Presentation from the Weichert Princeton July 2009 Market Update. Offers analysis and insights into the real estate market trends in Princeton and the Greater Princeton NJ real estate markets.
1. Weichert, Princeton Office
July Market Update Seminar
Offers analysis of the Princeton
and Greater Princeton, NJ real
estate markets & effective
strategies to buy and sell.
2. Presented by:
Joshua D Wilton
Broker/ Sales Representitive
Weichert Realtors
Princeton, NJ
O 609-921-1900
6. Consumer Sentiment Not This Low
Since Early 1980s
• U.S. Economy: Consumer Sentiment Falls on Job Losses
• By Shobhana Chandra and Bob Willis
• 1966Q1 = 100
July 10 (Bloomberg) -- Sentiment among U.S. consumers, whose spending is critical to
an economic recovery, dropped in July after four months of gains as unemployment
approached 10 percent.
• The Reuters/University of Michigan preliminary index of consumer sentiment fell by
more than forecast to 64.6 from 70.8 in the prior month. A separate report from the
Commerce Department showed the trade deficit unexpectedly narrowed in May to the
lowest level in almost a decade.
• Unemployment is rising even as economists predict an end to the recession in
coming months. Consumers in the survey said they are less likely to buy cars or appliances,
suggesting that the recovery may be weaker than anticipated.
www.bloomberg.com
Source: University of Michigan
10. 2009: Foreclosure Forecast
Within Company-Owned Footprint
Over 1800 Foreclosure in Mercer
County.
Less than 72 foreclosures in 08540 (3
townships).
Less than 27 foreclosures in West Windsor.
Majority of the 1800 are in Trenton.
- foreclosurepoint.com
11. Home Price Trends in Down Markets:
Big Declines in Subprime Neighborhoods
Yellow – Conforming Loans Only (OFHEO)
Orange – All Loans including subprime and jumbo loans (Case-Shiller)
Red – Subprime Loans (NAR estimate based on subprime weight)
12. Where is the bottom of the market?
“The effects (of foreclosures) are continued declining
prices….probably another 5-8%* to the bottom. As for the
effect of foreclosure pricing, all of these problems are
causing home prices to go lower than is necessary from an
affordability perspective.
That’s because everyone is now worrying about job
security.
As a result, the recovery will take place at a faster pace
once it gets started.”
– Jeff Otteau (otteau.com- January 2009)
14. Pending Home Sales Record Fourth Straight Monthly Gain
Washington, July 01, 2009
Pending home sales show a sustained uptrend, rising for four
consecutive months with very favorable housing affordability
and a first-time buyer tax credit boosting activity, according to
the National Association of Realtors®.
The Pending Home Sales Index,1 a forward-looking indicator
based on contracts signed in May, increased 0.1 percent to
90.7 from an upwardly revised reading of 90.6 in April, and is
6.7 percent higher than May 2008 when it was 85.0. The last
time there were four consecutive monthly gains was in October
2004.
15. “Everything I am
seeing tells me we
have arrived at the
bottom of the market,
specifically in the
popular and
affordable price
ranges.”
J. Weichert
6/2009
16. Recovery Has Begun
49.8%
Increase in Sales
$300,000 & Under
May YTD reported internal revenue units
22. Share Yesterday at 12:43pm
Quick Take: Housing Starts and Bank Profits
Where is the bottom of the market?
July 17, 2009
By Lawrence Yun, Chief Economist
www.realtor.org
•Homebuilders are getting busier. Housing starts rose 4
percent to 582,000 annualized unit pace in June, the
highest six months and over 100,000 higher from the
pace just two months ago. The construction of single-
family homes advanced while that of multifamily units
declined. But even with the latest rise, new construction
activity is still down by 46 percent from one year ago.
Recent prior months data were modestly revised
upward.
23. Share Yesterday at 12:43pm
Quick Take: Housing Starts and Bank Profits
Where is the bottom of the market?
July 17, 2009
By Lawrence Yun, Chief Economist
www.realtor.org
•At the bubblish peak in 2005, new home construction totaled 2.1
million units. So the current activity is only about one-quarter of
the peak level. Clearly unsustainable then, but the four straights
years of housing starts decline has translated into over one
million job losses in the residential construction sector. The latest
rise in building could arrest further job cuts in the sector.
•Perhaps the worst is over. Home sales have been rising
modestly in the past few months. The builders took our more
housing permits, a good indicator of future housing starts. Still
inventory of existing homes remain elevated (nationally) and
the builders will have difficult time competing….
