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1 Barb Bottitta CSR, GRI, ABR, SRS, SRES Lehigh Valley Real Estate Today

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Lehigh Valley Real Estate Today. Barb Bottitta CSR, GRI, ABR, SRS, SRES . The Numbers That Drive U.S. Real Estate. Home Sales Home Prices Inventory Mortgage Rates Affordability. WA. ME. VT. ND. MT. MN. OR. NH. ID. SD. WI. NY. MA. CT. MI. WY. RI. PA. IA. NJ. NE. NV. - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

1Barb Bottitta CSR, GRI, ABR, SRS, SRES

Lehigh Valley Real Estate Today

Page 2: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

The Numbers That Drive U.S. Real Estate

1. Home Sales2. Home Prices3. Inventory4. Mortgage Rates5. Affordability

2

Page 3: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

In Q3 2010, all 50 states experienced a decrease in sales …

TX

UT

MT

CA

AZ

ID

NV

OR

IA

COKS

WY

NM

MO

MN

NE

OK

SD

WA

AR

ND

LA

IL

FL

GAAL

WI

VAIN

MI

MS

KYTN

PA

NCSC

WVNJ

ME

NY

VT

MD

NHCT

DE

MARI

AKHI

Below 10%

Below 20%

Home Sales Direction (Year-Over-Year Change)

OH

Source: National Association of REALTORS®

Below 30%

Below 40%

3

Page 4: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

In Q4 2010, all states except for Virginia experienced an increase in

sales …

TX

UT

MT

CA

AZ

ID

NV

OR

IA

COKS

WY

NM

MO

MN

NE

OK

SD

WA

AR

ND

LA

IL

FL

GAAL

WI

VAIN

MI

MS

KYTN

PA

NCSC

WVNJ

ME

NY

VT

MD

NHCT

DE

MARI

AKHI

OH

Source: National Association of REALTORS®

Sales IncreasedSales Decreased

Home Sales Direction (Year-Over-Year Change)

4

Page 5: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

Monthly Lehigh Valley Home Sales

5JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC0

100200300400500600700800900

1000

2006200720082009201020112012

Units

2006

Page 6: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

6

Average Lehigh Valley Sale Price (In $100Ks)Over the last 2 ½ Years, the average sale price peaked at $211,00 in June 2010, but dropped back to $200K or lower

for all of 2011, before it jumped back over that mark to $206,000 this past June.

$206K

Statistics from LVAR

Average Sale Price = Total Price of all properties sold, divided by the number of sales

$200K$211K

Page 7: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

710-A

pr10

-May

10-J

un10

-Jul

10-A

ugSe

p. 1

0O

ct. 1

0No

v. 1

0De

c. 1

0Ja

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1Fe

b. 1

1M

ar. 1

1Ap

r. 11

May

. 11

Jun.

11

Jul.

11Au

g. 1

1Se

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r. 12

May

.12

Jun.

12

0

100

200

300

400

500

600

700

800#

of H

omes

Sol

dJune 2010

June 2011June 2012

Average Lehigh Valley SalesApril 2010 through June 2012

Statistics from LVAR

Page 8: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

8

Lehigh Valley Absorption Rates April 2010 through June 2012

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

8.4

6.8

7.9

12.5 12.4

13.9

11.5

12.4

10.9

13.9 14.0

11.711.2

8.7

9.8

8.4

14.1

8.27.8

6.8

5.0

7.9

10.7

8.2

6.9 6.76.2

July 201114 Months

6.2 Months, June 2012

Months

Statistics from LVAR

Page 9: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

9

Lehigh Valley Absorption Rates bySchool District, June 2012

NazarethN. Western

NorthamptonEaston

Lehigh ValleyS. Lehigh

BethlehemParkland

SalisburyEast Penn

0 2 4 6 8 10 12

9.58.3

6.56.5

6.25.4

4.94.7

4.54.0

Months of Inventory

- Lehigh Valley average

Statistics from LVAR

Page 10: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

0%2%4%6%8%

10%12%

'89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 11

Mortgage Rates (30-Year Fixed)

Source: Freddie Mac

Mortgage rates averaged 4.69% in 2010, an all-time low since Freddie Mac started tracking in 1971… and they’ve just kept going down, setting record lows for 6 consecutive months.

10.3%

6.0%5.0%

3.25%

10

Page 11: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

Affordability (In Thousands)

Given the historical rate of home appreciation rates, home prices are a huge bargain. Are 2011 homes

undervalued by 23%?

0

50

100

150

200

250

'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 11

Source: National Association of REALTORS®

Historical appreciation rate = 4%$153K

$222K

$163K

$211K

11

Page 12: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

Affordability: Let’s put this in perspective …1989 2010 2011

Bread $0.67 $2.49 $2.78Gas (gal.) $0.97 $2.73 $2.84New Car $15,350 $28,400 $30,000Existing Home $94,000 $173,000 $166,100Mortgage Rate 10% 4.69% 4.45%Monthly Payment $825 $896 $837

In 1981, home mortgage payments were 36% of family income.

