Weichert Princeton Office April 2014 Princeton Real Estate Market Seminar

Weichert, Princeton Office
April 2014
Real EstateReal Estate
Market UpdateMarket Update

Weichert, Princeton Office
January 2014
Real Estate
Market Update
Joshua D Wilton
Managing Broker
Princeton Office
DaveMcDermott
Gold Services Manager
Princeton Office

Agenda
1. The Market
- A History, Current Conditions and Forecast
2. Strategies for Buying & Selling
3. We are here to help

Agenda
1. The Real Estate Market
(a brief history)

The boom….
Otteau.com
The Boom…The Boom…

Affordability
will
Spur Recovery
2012: State of the Market

Affordability Index
Source: NAR Housing Affordability Index 1971 to 2010
Definition: A measure of the financial ability of US
Families to buy a house. 100 means that families
earning the national median income have just the
amount of money needed to qualify for a mortgage
on a median priced home.
Higher than100 means they have more than enough.
Lower than 100 means they have less than enough.
Definition: A measure of the financial ability of US
Families to buy a house. 100 means that families
earning the national median income have just the
amount of money needed to qualify for a mortgage
on a median priced home.
Higher than100 means they have more than enough.
Lower than 100 means they have less than enough.

194.5
Nov 2011
Affordability Index

Weichert Princeton Office April 2014 Princeton Real Estate Market Seminar

What’s ahead in 2014…?
• Low inventory, high demand in
popular price points and
neighborhoods
• Tight Listing Activity
• Multiple Offers
• Rising Prices
• Repeat, Smart-Money Buyers

Real Estate Market UpdateReal Estate Market Update
What are the ‘experts’ saying about the market
now…?

Home Price Expectation Survey 2014 1Q
Average Annual %
APPRECIATION

4.5
4.0
3.7 3.7 3.8
2014 2015 2016 2017 2018
PROJECTED
Percentage Appreciation

Cumulative House Appreciation by 2018
19.4%
28.4%
19.7%
10.9%
Pre-Bubble
Trend
Bulls All
Projections
Bears

“We expect single-family
home sales and housing
starts to be at the highest
level since 2007.”
Frank E. Nothaft
Chief Economist at Freddie Mac

"The conditions that led to the robust appreciation
experienced earlier this year, including historically
low mortgage interest rates, high affordability, low
inventory and high demand, are waning. In their
place, we're beginning to see more inventory and
rising mortgage rates, which will lead to further
normalization in the market going forward."
Dr. Stan Humphries
Zillow Chief Economist

Affordability is still good compared to any time over the last 50 years.
"All those young people who moved in
with their parents over the past few
years and didn't move out during the
recession, there should be pent-up
demand for household formation."
Jed Kolko
Trulia’s Chief Economist

Affordability is still good compared to any time over the last 50 years.
I can do all my own research online…
The Customer….

Online Estimates
If the estimate is accurate within
5% you’re talking about a $50,000
swing on a $500,000 estimate
The home value could be anywhere
from $475,000 - $525,000
And they’re only that close a third of
the time

4,000,000
4,500,000
5,000,000
5,500,000
Existing Home Sales
S&P Case Shiller 12/2013

Percentage of Distressed Property SalesPercentage of Distressed Property Sales
35%
14%
NAR 12/2013

WEST
Down 10.1%
MIDWEST
Unchanged
SOUTH
Up 1%
NORTHEAST
Up 6.6%
NAR’s Existing Homes
Sales Report 12.2013
Year-Over-Year % Change in House Sales

NAR 12/2013
100 = Historically Healthy Level
Pending Home Sales

Months Inventory of Homes for Sale
5-6 Months = Normal Market Inventory
NAR 12/2013

Agenda
Then…
Source: Otteau Valuation Group

Mercer County Building Permits 2003-2012
Source: NAR, November 2008 Forecast
http://lwd.dol.state.nj.us/labor/lpa/industry/bp/bp2000_index.html

