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March customer seminar

  1. 1. Weichert, Princeton Office March 2013 Market Update/ Forecast Seminar Offers analysis of the Princeton & Greater Princeton, NJ real estate markets & effective strategies to buy and sell.
  2. 2. Presented by: Joshua D Wilton Broker/ Manager Weichert Realtors Princeton, NJ (o) 609-921-1900 weichert-princeton.com facebook.com/weichertprinceton
  3. 3. Agenda 1. The Market - A History - Forecast for 2012 2. Strategies for Buying 3. Strategies for Selling
  4. 4. Agenda 1. The Real Estate Market (a brief history)
  5. 5. Agenda Then…
  6. 6. Otteau.com
  7. 7. Unsold I nventory from t he MLS in Weichert Market Areas November 2004 thru November 2010 * added Waters & Williams Region to Totals 11/ 13/ 06 11/ 12/ 07 11/ 17/ 08 11/ 15/ 04 11/ 14/ 05 11/ 16/ 09 11/ 15/ 10 84,621 88,414 84,942 31,676 41,156 77,985 92,096 25,000 20,000 Variance % 2010 to 2009 NY (Ashby) +13.11% CT (Doepper) +118.53% Passaic/Hudson/Bergen NJ (Bixon) +5.86% Western Central NJ/Lehigh Valley PA (McDonald) +6.78% 15,000 Northern and Central NJ (Prevete) +9.24% Eastern Central/Shore Points NJ (Waters) +10.63% Southern NJ (Williams) +10.87% 10,000 5,000 0 1/20/2004 2/20/2004 3/20/2004 4/20/2004 5/20/2004 6/20/2004 7/20/2004 9/20/2004 1/20/2005 2/20/2005 3/20/2005 4/20/2005 5/20/2005 6/20/2005 7/20/2005 8/20/2005 9/20/2005 1/20/2006 2/20/2006 3/20/2006 4/20/2006 5/20/2006 6/20/2006 7/20/2006 8/20/2006 9/20/2006 1/20/2007 2/20/2007 3/20/2007 4/20/2007 6/20/2007 7/20/2007 9/20/2007 1/20/2008 2/20/2008 3/20/2008 4/20/2008 5/20/2008 6/20/2008 7/20/2008 8/20/2008 9/20/2008 2/20/2009 3/20/2009 4/20/2009 5/20/2009 6/20/2009 7/20/2009 8/20/2009 9/20/2009 1/20/2010 2/20/2010 3/20/2010 8/20/2004 5/20/2007 8/20/2007 1/20/2009 4/20/2010 10/20/2003 11/20/2003 12/20/2003 10/20/2004 12/20/2004 10/20/2005 11/20/2005 12/20/2005 10/20/2006 11/20/2006 12/20/2006 10/20/2007 11/20/2007 12/20/2007 11/20/2008 12/20/2008 11/20/2009 12/20/2009 11/20/2004 10/20/2008 10/20/2009 ASHBY TOTAL DOEPPER TOTAL BIXON TOTAL MCDONALD TOTAL PREVETE TOTAL WATERS TOTAL WILLIAMS TOTAL In our local area (CT/NY/NJ Lehigh Valley, PA), the number of homes for sale (Weichert and non-Weichert listings) has steadily increased over the past four years.
  8. 8. The Market Last Year…
  9. 9. 2012: State of the Market Affordability will Spur Recovery
  10. 10. Affordability Index 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. Source: NAR Housing Affordability Index 1971 to 2010
  11. 11. 194.5 Nov 2011 Affordability Index
  12. 12. 2012: State of the Market Historically Low Interest Rates
  13. 13. 30 Year Fixed interest rate 3.94% Lowest in recorded history
  14. 14. How Long Will Interest Rates Remain Low? 5-6 months absorption rate indicates a normal market.
  15. 15. What will the future bring…?
  16. 16. What will the future bring…?
  17. 17. What will the future bring…? http://money.cnn.com/2011/03/15/real_estate/rent _rise_housing/index.htm
  18. 18. 2012 Better Year… 2013…
  19. 19. Where we are …
  20. 20. Single Family Sales (year-over-year) NORTHEAST +2.8% WEST MIDWEST +1.2% +9.7% SOUTH +7.5% U.S. AVERAGE +5.8% NAR 2/2013
  21. 21. $1M+ Home Sales (year-over-year) NORTHEAST +71.3% WEST MIDWEST +66.7% +48.0% SOUTH +47.4% U.S. AVERAGE +62.3% NAR 2/2013
  22. 22. Projected % Change in Home Prices Source 2013 JP Morgan 9.7% Barclays 5.5% Capital Economics 5% Freddie Mac 2-3%
  23. 23. Average Annual Appreciation 12.0% 10.0% 10.4% 8.0% 6.0% 4.0% 3.6% 3.3% 2.0% 0.0% -2.0% -4.0% -5.7% -6.0% Pre-Bubble (1987-1999) Bubble (Q1 2000 - Q2 2006) Bust (Q3 2006 - Q2 2012) Expectations (2013 - 2017) Home Price Expectation Survey 12/2012
  24. 24. Fiscal Cliff Legislation ~ Good For Real Estate • Mortgage Cancellation Relief is extended for one year to January 1, 2014. • Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012. • The 10% tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012
  25. 25. Fiscal Cliff Legislation ~ Good For Real Estate • The tax exclusion for gains on the sale of a principle residence remains in effect for sellers whose income is above $450,000 (for those filing a joint return). • Continuation of Mortgage Interest deduction on Federal Income Taxes.
