march 2014 market update seminar public
DESCRIPTION
The presentation from the 31/1 Market Seminar.TRANSCRIPT
Weichert, Princeton Junction Office
January 2014
Real EstateReal EstateMarket UpdateMarket Update
Weichert, Princeton Office January 2014
Real EstateMarket Update
Joshua D WiltonManaging Broker
Princeton Office
DaveMcDermottGold Services Manager
Princeton Office
Agenda
1. The Market
- A History, Current Conditions and Forecast
2. Strategies for Buying & Selling
3. We are here to help
Agenda
1. The Real Estate Market
(a brief history)
Agenda
Then…
The boom….
Otteau.com
The Boom…The Boom…
Otteau.com
The NJ version of the bust...
Otteau.com
NJ Version of the Bust…NJ Version of the Bust…
Affordabilitywill
Spur Recovery
2012: State of the Market
Affordability Index
Source: NAR Housing Affordability Index 1971 to 2010
Definition: A measure of the financial ability of US Families to buy a house. 100 means that families earning the national median income have just the amount of money needed to qualify for a mortgage on a median priced home.
Higher than100 means they have more than enough. Lower than 100 means they have less than enough.
Definition: A measure of the financial ability of US Families to buy a house. 100 means that families earning the national median income have just the amount of money needed to qualify for a mortgage on a median priced home.
Higher than100 means they have more than enough. Lower than 100 means they have less than enough.
194.5Nov 2011
Affordability Index
The NJ version of the bust...
Otteau.com
NJ Version of the Bust…NJ Version of the Bust…
The Forecast…
What’s ahead in 2014…?• Low inventory, high demand in
popular price points and neighborhoods
• Tight Listing Activity
• Multiple Offers
• Rising Prices
• Repeat, Smart-Money Buyers
Real Estate Market UpdateReal Estate Market Update
What are the ‘experts’ saying about the market now…?
“We expect single-family home sales and housing starts to be at the highest
level since 2007.”
Frank E. NothaftChief Economist at Freddie Mac
"The conditions that led to the robust appreciation experienced earlier this year, including historically low mortgage interest rates, high affordability, low inventory and high demand, are waning. In their
place, we're beginning to see more inventory and rising mortgage rates, which will lead to further
normalization in the market going forward."
Dr. Stan Humphries Zillow Chief Economist
Affordability is still good compared to any time over the last 50 years.
"All those young people who moved in with their parents over the past few
years and didn't move out during the recession, there should be pent-up demand for household formation."
Jed Kolko Trulia’s Chief Economist
Affordability is still good compared to any time over the last 50 years.
I can do all my own research online…
The Customer….
The Local Market
Online Estimates
If the estimate is accurate within 5% you’re talking about a $50,000
swing on a $500,000 estimate
The home value could be anywhere from $475,000 - $525,000
And they’re only that close a third of the time
The National Picture
4,000,000
4,500,000
5,000,000
5,500,000
Existing Home Sales
S&P Case Shiller 12/2013
Percentage of Distressed Property SalesPercentage of Distressed Property Sales
35%
14%
NAR 12/2013
WEST
Down 10.1%
MIDWEST
Unchanged
SOUTH
Up 1%
NORTHEAST
Up 6.6%
NAR’s Existing Homes Sales Report 12.2013
Year-Over-Year % Change in House Sales
NAR 12/2013
100 = Historically Healthy Level
Pending Home Sales
Months Inventory of Homes for Sale
5-6 Months = Normal Market Inventory
NAR 12/2013
The New Jersey Picture
Agenda
Then…
Source: Otteau Valuation Group
The Greater Princeton Picture
Long Term Supply …
Source: NAR, November 2008 ForecastRichardson Commercial
Long Term Demand …
Source: NAR, November 2008 Forecast
http://lwd.dol.state.nj.us/labor/lpa/pub/factbook/merfct.pdf
The Local Market
Top 5 Rules in Real Estate
Real Estate is Local
Real Estate is Local
Real Estate is Local
Real Estate is Local
Real Estate is Local
Mercer County
Source: Trend MLS
Somerset County
Source: Trend MLS
Middlesex County
Source: Trend MLS
Market Absorption Scale(Absorption Rate in Months)
5-6 months absorption rate indicates a normal market.
