Weichert Princeton March 2016 Market Update Seminar

Weichert Princeton March 2016 Market Update Seminar
Princeton Area Real EstatePrinceton Area Real Estate Market UpdateMarket Update Joshua D Wilton Managing Broker Weichert Realtors Princeton Office
“ Dave Ramsey Financial Guru When getting help with money, whether it is insurance, real estate or investments you should always look for someone with the heart of a teacher, not the heart of a salesman.
Agenda The Market: The Big Picture Understanding the Local Market(s) You’re Buying Into or Selling Out Of Process and Strategies for Buyers and Sellers Real Estate Market UpdateReal Estate Market Update Agenda
Real Estate Market UpdateReal Estate Market Update What are you hearing about the market?
The National Picture
17 Year Real Estate Cycle
NAR Number of Home Sales January through November in millions
Y-O-Y by region EXISTING Home Sales Northeast NAR 1/2016
2016: Looking Forward Source: 5 Real Estate Trends That Will Dominate 2016. Realtormag.realtor.org. Experts say five trends will dominate the real estate market in 2016:
2016: Looking Forward 5 Trends Will Dominate the Market Trend #1: Normal is coming • Expect healthy growth in home sales and prices – at a slower pace than in 2015. • New construction and distressed sales should return to more historic levels, and home prices are expected to follow at “more normal rates consistent with a more balanced market.” • “We’ve lived through 15 years of truly abnormal trends, and after working off the devastating effects of the housing bust, we’re finally seeing signs of more normal conditions.” – Jonathon Smoke, chief economist at realtor.com®. Source: 5 Real Estate Trends That Will Dominate 2016. Realtormag.realtor.org.
• Millennials represented nearly 2 billion sales in 2015 – one-third of homebuyers. They are expected to continue to be a major buying pool in 2016, with the majority of buyers between ages 25 and 34 expected to be first-time homebuyers next year. • Two other generations will also have a big presence in 2016: financially recovering GenXers and older Baby Boomers who are entering retirement. Since most of these people are already homeowners, they’ll play a double role, boosting the market as both sellers and buyers. Trend #2: Generational buyer trends shape up Source: 5 Real Estate Trends That Will Dominate 2016. Realtormag.realtor.org. 2016: Looking Forward 5 Trends Will Dominate the Market
Source: 5 Real Estate Trends That Will Dominate 2016. Realtormag.realtor.org. • Builders have been faced with higher land costs, limited labor and concerns about the demand of the entry-level market. As such, they shifted to constructing more higher-priced homes, which caused new-home prices to rise significantly faster than existing-home prices. • In 2016, they likely will shift to more affordable products to cater to the entry-level buyers. Trend #3: New home construction focuses more on affordability 2016: Looking Forward 5 Trends Will Dominate the Market
Source: 5 Real Estate Trends That Will Dominate 2016. Realtormag.realtor.org. • Mortgage rates will likely be volatile in 2016. But the recent move by the Federal Reserve to guide interest rates higher should push mortgage rates higher in the new year from the historic lows they have been at for years. • However, higher rates will drive monthly payments higher. Along with that, debt-to-income ratios will also go higher. This means the markets with the highest home prices will see the effects from the higher rates the most. Trend #4: Higher mortgage rates 2016: Looking Forward 5 Trends Will Dominate the Market