  26. 26. 2013 Economic Indicators GDP Growth: 2% growth in 2013, about the same as last year Interest Rates: Little or no increase in short-term rates in 2013 Inflation: Rising slightly this year, to about 2.3% Business Spending: About a 4% gain in 2013 Unemployment: Falling gradually over 2013 to around 7.5% Housing: Up 8% in 2012; helping GDP in 2013 Energy: Crude oil holding steady at $90-$95/barrel through early spring Consumer Confidence: Rising this winter.
  27. 27. NAR 2013 Projections • Affordability Index a record high in November 2012 at 194 projecting 160 for 2013. • Total Sales projecting 5.08 Million or 8.5% increase in 2013. • New Home Sales projecting 533,000 in 2013 a 46% increase. • Average Home Sales Price $185,800 or 4.2% increase in 2013. *Source: NAR News Release 12/20/12
  28. 28. February 2013 Real Estate Headlines
  29. 29. February 2013 Real Estate Headlines From Lawrence Yun, NAR chief economist. [NAR Release 2/11/13] • “Unsold listing inventory is the lowest level in 12 years.” • “In fact, buyer traffic is 40 percent above a year ago.” • “Total housing inventory at the end of January fell 4.9 percent…which represents a 4.2 month supply. It’s the lowest housing supply since April 2005.”
  30. 30. February 2013 Real Estate Headlines
  31. 31. February 2013 Real Estate Headlines 6.0% 5.5% Year-over-Year Change in Prices 4.3% 4.0% Increase of 3.6% 7.3% 2.0% 2.0% Jan for 2012 Apr Feb Mar 1.1% May 0.6% 0.0% -0.5% Jun Jul Aug Sep Oct Nov -2.0% -1.7% -2.5% -4.0% -3.5% -3.9% -6.0% S&P Case Shiller 2/2013
  32. 32. Spring 2013 Market Conditions • Dramatically reduced listing inventory levels. • Multiple Offers on the vast majority of houses going under contract. • Homes selling fast. • Heavy buyer demand especially in the more popular neighborhoods and price points.
  33. 33. Why is This Happening? • Improved job market • Fiscal Cliff behind us • Consumer Affordability and stronger consumer confidence • Post election pent up demand • Low interest rates • Overall positive real estate industry news • Wasn’t the world suppose to end on 12/21/12 according to the Mayan calendar?
  34. 34. 2013 Real Estate Market Mentally Shift into a Different Gear
  35. 35. What will the future bring…?
  36. 36. Mercer County ‘Supply & Demand’ Source: NAR, November 2008 Forecast
  37. 37. NJ Housing Permits In thousand units Source: Census
  38. 38. Mercer County Housing Permits 2000- 2009 Source: Census
  39. 39. Mercer County Housing Permits 2012 Single- Single- Two- Two- 3-or-4- 3-or-4- 5-or-More 5-or-More Total Family Family Family Family Family Family Family Family Mercer Units Units Value Units Value Units Value Units Value East Windsor township 27 27 5,264,144 0 0 0 0 0 0 Ewing township 85 3 2,378,118 4 4,000 3 55,000 75 6,603,330 Hamilton township 31 22 3,285,541 2 150,000 0 0 7 114,762 Hightstown borough 3 3 411,900 0 0 0 0 0 0 Hopewell borough 0 0 0 0 0 0 0 0 0 Hopewell township 68 8 3,115,896 0 0 0 0 60 5,779,000 Lawrence township 2 2 383,650 0 0 0 0 0 0 Pennington borough 0 0 0 0 0 0 0 0 0 Princeton borough 8 6 2,998,400 2 474,527 0 0 0 0 Princeton township 14 14 6,938,120 0 0 0 0 0 0 Robbinsville township* 85 0 10,021 4 329,000 0 0 5 9,156 Trenton 9 21 5,188,122 0 0 0 0 64 5,411,451 West Windsor township 115 6 1,262,785 0 0 0 0 109 7,729,428 Mercer County Total 447 112 31,236,697 12 957,527 3 55,000 320 25,647,127 Source: Census
  40. 40. Long Term Supply … Source: NAR, November 2008 Forecast Richardson Commercial
  41. 41. Long Term Demand … Source: NAR, November 2008 Forecast http://lwd.dol.state.nj.us/labor/lpa/pub/factbook/merfct.pdf
  42. 42. Top Five Rules for Understanding the Real Estate Market: 1. Real Estate is Local 2. Real Estate is Local 3. Real Estate is Local 4. Real Estate is Local 5. Real Estate is Local
  43. 43. 1. You Understand the Local Market That You are Buying into or Selling out of… -Inventory - Location - Sales Patterns - Neighborhood, Location - Style of Home, Beds, Baths, etc
  44. 44. Market Absorption Scale (Absorption Rate in Months) 5-6 months absorption rate indicates a normal market.
