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Fall 2010 Chairman's Report on Real Estate Market
1. The Chairman’s Report
A Message from Lawrence F. Flick, IV, Chairman and Chief Executive Officer
Prudential Fox & Roach, REALTORS® and The Trident Group
SUMMER/FALL 2010
Many people are treading
Risk versus Reward
cautiously, carefully
considering the balance between
present risk and potential reward.
Have you ever looked back on the opportunities you’ve Right now, many people are faced with an unusually
had in your life and been satisfied that you made the good opportunity to buy a new home. They are treading
most of some, yet wonder why you let others slip by? cautiously, carefully considering the balance between
We all ask ourselves at some time if we’ve made the present risk and potential reward. I understand why —
right decisions. Of these times, the ones I regret the we are receiving mixed signals about the economy and
most are when I chose not to do something, when I real estate market. Technically, the recession is over, but
let caution keep me from taking full advantage of it doesn’t quite feel like it. We knew the recovery would
opportunities presented to me, when hesitation kept be long and choppy, but we’re impatient because it
me from reaching out for my dreams. Have you ever seems like the economy has hit an invisible wall. So
felt this way? what do we do?
First, let’s look at the facts. Our economy is moving, albeit slowly, in the right direction:
Employment growth Six out of last nine months
Private sector employment growth Past seven consecutive months
Personal income Nine consecutive months
Wages and salaries Seven of the last nine months
Local real estate sales Twelve months of improvement
Source: Naroff Economic Advisors, August 2010
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2. It’s been a year since real estate sales in our area hit S ho rt - t e rm ri s k v ers u s
bottom. In that time, sales grew each month until they l ong - t er m rew ar d
spiked to April 2010’s peak. Activity then decreased in Our current market presents a paradox. It’s a great time
June and July because many buyers accelerated their to buy a home, yet the fear of taking a risk can paralyze
plans to take advantage of the federal tax credit consumers. If you’ve been thinking about making a
before its April 30, 2010 deadline. The chart move, I urge you to consider that despite lack of
below illustrates unit sales in Prudential Fox & confidence about the short-term economic recovery, the
Roach/Trident’s market area. best time to buy a house is now. Here’s why:
Prudential Fox & Roach Realtors® • Interest rates are at record lows
Marketplace Pending Units Rolling 12 Months • The selection of houses for sale is great
• Prices in our area have stabilized
These favorable conditions will not last. I believe our
real estate market will bump along for another few
months then grow stronger in 2011 and 2012. When
the pace of the recovery accelerates, prices will begin
to rise and interest rates will go up. And here is where
the long-term reward comes in — our local real estate
has proven to be an excellent investment. Over the
past ten years average house values in our region have
increased significantly:
Source: Trend MLS
Average 10 Year Price Appreciation
These are all positive signs in both the economy and
Atlantic City . . . . . . . . . . . . . . . . . . . . . . 71%
real estate market, yet we seem to be fighting headwinds
that keep us from feeling confident in the recovery. As Edison-New Brunswick . . . . . . . . . . . . . . 66%
consumers, we are saving more and spending less.
Businesses are cautious resulting in slow job growth. Ocean City, NJ . . . . . . . . . . . . . . . . . . . . 85%
Events in Greece and other parts of Europe have had
Philadelphia PSMA . . . . . . . . . . . . . . . . . 91%
the positive effect of bringing interest rates back down
to historic lows, but have negatively affected our stock Trenton-Ewing. . . . . . . . . . . . . . . . . . . . . 61%
market. Economic signals are not as clear as we would
like them to be, and as a result, we tend to hesitate Wilmington. . . . . . . . . . . . . . . . . . . . . . . 59%
when planning for the future.
Source: Naroff Economic Advisors, August 2010
The best investments
are made before they become obvious
to everyone but after the bottom begins
to curve upward. That time is now.
