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Weichert Princeton March 2016 Market Update Seminar

The document provides an update on the Princeton area real estate market, detailing trends and predictions for 2016, including a shift towards more normal growth in home sales and prices, and a greater focus on affordability in new construction. Millennials are highlighted as a significant demographic in the market, while rising rental costs indicate that buying is becoming more affordable than renting in many areas. The document emphasizes the importance of local market conditions and strategic pricing for both buyers and sellers.

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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
Source: NJAR 10K Research DataSource: NJAR 10K Research
Source: NJAR 10K Research DataSource: NJAR 10K Research
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
Source: NJAR 10K Research DataSource: NJAR 10K Research
Source: NJAR 10K Research DataSource: NJAR 10K Research
Source: NJAR 10K Research DataSource: NJAR 10K Research
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
Source: NJAR 10K Research DataSource: NJAR 10K Research
Source: NJAR 10K Research DataSource: NJAR 10K Research
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
Source: NJAR 10K Research DataSource: NJAR 10K Research
Source: NJAR 10K Research DataSource: NJAR 10K Research
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
Source: NJAR 10K Research DataSource: NJAR 10K Research
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