january 2010 market update seminar
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The market update presentation for January 2010.TRANSCRIPT
Weichert, Princeton Office January Market
Update Seminar
Offers analysis of the Princeton & Greater
Princeton, NJ real estate markets & effective
strategies to buy and sell.
Presented by:
Joshua D Wilton
Broker/ Sales Rep.
Weichert Realtors
Princeton, NJ
O 609-921-1900
www.weichert-princeton.com
www.facebook.com/weichertprinceton
Presented by:
The presentation will be posted on the
following site immediately after today’s
session to the following site.
Will be available for downloads thru Monday.
www.weichert-princeton.com
www.facebook.com/weichertprinceton
Agenda
1. The Market
2. Strategies for Buying
3. Strategies for Selling
Agenda
1. The Market:
- The National Economy a
Year Ago…
‘The U.S. economy is experiencing its worst recession in decades. Jobs and wealth are falling at a rapid pace, driving families more quickly into default, foreclosure, and bankruptcy. This crisis is precipitated by a sharp
drop in consumer spending, as well as a decline in business investment and the fact that the United States continues to import more than it exports. The only sector of the economy that can turn the situation around is the federal government, but irresponsible management in the past has created large, looming deficits that will
make it harder to design the necessary stimulus and economic recovery package.1. GDP growth turns negative. The gross domestic product declined at an annual rate of 0.5 percent in the
third quarter of 2008—the largest decline since the third quarter of 2001. The drop in growth followed a 3.8% decline in consumer spending—the largest decrease since the second quarter of 1980. Spending on homes also
declined by 16.0% in the third quarter of 2008, marking the 11th quarterly decline in a row and the longest continuous decline in residential real estate spending since the 11th quarter period that ended in March 1958.
2. Job losses accelerate. The U.S. economy lost 2.6 million jobs in 2008, including 524,000 jobs in December. Fifty-nine percent of job losses came during the last quarter.
3. Unemployment rates reflect broad labor market recession. The unemployment rate was 7.2% in December 2008—the highest level since January 1993. The African-American unemployment rate stood at
11.9%, the Hispanic unemployment rate at 9.2%, and the unemployment rate for whites at 6.6% in December 2008.
4. The job market recession is the most severe in decades. The labor market shrunk by 1.9% over the course of 2008—the fastest decline during the 12 months after a recession started since the recession that started in May 1960. The unemployment rate rose 2.3% during the first 12 months of the recession—the fastest such
increase since the recession that started in January 1970.5. Wages have temporarily outgrown inflation. Factoring in inflation, hourly wages were 2.3% and weekly wages were 3.3% higher in November 2008 than in December 2007. These increases followed lower prices in
November 2008 and are unlikely to continue.6. Benefits decreased before the crisis. The share of private sector workers with a pension dropped from
50.3% in 2000 to 45.1% in 2007, and the share of people with employer-provided health insurance dropped from 64.2% in 2000 to 59.3% in 2007.
Source: Americanprogress.org
8. The housing crisis deepens. New home sales in November 2008 were 35.3% lower and existing home sales were 10.6% lower than a year earlier. Median sale prices for new homes dropped by 11.5% and those for
existing homes by 13.2% during the same time. It would take more than 11 months to sell all houses on the market at the current rate of new home sales. This has been true for four months in a row now, making this the
worst new home sales market since the Census Bureau collected these data in 1963.9. Homeowners lose wealth. The values of all homes fell by $656 billion in the third quarter of 2008 after accounting for inflation, and they were 13.6% or $2.4 trillion lower than a year earlier, making it the largest
such drop since the Federal Reserve collected these data in 1952. Home equity as a share of home values also fell to a record low of 44.7% in the third quarter of 2008.
10. Mortgage troubles mount. One in 10 mortgages is delinquent or in foreclosure. The share of mortgages that were delinquent during the third quarter of 2008 was 7.0%, and the share of mortgages that were in
foreclosure was 3.0%. The share of new mortgages going into foreclosure stayed at its record high of 1.1% in the third quarter.
11. Families feel the pressure. Credit card defaults rose to 5.6% of all credit card debt by the third quarter of 2008—an increase of 35.4% from the fourth quarter of 2007.
12. Business investment declines. Business investment declined by 1.7% in the third quarter of 2008—the largest decline since the first quarter of 2004. Business spending on equipment and software also dropped for
the third quarter in a row, the longest such decline since the first quarter of 2002.13. The trade deficit remains high. The trade deficit stood at 4.9% of GDP in the third quarter of 2008.