Source: 5 Real Estate Trends That Will Dominate 2016. Realtormag.realtor.org. • Rental costs are skyrocketing, and the costs are likely to only go up in the new year. More than 85 percent of the nation’s markets have rents that exceed 30 percent of the income of renting households. • Rents are accelerating at a more rapid pace than home prices, which are moderating. Because of this, it is more affordable to buy than to rent in more than three-quarters of the United States. Trend #5: Rents go up even higher 2016: Looking Forward 5 Trends Will Dominate the Market
2016 Market Trend 5.05.0 %% Dec 2015 Labor force status: Unemployment rate Source: US Bureau of Labor Statistics
2016 Market Trend 15 Largest Job Markets Job Change: Nov 2014 – Nov 2015 Added +61,90+61,90 00 JobsNew York +1.8% Philadelphia +1.3%
2016 Market Trend 15 Largest Job Markets Ranked by Unemployment Rate 4.8
Year of the MILLENNIALSMILLENNIALS 2016 Market Trend
MILLENNIALS ~ 25 TO 34 YEAR OLDS• Largest demographic of buyers 32%* • Largest share of First Time Buyers 68%* 2016 Buying Force *Source: NAR 12/2015
MILLENNIALS ~ Raising Confidence in Owning* • 2011: 65% Want to Own/Buy • 2014: 78% Want to Own/Buy • 2015: 80% Want to Own/Buy 2016 Buying Force *Source: Ralph McLaughlin, economist with real-estate research group Trulia.com
MILLENNIALS ~ Soaring Rental Rates* 2016 Buying Force *Source: US Census Bureau News Report
MILLENNIALS ~ Buying Preferences 2016 Buying Force • Safety of Neighborhood • Quality of home • Resales • Live near public transportation/city centers/close-in suburbs popular • Convenient to shopping/restaurants/amenities
Baby Boomer ~ Buying Preferences 2016 Buying Force • Safety of Neighborhood • Quality of home • Resales • Live near public transportation/city centers/close-in suburbs popular • Convenient to shopping/restaurants/amenities
Now* 2014 2013 2010 Gas per gallon (NY area) $1.58 $1.99 $3.81 $2.73 Stock market (Dow Jones) 16,943 17,893 14,776 11,578 Avg. 30-year fixed rate 3.75% 3.73% 4.43% 4.71% GDP 17,649 17,419 16,163 14,964 Household income $54,382 $53,891 $53,046 $49,276 Unemployment rate 5.0% 5.67% 7.4% 9.3% Foreclosures 1,009,345 1,117,426 1,369 ,405 2,871,891 2010 to Current Comparisons
Tightest Inventory Markets City Centers/Close-In Suburbs Sales Office Absorption Rates 1/01/2016 Jersey City/Downtown, NJ 1.79 Jersey City/Exchange Place, NJ 1.70 Hoboken, NJ 1.60 Bayonne, NJ 3.50 Chatham, NJ 3.08 Madison, NJ 1.22 Summit, NJ 3.43 Short Hills, NJ 1.74 Maplewood, NJ 1.89 Westfield, NJ 3.76 2016 Buying Force
Inventory Challenges/Shortages ~ Why? 2016 • Current heavier buyer demand than supply – City centers/close suburbs – Most affordable/popular price points – Public commuter route destinations • Low new construction availability
The boom….The New Jersey MarketThe Statewide Picture
The New Jersey MarketThe Statewide Picture Source: NJAR 10K Research Closed Sales 2015
The New Jersey MarketThe Statewide Picture Source: NJAR 10K Research Days on Market 2015
The New Jersey MarketThe Statewide Picture Source: NJAR 10K Research Average Sales Price 2015
The Hyper Local Market Real Estate is Local It’s Local to the County 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 Real Estate is Local
Icando myownlocal researchonline… You’re probably thinking….
