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The Chairman’s Report
                                                                A Message from Lawrence F. Flick, IV...
LOCAL TRENDS                                                     Camden                                                   ...
WHY YOU SHOULD BUY A HOME NOW                                                                              Risk vs. Opport...
                                Joel L. Naroff, Ph. D., is the                             There has b...
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Chairmanss Report Spring Summer2009 Regions 1 4 July 10th Mailing 2009


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A positive Report for our area - yahoo!

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Chairmanss Report Spring Summer2009 Regions 1 4 July 10th Mailing 2009

  1. 1. The Chairman’s Report A Message from Lawrence F. Flick, IV Chairman and Chief Executive Officer Prudential Fox & Roach, REALTORS® SPRING/SUMMER 2009 Here comes the sun Here comes the sun It’s all right… George Harrison Yes, it’s been a long, cold lonely winter—and it feels like • Construction spending rose in March winter has been here for a long time, but at last, the sun • We are starting to see some results of the is peeking through the clouds, brightening the outlook stimulus package on our economy and the real estate market. What was once despair driven by a constant stream of bad news And as for real estate: has blossomed into growing confidence that the worst • National home prices remained stable for the past of the downturn is over and a gradual recovery is in two months1 sight by year end. • The rate of national home price decline tracked by the Case-Shiller Index decreased in March2 Positive economic signs: • Existing home sales rose 5% in February and 3.2% • The Dow, NASDAQ, and S&P 500 have risen as in March3 much as 30% over their March 9, 2009 lows • New home sales performed better than expected • The flow of credit has eased in March4 • Consumers are starting to spend again as • Inventories of houses for sale have peaked confidence is rising • Mortgage rates are at fifty-year lows • Retail sales are above those in December The smiles returning to the faces It seems like years since it’s been here Consumers now believe that it will be all right. In Employment is a cloud that still hovers on the April, consumer confidence rose sharply, led by a huge economic horizon. Yet, even here, there are signs of gain in expectations.5 This is an important indicator: light: employment fell less than expected in April and consumer confidence has traditionally led the way to unemployment claims have leveled off. economic recovery. 1
  2. 2. LOCAL TRENDS Camden -5.2% New Castle -6.0% These national statistics are quite promising, but real Bucks -6.1% estate markets are like the weather—it’s the local forecast Philadelphia -8.4% that matters. Is the sun coming out over the Prudential Fox & Roach market as well? Since the market’s peak in 2006, home prices have The answer is yes. declined approximately 14.8%.8 • Home sales rose 61% from January to April, 20096 • Month’s supply of inventory dropped from 12.5 in House Price Appreciation 1987-2009: January, 2009 to 8.8 months in April, 2009—a 390.0 Philadelphia Region v. 10-City Composite 29.6% decrease6 • The foreclosure rate in our area remains low—less 340.0 10-City Composite* Philadelphia Region than ½ of 1%7 290.0 240.0 Until recently, our market had been insulated from price 190.0 %Change 1998 to Peak: 10-City +174% Philadelphia +114% From Peak: -30% -14.8% declines plaguing many areas of the country, but this 140.0 changed in 2008:2,8 90.0 County Annual Price Decrease 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 *Source: Case-Shiller Macro Markets LLC. The 10-City Composite Index includes Boston, Chicago, Denver, Las Vegas, Delaware -0.5% Los Angeles, Miami, New York, San Diego, San Francisco and Washington DC. It does not include Philadelphia. Montgomery -0.6% Mercer -1.4% This isn’t necessarily bad. Up until now, houses in Atlantic -1.5% our region were considered over-valued and an Chester -2.4% adjustment was needed in order for the real estate Gloucester -2.7% market to gain activity. Now, houses are more affordable Salem -4.2% than they have been in years. Burlington -5.0% I feel the ice is slowly melting It seems like years since its been clear An increase in real estate activity usually accompanies ABC News Consumer Confidence Index: spring, and this season is no exception. Our real estate Ecomonic Expectations 70 agents are busier than they have been in quite some time. 60 In fact, our area real estate market is experiencing “Economy is Getting Better” 50 the largest increase in buyer activity in the past two years.8 40 Record Low 30 2% 20 10 0 05 09 9 1 2 3 4 5 6 7 8 /0 0 0 0 0 0 0 0 0 / 20 20 20 20 20 20 20 20 02 2