Despite declining slightly, the trade deficit remains at a historically high and ultimately unsustainable level.14. Large deficits are looming. Following years of fiscal and economic mismanagement, the federal
government’s deficit is expected to reach $1.2 trillion in 2009, even before a necessary economic stimulus has been enacted.
Source: Americanprogress.org
‘Congrats! You Just Lived Through the Worst Stock
Market Drop Since the Depression’-about.com
Source: Autodata
We Survived…
‘TARP…BAILOUTS…
CREDIT CRUCH…“TBTF”
RECESSIONISTA…CREDIT DEFAULT SWAP’
Source: Autodata
We learned a new vocabulary…
Source: yahoo finance
5 Year Picture of the DOW…
WSJ estimates over $8.4 trillion lost in the stock market crash.
Source: wsj
From the end of 2006 through March 31, it says, the total market value of U.S. household real estate
fell from $21.9 trillion to $17.9 trillion. That's about 18%. (The lost
wealth works out at just over $13,000 for every person in the
country.)Source: wsj
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LASST34000003
The consequences…
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LASST34000003
The consequences…
What about the Real Estate Markets….?
A real estate market correction was taking shape the summer
of 2001…Inventory was growing…Rates were edging up…
Contracts were slowing…
Unsold Inventory from the MLS in Weichert Market Areas10/20/2003 thru 9/14/2009
0
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ASHBY TOTAL DOEPPER TOTAL BIXON TOTAL MCDONALD TOTAL PREVETE TOTAL WATERS TOTAL WILLIAMS TOTAL
9/13/0432,893
9/12/0538,513
9/11/0683,739
9/17/07*91,009
9/15/0891,267
*added Waters & Williams Region to Totals
9/14/0983,431
Listings from the MLS in Weichert Market AreasListings from the MLS in Weichert Market Areas
In our local area (CT/NY/NJ Lehigh Valley, PA), the number of homes for sale (Weichert and non-Weichert listings) has steadily increased over the past four years.
Variance % 2009 from 2008NY (Ashby) -9.26%CT (Doepper) +1.44%Passaic/Hudson/Bergen NJ (Bixon) +.32%Western Central NJ/Lehigh Valley PA (McDonald) +.32%Northern and Central NJ (Prevete) +.28%Eastern Central/Shore Points NJ (Waters) +.08%Southern NJ (Williams) -.03%
123 Any street, Princeton, NJ
• First Time home buyers were priced out of the market
• Financing was too available (ie ‘subprime’)
• Banks made bad bets (ie that home prices would continue to
rise)Lehman, Merril, over 300+ fail• Credit freeze, affects ‘main street’
business…
A long term outlook in Mercer County…
Source: NAR, November 2008 Forecast
Long Term Supply …
Source: NAR, November 2008 Forecast
Richardson Commercial
NJ Housing Permits
Source: CensusSource: Census
In thousand units
Long Term Demand in Mercer County …
Source: NAR, November 2008 ForecastSource: https://edis.commerce.state.nc.us/docs/countyProfile/NJ/34021.pdf
(Mercer County) Population & Growth Population Annual Growth Rate2013 Total Population 383,677 0.6%2008 Total Population 371,963 0.7%2000 Total Population 350,761
Long Term Demand in Mercer County …
Source: NAR, November 2008 ForecastSource: https://edis.commerce.state.nc.us/docs/countyProfile/NJ/34021.pdf
Estimated Pop. by Age Pop by Age, % Est.2013 Median Age 392008 Median Age 382000 Median Age 362008 Total Pop 0-19 98,816 26.6%2008 Total Pop 20-29 49,307 13.3%2008 Total Pop 30-39 49,497 13.3%2008 Total Pop 40-49 58,288 15.7%2008 Total Pop 50-59 51,605 13.9%2008 Total Pop 60+ 64,450 17.3%
Fast Forward to today…Have we hit the bottom of the market yet…?!?!?!?