24. Less New Construction in Mercer
Source: NAR, November 2008 Forecast
Richardson Commercial
33. •With few exceptions (Princeton Township, Hamilton and
Ewing, Inventory in Mercer County is down compared to the
last several years.
•Absorption Rates in the majority of towns are lower,
suggesting an improved sales performance, specifically in the
lower price ranges in each town and product line (is single
family, townhouses, etc.
•The most expensive homes in each Community will have the
slowest pace of sales and continued depreciation.
• The 55+ Active Adult market will continue to struggle.
34. While continuing economic challenges lie ahead, it’s
instructive to remember that the housing market tends to lead
the economy in-to and out-of recession. …
Building on last month’s column as to what a housing recovery
will look like – more homes selling and fewer to choose from –
the New Jersey market continued in the direction of
stabilization last month. In May, Contract-Sales continued to
rise by equaling the pace from one year ago and appear poised to
exceed last year’s sales pace soon. Such a break-through above
the prior year’s pace has occurred only 3 times in the past 5 years,
in early 2007 and again in July 2007, as the market attempted to
stabilize before being swamped by mortgage foreclosures. But
different from 2007 when home sales slumped in the critical
spring month of April amidst rising foreclosures and falling
consumer confidence, this year’s sales pace has risen steadily in
each month and now stands 86% higher than the January pace.
Source- www.otteau.com
35. Top Five Rules for Understanding the
Real Estate Market:
1. Real Estate is Local
2. Real Estate is Local
3. Real Estate is Local
4. Real Estate is Local
5. Real Estate is Local
37. Market Absorption Scale
(Absorption Rate in Months)
5-6 months absorption rate indicates a normal market.
38. Town by Town Analysis 7/12/09
Towns Active Pending Absorption New Net Gain Listings % of Expired W/drawn Closed
Listings in Last Rate in Listings in (Loss) to Reduced Invent. Listings Listings Listings
30 Days Months 30 Days Market in 30 Reduced
Days
Princeton
Boro: 47 7 6.7 10 3 12 25% 4 2 6
All Styles
Pton -Boro
Condo/ 13 0 99 5 5 2 15% 1 2 0
Thouses
Pton-Boro
Single
34 7 4.85 5 (2) 10 29% 3 0 6
Family
Pton Twp:
All Styles 152 8 19 31 23 26 17% 8 9 22
Pton Twp:
Condo/ 21 1 21 5 4 3 14% 1 1 7
Thouses
Pton Twp:
Single
131 7 18.1 26 19 23 18% 7 8 15
Family
39. Town by Town Analysis 7/12/09
Towns Active Pending Absorption New Net Listings % of Expired W/drawn Closed
Listings in Last Rate in Listings in Gain Reduced Invent. Listings Listings Listings
30 Days Months 30 Days (Loss) to in 30 Days Reduced
Market
West
Windsor:
107 41 3 23 (18) 40 37% 8 9 49
All Styles
West
Windsor
18 11 2 10 (1) 8 44% 1 5 18
Condo/
T.Houses
West
Windsor
6 0 99 - - - - - - -
55+
West
Windsor
83 31 3 13 (19) 32 39% 7 4 31
Single
Family
Lawrence:
All Styles
187 34 5.5 39 5 54 30% 11 12 35
Lawrence:
Condo/
82 14 6 19 5 21 26% 5 5 18
THouses
Lawrence:
55+
13 0 99 - - - - - - -
Lawrence:
Single
92 20 5 20 0 33 36% 6 7 17
40. Town by Town Analysis 7/12/09
Towns Active Pending Absorption New Net Gain Listings % of Expired W/drawn Closed
Listings in Last Rate in Listings in (Loss) to Reduced Invent. Listings Listings Listings
30 Days Months 30 Days Market in 30 Days Reduced
Ewing:
All Styles
237 29 8 58 29 47 20% 20 5 26
Ewing :
Condo/
42 8 5 6 (2) 10 24% 2 1 4
T.Houses
Ewing:
55+
2 0 99 - - - - - - -
Ewing:
Single
195 21 9 52 27 37 19% 18 4 22
Family
East
Windsor:
191 32 6 42 10 35 18% 14 6 34
All Styles
East
Windsor:
95 18 5 26 8 18 19% 7 32 15
Condo/
THouses
East
Windsor:
20 0 99 - - - - - - -
55+
East
Windsor:
76 14 5 16 2 17 22% 7 4 19
Single
Family
41. Market Absorption Scale
(Absorption Rate in Months)
5-6 months absorption rate indicates a normal market.