  45. 45. Absorption Rate 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.
  46. 46. Sample Market Absorption Rate Anytown., NJ 107 current active listings 24.3 = months absorption 4 reported sales in last 30 days rate 5-6 Months Market Absorption Rate indicates a normal market.
  47. 47. 47 Market Scale for Supply & Demand High Supply/Low Demand Low Supply/High Demand Normal 1 Market Absorption in Months Weichert has been 2 studying market conditions for more than 3 3 decades and has found a direct correlation between 4 market absorption and 5 property values. Normal 6 As absorption rates 7 increase beyond a normal market level of 5-6 8 months, property values depreciate annually. 9 Note: This Market Scale is valid 10 only for absorption rates between 1 and 12 months. 11 12
  48. 48. 3/26/12 Towns Active Pending Absorption New Listings Net Gain Listings % of Expired W/drawn Closed Listings in Last Rate in in 30 Days (Loss) to Reduced in Invent. Listings Listings Listings 30 Days Months Market 30 Days Reduced West Windsor: 119 25 4.8 47 22 18 15.1% 2 3 13 All Styles West Windsor 13 3 4.3 6 3 1 7.7% 0 1 8 Condo/ T.Houses West Windsor 11 2 5.5 4 2 _ _ 0 0 1 55+ West Windsor 95 20 4.8 37 17 17 17.9% 2 2 4 Single Family Lawrence: All Styles 192 20 9.6 51 31 47 24.5% 5 8 9 Lawrence: Condo/ 55 8 6.9 17 9 21 38.2% 2 2 5 THouses Lawrence: 55+ 14 1 14 2 1 _ _ 0 1 1 Lawrence: Single 123 11 11.2 32 21 26 21.1% 3 5 3
  49. 49. 3/19/13 Towns Active Pending Absorption New Listings Net Gain Listings % of Expired W/drawn Closed Listings in Last Rate in in 30 Days (Loss) to Reduced in Invent. Listings Listings Listings 30 Days Months Market 30 Days Reduced West Windsor: 64 28 2.3 26 (2) 13 20.3% 2 0 16 All Styles West Windsor 7 7 1.0 3 (4) 1 14.3% 1 0 6 Condo/ T.Houses West Windsor 7 2 3.5 2 0 _ _ 1 0 3 55+ West Windsor 50 19 2.6 21 2 12 24.0% 0 0 7 Single Family Lawrence: All Styles 148 15 9.9 42 27 27 18.2% 8 1 18 Lawrence: Condo/ 40 7 5.7 11 4 8 20.0% 4 0 9 THouses Lawrence: 55+ 9 1 9.0 3 2 _ _ 1 0 2 Lawrence: Single 99 7 14.1 28 21 19 19.2% 3 1 7 Family
  50. 50. 3/26/12 Towns Active Pending Absorption New Net Listings % of Expire W/drawn Closed Listings in Last Rate in Listings in Gain Reduced Invent. d Listings Listings 30 Days Months 30 Days (Loss) in 30 Reduced Listing to Days s Market Plainsboro All Styles 82 17 4.8 25 8 15 18% 11 0 13 Plainsboro Condo/ 38 8 4.75 14 6 7 18% 9 0 6 THouses Plainsboro 55+ 14 3 4.6 1 (2) 1 7% 0 0 1 Plainsboro Single 30 6 5 10 4 7 23% 2 0 6 Family Cranbury: All Styles 18 2 9 2 0 2 11% 0 0 3
  51. 51. 3/19/13 Towns Active Pending Absorption New Net Listings % of Expire W/drawn Closed Listings in Last Rate in Listings in Gain Reduced Invent. d Listings Listings 30 Days Months 30 Days (Loss) in 30 Reduced Listing to Days s Market Plainsboro All Styles 59 16 3.6 22 6 8 14% 6 0 14 Plainsboro Condo/ 27 9 3 10 1 2 7% 5 0 6 THouses Plainsboro 55+ 12 2 6 1 (1) 0 0 0 0 5 Plainsboro Single 20 5 4 11 6 6 30% 1 0 3 Family Cranbury: All Styles 14 3 4.6 4 1 2 14% 1 0 1
  52. 52. 3/26/12 Towns Active Pending Absorption New Net Gain Listings % of Expired W/drawn Closed Listings in Last Rate in Listings in (Loss) to Reduced in Invent. Listings Listings Listings 30 Days Months 30 Days Market 30 Days Reduced Ewing: All Styles 250 14 18 55 41 44 18% 12 7 18 Ewing : Condo/ 30 0 999 8 8 6 20% 1 1 1 T.Houses Ewing 55+: 14 0 999 2 2 --- --- 0 0 1 Ewing: Single 206 14 15 45 31 38 18% 11 6 16 Family East Windsor: 193 18 11 40 22 38 20% 20 3 12 All Styles East Windsor: 110 8 14 22 14 17 15% 11 2 7 Condo/ Thouses East Windsor: 13 2 6.5 3 1 --- --- 4 0 1 55+ East Windsor: 70 8 9 15 7 21 30% 5 1 4 Single Family