Source: Zillow.com
Online Estimates If the estimate is accurate within 5% you’re talking about a $50,000 spread 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
Quicken Loans Appraiser Home Value Opinions Compared to Homeowner Estimates 2015
The boom….The Local MarketThe Local Picture
Mercer County 1. Supply & Demand 2. Price Trends Source: NAR, November 2008 Forecast The Local Picture
Long Term Demand … Source: NAR, November 2008 Forecast http://lwd.dol.state.nj.us/labor/lpa/pub/factbook/merfct.pdf Long Term Demand for Housing
Source: NJAR 10K Research DataSource: NJAR 10K Research Mercer County Single Family Market
Source: NJAR 10K Research DataSource: NJAR 10K Research Mercer County Condo/Townhouse Market
Source: NJAR 10K Research DataSource: NJAR 10K Research Mercer/ Middlesex/ Somerset County ‘Market Drivers’ 1. Trains/ Schools/ Affordability 2. Schools/ Trains/ Affordability 3. Convenience/ Town Center/ Lifestyle 4. Affordability
Source: NJAR 10K Research DataSource: NJAR 10K Research Hopewell Train Schools Lifestyle Affordability
Source: NJAR 10K Research DataSource: NJAR 10K Research
Hopewell Twp Market Activity Single Family Homes Average Sale Price 2012 2013 2014 Source: TrendMLS 2015
Hopewell Twp Market Activity Single Family Homes Average Days on Market Source: TrendMLS 2012 2013 2014 2015
Hopewell Twp Market Activity Single Family Homes List to Sale Price Ratio Source: TrendMLS 2012 2013 2014 2015
Hopewell Twp Market Activity Condos & Townhouses Average Sale Price Source: TrendMLS 2012 2013 2014 2015
Hopewell Twp Market Activity Condos & Townhouses Average Days on Market Source: TrendMLS 2012 2013 2014 2015
Hopewell Twp Market Activity Condos & Townhouses List to Sale Price Ratio Source: TrendMLS 2012 2013 2014 2015
Source: NJAR 10K Research DataSource: NJAR 10K Research Lawrenceville Train Schools Lifestyle Affordability
Lawrenceville Market Activity Single Family Homes Average Sale Price 2012 2013 2015 Source: TrendMLS 2014 -36.9% vs 2014
Lawrenceville Market Activity Single Family Homes Average Days on Market Source: TrendMLS 2012 2013 20152014
Lawrenceville Market Activity Single Family Homes List to Sale Price Ratio Source: TrendMLS 2012 2013 20152014
Lawrenceville Market Activity Condos & Townhouses Average Sale Price Source: TrendMLS 2012 2013 20152014 -27.7% vs 2014
Lawrenceville Market Activity Condos & Townhouses Average Days on Market Source: TrendMLS 2012 2013 20152014
Lawrenceville Market Activity Condos & Townhouses List to Sale Price Ratio Source: TrendMLS 2012 2013 20152014
Source: NJAR 10K Research DataSource: NJAR 10K Research West Windsor Train Schools Lifestyle Affordability
West Windsor Market Activity Single Family Homes Average Sale Price 2012 2013 2014 2015
West Windsor Market Activity Single Family Homes Average Days on Market 2012 2013 2014 2015
West Windsor Market Activity Single Family Homes List to Sale Price Ratio 2012 2013 2014 2015
West Windsor Market Activity Condos & Townhouses Average Sale Price 2012 2013 2014 2015 YTD as of 7/21/15
West Windsor Market Activity Condos & Townhouses Average Days on Market 2012 2013 2014 2015
West Windsor Market Activity Condos & Townhouses List to Sale Price Ratio 2012 2013 2014 2015
West Windsor Market Activity Condos & Townhouses – Canal/Colonnade Point Average Sale Price 2012 2013 2014 2015
Source: NJAR 10K Research DataSource: NJAR 10K Research Robbinsville Train Schools Lifestyle Affordability
Robbinsville Market Activity Single Family Homes Average Sale Price 2012 2013 2014 2015 Source: Trend MLS
Robbinsville Market Activity Single Family Homes Average Days on Market 2012 2013 2014 2015 Source: Trend MLS
Robbinsville Market Activity Single Family Homes List to Sale Price Ratio 2012 2013 2014 2015 Source: Trend MLS
Robbinsville Market Activity Condos & Townhouses Average Sale Price 2012 2013 20142012 2013 2014 2015 Source: Trend MLS