“Market Absorption” Rate
107 current active listings
4 reported sales in last 30 days
=
24.3months absorptionrate
Anytown., NJ
5-6 Months Market Absorption Rate indicates a normal market.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. Also referred to as “Months of Inventory”
5-6 Months Absorption Rate indicates a Normal Market
46Market Scale for Supply & Market Scale for Supply & DemandDemand
High Supply/Low Demand Low Supply/High DemandNormal
Ma
rke
t A
bso
rpti
on
in M
on
ths 1
2
3
4
5
6
7
8
9
10
11
12
No
rma
l
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.
Note: This Market Scale is valid only for absorption rates between 1 and 12 months.
“Market Absorption” Rate
107 current active listings
4 reported sales in last 30 days
=
24.3months absorptionrate
Anytown., NJ
5-6 Months Market Absorption Rate indicates a normal market.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. Also referred to as “Months of Inventory”
5-6 Months Absorption Rate indicates a Normal Market
2/25/14
TownsActive Listings
Pending in Last 30 Days
Absorption Rate in Months
New Listings in 30 Days
Net Gain (Loss) to Market
Listings Reduced in 30 Days
% of Invent. Reduced
Expired Listings
W/drawn Listings
Closed Listings
West Windsor: All Styles 63 11 5.73 31 20 4 6.4% 1 2 10West Windsor Condo/ T.Houses
16 1 16 9 8 1 6.3% 0 1 2
West Windsor55+ 2 0 99 2 2 -- -- 0 0 0
West Windsor Single Family 45 10 4.5 20 10 3 6.7% 1 1 8
Lawrence: All Styles 117 15 7.8 33 18 18 15.4% 8 7 13Lawrence:Condo/THouses
33 4 8.3 17 13 2 6.1% 1 4 3
Lawrence: 55+ 6 3 2 1 (2) -- -- 0 0 0
Lawrence: Single Family 78 8 9.8 15 7 16 20.5% 7 3 10
2/25/14Towns Active
ListingsPending in Last 30 Days
Absorption Rate in Months
New Listings in 30 Days
Net Gain (Loss) to Market
Listings Reduced in 30 Days
% of Invent. Reduced
Expired Listings
W/drawn Listings
Closed Listings
Ewing: All Styles
176 13 14 26 13 44 25% 12 2 14
Ewing : Condo/ T.Houses
32 1 32 8 7 4 13% 2 1 2
Ewing 55+:
1 0 999 1 1 --- --- 0 0 0
Ewing:Single Family
143 12 12 18 6 40 28% 10 1 12
East Windsor:All Styles
102 13 8 27 14 22 22% 10 2 14
East Windsor:Condo/ Thouses
57 6 10 21 15 16 28% 8 0 9
East Windsor:55+
8 1 8 8 7 --- --- 1 0 0
East Windsor: Single Family
37 6 6 6 0 6 16% 1 2 5
2/25/14
Towns Active Listings
Pending in Last 30 Days
Absorption Rate in Months
New Listings in 30 Days
Net Gain (Loss) to Market
Listings Reduced in 30 Days
% of Invent. Reduced
Expired Listings
W/drawn Listings
Closed Listings
Hopewell Twp.All Styles
126 10 12.6 25 15 16 12.7% 4 3 4
Hopewell Twp. Condo/ T.Houses
9 1 9.0 3 2 2 22.2% 0 1 1
Hopewell Twp.:55+
0 0 0 0 0 0 0.0% 1 0 0
Hopewell Twp Single Family 117 9 13.0 22 13 14 11.9% 3 2 3