  53. 53. 3/19/13 Towns Active Pending Absorption New Net Gain Listings % of Expired W/drawn Closed Listings in Last Rate in Listings in (Loss) to Reduced in Invent. Listings Listings Listings 30 Days Months 30 Days Market 30 Days Reduced Ewing: All Styles 190 25 8 38 13 32 17% 19 1 12 Ewing : Condo/ 28 4 7 8 4 5 18% 2 1 3 T.Houses Ewing 55+: 3 2 1.5 0 -2 --- --- 3 0 1 Ewing: Single 159 19 8 30 11 27 17% 14 0 8 Family East Windsor: 140 21 7 32 11 22 16% 6 3 15 All Styles East Windsor: 69 14 5 13 -1 13 19% 5 2 7 Condo/ Thouses East Windsor: 8 0 999 2 2 --- --- 0 0 1 55+ East Windsor: 63 7 9 17 10 9 10% 1 1 7 Single Family
  54. 54. 3/26/12 Towns Active Pending Absorptio New Net Gain Listings % of Expired W/drawn Closed Listings in Last n Rate in Listings in (Loss) to Reduced in Invent. Listings Listings Listings 30 Days Months 30 Days Market 30 Days Reduced Hopewell Twp. 137 9 14.67 34 25 20 14.5% 3 4 15 All Styles Hopewell Twp. Condo/ 11 2 5.5 2 0 4 36% 0 2 0 T.Houses Hopewell Twp.: 11 0 99 5 5 - - 0 0 1 55+ Hopewell Twp Single Family 140 7 20 27 20 16 14% 3 2 14 528 72 7.33 118 46 121 23% 19 11 50 Hamilton: All Styles 101 25 4.04 8 -17 28 28% 6 3 5 Hamilton: Condo/ THouses 33 3 11 8 5 - - 3 0 3 Hamilton: 55+ 394 44 8.9 102 58 93 23.6% 10 8 42 Hamilton: Single Family
  55. 55. 3/19/13 Towns Active Pending Absorption New Net Gain Listings % of Expired W/drawn Closed Listings in Last Rate in Listings in (Loss) to Reduced in Invent. Listings Listings Listings 30 Days Months 30 Days Market 30 Days Reduced Hopewell Twp. 143 13 11 47 34 16 11.2% 8 2 7 All Styles Hopewell Twp. Condo/ 8 5 1.6 6 1 1 12.5% 7 0 0 T.Houses Hopewell Twp.: 3 0 99 2 2 -- -- 0 0 0 55+ Hopewell Twp Single Family 132 8 16.5 39 31 15 11.4% 1 2 7 Hamilton: All Styles 422 57 7.4 116 59 55 13% 23 13 49 Hamilton: Condo/ THouses 82 8 10.3 18 10 1 12.5% 3 3 10 Hamilton: 55+ 25 7 3.6 7 0 -- -- 1 0 2 Hamilton: Single Family 315 42 7.5 91 49 54 17.1% 19 10 37
  56. 56. 3/26/12 Towns Active Pending Absorption New Net Gain Listings % of Expired W/draw Closed Listings in Last Rate in Listings in (Loss) to Reduced Invent. Listings n Listings 30 Days Months 30 Days Market in 30 Reduced Listings Days Princeton Boro: All Styles 42 2 21 14 12 8 19% 0 2 1 Pton -Boro Condo/ Thouses 20 1 20 4 3 5 25% 0 2 1 Pton-Boro Single Family 22 1 22 10 9 3 13.6% 0 0 0 Pton Twp: All Styles 127 11 11.5 42 31 14 11% 1 0 10 Pton Twp: Condo/ Thouses 21 2 10.5 8 6 1 4.6% 0 0 3 Pton Twp: Single Family 106 9 11.8 34 25 13 12.3% 1 0 7
  57. 57. 3/19/13 Towns Active Pending Absorption New Net Gain Listings % of Invent. Expired W/drawn Closed Listings in Last Rate in Listings in (Loss) to Reduced Reduced Listings Listings Listings 30 Days Months 30 Days Market in 30 Days Princeton: All Styles 129 18 7.2 36 18 15 11.6% 4 4 9 Princeton: Condo/ Thouses 31 2 15.5 8 6 4 12.9% 1 1 3 Princeton: Single Family 98 16 6.1 28 12 11 11.2% 3 3 6
  58. 58. 3/26/12 Towns Active Pending Absorption New Net Listings % of Expire W/draw Closed Listings in Last Rate in Listings in Gain Reduce Invent. d n Listings 30 Days Months 30 Days (Loss) d in 30 Reduced Listing Listings to Days s Market South Brunswick 328 14 23 47 33 38 12 17 2 23 All Styles South BrunswickCon do/ T.Houses 80 5 16 23 18 13 16 9 0 8 South Brunswick 33 1 33 1 0 2 6 0 0 1 55+ South Brunswick 215 8 27 23 15 23 11 8 2 14 Single Family Monroe: All Styles 432 20 22 111 91 67 16 3 0 3 Monroe: 55+ 319 15 21 74 59 41 13 0 0 3 Monroe: Single Family 173 5 35 37 32 26 15 3 0 0