71% of the building permits issues in Mercer
County were for ‘multi-family’ housing.
http://lwd.dol.state.nj.us/labor/lpa/industry/bp/bp2000_index.html

Long Term Demand …
http://lwd.dol.state.nj.us/labor/lpa/pub/factbook/merfct.pdf

The Local Market
Top 5 Rules in Real Estate
Real Estate is Local

Mercer County
Source: Trend MLS

Somerset County
Source: Trend MLS

Middlesex County
Source: Trend MLS

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

“Market Absorption” Rate
107 current active listings
4 reported sales in last 30 days
=
24.3
months
absorption
rate
Anytown., NJ
5-6 Months Market Absorption Rate indicates a normal market.Market Absorption Rate is the number of months it will take to sell the current inventory of
homes if nothing new comes on the market and the rate of sales stays the same. Also referred
to as “Months of Inventory”
5-6 Months Absorption Rate indicates a Normal Market

52
Market Scale for Supply & DemandMarket Scale for Supply & Demand
High Supply/Low Demand Low Supply/High Demand
Normal
MarketAbsorptioninMonths
1
2
3
4
5
6
7
8
9
10
11
12
Normal
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.
Note: This Market Scale is valid
only for absorption rates
between 1 and 12 months.

Plainsboro
Inventory
Accumulation:
Also known as
“Absorption Rate” or
“Market
Absorption”
Source: TREND Multiple
Listing Service

West Windsor
Inventory
Accumulation:
Also known as
“Absorption Rate” or
“Market
Absorption”
Source: TREND Multiple
Listing Service

56
Market Scale for Supply & DemandMarket Scale for Supply & Demand
High Supply/Low Demand Low Supply/High Demand
Normal
MarketAbsorptioninMonths
1
2
3
4
5
6
7
8
9
10
11
12
Normal
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.
Note: This Market Scale is valid
only for absorption rates
between 1 and 12 months.

4/1/14
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
West Windsor:
All Styles 85 23 3.7 41 18 13 15.3% 1 2 15
West Windsor
Condo/
T.Houses
16 7 2.3 8 1 1 6.3% 0 0 3
West Windsor
55+ 3 0 999 1 1 -- -- 0 0 0
West Windsor
Single Family 66 16 4.1 32 16 12 18.2% 1 2 12
Lawrence: All
Styles 147 17 8.7 51 34 31 21.1% 6 1 17
Lawrence:
Condo/
THouses
38 7 5.4 13 6 7 18.4% 2 0 7
Lawrence:
55+ 10 1 10 4 3 -- -- 0 0 2
Lawrence:
Single Family 99 9 11 34 25 24 24.2% 4 1 8

4/1/14
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
Plainsboro
All Styles
46 18 2.5 19 1 4 8% 4 0 4
Plainsboro
Condo/
THouses
19 6 3.1 11 5 0 0 3 0 1
Plainsboro
55+
8 1 8 0 (1) 0 0 0 0 1
Plainsboro
Single
Family
19 11 1.7 8 (4) 4 21% 1 0 2
Cranbury:
All Styles
16 4 4 6 2 1 6% 0 0 1

4/1/14
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
Ewing:
All Styles
187 12 16 48 36 29 16% 3 8 13
Ewing :
Condo/
T.Houses
30 2 15 7 5 4 13% 0 3 2
Ewing
55+:
2 0 999 1 1 --- --- 0 0 0
Ewing:
Single
Family
155 10 16 40 30 25 16% 3 5 11
East
Windsor:
All Styles
108 22 5 36 14 15 14% 3 5 15
East
Windsor:
Condo/
Thouses
56 13 4 14 1 5 9% 3 0 6
East
Windsor:
55+
8 1 8 2 1 --- --- 0 0 1
East
Windsor:
Single
Family
44 8 6 20 12 10 23% 0 5 8

