Southeastern PA - Summer 2011 PFR Chairman’s Report


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Home Buyers: Are We There Yet?
Regional Edition: Southeastern PA

(c) Prudential Fox and Roach, REALTORS®

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Southeastern PA - 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: SOUTHEASTERN PENNSYLVANIA “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. Southeastern Pennsylvania Since 2000: up 71% Since Peak: down 7.15% Case-Shiller® Home Price Index: Single-Family Aggregate Index, (Index,2000Q1=100), SA Source: Fiserv, FHFA, Moodys Analytics 5/09/11 Philadelphia, PA Metro Division Counties: Bucks PA, Chester PA, Delaware PA, Montgomery PA, Philadelphia PA But, in the Philadelphia region, this simply is not true! year ago. But when distressed sales are taken out of the Yes, prices have declined since their 2007 peak, but they equation, prices fell just 0.5% in that time. In our area, remain well above 2000 values, as illustrated above. it is important to note that less than 1/2 of 1% of all households are in the foreclosure process, yet because In the past ten years, the average sales price in our area the media doesn’t highlight regional differences, many has also increased significantly. In 2000, average sales perceive that our market is also distressed. The reality is price was $154,000. So far in 2011, it’s $241,251. that we are faring better than much of the country: ARE REAL ESTATE PRICES AT THE BOTTOM? Our market is not suffering from a foreclosure/shadow inventory hangover. No one really knows that a market has hit “the” bottom until after it has begun to rise. Prices in our region have Even if prices were to fall a bit more to what we imagine been bumping along a bottom since 2009. must be rock bottom, consumers need to consider current interest rates. Earlier this year, mortgage rates, What’s more, if we remove foreclosures from the while still low, rose to 5.25%. At publication of this picture, prices have been steady across the country. report, interest rates unexpectedly decreased once again According to Core Logic, another source of data, overall to 4.5%. For a $250,000 mortgage, the lower rates will home prices fell 7.5% in April versus the same period a produce a savings of $41,000 over 30 years.2
  3. 3. Our area is strong because our local economy is diverse with significant concentration in “eds, meds, and pharma.”IS THERE GOING TO BE A DOUBLE DIP can get a mortgage. With proof of income and assets,RECESSION? applicants today can secure a mortgage at a good rate. FHA loans are still available with 3.5% down, and 5%As far as the recession is concerned, it’s been a long conventional loans are commonplace. Your Trident loanroad — bumpier and more uneven than we anticipated. consultant can help determine what program works bestBut all signs point to a sustainable recovery and most for you.economists do not believe that there will be a doubledip recession. Employment is a key factor. So far this WHY NOW IS THE TIMEyear, the economy has added almost a million jobs.Manufacturing is also strong. Events in the Middle East Every buyer has an individual situation and motivationand North Africa have caused gas prices to spike, but for making a purchase. If your personal circumstancesthey are beginning to come down again. dictate a move, here are four excellent reasons why the time to buy is now:Our area is strong because our local economy isdiverse with significant concentration in “eds, meds, • Affordability — Homes are more affordable now thanand pharma.” Overall, there’s been positive growth since since the industry started keeping records in 1970.July 2009 and I expect this to continue. The Moody’s • Selection — There’s a great selection of homes forAnalytics report of the five county southeastern today’s buyers.Pennsylvania region states that “Philadelphia’s recovery • Low prices and interest rates — Once the majority ofhas been strengthened with house prices at a bottom consumers begin to feel confident again and enter theand private employment at a two year high.” market, both prices and interest rates will rise. • Pent up demand — Households waiting to form willISN’T IT HARD TO GET A MORTGAGE NOW? begin to unleash many new buyers into the market.The pendulum has changed direction away from loans Also, a recent survey noted that 65% of renters saidwithout income or asset verification. The fact remains they were planning to buy a home soon.that those who are employed and have average credit 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 Lawrence F. Flick, IV appealing to potential buyers. 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