april market seminar

Making Sense of the Real Estate Market of

2009

Weichert, Princeton’s Market Weichert, Princeton’s Market Seminar Seminar A complimentary service of Weichert, Realtors

Each WEICHERT® franchised office is independently owned and operated.

®

Agenda

1. The Market

2. Strategies for Buying

3. Strategies for Selling

What are you hearing about the economy?

Job Market Retrenches in 2008

thousands

Source: Bureau of Labor Statistics

Auto Sales at Lowest Level Since 1992

Source: Autodata

Chrysler in Bankruptcy…GM Next…Over 1000 Chrysler Dealers

to be shuttered…

Source: Autodata

Financial Turmoil Not Just a U.S. Problem

Source: Haver Analytics

Consumer Sentiment Not This Low Since Early 1980s

Source: University of Michigan

1966Q1 = 100

Employment Year over Year Percent Change

Good news, we only lost 549,000 jobs in April, 2009…

Thursday, January 1, 2009

The ‘recession’ officially started in December 2007

Source: Federal Reserve

What about the Housing Market…?

% Appreciation in 5 Year Increments% Appreciation in 5 Year IncrementsSource: Brookings Papers 9/08


Housing IndicatorsCurrent Figures Period Covered Next

Release

Existing-Home Sales Sales down 3 percent in March. March May 27

Pending Home Sales Index PHSI rose 3.17 percent to 84.60 March June 2

New-Home Sales Down .6 percent from last month (PDF: 36KB)

March May 27

Housing Starts SAAR* of 510,000 units (PDF: 29KB) March May 22

Housing Affordability 158.8 — up 15.6 from previous month (PDF: 16KB)

December Feb 27


Housing Indicators

Mortgage Purchase Application Index

Up .5 % to 265.70 from last week. (PDF: 37KB)

Week of May 13

May 20

Fixed-Rate Mortgage Rate

Up .2 percent to 4.86 (PDF: 39KB) Week of May 13

May 21

GDP Down 6.3% from last Quarter (PDF: 38 KB) Q1 2009 June 26

Consumer Confidence

Down 32.35% from a month ago (PDF: 40KB)

March April 27

Employment Situation

Down 539,000 jobs (PDF: 40KB) April June


Housing Indicators

Consumer Price Index

Up .1% from the previous month (PDF: 27KB)

April June

Producer Price Index Up .3% from the previous month (PDF: 30KB)

April June

Retail Sales Down .4% from the previous month (PDF: 39KB)

April June

Source: NAR

Home Sales Starting to Recover in Some Areas as Affordability Improves

Source: NAR

Positive Indicators Across the Board….1st time in 4 years….!

Less New Construction in Mercer

Source: NAR, November 2008 Forecast

Richardson Commercial

Mercer Population Growth will Outpace NJ

Source: NAR, November 2008 Forecasthttp://lwd.dol.state.nj.us/labor/lpa/pub/jobdmnd/mercer.pdf

• The region’s overall population will increase by 11.9 percent, faster than the state’s 8.1 percent growth rate, from 3,167,200 in 2002 to 3,542,900 in 2012.

• The number of persons 45-64 years old will grow substantially while the 25-44 age group will decline due to the baby boom-to-baby bust effect.

• Senior citizens will account for 14.7 percent of the region’s total residents, higher than the statewide proportion of 13.8 percent.

2009: Foreclosure ForecastWithin Company-Owned Footprint

Region 12/22/2008 12/29/2008 1/5/2009 1/12/09 1/19/09

Ashby 12,001 15,003 14,736 14,778 13,837

Bixon 6,844 6,682 6,605 6,638 6,546

McDonald 7,064 7,194 7,121 6,216 7,333

Minsky 14,411 14,468 15,224 15,453 16,253

Prevete 8,425 8,300 8,150 8,116 8,077

Waters 9,627 9,602 9,620 9,514 9,474

Williams 6,158 6,108 6,225 6,236 6,255Huffman/

Chappell (MD/DC) 16,953 16,376 16,522 18,112 18,232

Green (VA) 23,722 23,554 23,570 23,561 23,403

Totals 105,205 107,287 107,773 108,624 109,410

NY, NJ, PA, CT, DE

DC, MD, VA

2009: Foreclosure ForecastWithin Company-Owned Footprint

Over 1800 Foreclosure in Mercer County.