Source: NAR, November 2008 Forecast
Source: yahoo finance
1 Year Picture of the DOW…
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)
““Everything I am Everything I am seeing tells me we seeing tells me we have arrived at the have arrived at the
bottom of the market, bottom of the market, specifically in the specifically in the
popular and popular and affordable price affordable price
ranges.”ranges.”J. Weichert
6/2009
‘Real Estate is a Bottom up market…’
Source: otteau.com
Months Supply of Lower Priced Single Family Homes Falling
Price Category August 2008 August 2009
$99,999 or less 6.8 4.3
$100,000 to 249,999 7.8 4.9
$250,000 to $499,999 10.2 6.4
$500,000 to $749,999 14.0 10.0
$750,000 to $999,999 16.5 10.5
$1,000,000 to $1,999,999 19.8 15.2
$2,000,000 or greater 32.0 31.7
All Single-family 10.0 8.2
Source: NAR (Unpublished data)
Statistically speaking, there are grounds for modest optimism that prices will trend upward in the near
future, said the market analyst Jeffrey Otteau, whose Otteau Valuation Group continuously tracks sales
data in 21 counties for real estate companies.Mr. Otteau cited one recent report indicating that New Jersey was one of a half dozen “breakout”
states in which prices had already begun to creep up in the second half of 2009. That report came from
the Federal Housing Finance Agency, which indexes purchase prices of homes with mortgages guaranteed
by Freddie Mac and Fannie Mae.Looking at data from the entire period of the slide — the start of 2006 through the third quarter of 2009 —
Mr. Otteau concluded that the state’s residential market “didn’t get hammered all that bad” compared
with the nation at large, and was likely to recover faster.
Optimism About the New Year…Optimism About the New Year…-nytimes.com-nytimes.com
NJ 2008 v 2009 SalesNJ 2008 v 2009 Sales
State Housing SupplyState Housing Supply
Local Inventory Trends.Economics 101:
As supply goes up, prices go ___.
Source: NAR, November 2008 Forecast
Princeton Boro Inventory Trends: 3 Year Snapshot
Princeton Twp Inventory Trends: 3 Year Snapshot
Lawrence Inventory Trends: 4 year View
Hopewell Inventory Trends: 4 year View
Ewing Inventory Trends: 4 year View
West Windsor Inventory Trends: 4 Year View
Plainsboro Inventory Trends: 4 year View
Closed Homes Snapshot:2007 2008 2009
Princeton Boro
87 72 61
Princeton Twp.
211 163 157
West Windsor
371 299 303
Lawrence 383 285 305
Hopewell 226 191 153
Plainsboro 273 214 231
Town 08
Inven.
Count
08
Pending
Sales
(prev. 30 days)
08
Absorp.
Rate
09
Inven.
Count
09
Pending Sales
(prev. 30 days)
09
Absorp. Rate
(months)
10
Inven.
Count
10
Pending Sales
(prev. 30 days)
10
Absorp.
Rate(months)
Pton. Boro 35 3 11.6 39 4 9.6 29 1 29
Pton.
Twp.87 16 5.4 87 6 14.5 77 3 25
W. Windsor 100 11 9.09 96 7 13.7 76 18 4.2
Lawrence 173 15 11.5 158 10 15.8 188 19 9.8
East Windsor 171 24 7.1 159 11 14.4 139 15 9.2
Ewing 244 23 10.6 198 12 16.5 204 18 11.3
Hopewell Twp. 140 21 6.6 97 11 8.8 123 14 9
Cranbury 19 2 9.5 25 0 99 25 0 99
Plainsboro 77 19 4.05 66 4 16 49 6 8.1
Montgom 99 6 16.5 83 4 20.7 81 4 20.2
Cum. 1145 140 8.1 1008 69 14.6 991 98 10.1
1. Real Estate is Local
Top Five Rules for Understanding the Real
Estate Market:
2. Real Estate is Local
3. Real Estate is Local
4. Real Estate is Local5. Real Estate is Local
1. Understand the Local Market That You are Buying into…
Market Absorption Scale(Absorption Rate in Months)
5-6 months absorption rate indicates a normal market.
