weichert princeton office april 2014 princeton real estate market seminar

Weichert, Princeton Office April 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

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 Forecast…

The 1st Quarter Results….

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…?

Home Price Expectation Survey 2014 1Q

Average Annual % APPRECIATION

4.54.0

3.7 3.7 3.8

2014 2015 2016 2017 2018

PROJECTED Percentage Appreciation



Cumulative House Appreciation by 2018

19.4%

28.4%

19.7%

10.9%

Pre-BubbleTrend

Bulls All Projections

Bears

“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…

Mercer County Building Permits 2003-2012

Source: NAR, November 2008 Forecasthttp://lwd.dol.state.nj.us/labor/lpa/industry/bp/bp2000_index.html

71% of the building permits issues in Mercer County were for ‘multi-family’ housing.

Source: NAR, November 2008 Forecasthttp://lwd.dol.state.nj.us/labor/lpa/industry/bp/bp2000_index.html

Long Term Demand …

Source: NAR, November 2008 Forecast

http://lwd.dol.state.nj.us/labor/lpa/pub/factbook/merfct.pdf

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





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

52Market 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


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”


Plainsboro

Inventory Accumulation: Also known as “Absorption Rate” or “Market Absorption”

Source: TREND Multiple Listing Service

West Windsor

Inventory Accumulation: Also known as “Absorption Rate” or “Market Absorption”

Source: TREND Multiple Listing Service

56Market 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.

4/1/14

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 85 23 3.7 41 18 13 15.3% 1 2 15West Windsor Condo/ T.Houses

16 7 2.3 8 1 1 6.3% 0 0 3

West Windsor55+ 3 0 999 1 1 -- -- 0 0 0

West Windsor Single Family 66 16 4.1 32 16 12 18.2% 1 2 12

Lawrence: All Styles 147 17 8.7 51 34 31 21.1% 6 1 17Lawrence:Condo/THouses

38 7 5.4 13 6 7 18.4% 2 0 7

Lawrence: 55+ 10 1 10 4 3 -- -- 0 0 2

Lawrence: Single Family 99 9 11 34 25 24 24.2% 4 1 8

4/1/14

Towns Active Listings







Expired Listings

W/drawn Listings

Closed Listings

PlainsboroAll Styles

46 18 2.5 19 1 4 8% 4 0 4

PlainsboroCondo/ THouses

19 6 3.1 11 5 0 0 3 0 1

Plainsboro55+

8 1 8 0 (1) 0 0 0 0 1

PlainsboroSingle Family

19 11 1.7 8 (4) 4 21% 1 0 2

Cranbury:All Styles

16 4 4 6 2 1 6% 0 0 1

4/1/14Towns Active

ListingsPending in Last 30 Days






Expired Listings

W/drawn Listings

Closed Listings

Ewing: All Styles

187 12 16 48 36 29 16% 3 8 13

Ewing : Condo/ T.Houses

30 2 15 7 5 4 13% 0 3 2

Ewing 55+:

2 0 999 1 1 --- --- 0 0 0

Ewing:Single Family

155 10 16 40 30 25 16% 3 5 11

East Windsor:All Styles

108 22 5 36 14 15 14% 3 5 15

East Windsor:Condo/ Thouses

56 13 4 14 1 5 9% 3 0 6

East Windsor:55+

8 1 8 2 1 --- --- 0 0 1

East Windsor: Single Family

44 8 6 20 12 10 23% 0 5 8

4/1/14








Expired Listings

W/drawn Listings

Closed Listings

Hopewell Twp.All Styles

159 15 10.6 49 34 28 17.6% 2 6 7

Hopewell Twp. Condo/ T.Houses

9 2 4.5 4 2 4 44.4% 1 1 1

Hopewell Twp.:55+

2 2 1.0 2 0 0 0 0 1 0

Hopewell Twp Single Family 148 11 13.5 43 32 24 16.2% 1 4 6

Hamilton: All Styles 461 47 9.8 141 94 108 23.4% 23 7 39

Hamilton:Condo/ THouses 91 12 7.6 24 12 12 13.2% 10 2 7

Hamilton:55+ 6 0 99.9 1 1 0 0 1 0 1

Hamilton: Single Family 364 35 10.4 116 81 96 26.6% 12 5 31

4/1/14








Expired Listings

W/drawn Listings

Closed Listings

Princeton: All Styles 121 15 8.1 37 22 13 10.7% 6 5 16

Princeton:Condo/ Thouses

37 3 12.3 14 11 3 8.1% 2 1 6

Princeton:Single Family

84 12 7 23 11 10 11.9% 4 4 10

4/1/14








Expired Listings

W/drawn Listings

Closed Listings

South

Brunswick

All Styles

150 13 11 46 33 4 3 11 0 15

South BrunswickCondo/ T.Houses

38 6 6 16 10 2 5 2 0 9

South Brunswick

55+

30 0 99 8 8 0 0 2 0 1

South Brunswick

Single Family

82 7 17 20 13 2 2 7 0 5

Monroe:

All Styles 309 18 17 122 104 7 2 32 1 63

Monroe:

55+ 166 13 13 79 66 8 5 11 0 50

Monroe:

Single Family 143 5 29 43 38 -1 1 21 1 13

4/1/14








Expired Listings

W/drawn Listings

Closed Listings

Montgomery

All Styles 111 30 3.7 55 +25 24 22% 3 1 15

Montgomery

Condo/Twnhms 12 12 1 10 -2 2 17% 1 0 3

Single Family 99 18 5.5 45 +27 22 22% 2 1 12

Hillsborough

All Styles 158 48 3.3 79 +31 29 18% 9 4 26

Hillsborough

Condo/Twnhms 64 21 3 37 +16 13 20% 3 1 13

Hillsborough

Single Family 94 27 3.5 42 +15 16 17% 6 3 13

2006 - 2008 Core Market Comparison: Week of 10/13/08

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 131 21 6.2 72 35 2.1 85 23 3.7 (35%) 18%

Plainsboro 84 18 9 45 19 2.3 46 18 7.5 (45%) 1%

Lawrence 196 20 9.8 141 16 8.8 147 17 8.7 (25%) 4%

East Windsor 187 16 12 130 30 4 108 22 5 (40%) (17%)

Hamilton 538 56 9.6 426 58 7.4 461 47 9.8 (20%) 10%

Hopewell Twp 147 13 11.3 145 13 11.1 159 15 10.6 2% 8%

Robbinsville 123 12 10.3 98 25 4 74 19 4 (39%) (24%)

Princeton 169 14 12.07 133 16 8.3 121 15 8.1 (28%) (9%)

South Brunswick 232 12 19 171 18 10 150 13 11 (35%) (12%)

Montgomery 152 20 7.6 111 37 3 111 30 3.7 (26%) ---------

1/7/14 Year over year

The Local Market


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


Market Absorption Rate


9 reported ‘pending’ sales in last 30 days=

9.8 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






PrincetonNOT Single Family Homes






2 months absorptionrate

PrincetonTwin or Townhouse

3 bedroom







South BrunswickAll Inventory







South BrunswickCondo/Townhouse Market







South BrunswickPrinceton Walk Development

All Types







South BrunswickPrinceton Walk DevelopmentTownhomes







West Windsor







West WindsorUnder $500,000




31* current active listings



West Windsor$501,000 - $750,000



Of the 31 homes ‘active’ in this price point10 have offers accepted and are

showing for back up only.





West Windsor$501,000 - $750,000



Of the 31 homes ‘active’ in this price point 7 have offers accepted and are

showing for back up only.





West Windsor$501,000 - $750,000



Of the 24 ‘active’ 5 were 55+ or townhouse.


19 * current active listings



West Windsor$501,000 - $750,000



Of the 19 left, 5 are currently negotiating offers.


14 * current active listings



West Windsor$501,000 - $750,000







West Windsor$750,000 +



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

Listed in Princeton at $799,000

Weichert Buyer prevailed at $890,000

Reed Dr S, West WindsorListed at $749,000

7 offers…

http://www.trendmls.com/AssetLocator/getAsset.ashx?EntityType=Listing&AssetType=Image&ImageVersion=LRG&ImageNumber=1&MlsNumber=6327502&BusinessPartnerID=1

Exact Comp Listed $759,000 2 weeks later

5 offers

http://www.trendmls.com/AssetLocator/getAsset.ashx?EntityType=Listing&AssetType=Image&ImageVersion=LRG&ImageNumber=1&MlsNumber=6350595&BusinessPartnerID=1

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..…


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..…


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

[email protected]

The Financial Forecast…

Mortgage Rate Projections

Analyst Projected Rate 1Q 2015

Fannie Mae 4.9% National Assoc of Realtors 5.5% Freddie Mac 5.1% Mortgage Bankers Assoc 5.1%

2/2014

My Job is to Provide You the Highest Level of Customer Service in the

Industry

Sellers:

Inking the Deal is only ½ the battle.

Appraisals are always an issue in a rising market.

Choose the buyer based on the lender as much as the offer.

(ability to close)

Buyers:

Preparation leads to success.

Over 100 loan products to choose from.

Work with someone local that is accessible THROUGHOUT the deal.

My Team…

We put Jim’s Money on the line and Guarantee our performance

We close you on time or we pay you $1,000.

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

We are here to helpWe are here to help

Buying and selling a home involves the careful coordination of a lot of 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/10k

www.Otteau.com

www.Pre-listing-inspection.com

www.Housemaster.com

www.Stagingshoppingcenter.com

www.realtytrac.com

www.njar.com/10k

http://www.realtor.org/research/research/housinginx%20Remodeling.com



http://www.otteau.com/

http://www.pre-listing-inspection.com/

http://www.housemaster.com/

http://www.stagingshoppingcenter.com/

http://www.realtytrac.com/

http://www.njar.com/10k

weichert princeton office april 2014 princeton real estate market seminar

Real Estate

including real estate

national median income

accredited staging professional

median priced home

reduced expired listings

local real estate

absorption rates increase

studying market conditions