Less than 78 foreclosures in 08540 (3 townships).

Less than 31 foreclosures in West Windsor.

Majority of the 1800 are in Trenton.- foreclosurepoint.com

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)

Mercer County Inventory Trends

Trend mls

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)

Where is the bottom of the market?

1. Real Estate is Local

Top Five Rules for Understanding the Real

Estate Market:



4. Real Estate is Local5. Real Estate is Local

Joshua D. Wilton, Manager

Strategies for Strategies for BuyingBuying

1. Understand the Local Market That You are Buying into…

Sample Market Absorption RateSample 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 Scale(Absorption Rate in Months)

5-6 months absorption rate indicates a normal market.

Town by Town Analysis 5/11/09Towns Active

ListingsPending in Last 30 Days

Absorption Rate in Months

Active w/ Contract in 30 Days

New Listings 1in 30 Days

Net Gain (Loss) to Market

Listings Reduced in 30 Days

% of Invent. Reduced

Expired & W/drawnListings

Closed Listings

Princeton Boro:

All Styles

54 4 13.5 6 13 3 9 16.7% 3 3 4

Pton -Boro Condo/ Thouses

11 0 99 0 2 2 1 9% 2 2 2

Pton-Boro

Single Family

43 4 10.75 6 11 1 8 18.6% 1 1 2

Pton Twp: All Styles

158 10 15.8 19 52 23 23 14.6% 5 4 7

Pton Twp: Condo/ Thouses

30 3 10 5 8 0 4 13.4% 0 1 0

Pton Twp:

Single Family

128 7 18.3 14 44 23 19 14.8% 5 3 7





New Listings in 30 Days




Expired Listings

W/drawn Listings

West Windsor:

All Styles

144 35 4.1 48 52 (31) 38 26% 5 3

West Windsor Condo/ T.Houses

34 11 3.0 14 18 (7) 7 20% 2 0

West Windsor

55+

9 0 99 - - - - - - -

West Windsor

Single Family

101 24 4.2 34 34 (24) 31 31% 3 3

Lawrence: All Styles

200 22 9.0 34 67 11 42 21% 6 9

Lawrence:

Condo/

THouses

85 11 7.7 18 30 1 9 11% 3 4

Lawrence:

55+15 0 99 - - - - - - -

Lawrence:

Single Family

100 11 9.0 16 37 10 33 33% 3 5









Expired Listings

W/drawn Listings

Ewing:

All Styles215 19 23.8 34 47 (6) 56 26% 19 6

Ewing : Condo/ T.Houses

48 2 24 5 8 1 9 18% 3 3

Ewing:

55+2 1 2 - - - - - - -

Ewing:

Single Family

165 16 10.3 29 39 (6) 47 28% 16 3

East Windsor:

All Styles

197 21 9.3 35 37 (19) 42 21% 12 13

East Windsor:

Condo/ THouses

91 13 7 22 17 (18) 17 19% 9 7

East Windsor:

55+

22 1 22 - - - - - - -

East Windsor: Single Family

84 8 10.5 13 20 (1) 25 29% 3 6









Expired Listings

W/drawn Listings

Hopewell Twp.:

All Styles

172 10 17.2 14 38 14 55 32% 7 4

Hopewell Twp. : Condo/ T.Houses

21 5 4.2 0 6 1 9 43% 2 0

Hopewell Twp.:

55+

3 0 99 - - - - - - -

Hopewell :

