Princeton Boro Market Update

Weichert, Princeton Office Offers analysis of the Princeton Borough, NJ Market Trends.

Prepared by: Joshua D Wilton Broker/ Sales Associate Weichert, Princeton O 609-921-1900 [email_address]

Agenda:
Inventory: Inventory in the local markets is a great indicator of the health of the market, too much inventory indicates a slow pace of sales and declining prices.
Sales Patterns: Each segment of the market is different; single family v townhouse and the moderate priced vs the luxury market.
Absorption Rates: Indicates the pace of sales in a given market.
Pricing: Reviews price reduction trends

1. Inventory Pattern:
As depicted in the next slide the available inventory in Princeton Borough is 19 units or nearly 30% lower than at the same point in 2006.
This does not indicate a market correction merely that there is less inventory available, the first step towards a normalized market.
The following slides depict the inventory patterns in the Borough. As you can see on the slide 6, we are at a 3 year low for inventory.

Princeton Boro. Active Inventory

Princeton Boro. Condo/Townhouses Active Inventory

Princeton Boro. Single Family Active Inventory

2. Sales Patterns:
In the Borough Single Families are selling better than the townhouses and the condos.
The single family absorption rate is 6.6 months vs 13 months for the condo townhouse market (slide 10).
This is occuring due to the fact that the Borough condos and townhouses are extremely expensive in comparison with neighboring towns and financing for condos with less than 4 units has become more stringent.
38% of the Condo/ Townhouse inventory has taken a price reduction in the last 30 days vs only 24% for the single family market (slide 10).

Town by Town Analysis 7/127/09 Towns Active Listings Pending Sales 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 46 6 7.7 6 0 13 28% 3 2 5 Pton -Boro Condo/ Thouses 13 1 13 2 1 5 38% 0 1 0 Pton-Boro Single Family 33 5 6.6 4 (1) 8 24% 3 1 5

4. Absorption Rate The Effect of ‘Absorption Rate’ on the Housing Market 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.

Market Absorption Scale (Absorption Rate in Months) 5-6 months absorption rate indicates a normal market.

Town by Town Analysis 7/127/09 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 46 6 7.7 6 0 13 28% 3 2 5 Pton -Boro Condo/ Thouses 13 1 13 2 1 5 38% 0 1 0 Pton-Boro Single Family 33 5 6.6 4 (1) 8 24% 3 1 5

Princeton Borough Absorption Rate By Price Active Listings Pending in Last 30 Days Absorption Rate in Months 0-$500 8 1 8 $500-750k 8 3 2.6 $750-999 7 2 3.5 $999-$1.5 million 11 0 99 $1.5 million + 13 1 13

The Absorption Rate in the Borough is highest for the condo v the single family home market.
Slide 14 depicts how Absorption Rate goes up in the higher price ranges, indicating that the majority of the transactions are taking place in the moderate price ranges. The higher the price, the tougher the market.

Princeton Twp. Condo/Townhouses Absorption Rate

Princeton Twp. Single Family Absorption Rate

4. Price Trends
The next several slides show the overall pricing trends in the Borough. The highlighted area in the next slide shows that over 28% of the overall inventory was reduced in the past 30 days.
Condos were reduced at a faster pace than single families.

Town by Town Analysis 7/127/09 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 46 6 7.7 6 0 13 28% 3 2 5 Pton -Boro Condo/ Thouses 13 1 13 2 1 5 38% 0 1 0 Pton-Boro Single Family 33 5 6.6 4 (1) 8 24% 3 1 5

Princeton Boro. Active YTD Listings v Pending Analysis

4. Price Trends
The next slide shows the relationship between price improvements and buyers placing contracts on houses.
As the overall number of price reductions increased in the Borough, buyers jumped in to buy.
Buyers have been motivated by deals for the past several years and it has been no different in the Borough.

Source: trend mls Relationship of Price Reductions to ‘Pending Sales’

Princeton Borough Market Statistics Source: Trend MLS

Princeton Twp. Residential Transactions Settled: June 2009 Source: Trend MLS

4. Price Trends
Of the 9 homes that settled in the Borough in June, 6 were under a million dollars. Keep in mind that as of 7/30/09, 23 homes are for sale under a million dollars in the Borough and 23 homes are for sale over a million dollars.
Another way to look at this is as follows:
The seller to buyer ratio under $999k is 3:1
The seller to buyer ratio over $999k is 11:1
The over $1million market will continue to be challenged and the super luxury market will be challenged even further.

Princeton Boro Market Update

by Weichert Realtors on Jul 30, 2009

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Princeton Boro Market Update — Presentation Transcript