Robbinsville Market Activity Condos & Townhouses Average Days on Market 2012 2013 2014 2015 Source: Trend MLS
Robbinsville Market Activity Condos & Townhouses List to Sale Price Ratio 2012 2013 2014 2015 Source: Trend MLS
Source: NJAR 10K Research DataSource: NJAR 10K Research South Brunswick Train Schools Lifestyle Affordability
South Brunswick Market Activity Single Family Homes Average Sale Price 2012 2013 2014 Source: Middlesex MLS 2015
South Brunswick Market Activity Single Family Homes Average Days on Market Source: Middlesex MLS 2012 2013 2014 2015
South Brunswick Market Activity Single Family Homes List to Sale Price Ratio Source: Middlesex MLS 2012 2013 2014 2015
South Brunswick Market Activity Condos & Townhouses Average Sale Price Source: Middlesex MLS 2012 2013 2014 2015
South Brunswick Market Activity Condos & Townhouses Average Days on Market Source: Middlesex MLS 2012 2013 2014 2015
South Brunswick Market Activity Condos & Townhouses List to Sale Price Ratio Source: Middlesex MLS 2012 2013 2014 2015
Source: NJAR 10K Research DataSource: NJAR 10K Research Princeton Train Schools Lifestyle Affordability
Princeton Market Activity Single Family Homes Average Sale Price 2012 2013 2014 Source: TrendMLS 2015
Princeton Market Activity Single Family Homes Average Days on Market 2012 2013 2014 Source: TrendMLS 2015
Princeton Market Activity Single Family Homes List to Sale Price Ratio 2012 2013 2014 Source: TrendMLS 2015
Princeton Market Activity Condos & Townhouses Average Sale Price 2012 2013 Source: TrendMLS 2013 2015
Princeton Market Activity Condos & Townhouses Average Days on Market 2012 2013 2014 Source: TrendMLS 2015
Princeton Market Activity Condos & Townhouses List to Sale Price Ratio 2012 2013 2014 Source: TrendMLS 2015
The Local Market Real Estate is Local 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 Real Estate is Local
The Take-Away Is… Be Strategic Think Hyper Local Slice the Market Thin
The boom….The Local MarketYour Strategy Tips for Buying and Selling in Today’s Market
When is the Best Time to buy or sell a house? When it’s time to move.
Source: NJAR 10K Research Data When’s the best time to Buy/Sell? Source: Trend MLS
2016 Top Seller Negotiating Strategy… 1.Price it Right 2.Pretty it Up 3.Fix it First 4.Stay in Control
All Negotiations, including real estate, are all about negotiation and control. Home Pricing Who is in control?
The Impact of Your Initial List Price
• Promotes a sense of urgency among buyers & agents (fear of loss) • Generates interest and showings • Sets the stage for multiple offers in the first 30 days • Offers tend to be higher in relation to list price • 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 Effects of Over Pricing:
Negotiations are about leverage, use the listing price as yours… PTA suggested Market Value of $780,000 Listed at $769,000 8 Days on Market 11 Offers Sold for $805,000 The seller had control West Windsor
Princeton 36 Mercer St. The Price Trend Analysis suggested Market Value of $1.250 I recommended listing at $1.1 million
Princeton 36 Mercer St. • Pre-inspection • Staged* • Right Pricing Sold for $1.350 million, cash in 7 days. No contingencies.
62 Maidenhead Listed at $629,000 Comparable property had sold previous at $640 8 offers Pending
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
Hamilton Seller Our recommended price at time of listing: $149,000 Sale Price is 5% higher at the lower List Price Seller received 7.5% MORE at a lower list price
All Negotiations, including real estate, are all about negotiation and control. 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?
Clean & In Good Repair
“Wow…. I could live here!”
Buyers Only Know What They See …
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!”
All Negotiations, including real estate, are all about negotiation and control. Pre - Inspection Who is in control?