Single Family

148 5 29.6 14 32 13 46 31% 5 4

Hamilton: All Styles

583 47 12 41 160 72 143 25% 41 21

Hamilton:

Condo/ THouses

88 6 15 6 35 23 38 43% 11 5

Hamilton 55+

37 0 99 - - - - - - -

Hamilton:

Single Family

458 41 11 35 125 49 105 23% 30 16









Expired Listings

W/drawn Listings

Rbnville.:

All Styles116 11 10.5 12 27 4 22 19% 9 6

Rbnville. : Condo/ T.Houses

49 4 12.2 6 13 3 10 20% 6 3

Rbnville.:

55+0 0 0 0 0 0 0 0 0 0

Rbinville.:

Single Family

67 7 9.6 6 14 1 12 18% 3 3

HightstownBoro:

All Styles

53 0 99 1 9 8 10 19% 3 1

Pennington Boro:

All Styles

25 0 99 3 7 4 3 12% 1 0

Hopewell

Boro:16 0 99 1 2 1 2 13% 1 0

Market Activity: Town by Town Analysis 5/11/09Towns Active








Expired Listings

W/drawn Listings

PlainsboroAll Styles

72 16 4.5 11 32 5 14 19% 6 0

Plainsboro

Condo/ THouses

45 8 5.6 8 21 5 10 22% 4 0

Plainsboro

55+9 0 99 0 2 2 1 11% 0 0

Plainsboro

Single Family

18 8 2.2 3 9 (2) 3 16% 2 0

Cranbury:

All Styles25 4 6.2 1 4 (1) 4 16% 1 0

Cranbury:

55+6 0 99 0 0 0 0 0 0 0

Cranbury: Single Family

19 4 4.7 1 4 (1) 4 21% 1 0









Expired Listings

W/drawn Listings

South

Brunswick

All Styles

230 21 13 13 56 36 44 19% 16 2

South BrunswickCondo/ T.Houses

69 5 14 7 22 8 11 16% 5 0

South Brunswick

55+

31 0 99 0 4 4 3 12% 4 1

South Brunswick

Single Family

136 12 11 6 31 13 30 22% 10 1

Monroe:

All Styles481 22 240 10 90 58 100 21% 36 7

Monroe:

55+320 16 20 5 58 37 71 22% 20 5

Monroe:

Single Family

160 6 26 5 232 21 29 17% 16 2








Expired & W/drawn Listings

Closed Listings

Montgom. 156 22 7.1 56 34 42 26.9% 5 5 16

Hillboro 253 37 6.8 58 21 51 20.2% 12 8 35

Rocky Hill 4 0 99 0 0 1 25% 1 0 1

Franklin 389 43 9 114 71 61 15.7% 18 15 30

West Windsor Condo/Townhouses Absorption Rate

0

5

10

15

20

25

30

West Windsor C/T Abs. Rate

West Windsor Single Family Absorption Rate

0

10

20

30

40

50

60

70

80

West Windsor Single Family Abs. Rate

South Brunswick Condo/Townhouse Absorption Rate

02468

101214161820

South Brunswick C/T Abs. Rate

South Brunswick Single Family Absorption Rate

0

5

10

15

20

25

30

3512

/29/

2008

1/5/

2009

1/12

/200

91/

19/2

009

1/26

/200

92/

2/20

092/

9/20

092/

16/2

009

2/23

/200

93/

2/20

093/

9/20

093/

16/2

009

3/23

/200

93/

30/2

009

4/6/

2009

4/13

/200

94/

20/2

009

4/27

/200

95/

4/20

095/

11/2

009

South Brunswick Single Family Abs. Rate

Lawrence April Statistics

Princeton Township April Statistics

Hopewell Township April Statistics

WW Township April Statistics

Understand the Market That You are Buying into…

I want to live in West Windsor because of the schools and the trains









Expired Listings

W/drawn Listings

West Windsor:

All Styles

144 35 4.1 48 52 (31) 38 26% 5 3

West Windsor Condo/ T.Houses

34 11 3.0 14 18 (7) 7 20% 2 0

West Windsor

55+

9 0 99 - - - - - - -

West Windsor

Single Family

101 24 4.2 34 34 (24) 31 31% 3 3

Market Absorption Rate


10 reported ‘pending’ sales in last 30 days=2.6 months absorptionrate

West Windsor, NJTownhouse Market: All





West Windsor, NJAll Single Family





West Windsor, NJAll Single Family$600-$800k




0 reported ‘pending’ sales in last 30 days=99 months absorptionrate

West Windsor, NJAll Single Family$1 million +




0 reported ‘pending’ sales in last 30 days=99 months absorptionrate

West Windsor, NJ‘55+’ only


2. ‘I am going to time the Market and buy at

the peak inventory level and when no one else

buys…’Source: MLS

Source: MLS0

20

40

60

80

100

120

140

160

180

1/7/2007 4/1/2007 6/24/2007 9/23/2007 12/16/2007

Gross # of Guests 2007

Gross # ofGuests 2007

Weekly Guests Thru the Weichert Princeton Open Houses, 2007

Source: MLS

Inventory Levels, Princeton, New Jersey, 2007

0

50

100

150

200

250

1/8/07 3/5/07 4/30/07 6/24/07 8/20/07 10/16/07 12/11/07

3. ‘I am going to wait until the price comes down further and then make an

offer…’Source: MLS









Expired Listings

W/drawn Listings

Hopewell Twp.:

All Styles

172 10 17.2 14 38 14 55 32% 7 4

Hopewell Twp. : Condo/ T.Houses

21 5 4.2 0 6 1 9 43% 2 0

Hopewell Twp.:

55+

3 0 99 - - - - - - -

Hopewell :

Single Family

148 5 29.6 14 32 13 46 31% 5 4

Hamilton: All Styles

583 47 12 41 160 72 143 25% 41 21

Hamilton:

Condo/ THouses

88 6 15 6 35 23 38 43% 11 5

Hamilton 55+

37 0 99 - - - - - - -

Hamilton:

Single Family

458 41 11 35 125 49 105 23% 30 16

Source: trend mls

Relationship of Price Reductions to ‘Pending Sales’

0

10

20

30

40

50

60

70

Princeton Pendings

Princeton Price Reductions

Source: trend mls


0

20

40

60

80

100

120

West Windsor Pendings

West Windsor Reductions

Source: trend mls


0

10

20

30

40

50

60

70

80

90

100

Lawrence Pendings

Lawrence Reductions

Factors to consider Factors to consider when buying and when buying and

selling…selling…

Source: MLS

Inventory(supply and Inventory(supply and demand)demand)

Interest RatesInterest Rates

Interest Rates Remain Interest Rates Remain LowLowAverage Annual Rate (30-year fixed rate mortgage)

5%

7%

9%

11%

13%

15%

17%

19%

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Year

Percent

Source: Freddie Mac

Interest Rates Remain Interest Rates Remain LowLow

Source: otteau

Seeing the Opportunity.Seeing the Opportunity.

Seeing the Opportunity.Seeing the Opportunity.

Q. If this were 2005, where would you place the Price and Rate dots?

Prices Rates

High

Mid-Range

Low

A. In 2005, the V would look somewhat like this one, where prices were on the high end of the scale and rates were in the lower range.

Seizing the Opportunity.Seizing the Opportunity.

In recent history, there has never been an opportunity like this, with low prices and low rates. In real estate, this circular area at the bottom of the V is called the “Buying Zone” – it’s an unbelievable time to buy.

Prices Rates

High

Mid-Range

Low

Jeff Smith,

Gold Services Manager/ Loan Officer

Financial Benefits and Financial Benefits and Process of Home-Process of Home-

Ownership.Ownership.