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3. Those who bought at the top of the market in 2005 W hen y ou l ook b ac k,
and 2006 may not yet see an increase in value, but w ha t w il l y ou s ay ?
over the long-term their investment will grow. Soon
the market will return to a more normal rate of sales When thinking about your future, it’s important to
and appreciation. carefully consider the balance between risk and reward.
My favorite quote is by Mark Twain — “Twenty years
The best investments are made before they become from now you will be more disappointed by the things
obvious to everyone but after the bottom begins to you didn’t do than by the ones you did do. So throw off
curve upward. That time is now. the bowlines. Sail away from the safe harbor. Catch the
trade winds in your sails. Explore. Dream. Discover.”
There is a practical side to homeownership — building
equity, taking advantage of income tax deductions, and Whether it is ten or twenty years from now, will you be
benefiting from long-term disappointed in the things you didn’t do? Or will you
appreciation. But there is an catch the winds of opportunity and live your dreams?
emotional side as well. We choose My wish for you is that it be the latter.
homeownership because we want to
have control of our future. Each
property is unique, and we are drawn
to the one we feel we were meant to
have. We are willing to take a
calculated risk to attain long-term Lawrence F. Flick, IV
security, and we benefit from Chairman and Chief Executive Officer
meeting our current needs, as well! Prudential Fox & Roach, Realtors® and The Trident Group
What do consumers want in a Realtor®?
Prudential Real Estate just compiled results of an research, keeping up on the latest news. Unfortunately
online survey of homeowners and those who stated not all information we see online is reliable, which
they intended to buy a home within two years. It found can adversely affect decision making of potential
that consumers realize that the complexity of today’s buyers and sellers. That’s why it is crucial to select
market requires greater sophistication: a professional Realtor® with the knowledge,
experience and creativity to guide you through the
• 69% agree that buying a home is a much bigger process. When buying, it’s important to tap current
decision than it used to be opportunity. When selling, it’s important to understand
• 76% agree that buying or selling a home is more that we are in a value-driven market. From a strategic
complicated than in the past standpoint, sellers who ensure their house is in great
• 89% agree that previously “any home used to sell” condition, use accurate pricing, and employ staging
but that marketing a home today must be much techniques will experience success. Prudential Fox &
more sophisticated Roach can assist you in all these vital areas. We are
Based on these answers, it’s no surprise to see that: the market leader with a history of trust and integrity
• 93% agree that finding an agent and real estate dating back to 1886. The expertise of our
firm they can trust is more important than ever professionals is unmatched. And the consultants of
The Trident Group will make the process easy and
Relationships built on trust take time to develop. Many convenient while helping you settle on time, with
consumers strive to do their homework through online great service and value.
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4. AN INDEPENDENT VIEW
Joel L. Naroff, Ph.D. is the every month during 2010. Yet households are
President and founder of concerned and consumer confidence is near recession
Naroff Economic Advisors. levels. The reason for this disconnect is the pace of
He is a consultant to job increases, which has been less than stellar. That
has left many feeling uncertain about their future,
Prudential Fox & Roach,
restrained spending and helped create the sluggish
Realtors® and The Trident recovery. However, there is little reason to believe that
Group. A nationally we will fall back into a double-dip recession. The
recognized economic expansion may be less than hoped for, but it is likely
forecasting expert, Joel was to continue.
awarded the Lawrence Klein
There is a positive aspect to the softer growth: interest
Award for Blue Chip forecasting excellence and was the rates remain at historically low levels. Firms have little
Bloomberg Business News top economic forecaster in pricing power so inflation is modest. Also, the Federal
2008. In 2007, he received the National Association of Reserve has pledged to keep rates down to encourage
Business Economists Outlook Award and was named the growth. We have also seen that home prices have
top economic forecaster by MSNBC in 2006. bottomed in most places and are beginning to rise
again. The combination of low cost mortgages and
The economy has been growing for one year now a growing belief that you can buy a home without it
and private sector employment gains have been posted losing value should lead to steady improvement in
the housing market.
An Independently Owned and Operated Member of the Prudential Real Estate Affiliates, Inc.
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