42. Absorption Rate by Price Range
Weichert has been studying market
conditions for more than 3 decades and has
found a direct correlation between market
absorption and property values.
As absorption rates increase beyond a
normal market level of 5-6 months, property
values depreciate annually.
43. Sample Market Absorption Rate
Anytown., NJ
107 current active listings 24.3
= months
absorption
4 reported sales in last 30 days
rate
5-6 Months Market Absorption Rate indicates a normal market.
44. Princeton Borough Absorption Rate By Price
Towns Active Listings Pending in Last Absorption Rate in
30 Days Months
8 1 8
0-$500
$500-750k 8 3 2.6
$750-999 7 2 3.5
$999-$1.5 11 0 99
million
$1.5 million + 13 1 13
45. Princeton Township Absorption Rate By Price
Towns Active Listings Pending in Last Absorption Rate in
30 Days Months
12 1 12
0-$500
$500-999k 54 4 13.5
$999-1.5 29 1 29
$1.5-2.5 34 1 34
$2.5 + 21 1 21
46. West Windsor Absorption Rate By Price
Towns Active Listings Pending in Last Absorption Rate in
30 Days Months
46 12 3.83
0-$500
$500-750k 36 11 3.27
$750-999 20 3 6.6
$999 + 6 0 99
47. Lawrence Absorption Rate By Price
Towns Active Listings Pending in Last Absorption Rate in
30 Days Months
134 16 8.3
0-$400
$400-650 44 7 6.2
$650-999 11 1 11
$999 + 8 0 99
48. Ewing Absorption Rate By Price
Towns Active Listings Pending in Last Absorption Rate in
30 Days Months
30 3 10
0-$150
$150-250 126 12 10.5
$250-450 80 4 20
450+ 9 0 99
49. Hopewell Absorption Rate By Price
Towns Active Listings Pending in Last Absorption Rate in
30 Days Months
63 4 15.7
0-$400
$400-$650 46 1 46
$650-999 39 1 39
$999+ 33 0 99
58. Town by Town Analysis 7/12/09
Towns Active Pending Absorption New Net Gain Listings % of Expired W/drawn Closed
Listings in Last Rate in Listings in (Loss) to Reduced Invent. Listings Listings Listings
30 Days Months 30 Days Market in 30 Reduced
Days
Hopewell
Twp. 175 14 12.5 31 17 40 23% 11 7 17
All Styles
Hopewell
Twp. Condo/ 25 5 5 7 2 6 24% 1 2 1
T.Houses
Hopewell
Twp.: 4 0 99 - - - - - - -
55+
Hopewell
Twp: 146 9 16 24 15 34 23% 10 5 16
Single Family
59. Market Absorption Rate
Hopewell Twp.
Townhouses
Under $500,000
24 current active listings 8 month
=absorption
3 reported ‘pending’ sales in last 30 days rate
Market Absorption Rate is the number of months it will take to sell the current inventory of
homes if nothing new comes on the market and the rate of sales stays the same
5-6 Months Absorption Rate indicates a Normal Market
60. Market Absorption Scale
(Absorption Rate in Months)
5-6 months absorption rate indicates a normal market.
61. Market Absorption Rate
Hopewell Twp.
Townhouses
$200-400k
22 current active listings 5.5 month
=absorption
4 reported ‘pending’ sales in last 30 days rate
Market Absorption Rate is the number of months it will take to sell the current inventory of
homes if nothing new comes on the market and the rate of sales stays the same
5-6 Months Absorption Rate indicates a Normal Market
62. Market Absorption Rate
Hopewell Twp.
Townhouses
$200-400k
3 bedrooms
17 current active listings 4.25 month
=absorption
4 reported ‘pending’ sales in last 30 days rate
Market Absorption Rate is the number of months it will take to sell the current inventory of
homes if nothing new comes on the market and the rate of sales stays the same
5-6 Months Absorption Rate indicates a Normal Market
63. 2. ‘I am going to time the
Market and buy at the peak
inventory level and when no
one else buys…’
Source: MLS
73. Seeing the Opportunity.
Prices Rates
Q. If this were 2005,
High
where would you place
the Price and Rate dots?
