Sioux Falls Housing Market: The Big Picture and The Little Details Jeff Allen Director of Research Services [email_address]

Today Recent History of Sioux Falls Real Estate Group Discussion: Consumer Challenges and Misconceptions Break

Recent History of Sioux Falls Real Estate

Group Discussion: Consumer Challenges and Misconceptions

Break

Today II 4. Show, Don’t Tell: Using Market Statistics Intelligently with Clients 5. Group Discussion: The Uncooperative Seller Scenario 6. The Future of Sioux Falls Real Estate

4. Show, Don’t Tell: Using Market Statistics Intelligently with Clients

5. Group Discussion: The Uncooperative Seller Scenario

6. The Future of Sioux Falls Real Estate

Introduction: Supply and Demand The guiding law of how markets operate. The balance of supply and demand affects everything.

The guiding law of how markets operate.

The balance of supply and demand affects everything.

“ Sellers Market” Low supply, high demand Seller advantage Growing prices Quick sales

Low supply, high demand

Seller advantage

Growing prices

Quick sales

“ Buyers Market” High supply, low demand Buyer advantage Flat or declining prices Longer market time

High supply, low demand

Buyer advantage

Flat or declining prices

Longer market time

“ Balanced Market” Neither side has a market-wide advantage Price growth and market times in line with historical norms

Neither side has a market-wide advantage

Price growth and market times in line with historical norms

Recent History: Gradually Shifting to Buyer’s Market

Gradually Shifting to Buyer’s Market

Gradually Shifting to Buyer’s Market

Gradually Shifting to Buyer’s Market

Prices Softening

Tougher Conditions for Sellers

Tougher Conditions for Sellers

Recent Surge in Home Sales

Small Group Discussion What are the biggest challenges or misconceptions you face with today’s buyers? What are the biggest challenges or misconceptions you face with today’s sellers?

What are the biggest challenges or misconceptions you face with today’s buyers?

What are the biggest challenges or misconceptions you face with today’s sellers?

Show, Don’t Tell Using market statistics intelligently with clients

Show, Don’t Tell Statistics aren’t numbers, they’re stories. Don’t be scared.

Statistics aren’t numbers, they’re stories.

Don’t be scared.

Show, Don’t Tell Statistics are more important now than ever. Unique market conditions Consumers have far more information

Statistics are more important now than ever.

Unique market conditions

Consumers have far more information

Show, Don’t Tell Provide knowledge at the expense of salesmanship. It’s not always a good time to buy or sell. Tell a consumer that and you have their loyalty for life.

Provide knowledge at the expense of salesmanship.

It’s not always a good time to buy or sell. Tell a consumer that and you have their loyalty for life.

Show, Don’t Tell Use proof to back up your claims. RASE market reports give independent third-party verification.

Use proof to back up your claims.

RASE market reports give independent third-party verification.

Show, Don’t Tell: RASE Market Reports

Small Group Discussion You’re making a listing presentation to a seller. They believe their house is worth far more than you do. How would you make your case? Use statistics from the Monthly Indicators Report, but what else would you say?

The Future of Sioux Falls Real Estate Beyond 2009, the crystal ball is hard to read. Sales are up, but some of the incentives driving the recent surge are temporary: Historically low mortgage rates $8,000 Tax Credit for 1 st Time Buyers

Beyond 2009, the crystal ball is hard to read.

Sales are up, but some of the incentives driving the recent surge are temporary:

Historically low mortgage rates

$8,000 Tax Credit for 1 st Time Buyers

First-Time Home Buyer Tax Credit

First-Time Home Buyer Tax Credit Q: What will happen when the tax credit expires? + 52.6% 119 78 First-Time Buyers - 29.9% 171 August 2009 244 August 2008 All Other Buyers

First-Time Home Buyer Tax Credit

Areas With Heavy First-Time Buyer Sales

Extension/Expansion of Tax Credit The sequel won’t be as effective as the original Sell-forward effect

The sequel won’t be as effective as the original

Sell-forward effect

Inefficient Use of Government Funds? From “Help May Bring Another Bubble” Las Vegas Sun, 9.22.09 “ We paid $8,000 to at least 1.5 million people to do something they were going to do anyway,” Jakabovics says. ... The tax break, due to expire at the end of November, is on track to cost $15 billion, twice what Congress had planned. In other words, it will cost $43,000 for every new homebuyer who would not have bought a house without the tax break.

From “Help May Bring Another Bubble” Las Vegas Sun, 9.22.09

“ We paid $8,000 to at least 1.5 million people to do something they were going to do anyway,” Jakabovics says. ... The tax break, due to expire at the end of November, is on track to cost $15 billion, twice what Congress had planned. In other words, it will cost $43,000 for every new homebuyer who would not have bought a house without the tax break.

Positive News: Improved Housing Affordability

Positive News: Relatively Few Foreclosures *Source: RealtyTrac 234 Michigan 5 150 Arizona 4 144 California 3 140 Florida 2 62 Nevada 1 Housing Units Per Foreclosure

Positive News: Relatively Few Foreclosures *Source: RealtyTrac 234 Michigan 5 3,027 South Dakota 44 150 Arizona 4 144 California 3 140 Florida 2 62 Nevada 1 Housing Units Per Foreclosure

Takeaway: the foreclosure crisis hasn’t and won’t hit Sioux Falls as hard as the rest of the country. But more are coming down the pipeline. Positive News: Relatively Few Foreclosures

Positive News: Relatively Healthy Job Outlook Trivia Question: What two states are the Top 5 healthiest regions for employment located in?

Positive News: Relatively Healthy Job Outlook 4.6 Grand Forks, ND 5 4.5 Sioux Falls, SD 4 4.2 Rapid City, SD 3 4.2 Fargo, ND 2 3.1 Bismark, ND 1 Current Unemployment Rate

Positive News: Relatively Healthy Job Outlook

Positive News: Relatively Healthy Job Outlook

Positive News: Relatively Healthy Population Growth

Positive News: Relatively Healthy Job Outlook & Population Growth Takeaway: Sioux Falls is weathering the recession better than most regions in the country and is growing. This bodes well for housing demand.

Sioux Falls Outlook Summary Sales are likely to dip down again in 2010 Buyer’s market into foreseeable future, especially in higher price ranges Pending sales up for 3 consecutive months Housing affordability up dramatically Relatively few foreclosures Healthy Job Outlook and Population Growth In sum: optimistic long-term outlook.

Sioux Falls Outlook Summary The only constant is change. Stay on top of Sioux Falls housing market trends using RASE market tools: www.rase-inc.org

Sioux Falls Housing Market: The Big Picture and The Little Details Jeff Allen Director of Research Services [email_address]