In 1989 – 24% and in 2011 – 13%12Source: Keller Williams

International

Page 13: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

Barb’s Top 10 Things You Should Know about Real Estate

10. Distressed Properties: Short Sales and Bank Foreclosures (REOs) are not for everyone:

Hurdles to overcome:• “As is” property condition• Increased paperwork & complexity• Increased chance for multiple offers• Bank REO process is long & arduous• Buyer probably is not getting a “steal”• Buyer must be “patient”

13

Page 14: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

#9 - “Aging in Place”

Did you know?• Half of older women age 75+ live alone.• Persons reaching age 65 have an average life

expectancy of an additional 18.1 years.• The 85+ population is projected to increase from 4.6

million in 2002 to 9.6 million in 2030.• Median # of years home owners are staying in their

homes has increased from 8 to 10 yrs

14

Page 15: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

#8 – Today’s Agent must be “tech savvy”Info Sources Used in Home Search

2009 2010Internet 90% 89%Real estate agent 87 88Yard sign 59 57Open house 46 45Print newspaper advertisement 40 36Home book or magazine 26 23Home builder 18 16Relocation company 4 3Television 8 7Billboard 6 5

Every source was used less except one – the Realtor!

15Source: Keller Williams International

Page 16: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

#7 – Down payments of 5% or less have not disappeared

• Both first-time and repeat buyers are putting less than 20% down, even though a down payment of 20% will typically provide the best financing terms.

• 68% of first-time buyers and 28% of repeat buyers had a down payment of 5% or less in 2011.

16Source: Keller Williams International

Page 17: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

#6 – Yes, it’s still the economy• Employment will remain a challenge over the next few years, which impacts the market by tempering GDP and holding back demand for home buying. •To get back to 6% unemployment, 13.3 million jobs need to be added over the next 3 years. That’s 400,000 jobs/month

17Source: Keller Williams International

Page 18: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

The Four Keys to Housing Recovery

18Source: Keller Williams International

Page 19: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

#5 – Condition is the key for serious buyers

• Homes in better condition sold for an average of 96% of list price compared to 92% of list price for homes in poorer condition.• The most common updates:

•Paint 44%•Floorings 25%•Lighting Fixtures 20%

19Source: Keller Williams International

Page 20: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

#4 – Staging is well worth the effort• Staged Homes sell faster.• Staged homes get higher offers.• Staged houses look better in the MLS pictures, getting more potential buyers to actually come see the house in the first place.• Staged houses have an edge over competing properties, and the staging can often sway the final decision.

20Source: HomeStaging.com

Page 21: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

#3 – First-Time Home BuyersPercent of Home Buyers

21Source: Keller Williams International

Page 22: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

#2 – Price it right the first time!

• For the 48% of sellers who set their listing price according to their agent’s interpretation of the market value of their house:

• Sold faster – 56 days compared to 105 • Sold for 6.7% higher list-to-sell ratio• Experienced fewer price reductions

(4 to 6 weeks between price reductions of between $5,000 and $15,000

22Source: Keller Williams International

Page 23: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

#1 – “The end is in sight” – we have “hit bottom”

• We have been in a Buyer’s Market for the last 6 years because: home prices have been low, Mortgage rates are at an all-time low and Inventory has been high.•Prices have stabilized (we’ve had our pricing correction), it doesn’t seem likely that interest rates can go any lower & we are reaching an inventory balance.

23Source: Keller Williams International

Page 24: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

Barb’s Top 10

24

1. The end is in sight.2. Price it right the first time!3. First-time Home Buyers4. Staging is well worth it.5. Condition is key for Buyers. 6. Lower unemployment is key to the housing recovery.7. Down payments of 5% are still feasible.8. Your Realtor should be “tech savvy”. 9. Aging in Place – the senior market.10. Short Sales & Foreclosures.

Page 25: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

Thank You! – Questions?

Slides & absorption graphs for all LV School Districts available at www.LVhomeExpert.com/Rotary

[email protected]

25

Page 26: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

First-Time Home Buyers

26

Page 27: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

Info Sources Used in Home Search2009 2010

Internet 90% 89%Real estate agent 87 88Yard sign 59 57Open house 46 45Print newspaper advertisement 40 36Home book or magazine 26 23Home builder 18 16Relocation company 4 3Television 8 7Billboard 6 5

Every source was used less except one – YOU!27

Page 28: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

What Buyers Want Most from Agents

Help with the price negotiations

14%

Help buyer negotiate the terms of sale

12%

Help with paperwork

10%

Determine what comparable homes

were selling for6%

Help determining how much home buyer can afford

3%

Help find and arrange

financing2%

Other3%

28

Page 29: Barb Bottitta  CSR, GRI, ABR, SRS, SRES

2005 2009 2010Good financial investment 94% 87% 85% Better than stocks * 54 47

About as good as stocks * 26 30

Not as good as stocks * 7 9

Not a good financial investment 1 3 4Don’t know 5 10 11

Buyer’s View of Home as a Financial Investment

29

2011