The Impact of Inspection & Repairs on the Salability of Your Home..… A Certified Home Inspector’s report will review: Condition of the home's HVAC, 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
• Why do a Pre-Inspection? – Fix/ Disclose/ Permit EVERYTHING before going on market – Removes buyer objections/ fears – Reduce the risk of going ‘off market’ for a buyer who ends up killing the deal – You stay in control Pre-Inspection
2016 Top Buyer Negotiating Strategy… 1.Pay Now or Pay More Later (core market, schools, trains and towns)
17 Year Real Estate Cycle
Reed Dr S, West Windsor Listed at $749,000 7 offers 2 Weeks Later Exact Comp Listed $759,000 5 offers
West Windsor Buyer
Buyer Negotiation Tips in a Fast Market 1. Understand the process before you start shopping. 2. Have mortgage pre-approval from a respected, reliable lender 3. Put a significant amount in escrow if possible 4. Be as flexible as possible with your closing date 5. Remove as many contingencies as possible 6. Use an Escalation Clause
Real Estate Market UpdateReal Estate Market Update FinancingFinancing What You Need to KnowWhat You Need to Know Jennifer Hayden Gold Services Manager NMLS #4384 Weichert Financial Services jhayden@weichertfinancial.com
The Financial Forecast…
Quarter Fannie Mae Freddie Mac MBA NAR Average of all four 2016 1Q 4.0% 4.1% 4.2% 4.1% 4.10% 2016 2Q 4.0% 4.3% 4.4% 4.3% 4.25% 2016 3Q 4.1% 4.5% 4.6% 4.6% 4.45% 2016 4Q 4.1% 4.7% 4.8% 4.9% 4.63% Mortgage Rate Projections 1/2016
Where Are They Going in 2016 2016 Q1 2016 Q2 2016 Q3 2016 Q4 Where They Were in 2015 Source: Freddie Mac Mortgage Rates Freddie Mac 30 Year Fixed Rate
Which Group is Most Sensitive to Interest Rates? Source: First American Real Estate Sentiment Index
Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association Mortgage Credit Availability
Typical Down Payment NAR
Pop Quiz What is the monthly P&I payment on a $200,000 30-year loan? A.$1,146 B.$966 C.$1,278 D.$1,544
Negotiating Your Purchase Sales Price Loan Amount 20% Down Payment Monthly Payment (P&I) Incremental Monthly Increase Initial Offer $325,000.00 $260,000 $65,000 $1,260.09 +$5K $330,000.00 $264,000 $66,000 $1,279.48 $19.39 +$10K $335,000.00 $268,000 $67,000 $1,298.86 $19.38 +$15K $340,000.00 $272,000 $68,000 $1,318.75 $19.89 +$20K $345,000.00 $276,000 $69,000 $1,337.63 $18.88 +$25K $350,000.00 $280,000 $70,000 $1,357.02 $19.39
The Mortgage Market Now… • 3%, 3.5% and 5% down payment available • 100% VA/USDA available (0% down) • FHA reduced MIP from 1.35 to .85
The Mortgage Market Now… • The mortgage underwriting process requires more due diligence since the Dodd-Frank Act was passed in July 2010 • TRID regulations impose mandatory wait- times between events
Average days needed to close a loan… 49 days is the longest time needed to close a loan since February 2013. All closed loans as per Ellie Mae
• Provide you the highest level of Customer Service in the industry • Make sure you understand your financing options so you make educated decisions • Ensure your purchase closes on time with the least amount of hassle My Job…
I look forward to meeting with you Jennifer Hayden Gold Services Manager Weichert Financial Services Jhayden@weichertfinancial.com
Weichert Family of Companies 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
MakingMaking Your Purchase asPurchase as Smooth as PossibleSmooth 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.
Thank you for your time today
Resource and Website ListResource and Website List www.trendmls.com www.realtor.org www.njar.com www.Otteau.com www.Pre-listing-inspection.com www.Housemaster.com www.Stagingshoppingcenter.com www.realtytrac.com www.njar.com/10k www.keepingcurrentmatters.com https://education.state.nj.us/pr/

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