October 2010 PFR Chairman's Report


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Marketplace Quiz - October 2010 Chairman's Report

(c) Prudential Fox and Roach, REALTORS®

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October 2010 PFR Chairman's Report

  1. 1. A Message from Lawrence F. Flick, IV, Chairman and Chief Executive Officer Prudential Fox & Roach, Realtors® The Chairman’s Report OCTOBER 2010 An Independently Owned and Operated Member of the Prudential Real Estate Affiliates, Inc. HERE’S A QUIZ... TRUE OR FALSE: 1.Home prices have come down over 50%. 2.Over 6% of households are in foreclosure. 3.The suspension of foreclosures by major financial institutions will delay recovery of the real estate market. The answer for each is - IT DEPENDS. In Las Vegas, Nevada prices have come down an average of 58%. In the Prudential Fox & Roach market area, prices have declined an average of 7% from the peak of the market until now—a very moderate number. In addition to having the distinction of experiencing the greatest price declines, Las Vegas also has the highest foreclosure rate at 6.6%. Less than ½ of 1% of households in our market area are in the foreclosure process—one of the lowest rates in the country. Because foreclosures make up such a small percentage of households in our market, if some were suspended the impact would be insignificant. As Prudential Fox & Roach sales associates, you understand that real estate markets are local, that our prices haven’t taken a nosedive, and that our market isn’t flooded with foreclosures. But your clients may think differently. They have been inundated with a continuous stream of negative news from the press because extremes, whether booms or busts, get attention. Five years ago, good news about the real estate market was exaggerated. Now the statistics from the worst market in the country are generalized as if they were occurring everywhere. That’s why it’s so important for you to help your clients separate fact from fiction. HERE’S ANOTHER QUIZ: TRUE OR FALSE: Now is the best home buying opportunity of a lifetime. The answer for our marketplace is TRUE! Here's why: 1.The Market · We have clearly seen the bottom of the market. Unit sales have dropped after the April 30, 2010 expiration of the home buyer tax credit, but annual sales have been stable for three years. · Prices have been stable this past year. · There is a great selection of homes and sellers have become more realistic. 2. Interest Rates · Interest rates are at generational lows. It is hard to believe they will go much lower, and they will definitely rise as the economy begins to improve. We would normally think of 5.5% as a terrific rate but at the current rate of 4.25% is outstanding. A buyer borrowing $250,000 over 30 years will save $2,700 each year over the life of the loan. That’s a total savings of $68,000! You can be sure that The Trident Group will follow through on the promises they make to your clients. 3. Quality of Life · It’s not unusual to hear conversations about the rent versus buy scenario. There are some advantages to renting but in reality, the Philadelphia area has never been a rental market. The best communities are made up of owners who care about their properties. Owning a home is one of the best ways to take control of our future. · Houses are more affordable than they have been in years. Stable prices and incredibly low interest rates allow buyers to purchase more for their money so they can enjoy living in a house that better meets their lifestyle needs. 4. Long-term Investment · Owning a home has been the best long-term investment in our area, far outperforming the stock market. In the past ten years, the value of Philadelphia area housing rose an average of 91%, while the S&P 500 lost 22.5%. Right now, many people are carefully considering whether or not to buy a home. Lack of confidence in the economy and the job market are holding them back. But there is only so long to wait before this opportunity ends. If life circumstances dictate a move, it’s best to act now. I can’t imagine that conditions will improve for potential home buyers in this area! In five or seven years, many of your clients will look back and either be glad that they bought a home or be sorry they didn’t. It’s up to you to provide them with the expertise and knowledge to make the right choice now, or else they will look back and say, “I should have.” After all, the true value of what you do goes beyond showing houses or writing contracts. It is in helping people make their dreams come true. Best, Larry