‘I don’t want to buy a house and then watch it drop in value!’

The Real Estate Market is not like the Stock Market.

If you buy $400,000 in stock you need $400,000 in cash.

If you buy a $400,000 home you need only $14,000 down-payment.

Purchase Price $329,000 Loan Amount $281,000

Down Payment $11,515 Monthly P&I $1,590

Appreciation/Depreciation Home Value1st Year -3% $305,9702nd Year 0% $305,9703rd Year 1% $309,0304th Year 3% $318,3015th Year 5% $334,2165 Year Appreciation/Depreciation $5,216

Tax Benefit Rent @ $1600/mo1st Year $5,000 $19,2002nd Year $5,000 $19,2003rd Year $5,000 $19,2004th Year $5,000 $19,2005th Year $5,000 $19,2005 Year Total $25,000 $96,000

Total $30,216Create Equity

v Pay Rent

Incentive From the Government

First-time homebuyers can receive a

tax credit up to $8000!

Tax Credit OverviewAmount 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

First-Time Must not have owned a principal residence in 3 years prior to purchase

Distribute NAR Tax Credit Overview handout

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

How much house can I really afford?

• The first step is to meet with me!

Establish Establish YourYour Buying Buying PowerPower

Joshua D. Wilton, Manager

Strategies for Strategies for SellingSelling

Understand the Market That You are Selling Out of …

I live in Montgomery

Market Absorption Rate Comparable Properties


2 reported ‘pending’ sales in last 30 days=3.5 month absorption

rate


Montgomery, NJTownhouses Only



6 reported ‘pending’ sales in last 30 days=10.3 month absorption

rate


Montgomery, NJSingle Family

$500-799



3 reported ‘pending’ sales in last 30 days=14 month

absorptionrate


Montgomery, NJSingle Family $800+



0 reported ‘pending’ sales in last 30 days=99 month

absorptionrate


Montgomery, NJ4+ Bed, Single Family

$600 - $800k

‘Great speech but does it really work?

We know the best way to evaluate pricing

Does this really work?

22. . The Effect of The Effect of StagingStaging on the on the Value of a Value of a YourYour

HomeHome..

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.

The Way You Live In Your Home…

… And The Way We Market And Sell A House Are Two Different

Things.

“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.

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 average marketing

time of an ASP Staged vs. non-Staged home is 80%

less.

3.3.The Effect of ‘The Effect of ‘Pre-Pre-Inspection’Inspection’ on the Sale of on the Sale of

YourYour Home. Home.

What is

‘Pre-Inspection?’

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.

PRE-LISTING Home Inspection

DOESN’T THE BUYER DO THE HOME INSPECTION?

All Negotiations, including real estate, are all about negotiation and control.

Who is in control?

Right Price

Right Staging

All Repairs are done in advance.

Offer a Home Warranty to the buyer..

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%.

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.

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.

Weichert Family of Companies

What will a real estate company

do for me?

Making Your Purchase as Making Your 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.

• Time is money.

The Weichert The Weichert DifferenceDifference

• Stress kills.

• Time is life.

Educate You.

Negotiate on your behalf.

Offer advice on due diligence.

Manage all aspects of the transaction

process.

What Will a Weichert Agent Do for Me?

We’re Here to HelpWe’re Here to Help

The Entire Process is reviewed by Legal Council.

Resource and website list:

Realtor.org

Remodeling.com

NAR.

Resource and Website Resource and Website ListList

http://www.realtor.org/research/research/housinginx

Remodeling.com

www.Otteau.com

www.Pre-listing-inspection.com

Resource and Website Resource and Website List:List:

www.Housemaster.com

www.Stagingshoppingcenter.com

Resource and website Resource and website list:list:

www.Stagedhomes.com

www.realestatestagingassociation.com

www.foreclosurepoint.com

www.realtytrac.com

Good Luck with your Good Luck with your Move!Move!