NJ Shore Edition - Summer 2011 PFR Chairman’s Report


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Home Buyers: Are We There Yet?
Regional Edition: NJ Shore

(c) Prudential Fox and Roach, REALTORS®

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NJ Shore Edition - Summer 2011 PFR Chairman’s Report

  1. 1. The Chairman’s Report A Message from Lawrence F. Flick, IV, Chairman and Chief Executive Officer Prudential Fox & Roach, REALTORS® and The Trident GroupSUMMER 2011 REGIONAL EDITION: NEW JERSEY SHORE “Are We There Yet?”Summer’s here and for many Americans that means we want to make sure we get the “best possible” deal.filling up the gas tank, checking the tires and venturing I understand these reasons for waiting, but eventually,down the highway. Whether driving to the mountains the desire to own the home we want overpowers ouror shore, or setting off on a cross country adventure, hesitancy. It is then that we make the decision to movewe’re eager to get to our destination. Perhaps you forward with our lives. I believe we’ve reached thatremember the road trips you took as a child, or those point — we’ve made our journey and are now pullingyou’ve taken with your own children. Either way, our up to the curb!journeys are often accompanied by the refrain “Are wethere yet?” IS BUYING A HOME STILL A GOOD INVESTMENT?“Are we there yet?” Lately I hear this question fromconsumers wondering if our real estate market has When Case Shiller released its latest Home Price Index,reached a turning point. My answer is: Yes — we the news media was flooded with talk of a double dip inare there! home prices. Case Shiller obtains its information from transfer tax data and compares the consecutive sellingWe’ve been waiting…waiting for the economy and real prices of the same properties. While it is a useful indexestate market to turn around. Meanwhile, we’ve put our for understanding some aspects of real estate trends, ithomeownership dreams on hold. There are two reasons can also be misleading if not used in context of localfor this. First, we worry about the employment outlook market trends. The press highlighted areas like Detroit,and our ability to continue meeting our financial MI and Las Vegas, NV where 2010 home values wereobligations. Second, before we start to look for a home, less than or equal to what they were in 2000. 1
  2. 2. New Jersey Shore Area Since 2000: up 97% Since Peak: down 21.13% Case-Shiller® Home Price Index: Single-Family Aggregate Index, (Index, 2000Q1=100), SA Source:Fiserv, FHFA, Moodys Analytics 5/09/11 Cape May County, NJ But, in the New Jersey Shore region, this simply is until after it has begun to rise. Prices in our region have not true! Yes, prices have declined since their 2007 been bumping along a bottom since 2009. peak, but they remain well above 2000 values, as illustrated above. What’s more, if we remove foreclosures from the picture, prices have been steady across the country. In the past ten years, the average sales price in our area According to Core Logic, another source of data, overall has also increased significantly, as shown below. home prices fell 7.5% in April versus the same period a year ago. But when distressed sales are taken out of the MLS Average Sale Price: 2000 vs 2010 equation, prices fell just 0.5% in that time. In our area, AREA 2000 Avg. 2010 Avg. it is important to note that less than 1/2 of 1% of all Brigantine $166,393 $418,464 households are in the foreclosure process, yet because Margate* $164,040 $407,603 the media doesn’t highlight regional differences, many Ocean City $312,798 $563,941 Upper Township $149,873 $291,023 perceive that our market is also distressed. The reality is *Margate, Ventnor, Longport, Atlantic City that we are faring better than much of the country: Our market is not suffering from a foreclosure/shadow inventory hangover. ARE REAL ESTATE PRICES AT THE BOTTOM? Even if prices were to fall a bit more to what we imagine No one really knows that a market has hit “the” bottom must be rock bottom, consumers need to consider2
  3. 3. Our area is strong because our local economy is diverse with significant concentration in “eds, meds, and pharma.”current interest rates. Earlier this year, mortgage rates, ISN’T IT HARD TO GET A MORTGAGE NOW?while still low, rose to 5.25%. At publication of thisreport, interest rates unexpectedly decreased once again The pendulum has changed direction away from loansto 4.5%. For a $250,000 mortgage, the lower rates will without income or asset verification. The fact remainsproduce a savings of $41,000 over 30 years. that those who are employed and have average credit can get a mortgage. With proof of income and assets,IS THERE GOING TO BE A DOUBLE DIP applicants today can secure a mortgage at a good rate.RECESSION? FHA loans are still available with 3.5% down, and 5% conventional loans are commonplace. Your Trident loanAs far as the recession is concerned, it’s been a long consultant can help determine what program works bestroad — bumpier and more uneven than we anticipated. for you.But all signs point to a sustainable recovery and mosteconomists do not believe that there will be a double WHY NOW IS THE TIMEdip recession. Employment is a key factor. So far thisyear, the economy has added almost a million jobs. Every buyer has an individual situation and motivationManufacturing is also strong. Events in the Middle East for making a purchase. If your personal circumstancesand North Africa have caused gas prices to spike, but dictate a move, here are four excellent reasons why thethey are beginning to come down again. time to buy is now:Our area is strong because our local economy is • Affordability — Homes are more affordable now thandiverse with significant concentration in “eds, meds, since the industry started keeping records in 1970.and pharma.” Overall, there’s been positive growth • Selection — There’s a great selection of homes forsince July 2009 and I expect this to continue. The today’s buyers.Moody’s Analytics report for Cape May County notes • Low prices and interest rates — Once the majority ofthat the area “will recover slowly over the near-term consumers begin to feel confident again and enter theas consumers grow more confident in their finances. market, both prices and interest rates will rise.The recent change in federal tax withholding will boost • Pent up demand — Households waiting to form willconsumption throughout the Northeast, benefiting begin to unleash many new buyers into the market.tourism and local spending. (The area’s) long-term Also, a recent survey noted that 65% of renters saidcomparative advantages stem from its tourism industry they were planning to buy a home soon.and location amid densely populated urban areas.” Homes are more affordable now than since the industry started keeping records in 1970. 3
  4. 4. WHAT IF I NEED TO SELL? ARE WE THERE YET? YES! We are in a buyer’s market, but homes are selling. Last Don’t wait until the road is jammed with traffic. year, 48,000 homes were sold in our market area. Why Be among the first to arrive and do take your did these properties sell when others sat on the market? trusted guides with you: your Prudential Fox & The two main reasons were price and condition. Roach sales associate and Trident loan consultant. They are dedicated professionals who can help you • Price — When selling your present home to buy navigate along the way. The long journey is over another that better meets your needs, it’s important and we’re pulling up to the curb. We can answer to price your home correctly. Keep in mind that the question “Are we there yet?” with confidence. although it may sell for less than it did in 2006, the Yes — we are there! home you buy now will not cost as much either. • Condition — There are a lot of houses on the market, so it is important to make sure that yours stands out. Your Prudential Fox & Roach sales associate will advise you on how to make it the most appealing to potential buyers. Lawrence F. Flick, IV Chairman and Chief Executive Officer Prudential Fox & Roach, Realtors® and The Trident Group We can answer the question “Are we there yet?” with confidence. Yes – we are there! An Independently Owned and Operated Member of the Prudential Real Estate Affiliates, Inc.4