Hamilton: All Styles 415 35 11.86 87 52 65 15.7% 16 17 34
Hamilton:Condo/ THouses 94 7 13.43 24 17 8 8.5% 0 4 5
Hamilton:55+ 4 2 2.00 0 (2) 0 0.0% 0 1 1
Hamilton: Single Family 317 26 12.19 63 37 57 17.9% 16 12 28
2/25/14
Towns Active Listings
Pending in Last 30 Days
Absorption Rate in Months
New Listings in 30 Days
Net Gain (Loss) to Market
Listings Reduced in 30 Days
% of Invent. Reduced
Expired Listings
W/drawn Listings
Closed Listings
RobbinsvilleAll Styles 64 18 4 25 7 7 11% 1 4 8
RobbinsvilleCondo/ T.Houses
32 6 5 15 9 2 6% 1 3 4
Single Family 32 12 3 10 (2) 5 16% 0 1 4
Hightstown Boro: All Styles
32 2 16 6 4 4 13% 2 1 4
Pennington 20 2 10 6 4 3 15% 0 1 0
Hopewell Boro 9 1 9 1 0 0 0% 0 0 1
2/25/14
Towns Active Listings
Pending in Last 30 Days
Absorption Rate in Months
New Listings in 30 Days
Net Gain (Loss) to Market
Listings Reduced in 30 Days
% of Invent. Reduced
Expired Listings
W/drawn Listings
Closed Listings
Princeton: All Styles 104 11 9.5 35 24 5 4.8% 1 6 13
Princeton:Condo/ Thouses
26 5 5.2 5 0 1 3.8% 0 0 2
Princeton:Single Family
78 6 13 30 24 4 5.1% 1 6 11
2/25/14
Towns Active Listings
Pending in Last 30 Days
Absorption Rate in Months
New Listings in 30 Days
Net Gain (Loss) to Market
Listings Reduced in 30 Days
% of Invent. Reduced
Expired Listings
W/drawn Listings
Closed Listings
South
Brunswick
All Styles
137 17 8 29 12 4 3 8 3 20
South BrunswickCondo/ T.Houses
34 7 5 8 1 -2 1 4 1 8
South Brunswick
55+
25 0 99 1 1 0 0 0 0 1
South Brunswick
Single Family
78 10 8 20 10 6 8 4 2 11
Monroe:
All Styles 279 26 10 85 59 7 5 30 2 61
Monroe:
55+ 149 18 8 49 31 2 1 8 1 44
Monroe:
Single Family 130 8 16 36 28 5 4 12 1 16
2/25/14
Towns Active Listings
Pending in Last 30 Days
Absorption Rate in Months
New Listings in 30 Days
Net Gain (Loss) to Market
Listings Reduced in 30 Days
% of Invent. Reduced
Expired Listings
W/drawn Listings
Closed Listings
Montgomery
All Styles 77 25 3 31 +6 4 5% 4 2 13
Montgomery
Condo/Twnhms 9 3 3 6 +3 0 0 0 0 4
Single Family 68 22 3 25 +3 4 5% 4 2 9
Hillsborough
All Styles 129 39 3.3 42 +3 9 7% 6 13 24
Hillsborough
Condo/Twnhms 54 18 3 22 +4 5 9% 3 7 11
Hillsborough
Single Family 75 21 3.6 20 -1 4 5% 3 6 13
Towns Active Listings
Pending in Last 30 Days
Absorption Rate in Months
New Listings in 30 Days
Net Gain (Loss) to Market
Listings Reduced in 30 Days
% of Invent. Reduced
Expired Listings
W/drawn Listings
Closed Listings
PlainsboroAll Styles
34 5 6.8 19 14 3 8% 6 0 12
Plainsborocond0T’home
5 2 2.5 7 5 0 0 2 0 5
Plainsboro55+
10 1 10 3 2 0 0 1 0 3
PlainsboroSingleFamily
19 2 9.5 9 7 3 16% 3 0 4
Cranbury:All Styles
13 1 13 2 1 4 31% 2 0 3
2/25/14
2006 - 2008 Core Market Comparison: Week of 1/13/14
Town’12
Inven.