  3. 3. WHY YOU SHOULD BUY A HOME NOW Risk vs. Opportunity If you are on the sidelines waiting for things to change, Point of maximum risk it’s time to get moving: in investment • Interest rates are at historic lows Euphoria Denial Mortgage Interest Rates Excitement 8.5 Fear Optimism 8.0 Optimism Panic Hope 7.5 7.0 Source: Westcourt Funds Despondency 6.5 Depression 6.0 Point of maximum 5.5 opportunity 5.0 4.5 00 01 02 03 04 05 06 07 08 09 We are now at the point of maximum opportunity. But things won’t stay this way forever. A Pew Research Study • There is a great selection of homes for sale revealed that 75% of consumers believe now is a good or • Houses are more affordable now than they have been very good time to buy a house. As more buyers enter the in years. And now that prices in our area are market, there will be more competition to obtain the best considered undervalued8, they won’t go much lower. homes. There will be fewer houses on the market. And, as Remember, we never truly know the bottom of any the economy recovers, interest rates will rise. market until we see it in the rear-view mirror MY HOUSE ISN’T WORTH WHAT IT WAS • Sales activity is increasing and inventory is IN 2006. SHOULDN’T I WAIT UNTIL ITS decreasing. There is still an oversupply of housing VALUE RECOVERS? inventory, but pent-up demand is building every day If your personal circumstances dictate a move, the as those who have been holding off buying a home answer is no. House prices have declined modestly from enter the market. In the future, there will be more the peak of the market, but most people did not buy buyers looking at fewer houses for sale when prices were at their peak. Even those who did can • If you haven’t owned a home in the past three years, take advantage of the price declines when “trading up” you are considered a first-time home buyer by the to a new home. You will more than make up for any federal government and can receive up to an $8,000 tax reduction in the value of your current home with the credit if you close on a home by December 1, 2009 savings achieved on a more expensive home (as compared to what the same house would have cost • Real estate is a great (if not the best) long-term investment in 2006.) Return on Investment YOU CAN SELL YOUR HOME NOW January 1, 2000 - December 31, 2008 DOW S&P NASDAQ Real Estate There is an oversupply of houses for sale, but now is the 70 time for sellers to take advantage of increased buyer 50 activity. Sellers must acknowledge the modest price 30 declines that have occurred in our market and price 10 their properties accordingly. Properties must also show -10 well. Your Prudential Fox & Roach sales associates will create a pricing and staging strategy that will work to -30 get your home sold. Contact them today, so you can -50 get started! Source: MSN Money -70 These factors combine to create the ideal conditions to buy. 3
  4. 4. AN INDEPENDENT VIEW Joel L. Naroff, Ph. D., is the There has been a dramatic change in the outlook for President and founder of the national economy. Pessimism has been replaced by Naroff Economic Advisors. He a growing belief that the recession is easing and could serves as Chief Economist for be over fairly soon. That is changing the dynamics in TD Bank and is a consultant many markets and housing is a key beneficiary. For a to Prudential Fox & Roach, long time, people were sitting on the fence waiting Realtors and The Trident for a housing bottom and as long as the economy Group. A nationally continued to falter, the belief was that housing prices recognized economic forecasting would keep falling. That perspective may no longer expert, Joel was awarded the be accurate. Lawrence Klein Award for Blue Chip forecasting In the region, sales seem to be starting to edge up and excellence and was the Bloomberg Business News top that has clear implications for prices. With mortgage economic forecaster in 2008. In 2007, he received the rates still quite low, affordability is great and supply National Association of Business Economists Outlook is ample. There is a lot of pent up demand as many Award and was named the top economic forecaster by people have put off making a move. While it is always MSNBC in 2006. difficult to determine the timing on any push back into the market, it is likely to come as the economy begins to show improvement. The window of opportunity looks to be open. Here comes the sun Rays of light are illuminating the economic horizon and daring to recognize and take advantage of the tremendous our local real estate market. It’s been said that fortune opportunity before us. Don’t be one of the people who does favor the bold, but in reality, one doesn’t have to be will look back at 2009 and say, “I should have…” Sincerely, Lawrence F. Flick, IV Chairman and Chief Executive Officer Prudential Fox & Roach, Realtors® It’s all right It’s all right. Sources: 1. Federal Housing Finance Agency, April 22, 2009. 2. S&P Case-Shiller Index, April 28, 2009 3. National Association of Realtors, May 4, 2009. 4. National Association of Home Builders, April 24, 2009 5. Conference Board, April 28, 2009 6. Trend Multiple Listing Service, May 15, 2009 7. Realty Trac, January 29, 2009 8. State of the Philadelphia Housing Market: 2009Q1. Kevin C. Gillen, PhD. May 7, 2009 An Independently Owned and Operated Member of the Prudential Real Estate Affiliates, Inc. 4