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 Boro:
All Styles 29 1 29 4 3 3 10% 1 3 4
Pton -Boro Condo/ Thouses 5 0 99 1 1 0 0 0 0 1
Pton-Boro
Single Family 24 1 24 3 2 3 13% 1 3 3
Pton Twp: All Styles 77 3 25.6 17 14 12 16 9 3 14
Pton Twp: Condo/ Thouses 7 0 99 4 4 3 43 1 1 7
Pton Twp:
Single Family 70 3 23.3 13 10 9 13 8 2 7
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
West Windsor:
All Styles76 18 4.2 15 (3) 18 23.7 13 5 21
West Windsor Condo/ T.Houses
18 3 6 8 5 5 5 27 8 1
West Windsor
55+12 0 99 - - - - - - -
West Windsor
Single Family
46 15 3.0 7 8 13 28.2 5 4 20
Lawrence: All Styles
188 19 9.8 33 14 23 12.2 14 6 25
Lawrence:
Condo/
THouses
63 8 7.8 17 9 12 19 3 3 14
Lawrence:
55+24 0 99 - - - - - - -
Lawrence:
Single Family
91 11 8.2 16 5 11 12.0 11 3 11
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
Ewing:
All Styles204 18 11.3 31 13 23 11.2 33 1 16
Ewing : Condo/ T.Houses
36 5 7.2 3 (2) 4 11.1 3 0 2
Ewing 55+: 4 0 99 - - - - - - -Ewing:
Single Family
164 13 12.6 28 15 19 11.5 30 1 14
East Windsor:
All Styles
139 15 9.2 20 5 20 14.3 21 6 18
East Windsor:
Condo/ THouses
79 11 7.1 14 3 13 16.4 18 5 9
East Windsor:
55+
13 0 99 - - - - - - -
East Windsor: Single Family
77 4 11.8 6 2 7 14.9 3 1 9
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
Robbinsville
All Styles 83 8 10 17 9 11 13% 5 4 12Robbinsville
Condo/ T.Houses 45 4 11 11 7 8 17% 1 2 5Robbinsville
55+ - - - - - - - - - -
-38 4 9.5 6 2 3 7% 4 2 7
Hightstown Boro: All Styles 46 5 9 2 (3) 1 2% 8 2 3
Pennington18 2 9 2 0 4 22 3 0 2
Hopewell Boro:
All Styles 13 0 99 4 4 1 7 1 0 0
Towns Active Listings
Pending in Last 30 Days
Absorption Rate in Months
=Ag
New Listings in 30 Days
Net Gain (Loss) to Market
Listings Reduced in 30 Days
% of Invent. Reduced
e
Expired Listings
W/drawn Listings
Closed Listings
Hopewell Twp.
All Styles 123 14 9 6 (8) 16 13% 14 8 13Hopewell Twp. Condo/ T.Houses 10 1 10 0 (1) 1 10% 2 0 1Hopewell Twp.:
55+ 2 0 99 - - - - - - -
Hopewell Twp. Single Family 113 13 9 6 (7) 15 13% 12 8 12
Hamilton: All Styles 462 30 15 67 37 54 12% 63 20 42Hamilton:
Condo/ THouses 97 12 8 26 14 13 13% 11 7 17
Hamilton:
Single Family 334 18 19 41 23 41 12% 52 13 25
Hamilton: 55+31 0 99 - - - - - - -
-
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
46 9 8.1 13 7 16 38% 12 2 6
Plainsboro
Condo/ THouses
29 4 7.2 11 7 7 23% 8 2 4
Plainsboro
55+7 0 99 0 0 3 42% 2 0 0
Plainsboro
Single Family
14 2 7 2 0 6 42% 2 0 2
Cranbury:
All Styles25 0 99 0 0 1 3 2 0 1
Cranbury:
55+2 0 99 0 0 0 0 0 0 0
Cranbury: Single Family
23 0 99 0 0 1 4 2 0 1
Towns Active Listings
Pending in Last 30 Days
Absorption Rate in Months
g
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
169 13 13 37 24 23 14% 21 4 1
South BrunswickCondo/ T.Houses
36 8 4,5 13 5 8 22% 8 0 0
South Brunswick
55+
31 0 0 9 9 4 12% 2 0 0
South Brunswick
Single Family
102 5 20.5 15 10 11 11% 11 4 1
Monroe:
All Styles 428 30 28.8 79 49 65 15% 62 7 5Monroe:
55+ 268 24 12 54 30 44 16% 40 5 2
Monroe:
Single Family 160 6 26.5 25 19 21 13% 22 2 3
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
196 21 9 54 3 22 11% 21 18 36
South Brunswick
Condo/ T.Houses
61 10 6 27 17 8 13% 6 8 16
South Brunswick
55+
30 1 30 2 1 3 1% 2 3 3
South Brunswick
Single Family
105 11 9.5 25 14 11 10% 13 7 21
Monroe:
All Styles471 30 16 107 77 57 12% 62 4 57
Monroe:
55+302 27 13 70 43 36 12% 26 3 44
Monroe:
Single Family
168 13 13 37 24 21 13% 36 1 12
Market Absorption Scale(Absorption Rate in Months)
5-6 months absorption rate indicates a normal market.