  59. 59. 3/19/13 Towns Active Pending Absorption New Net Gain Listings % of Expired W/drawn Closed Listings in Last Rate in Listings in (Loss) to Reduced Invent. Listings Listings Listings 30 Days Months 30 Days Market in 30 Days Reduced South Brunswick 171 13 13 48 35 7 4 18 2 12 All Styles South BrunswickCon do/ T.Houses 62 9 7 18 9 5 8 3 0 5 South Brunswick 30 1 30 5 4 -9 -30 5 1 1 55+ South Brunswick 79 10 7.9 24 21 11 14 10 1 6 Single Family Monroe: All Styles 427 32 13 108 76 40 9 26 3 71 Monroe: 55+ 268 25 26 70 45 25 9 16 1 52 Monroe: Single Family 159 7 22 38 31 15 1 10 2 19
  60. 60. 3/26/12 Towns Active Pending Absorption New Net Gain Listings % of Expired W/draw Closed Listings in Last Rate in Listings in (Loss) to Reduced Invent. Listings n Listings 30 Days Months 30 Days Market in 30 Reduced Listings Days Montgomery All Styles 144 23 6.3 47 +24 16 11% 8 4 11 Montgomery Condo/Twnhms 21 1 21 7 +6 4 19% 2 0 3 Single Family 123 22 5.6 40 +18 12 10% 6 4 8 Hillsborough All Styles 265 36 7.4 84 +48 52 20% 16 12 9 Hillsborough Condo/Twnhms 98 10 9.8 27 +17 19 19% 6 3 3 Hillsborough Single Family 167 26 6.4 57 +31 33 20% 10 9 6
  61. 61. 3/19/13 Towns Active Pending Absorption New Net Gain Listings % of Expired W/drawn Closed Listings in Last Rate in Listings in (Loss) to Reduced Invent. Listings Listings Listings 30 Days Months 30 Days Market in 30 Reduced Days Montgomery All Styles 112 15 7.5 26 +11 14 12% 3 1 11 Montgomery Condo/Twnhms 14 5 2.8 4 -1 1 7% 0 0 0 Single Family 98 10 9.8 22 +12 13 13% 3 1 11 Hillsborough All Styles 167 39 4.3 42 +3 22 13% 5 2 15 Hillsborough Condo/Twnhms 60 16 3.7 13 -3 14 23% 2 1 5 Hillsborough Single Family 107 23 4.6 29 +6 8 7% 3 1 10
  62. 62. 62 Market Scale for Supply & Demand High Supply/Low Demand Low Supply/High Demand Normal 1 Market Absorption in Months Weichert has been 2 studying market conditions for more than 3 3 decades and has found a direct correlation between 4 market absorption and 5 property values. Normal 6 As absorption rates 7 increase beyond a normal market level of 5-6 8 months, property values depreciate annually. 9 Note: This Market Scale is valid 10 only for absorption rates between 1 and 12 months. 11 12
  63. 63. Core Market Prices will go up 10% in 2013… Source: NAR, November 2008 Forecast
  64. 64. Buying/ Selling Strategies Source: MLS
  65. 65. Understand the Market That You are Buying/ Selling in…
  66. 66. Sample Market Absorption Rate Anytown., NJ 107 current active listings 24.3 = months absorption 4 reported sales in last 30 days rate Market Absorption Rate is the Absorption Rate indicates to normal current inventory of 5-6 Months Market number of months it will take a sell the market. homes if nothing new comes on the market and the rate of sales stays the same 5-6 Months Absorption Rate indicates a Normal Market
  67. 67. Market Absorption Rate West Windsor Single Family Homes $600,000 - $800,000 22 current active listings 2.2 months = absorption 10 reported ‘pending’ sales in last 30 days rate 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 5-6 Months Absorption Rate indicates a Normal Market
  68. 68. Market Absorption Rate West Windsor Condos/ Townhouses 7 current active listings 1 months = absorption 7 reported ‘pending’ sales in last 30 days rate 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 5-6 Months Absorption Rate indicates a Normal Market
  69. 69. Market Absorption Rate Robbinsville Condos/ Townhouses 33 current active listings 3 months = absorption 11 reported ‘pending’ sales in last 30 days rate 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 5-6 Months Absorption Rate indicates a Normal Market