4/1/14
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
Hopewell
Twp.
All Styles
159 15 10.6 49 34 28 17.6% 2 6 7
Hopewell
Twp. Condo/
T.Houses
9 2 4.5 4 2 4 44.4% 1 1 1
Hopewell
Twp.:
55+
2 2 1.0 2 0 0 0 0 1 0
Hopewell Twp
Single Family 148 11 13.5 43 32 24 16.2% 1 4 6
Hamilton: All
Styles 461 47 9.8 141 94 108 23.4% 23 7 39
Hamilton:
Condo/ THouses 91 12 7.6 24 12 12 13.2% 10 2 7
Hamilton:
55+ 6 0 99.9 1 1 0 0 1 0 1
Hamilton:
Single Family 364 35 10.4 116 81 96 26.6% 12 5 31

4/1/14
Towns Active
Listings
Pending in
Last 30
Days
Absorptio
n 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:
All Styles 121 15 8.1 37 22 13 10.7% 6 5 16
Princeton:
Condo/
Thouses
37 3 12.3 14 11 3 8.1% 2 1 6
Princeton:
Single
Family
84 12 7 23 11 10 11.9% 4 4 10

4/1/14
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
South
Brunswick
All Styles
150 13 11 46 33 4 3 11 0 15
South
BrunswickCon
do/ T.Houses
38 6 6 16 10 2 5 2 0 9
South
Brunswick
55+
30 0 99 8 8 0 0 2 0 1
South
Brunswick
Single Family
82 7 17 20 13 2 2 7 0 5
Monroe:
All Styles 309 18 17 122 104 7 2 32 1 63
Monroe:
55+ 166 13 13 79 66 8 5 11 0 50
Monroe:
Single Family 143 5 29 43 38 -1 1 21 1 13

4/1/14
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
Montgomery
All Styles 111 30 3.7 55 +25 24 22% 3 1 15
Montgomery
Condo/Twnhms 12 12 1 10 -2 2 17% 1 0 3
Single Family
99 18 5.5 45 +27 22 22% 2 1 12
Hillsborough
All Styles 158 48 3.3 79 +31 29 18% 9 4 26
Hillsborough
Condo/Twnhms 64 21 3 37 +16 13 20% 3 1 13
Hillsborough
Single Family 94 27 3.5 42 +15 16 17% 6 3 13

2006 - 2008 Core Market Comparison: Week of 10/13/08
Town
’12
Inven.
Count
‘12
Pending
Sales
‘12
Absorp.
Rate
‘13
Inven.
Count
‘13
Pending
Sales
‘13
Absorp.
Rate
‘14
Inven.
Count
‘14
Pending
Sales
‘14
Absorp.
Rate
Inventory
compared
to 2012
Inventory
compared to
2013
West
Windsor 131 21 6.2 72 35 2.1 85 23 3.7 (35%) 18%
Plainsboro 84 18 9 45 19 2.3 46 18 7.5 (45%) 1%
Lawrence 196 20 9.8 141 16 8.8 147 17 8.7 (25%) 4%
East
Windsor 187 16 12 130 30 4 108 22 5 (40%) (17%)
Hamilton 538 56 9.6 426 58 7.4 461 47 9.8 (20%) 10%
Hopewell
Twp 147 13 11.3 145 13 11.1 159 15 10.6 2% 8%
Robbinsvill
e 123 12 10.3 98 25 4 74 19 4 (39%) (24%)
Princeton 169 14 12.07 133 16 8.3 121 15 8.1 (28%) (9%)
South
Brunswick 232 12 19 171 18 10 150 13 11 (35%) (12%)
Montgome
ry 152 20 7.6 111 37 3 111 30 3.7 (26%) ---------
1/7/14 Year over year

The Local Market
It’s Local to the Town
It’s Local to the Price Point
It’s Local to the Neighborhood/Development
It’s Local to the Street

Market Absorption Rate
9 reported ‘pending’ sales in last 30 days
=
9.8 months
absorption
rate
Princeton
All Inventory
Market Absorption Rate is the number of months it will take to sell the current inventory of
homes if nothing new comes on the market and the rate of sales stays the same