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.
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.
58Market 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.
Source: otteau.com
West Windsor Absorption Rate By Price
Towns Active Listings Pending in Last 30 Days
Absorption Rate in Months
0-$500
46 6 7.6
$500-750k 24 3 8
$750-999 8 3 2.6
$999 + 4 0 99
Understand the Market That You are Buying/ Selling in…
I want to live/ sell in Princeton…..
Market Absorption Scale(Absorption Rate in Months)
5-6 months absorption rate indicates a normal market.
Hopewell Twp.Hopewell Twp.
120 current active listings
14 reported sales in last 30 days
=
9months absorptionrate
5-6 Months Market Absorption Rate indicates a normal market.
All Prices: All StylesAll Prices: All Styles
Hopewell Twp.Hopewell Twp.
62 current active listings
7 reported sales in last 30 days
=
8.8months absorptionrate
5-6 Months Market Absorption Rate indicates a normal market.
0-$600, All Styles0-$600, All Styles
Hopewell Twp.Hopewell Twp.
7 current active listings
4 reported sales in last 30 days
=
1.75months absorptionrate
5-6 Months Market Absorption Rate indicates a normal market.
0-$600k0-$600kTownhousesTownhouses
Hopewell Twp.Hopewell Twp.
30 current active listings
0 reported sales in last 30 days
=
99months absorptionrate
5-6 Months Market Absorption Rate indicates a normal market.
999+999+Single FamilySingle Family
2. ‘I am going to time the Market and buy/ sell at the time when
inventory & buyer count is in my favor…’
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 2009
Weekly Guests Thru the Weichert Princeton Open Houses, 2007
Source: MLS
Inventory Levels, Princeton Twp. New Jersey, 2009
3. ‘I am going to wait until the price comes down further and then make an offer/ if I lower my
price I will get lower bids…
Source: MLS
Source: trend mls
Relationship of Price Reductions to ‘Pending Sales’
0
10
20
30
40
50
60
70
Princeton Pendings
Princeton Price Reductions
Town by Town Analysis 9/21/09Towns 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
South
Brunswick
All Styles
196 21 9 54 3 22 11% 21 18 36
South Brunswick
Condo/ T.Houses
61 10 6 27 17 8 13% 6 8 16
South Brunswick
55+
30 1 30 2 1 3 1% 2 3 3
South Brunswick
Single Family
105 11 9.5 25 14 11 10% 13 7 21
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
Relationship of Price Reductions to ‘Pending Sales’
0
20
40
60
80
100
120
West Windsor Pendings
West Windsor Reductions
Source: trend mls
Relationship of Price Reductions to ‘Pending Sales’
0
10
20
30
40
50
60
70
80
90
100
Lawrence Pendings
Lawrence Reductions
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!’
Purchase Price $329,000 Loan Amount $317400
Down Payment $11,515 Monthly P&I $1802
Appreciation/Depreciation Home Value1st Year -3% $319,1302nd Year 0% $319,1303rd Year 1% $322,3214th Year 3% $331,9905th Year 5% $348,5905 Year Appreciation/Depreciation $19,500
Tax Benefit Vs Paying 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 Gain $44,200Create Equity
v Pay Rent
+ The Amortization Schedule on a Loan
Yearly Schedule of Balances and PaymentsYear
Beginning Balance
Payment Principal InterestCumulative
PrincipalCumulative Interest
Ending Balance
2010 $315,646.96 $21,625.92 $4,374.96 $17,250.96 $6,128.00 $24,508.72$311,272.0
0
2011 $311,272.00 $21,625.92 $4,621.30 $17,004.62 $10,749.30 $41,513.34$306,650.7
0
2012 $306,650.70 $21,625.92 $4,881.98 $16,743.94 $15,631.28 $58,257.28$301,768.7
2
2013 $301,768.72 $21,625.92 $5,157.36 $16,468.56 $20,788.64 $74,725.84$296,611.3
6
2014 $296,611.36 $21,625.92 $5,448.28 $16,177.64 $26,236.92 $90,903.48$291,163.0
8
= Total 5 Year Gain: $59,922
A Great Time to Buy a A Great Time to Buy a HomeHome
First-time homebuyers can receive a tax credit up to $8,000!