Count
‘12
Pending
Sales
‘12 Absorp.
Rate
‘13
Inven.
Count
‘13 Pending
Sales
‘13 Absorp.
Rate
‘14
Inven.
Count
‘14
Pending Sales
‘14
Absorp.
Rate
Inventory compared
to 2012
Inventory compared to
2013
West Windsor 95 18 5.3 72 12 6 63 11 5.3 (24%) (13%)
Plainsboro 86 12 7.16 66 10 6.6 34 5 6.8 (23%) (48%)
Lawrence 164 14 11.7 154 13 11.8 147 15 7.8 (6%) (5%)
East Windsor 202 18 11 142 13 11 102 13 8 (30%) (28%)
Hamilton 529 45 11.8 393 41 9.6 415 35 11 (25%) 5%
Hopewell Twp 135 5 27 105 9 11.7 126 10 12.6 (28%) 20%
Robbinsville 118 10 12 67 17 4 64 18 4 (43%) 4
Princeton 137 13 10.5 113 11 10.2 104 11 9.5 (17%) (7)
South Brunswick 220 9 24 160 17 9 137 17 8 (27%) (14%)
Montgomery 121 17 10.1 88 18 4.9 77 25 3 (27%) (12%)
The Local Market
Real Estate is Local
It’s Local to the Town
It’s Local to the Price Point
It’s Local to the Neighborhood/Development
It’s Local to the Street
Real Estate is Local
Market Absorption Rate
107 current active listings
11 reported ‘pending’ sales in last 30 days=
9.72 months absorptionrate
PrincetonAll Inventory
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
Market Absorption Rate
26 current active listings
4 reported ‘pending’ sales in last 30 days=
6.5 months absorptionrate
PrincetonNOT Single Family Homes
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
Market Absorption Rate
5 current active listings
2 reported ‘pending’ sales in last 30 days=
2.5 months absorptionrate
PrincetonTwin or Townhouse
3 bedroom
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
Market Absorption Rate
137 current active listings
17 reported ‘pending’ sales in last 30 days=
8 months absorptionrate
South BrunswickAll Inventory
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
Market Absorption Rate
24 current active listings
2 reported ‘pending’ sales in last 30 days=
12 months absorptionrate
South BrunswickCondo/Townhouse Market
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
Market Absorption Rate
3 current active listings
2 reported ‘pending’ sales in last 30 days=
1.5 months absorptionrate
South BrunswickPrinceton Walk Development
All Types
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
Market Absorption Rate
0 current active listings
1 reported ‘pending’ sales in last 30 days=
0 months absorptionrate
South BrunswickPrinceton Walk DevelopmentTownhomes
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
Market Absorption Rate
63 current active listings
11 reported ‘pending’ sales in last 30 days=
5.75 months absorptionrate
West Windsor
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
Market Absorption Rate
22 current active listings
4 reported ‘pending’ sales in last 30 days=
5.5 months absorptionrate
West WindsorUnder $500,000
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
Market Absorption Rate
15 current active listings
5 reported ‘pending’ sales in last 30 days=
3 months absorptionrate
West Windsor$501,000 - $750,000
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
Market Absorption Rate
11 current active listings
1 reported ‘pending’ sales in last 30 days=
11 months absorptionrate
West Windsor$750,000 +
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
Strategies to Buy & Sell in 2014…
2014
Top Buyer Negotiating Strategy…Pay now or Pay more
later.
Monroe Lane, PrincetonListed at $650,000
14 offers…
Weichert Buyer prevailed at $740,000
Exact Comp…currently on the market for $749,000…
2. ‘I am going to time the Market and buy/ sell at the
time when inventory & buyer count is in my
favor…’Source: MLS
Listing v Contracts: Dec – Jan 2013 Princeton
Listing v Contracts: Dec – Jan 2012, Lawrence Twp.
The Impact of
Pricing, Staging and Pre-Inspection
on the Salability of A Home..…
Negotiations are about leverage
Maximize Yours
Source: MLS
All Negotiations, including real estate, are all about negotiation and control.