  70. 70. Market Absorption Rate South Brunswick Condos/ Townhouses 56 current active listings 6.2 months = absorption 9 reported ‘pending’ sales in last 30 days rate 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 5-6 Months Absorption Rate indicates a Normal Market
  71. 71. Market Absorption Rate South Brunswick Condos/ Townhouses In Princeton Walk 2 current active listings 1 months = absorption 1 reported ‘pending’ sales in last 30 days rate 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 5-6 Months Absorption Rate indicates a Normal Market
  72. 72. Market Absorption Rate Plainsboro Townhouses 12 current active listings 3 months = absorption 4 reported ‘pending’ sales in last 30 days rate 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 5-6 Months Absorption Rate indicates a Normal Market
  73. 73. Market Absorption Rate Princeton Single Family $500k - $800k 19 current active listings 3.8 months = absorption 5 reported ‘pending’ sales in last 30 days rate 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 5-6 Months Absorption Rate indicates a Normal Market
  74. 74. Market Absorption Rate Princeton Single Family $1.0-$1.5 million 19 current active listings 9.5 months = absorption 2 reported ‘pending’ sales in last 30 days rate 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 5-6 Months Absorption Rate indicates a Normal Market
  75. 75. Market Absorption Rate Princeton Single Family $2.5 million + 16 current active listings 99* months = absorption 0 reported ‘pending’ sales in last 30 days rate 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 5-6 Months Absorption Rate indicates a Normal Market
  76. 76. 2012 NAR Home Buyer & Seller Profile
  77. 77. 2006 – 2012… ‘I don’t want to buy a house and then watch it drop in value!’
  78. 78.   Purchase Price $329,000 Loan Amount $317400 Down Payment $11,515 Monthly P&I $1802 Appreciation/Depreciation Home Value 1st Year -3% $319,130 2nd Year 0% $319,130 3rd Year 1% $322,321 4th Year 3% $331,990 5th Year 5% $348,590 5 Year Appreciation/Depreciation $19,500 Vs Paying Rent @ Tax Benefit   $1600/mo 1st Year $5,000 $19,200 2nd Year $5,000 $19,200 3rd Year $5,000 $19,200 4th Year $5,000 $19,200 5th Year $5,000 $19,200 5 Year Total $25,000 $96,000 Create Equity Total Gain $44,200 v Pay Rent
  79. 79.   Purchase Price $329,000 Loan Amount $317400 Down Payment $11,515 Monthly P&I $1802 Appreciation/Depreciation Home Value 1st Year 5 $319,130 2nd Year 3% $319,130 3rd Year 2% $322,321 4th Year 2% $331,990 5th Year 2% $348,590 5 Year Appreciation/Depreciation $48,590 Vs Paying Rent @ Tax Benefit   $1600/mo 1st Year $5,000 $19,200 2nd Year $5,000 $19,200 3rd Year $5,000 $19,200 4th Year $5,000 $19,200 5th Year $5,000 $19,200 5 Year Total $25,000 $96,000 Create Equity Total Gain $73,529 v Pay Rent
  80. 80. + The Amortization Schedule on a Loan Yearly Schedule of Balances and Payments Beginning Cumulative Cumulativ Ending Year Payment Principal Interest Balance Principal e Interest Balance 2010 $315,646.96 $21,625.92 $4,374.96 $17,250.96 $6,128.00 $24,508.72 $311,272.00 2011 $311,272.00 $21,625.92 $4,621.30 $17,004.62 $10,749.30 $41,513.34 $306,650.70 2012 $306,650.70 $21,625.92 $4,881.98 $16,743.94 $15,631.28 $58,257.28 $301,768.72 2013 $301,768.72 $21,625.92 $5,157.36 $16,468.56 $20,788.64 $74,725.84 $296,611.36 2014 $296,611.36 $21,625.92 $5,448.28 $16,177.64 $26,236.92 $90,903.48 $291,163.08
  81. 81. Appreciation (conservitive): $19,500 + Amortization: $20,109 + Tax Benefit of Home Ownership $25,000 + Low Interest Rates: $5000 ___________________ total 5 year gain = $69,609
  82. 82. Market Absorption Scale (Absorption Rate in Months) 5-6 months absorption rate indicates a normal market.