=
4.3 months
absorption
rate
Princeton
NOT Single Family Homes

=
2 months
absorption
rate
Princeton
Twin or Townhouse
3 bedroom

=
17.8 months
absorption
rate
South Brunswick
All Inventory

=
12 months
absorption
rate
South Brunswick
Condo/Townhouse Market

=
1.5 months
absorption
rate
South Brunswick
Princeton Walk Development
All Types

=
0 months
absorption
rate
South Brunswick
Princeton Walk Development
Townhomes

=
4.8 months
absorption
rate
West Windsor

=
5.5 months
absorption
rate
West Windsor
Under $500,000

31* current active listings
=
10.3 months
absorption
rate
West Windsor
$501,000 - $750,000

Of the 31 homes ‘active’ in this price
point10 have offers accepted and are
showing for back up only.

=
7 months
absorption
rate
West Windsor
$501,000 - $750,000

Of the 31 homes ‘active’ in this price
point 7 have offers accepted and are
showing for back up only.

=
8 months
absorption
rate
West Windsor
$501,000 - $750,000

Of the 24 ‘active’ 5 were 55+ or
townhouse.

19 * current active listings
=
6.3 months
absorption
rate
West Windsor
$501,000 - $750,000

Of the 19 left, 5 are currently
negotiating offers.

14 * current active listings
=
4.6 months
absorption
rate
West Windsor
$501,000 - $750,000

=
2.3 months
absorption
rate
West Windsor
$750,000 +

Strategies to Buy & Sell in 2014…

2014
Top Buyer Negotiating
Strategy…Pay now or Pay more
later.

Monroe Lane, Princeton
Listed at $650,000
14 offers…

Weichert Buyer prevailed at
$740,000

Listed in Princeton at $799,000

Weichert Buyer prevailed at
$890,000

Reed Dr S, West Windsor
Listed at $749,000
7 offers…

Exact Comp
Listed $759,000 2 weeks later
5 offers

2. ‘I am going to time the
Market and buy/ sell at the
time when inventory &
buyer count is in my
favor…’
Source: MLS

Listing v Contracts: Dec – Jan 2013 Princeton

Listing v Contracts: Dec – Jan 2012, Lawrence Twp.

The Impact of
Pricing, Staging and Pre-Inspection
on the Salability of A Home..…

Negotiations are about
leverage
Maximize Yours
Source: MLS

All Negotiations, including real estate, are all about negotiation and control.
Home Pricing
Who is in control?

• Promotes a sense of urgency among buyers
• Promotes a sense of urgency among agents
• Generates interest and showings
• Sets the stage for multiple purchase offers in the
first 30 days
• Offers tend to be higher in relation to list price
• Controls negotiations
• Results in highest price in shortest time
Effects of Right Pricing:

• Buyer excitement diminishes quickly
• Extends time house is on the market
• Results in price reductions
• May attract “bargain hunters” and discounted offers
• Results in a lower selling price
In the final stages of Over Pricing, after extended days-on-market
and several price reductions, a home begins to attract interest
from buyers who are looking to profit from sellers under duress.
These buyers, often referred to as bottom-feeders, tend to offer
deeply discounted prices for homes.
~Jeff Otteau
Effects of Over Pricing:

One Aim
Determining your best asking price.
Our unique method goes beyond the traditional assessment of comparable home prices
by anticipating changing marketing conditions in your area.

Hillsborough
The Price Trend Came up with a price of $520,000
We recommended a price of $499,000

Negotiations are about leverage, use the listing
price as yours…
Listed at $544,900
Reduced to $535,000
Reduced to $509,000
Reduced to $499,000
96 Days on Market
1 Offer
Sold for $490,000
The buyer had control

West Windsor
The Price Trend Came up with a price of $780,000
We recommended a price of $769,000

Negotiations are about leverage, use the listing
price as yours…
Listed at $769,000
8 Days on Market
11 Offers
Sold for $805,000
The seller had control

Princeton
Price Trend Price:
$1.275
Appraised by local
Appraiser prior to going on
market:
$1.275

Princeton
Put on market at
$1.1 million
8 offers
Sold in 8 days
$1.350 million
No contingencies

The Impact of Staging on the
Salability of Your Home..…

Home Staging
Who is in control?