Home Pricing
Who is in control?
• Promotes a sense of urgency among buyers• Promotes a sense of urgency among agents• Generates interest and showings• Sets the stage for multiple purchase offers in the
first 30 days• Offers tend to be higher in relation to list price• Controls negotiations• Results in highest price in shortest time
Effects of Right Pricing:
• Buyer excitement diminishes quickly• Extends time house is on the market• Results in price reductions• May attract “bargain hunters” and discounted offers• Results in a lower selling price
In the final stages of Over Pricing, after extended days-on-market and several price reductions, a home begins to attract interest
from buyers who are looking to profit from sellers under duress. These buyers, often referred to as bottom-feeders, tend to offer
deeply discounted prices for homes.~Jeff Otteau
Effects of Over Pricing:
One AimDetermining your best asking price.
Our unique method goes beyond the traditional assessment of comparable home prices by anticipating changing marketing conditions in your area.
Hillsborough
The Price Trend Came up with a price of $520,000 We recommended a price of $499,000
Negotiations are about leverage, use the listing price as yours…
Listed at $544,900
Reduced to $535,000
Reduced to $509,000
Reduced to $499,000
96 Days on Market
1 Offer
Sold for $490,000
The buyer had control
West Windsor
The Price Trend Came up with a price of $780,000 We recommended a price of $769,000
Negotiations are about leverage, use the listing price as yours…
Listed at $769,000
8 Days on Market
11 Offers
Sold for $805,000
The seller had control
Princeton
Price Trend Price:$1.275
Appraised by local Appraiser prior to going on
market:$1.275
Princeton
Put on market at $1.1 million
8 offersSold in 8 days
$1.350 million
No contingencies
The Impact of Staging on the Salability of Your Home..…
All Negotiations, including real estate, are all about negotiation and control.
Home Staging
Who is in control?
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.
What is Home Staging?
Clean & In Good Repair
“Wow…. I could live here!”
“The Investment in Home Staging is Always Less than Your
First Price Reduction!”
Buyers Only Know What They See …
… Not The Way It Is Going To Be.
Home Staging
*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.
“The investment in home staging is always less than your first price reduction!”
Home Staging
*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.
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
“The investment in home staging is always less than your first price reduction!”
The Impact of Inspection & Repairs on the Salability of Your Home..…
All Negotiations, including real estate, are all about negotiation and control.
Pre - Inspection
What is
‘Pre-Inspection?’
Pre-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. It will also advise if any potential environmental hazards
were observed.
Pre-Inspection
DOESN’T THE BUYER DO THE HOME INSPECTION?
• Why do a Pre-Inspection?– Fix EVERYTHING before going on market– Remove objections– Reduce the risk of going ‘off market’ for a buyer
who ends up killing the deal– Stay in Control
Pre-Inspection
Its about control.
Real Estate Market UpdateReal Estate Market Update
Weichert Financial ServicesWeichert Financial Services
Dave McDermottGold Services Manager
NMLS #101160
Weichert Financial Services
646-921-1900
The Financial Forecast…
Pop Quiz I
If you take out a $200,000 30 year fixed payment loan from
the bank, what is your monthly payment?A. $1802. B. $1597.
C. $1310.D. $998.
My Job is to Provide You the Highest Level of Customer Service in the
Industry
My Team…
We put Jim’s Money on the line and Guarantee our performance
I look forward to meeting with you.
What will a real estate company do for me?
Source: 2012 NAR Profile of Home Buyers and Sellers
This is where
you win or lose the sale
Making Making Your Purchase as Purchase as Smooth as PossibleSmooth 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.
Thank you for your time today.
Resource and Website Resource and Website ListList
www.trendmls.com
www.realtor.org
www.njar.com
www.Otteau.com
www.Pre-listing-inspection.com
www.Housemaster.com
www.Stagingshoppingcenter.com
www.realtytrac.com
www.njar.com/10k