  83. 83. 2013 - ? Top Buyer Negotiating Strategy…Pay up!
  84. 84. Monroe Lane, Princeton Listed at $650,000 14 offers…
  85. 85. Weichert’s Unique Negotiation Technique Escalation Clause Addendum
  86. 86. Escalation Clause Dialogue What is an escalation clause: “An escalation clause is simple language we include in your offer that authorizes your predetermined bid increments over all of the other bids up to your maximum purchase price.”
  87. 87. Have you ever used Ebay?
  88. 88. You don’t always pay your “maximum”
  89. 89. Increase your offer just enough to be the high bidder:
  90. 90. You set your offer, the bid increments and your maximum price up front:
  91. 91. 2. ‘I am going to time the Market and buy/ sell at the time when inventory & buyer count is in my favor…’ Source: MLS
  92. 92. Listing v Contracts: Dec – Jan 2012, Mercer County
  93. 93. Listing v Contracts: Dec – Jan 2012, Lawrence Twp.
  94. 94. 3. ‘I am going to wait until the price comes down further and then make an offer/ if I lower my price I will get lower Source: MLS bids…?
  95. 95. Don’t Wait Hopewell Twp: 82% Homes currently Under Contract: 17 Under contract within 30 days of Listing at the Right Price or Re-positioning in line with the market : 14 Princeton 63% Homes currently Under Contract: 19 Under contract within 30 days of Listing at the Right Price or Re-positioning in line with the market : 12
  96. 96. Don’t wait… 2/13/13 Listed at $614,999. No offers… 3/12/13 Reduced to $599,000….three offers.
  97. 97. It’s About Price Sellers, if your listing hasn’t gone under contract in the last 30 days and the price is not adjusted it will not go under contract in the next 30. If the home your buyer wants has not had a price adjustment in the last 30 days it is the perfect time to go face to face with the seller to negotiate!
  98. 98. Financial Benefits and Process of Home-Ownership. Richard Moller, Loan Officer Weichert Financial Services
  99. 99. Pop Quiz… If you take out a $200,000 30 year fixed payment loan from the bank, what is your monthly payment? A. $1901. B. $1640. C. $1201. D. $969.
  100. 100. Pop Quiz… What does an average buyer need for a down payment? A. 25% B. 20% C. 10% D. 3.5% D. 0%
  101. 101. Loan Application Checklist
  102. 102. The Financial Process
  103. 103. Establish Your Buying Power
  104. 104. The Process to Sell a Home… All Negotiations, including real estate, are all about negotiation and control.
  105. 105. Right Price All Negotiations, including real estate, are all about negotiation and control.
  106. 106. Negotiations are about leverage, use the listing price as part of yours… Source: MLS
  107. 107. Source: Otteau.com
  108. 108. Source: Otteau.com
  109. 109. Source: Otteau.com
  110. 110. Effects of Right Pricing… •Promotes buyer & agent interest • Generates home-viewings • Creates a Sense of Urgency • Sets the stage for multiple purchase offers during the 1st 30 days of marketing • Purchase offers tend to be higher in relation to asking price • Puts the seller in firm control of price negotiations • Likely to result in a higher home selling price in a shorter marketing time period Otteau.com
  111. 111. Effects of Over Pricing… 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. In the end, the Over Pricing scenario has many adverse effects, including: Eliminating all Sense of Urgency Extending marketing time in a price declining market Results in asking price reductions over time Forfeits price control to the buyer Encourages discounted purchase offers Attracts bottom-feeders Leads to lower selling price Otteau.com
  112. 112. Princeton Twp. 2010 The Price Trend Came up with a price of $850,000. I recommended a price of $799,000.
  113. 113. Negotiations are about leverage, use the listing price as yours… Listed at $799,000. 5 offers, sold at $942,000. The seller had control.
  114. 114. Otteau.com
  115. 115. 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.
  116. 116. 2. The Effect of Staging on the Value of a Home.
  117. 117. Home Staging All Negotiations, including real estate, are all about negotiation and control.
  118. 118. 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.
  119. 119. The Way You Live In Your Home…
  120. 120. … And The Way We Market And Sell A House Are Two Different Things.
  121. 121. “The Investment in Home Staging is Always Less than Your First Price Reduction!”
  122. 122. Buyers Only Know What They See …
  123. 123. … Not The Way It Is Going To Be.
  124. 124. Home Staging “The investment in home staging is always less than your first price reduction!” *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.