The process of preparing homes for sale
regardless of price, location, or condition to
achieve the maximum sales price in the
minimum marketing time.
The goal is to appeal to the broadest range of
BUYERS.
What is Home Staging?

“Wow…. I could live here!”

“The Investment in Home Staging
is Always Less than Your
First Price Reduction!”

Buyers Only Know What They See …

… Not The Way It Is Going To Be.

Home Staging
*Based on a StagedHomes.com survey of over 400 homes across Canada & the Continental US prepared for sale by an Accredited Staging Professional (ASP™) from June 2007 through November 2007.
“The investment in home staging is always less than your first price reduction!”

Home Staging
*Based on a StagedHomes.com survey of over 400 homes across Canada & the Continental US prepared for sale by an Accredited Staging Professional (ASP™) from June 2007 through November 2007.
The average increase
in sales price of an ASP
Staged vs. non-Staged
home is 6.9%
That is an additional
$31,050 on a
$450,000 sale
“The investment in home staging is always less than your first price reduction!”

The Impact of Inspection & Repairs
on the Salability of Your Home..…

Pre - Inspection

Pre-Inspection
WHAT DOES PRE-INSPECTION INCLUDE?
The standard home inspector's report will review the
condition of the home's heating system, central air
conditioning system (temperature permitting), interior
plumbing and electrical systems; the roof, attic, and
visible insulation; walls, ceilings, floors, windows and
doors; the foundation, basement, and visible structure. It
will also advise if any potential environmental hazards
were observed.

Pre-Inspection
DOESN’T THE BUYER DO THE HOME
INSPECTION?

• Why do a Pre-Inspection?
– Fix EVERYTHING before going on market
– Remove objections
– Reduce the risk of going ‘off market’ for a buyer
who ends up killing the deal
– Stay in Control
Pre-Inspection

Real Estate Market UpdateReal Estate Market Update
Weichert Financial ServicesWeichert Financial Services
Dave McDermott
Gold Services Manager
NMLS #101160
Weichert Financial Services
646-921-1900
dmcdermott@weichertfinancial.com

Mortgage Rate
Projections
Analyst Projected Rate
1Q 2015
Fannie Mae 4.9%
National Assoc of Realtors 5.5%
Freddie Mac 5.1%
Mortgage Bankers Assoc 5.1%
2/2014

My Job is to Provide You the Highest
Level of Customer Service in the
Industry

Sellers:
Inking the Deal is only ½ the battle.
Appraisals are always an issue in a
rising market.
Choose the buyer based on the lender
as much as the offer.
(ability to close)

Buyers:
Preparation leads to success.
Over 100 loan products to choose
from.
Work with someone local that is
accessible THROUGHOUT the deal.

We put Jim’s Money on the line and
Guarantee our performance
We close you on time or we pay you
$1,000.

I look forward to meeting with
you.

What will a real estate
company do for me?

Source: 2012 NAR Profile of Home Buyers and Sellers
This is
where
you win
or lose
the sale

We are here to helpWe are here to help
Buying and selling a home involves the
careful coordination of a lot of people.
Choosing a real estate team
you can count on will make the
process smoother and easier.

Thank you for your time
today.

Resource and Website ListResource and Website List
www.trendmls.com
www.realtor.org
www.njar.com/10k
www.Otteau.com
www.Pre-listing-inspection.com
www.Housemaster.com
www.Stagingshoppingcenter.com
www.realtytrac.com
www.njar.com/10k

Weichert Princeton Office April 2014 Princeton Real Estate Market Seminar

Weichert Princeton Office April 2014 Princeton Real Estate Market Seminar

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Weichert Princeton Office April 2014 Princeton Real Estate Market Seminar

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