keep your monthly housing expense affordable.
That’s why a greater number of ‘less-expensive’ houses are selling right now – and that’s causing the median home sales price to decline in some areas. But that doesn’t mean any single house lost value.
When you see the stories in the media that prices are falling later this week, remember the coins. Just because the median home sales price changes, it doesn’t mean home prices are falling. What it means is the mix of homes being sold is being impacted by affordability and current mortgage rates.
Home prices, thus home values, continue to rise in Ocean County. Contact me for a more in-depth understanding of home price trends and reports.
Karl Hess provides expert real estate services to residential buyers and sellers in Ocean County. Contact us today for more information on Ocean County Real Estate and for professional assistance navigating this complex home market.