  125. 125. Home Staging “The investment in home staging is always less than your first price reduction!” 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. *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.
  126. 126. Pre-Inspection All Negotiations, including real estate, are all about negotiation and control. Who is in control?
  127. 127. What is ‘Pre-Inspection?’
  128. 128. 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.
  129. 129. PRE-LISTING Home Inspection DOESN’T THE BUYER DO THE HOME INSPECTION?
  130. 130. Home Warranty All Negotiations, including real estate, are all about leverage and control. Who is in control?
  131. 131. Home Warranty Refrigerator? Stove? Washer? Dryer? Furnace? Central Air? Plumbing? WEICHERT HPP Electrical System? w Kn o ’ s t wha ed ud incl ur in yo g era Cov See terms, conditions and limitations in your home warranty. e!
  132. 132. Who is in control?
  133. 133. Home Improvements I am moving out of the house, I do not want spend too much money to move. Or I just spent $$ on a new kitchen, I want $$$$$$ back on that investment when I move.
  134. 134. Return on Home Improvements http://www.remodeling.hw.net/2011/costvsvalue/division/middle-atlantic.aspx
  135. 135. What will a real estate company do for me? Weichert Family of Companies
  136. 136. This is where you win or lose the sale Source: 2012 NAR Profile of Home Buyers and Sellers
  137. 137. Making Your Purchase as Smooth as Possible Buying a home involves the careful coordination of many people. Choosing a real estate team you can count on will make the process smoother and easier.
  138. 138. The Weichert Difference •Time is Money •Time is Life •Stress Kills
  139. 139. What Will a Weichert Agent Do for You? Educate You. Negotiate on your behalf. Offer advice on due diligence. Manage all aspects of the transaction process.
  140. 140. We’re Here to Help The Entire Process is reviewed by Legal Council • Use a LOCAL attorney • Use a REAL ESTATE attorney • Please, please, please… don’t use your brother’s cousin’s neighbor’s friend’s divorce attorney in Bergen County. It will cost you more than whatever “deal” they’re cutting you!
  141. 141. Become a Fan! www.facbook.com/weichertprinceton www.weichert-princeton.com We post a ton of great market data on these two sites.
  142. 142. Resource and website list: Realtor.org http://www.facebook.com/pages/ NAR-Research/73888294183# Remodeling.com
  143. 143. Resource and Website List http://www.realtor.org/research/res earch/housinginx Remodeling.com www.Otteau.com www.Pre-listing-inspection.com
  144. 144. Resource and Website List: www.Housemaster.com www.Stagingshoppingcenter.com
  145. 145. Resource and website list: www.Stagedhomes.com www.realestatestagingassociation.com www.realtytrac.com

Editor's Notes

  • www.realtor.org
  • www.realtor.org
  • https://pulsenomics.com/Dec_2012_HPE_Survey.html
  • (elicit responses)
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Populate this table to show the local absorption rate in the various price ranges that are appropriate for your market area. Please add or delete rows as necessary to adequately reflect local conditions.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Create your own table to approach the aspects of the marketplace that you consider most relevant and valuable to your associates. For ideas on what to cover, refer to the tables in the Planning Day Presentation on your Planning Day 2005 CD. For example, you might discuss the market conditions of different communities or price ranges each week.
  • Create your own table to approach the aspects of the marketplace that you consider most relevant and valuable to your associates. For ideas on what to cover, refer to the tables in the Planning Day Presentation on your Planning Day 2005 CD. For example, you might discuss the market conditions of different communities or price ranges each week.
  • Create your own table to approach the aspects of the marketplace that you consider most relevant and valuable to your associates. For ideas on what to cover, refer to the tables in the Planning Day Presentation on your Planning Day 2005 CD. For example, you might discuss the market conditions of different communities or price ranges each week.
  • Create your own table or put together a bulleted list that covers the aspects of the marketplace that you consider most relevant and valuable to your Associates. Examples of items that might be used on this slide include trends in sales, prices, inventory and/or foreclosures in the different communities in your local market; news from your local board of Realtors; what the competition is doing, etc.
  • Create your own table or put together a bulleted list that covers the aspects of the marketplace that you consider most relevant and valuable to your Associates. Examples of items that might be used on this slide include trends in sales, prices, inventory and/or foreclosures in the different communities in your local market; news from your local board of Realtors; what the competition is doing, etc.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.
  • Review the generic sample calculation and/or a customized calculation you prepared for your office market area. Follow the instructions below to update this slide with customized information for your office. Save the Sales Meeting Guide presentation to your C drive. Open the Sales Meeting Guide presentation from your C drive. Scroll down to the “Sample Market Absorption Rate” slide in the weekly training section of the presentation. Double-click on the slide to be able to make edits. Click in each section of the formula to edit text. Save the document to save edits.

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