A. In 2005, the V would Mid-Range
look somewhat like this
one, where prices were
on the high end of the Low
scale and rates were in
the lower range.
74. Seizing the Opportunity.
Prices Rates
In recent history, there
has never been an High
opportunity like this, with
low prices and low rates.
In real estate, this Mid-Range
circular area at the
bottom of the V is called
the “Buying Zone” –
Low
it’s an unbelievable
time to buy.
75. Financial Benefits and Process of
Home-Ownership.
Jeff Smith,
Gold Services Manager/ Loan
Officer
76. ‘I don’t want to buy a house and
then watch it drop in value!’
77. Purchase Price $329,000 Loan Amount $281,000
Down Payment $11,515 Monthly P&I $1,590
Appreciation/Depreciation Home Value
1st Year -3% $305,970
2nd Year 0% $305,970
3rd Year 1% $309,030
4th Year 3% $318,301
5th Year 5% $334,216
5 Year Appreciation/Depreciation $5,216
Tax Benefit Rent @ $1600/mo
1st Year $5,000 $19,200
2nd Year $5,000 $19,200
3rd Year $5,000 $19,200
4th Year $5,000 $19,200
5th Year $5,000 $19,200
5 Year Total $25,000 $96,000
Create Equity
Total $30,216 v Pay Rent
78. Incentive From the Government
First-time
homebuyers can
receive a tax credit
up to $8000!
79. Tax Credit Overview
Amount Ten percent of the cost of home, not to exceed $8,000
Property Any single family residence that will be used as a principal residence
Refundable Reduces income tax liability for the year of purchase
Income Limit Adjusted gross income of $75,000 single or $150,000 joint tax returns
Must not have owned a principal residence in 3 years prior to
First-Time purchase
Distribute NAR Tax Credit Overview handout
80. Tax Credit FAQs
• Can individuals with incomes higher than the
income limits still benefit from the tax credit?
• How does a tax credit work?
• How do I apply for the credit?
• Is there a way to get the credit before I file my tax
return?
• How does the repayment work?
Distribute NAR Frequently Asked Question handout
89. We know the best way to evaluate pricing
Does this really
work?
90. We know the best way to evaluate pricing
Does this
really work?
91. 2. The Effect of
Staging on the
Value of a Your
Home .
92. The process of preparing homes for sale
regardless of
Price, Location, or Condition
To achieve the maximum sales price in the
minimum marketing time.
The GOAL is to appeal to the broadest range of BUYERS.
98. Based on a StagedHomes.com survey of over 400 homes across Canada & the Continental US prepared for sale by an
Accredited Staging Professional (ASP™) from June 2007 through November 2007.
99. The average increase
in sales price of an
ASP Staged vs. non-
Staged home is 6.9%.
That is an additional
$31,050 on a $450,000
sale.
103. Home Inspection
WHAT DOES PRE-INSPECTION INCLUDE?
The standard home inspector's report will review the
condition of the home's heating system, central air
conditioning system (temperature permitting), interior
plumbing and electrical systems; the roof, attic, and visible
insulation; walls, ceilings, floors, windows and doors; the
foundation, basement, and visible structure.
105. All Negotiations, including real estate, are
all about negotiation and control.
Right Price
Right Staging
All Repairs are done in advance.
Offer a Home Warranty to the buyer..
Who is in control?
106. PRE-LISTING Home Inspection
Data on where most sales fall apart: attorney review, home
inspection.
Fall Thru Percentage 2007: 26%
Fall Thru Percentage 2008: 10.2%.
107. Home Improvements
I am moving out of the house, I do not want
spend too much money to move.
Or
I just spent $$ on a new kitchen, I want $$$$$$
back on that investment when I move.
108.
109.
110. Reality of today’s market is that you will see the
return on your investment not in an inflated sales
price but in retaining the highest percentage of
your list price and staying on the market the fewest
# of days.
Please consult with your Realtor & staging
professional as to which improvements you should
finish to make your home the most salable.
111. What will a real estate
company do for me?
Weichert Family of Companies
112. Making Your Purchase as
Smooth as Possible
Buying a home involves the careful
coordination of many people.
Choosing a real estate team
you can count on will make the process
smoother and easier.
114. What Will a Weichert Agent Do for Me?
Educate You.
Negotiate on your
behalf.
Offer advice on due
diligence.
Manage all aspects
of the transaction
process.
115. We’re Here to Help
The Entire Process is reviewed by
Legal Council.