Southern NJ - Summer 2011 PFR Chairman’s Report


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

(c) Prudential Fox and Roach, REALTORS®

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Southern NJ - 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: SOUTHERN NEW JERSEY “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. Southern New Jersey Since 2000: up 60% Since Peak: down 18.08% Case-Shiller® Home Price Index: Single-Family Aggregate Index, (Index, 2000Q1=100), SA Source:Fiserv, FHFA, Moodys Analytics 5/09/2011 Camden, NJ Metro Division Counties: Burlington NJ, Camden NJ, Gloucester NJ But, in the Southern New Jersey region, this simply is year ago. But when distressed sales are taken out of the not true! Yes, prices have declined since their 2007 equation, prices fell just 0.5% in that time. In our area, peak, but they remain well above 2000 values, as it is important to note that less than 1/2 of 1% of all illustrated above. households are in the foreclosure process, yet because the media doesn’t highlight regional differences, many In the past ten years, the average sales price in our area perceive that our market is also distressed. The reality is has also increased significantly. In 2000, average sales that we are faring better than much of the country: price was $154,000. So far in 2011, it’s $241,251. Our market is not suffering from a foreclosure/shadow ARE REAL ESTATE PRICES AT THE BOTTOM? inventory hangover. No one really knows that a market has hit “the” bottom Even if prices were to fall a bit more to what we imagine until after it has begun to rise. Prices in our region have must be rock bottom, consumers need to consider been bumping along a bottom since 2009. current interest rates. Earlier this year, mortgage rates, while still low, rose to 5.25%. At publication of this What’s more, if we remove foreclosures from the report, interest rates unexpectedly decreased once again picture, prices have been steady across the country. to 4.5%. For a $250,000 mortgage, the lower rates will According to Core Logic, another source of data, overall produce a savings of $41,000 over 30 years. home prices fell 7.5% in April versus the same period a2
  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 ISN’T IT HARD TO GET A MORTGAGE NOW?RECESSION? The pendulum has changed direction away from loansAs far as the recession is concerned, it’s been a long without income or asset verification. The fact remainsroad — bumpier and more uneven than we anticipated. that those who are employed and have average creditBut all signs point to a sustainable recovery and most can get a mortgage. With proof of income and assets,economists do not believe that there will be a double applicants today can secure a mortgage at a good rate.dip recession. Employment is a key factor. So far this FHA loans are still available with 3.5% down, and 5%year, the economy has added almost a million jobs. conventional loans are commonplace. Your Trident loanManufacturing is also strong. Events in the Middle East consultant can help determine what program works bestand North Africa have caused gas prices to spike, but for you.they are beginning to come down again. WHY NOW IS THE TIMEOur area is strong because our local economy isdiverse with significant concentration in “eds, meds, Every buyer has an individual situation and motivationand pharma.” Overall, there’s been positive growth for making a purchase. If your personal circumstancessince July 2009 and I expect this to continue. For dictate a move, here are four excellent reasons why theNew Jersey’s Burlington, Camden and Gloucester time to buy is now:counties, Moody’s Analytics states that the area is • Affordability — Homes are more affordable now than“well-situated to benefit from spillover growth from since the industry started keeping records in 1970.neighboring Philadelphia” and that the “costs of living • Selection — There’s a great selection of homes forand doing business are low for the region.” today’s buyers. • Low prices and interest rates — Once the majority of consumers begin to feel confident again and enter the market, both prices and interest rates will rise. • Pent up demand — Households waiting to form will begin to unleash many new buyers into the market. Also, a recent survey noted that 65% of renters said they were planning to buy a home soon. 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. Be year, 48,000 homes were sold in our market area. Why among the first to arrive and do take your trusted did these properties sell when others sat on the market? guides with you: your Prudential Fox & Roach sales The two main reasons were price and condition. associate and Trident loan consultant. They are dedicated professionals who can help you navigate • Price — When selling your present home to buy along the way. The long journey is over and we’re another that better meets your needs, it’s important pulling up to the curb. We can answer the question to price your home correctly. Keep in mind that “Are we there yet?” with confidence. Yes — we although it may sell for less than it did in 2006, the 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