NEW TAX CREDITCurrent homeowners may be eligible for a tax credit up to $6,500!
Tax Credit OverviewTax Credit Overview• In 2008, Congress created a tax credit for first-time
homebuyers.
• The tax credit was extremely successful in generating home sales and stimulating the overall economy.
• Realizing the importance of homeownership for individuals and the greater economy, the government enhanced and extended the homebuyer tax credit.
• On Nov. 6, President Obama signed a bill that extended the existing tax credit for first-time buyers and created a new provision for eligible move-up buyers.
The The NEWNEW First-Time Buyer Tax First-Time Buyer Tax CreditCreditAmount 10 percent of the cost of the home, not to exceed $8,000
PropertyAny home that will be used as a principal residence including single-family homes, condos, townhomes and co-ops; not to exceed $800,000
Refundable
Reduces income tax liability for the year of purchase
Income Limit
Adjusted gross income of $125,000 for single or $225,000 for joint tax returns INCREASED (Effective Nov. 7, 2009)!
First-Time Must not have owned a principal residence in three years prior to purchase
Limitation If home is sold within three years of purchase, entire amount of credit is recaptured
Effective Date
Purchases with closing/settlement between Nov. 7, 2009, and June 30, 2010 EXTENDED!
DeadlineWritten binding contract on or before April 30, 2010, with closing/settlement by June 30, 2010 EXTENDED!
The The NEWNEW Current Homeowner Current Homeowner Tax CreditTax Credit
Amount Up to $6,500
Eligibility Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years
Purchased Home
Any home that will be used as a principal residence including single-family homes, condos, townhomes and co-ops; not to exceed $800,000
Refundable
Reduces income tax liability for the year of purchase
Income Limit
Adjusted gross income of $125,000 for single or $225,000 for joint tax returns
Recapture If home is sold within three years of purchase, entire amount of credit is recaptured
Effective Date
Purchases with closing/settlement between Nov. 7, 2009, and June 30, 2010
Deadline Written binding contract on or before April 30, 2010, with closing/settlement by June 30, 2010
Tax Credit FAQsTax Credit FAQs
What Are the Deadlines What Are the Deadlines for Claiming the Credit?for Claiming the Credit?
• A written binding contract to purchase must be in effect no later than April 30, 2010.
• The purchase transaction must close byJune 30, 2010.
What if You ExceedWhat if You Exceedthe Income Limits?the Income Limits?
• Individuals with adjusted gross income of up to $125,000 and married couples with income up to $225,000 can claim the full credit.
• The amount of the tax credit decreases as incomes reach the maximum limits of $145,000 for singles and $245,000 for couples.
• Singles earning more than $145,000 and couples earning more than $245,000 are not eligible for the credit.
What Properties are What Properties are Eligible?Eligible?
• To claim the tax credit, the property must be used as a principal residence. This is generally considered to be the home where you spend 50 percent or more of your time. It can be a condo, single-family detached home, co-op, townhouse or something similar.
• The home must be located in the United States.
• Vacation homes and rental properties are not eligible.
• For new construction, the purchase date is the date you occupy the home. As a result, you must move in by June 30, 2010, to claim the credit.
When Can You Claim the When Can You Claim the Credit?Credit?
• Buyers purchasing homes on or before Dec. 31, 2009, may claim the credit on their 2009 tax returns.
• Buyers purchasing in 2010 will have the option to:
– Claim the credit on their 2009 return, even if the purchase is completed after Dec. 31, 2009;
– File an amended return for 2009 if their purchase is completed after April 15, 2010; or,
– Claim the credit on their 2010 tax returns.
Any Other Any Other Questions?Questions?
How much house can I really afford?
• The first step is to meet with me!
Establish Establish YourYour Buying Buying PowerPower
Factors to consider Factors to consider when buying and when buying and
selling…selling…
Source: MLS
1. Inventory(supply and 1. Inventory(supply and demand)demand)
2. Interest Rates2. Interest 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
The Impact of Pricing on the Salability of Your Home..…
‘Great speech but does it really work?
We know the best way to evaluate pricing
Does this 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 HomeValue of a Home..
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.
Become a Fan!
www.facbook.com/weichertprinceton
www.slideshare.net/jdwilton
Presentation available at all 3 sites, download file through Monday.
Resource and website list:
Realtor.org
http://www.facebook.com/pages/
NAR-Research/73888294183#
Remodeling.com
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
Happy Thanksgiving!Happy Thanksgiving!