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Weichert, Princeton Office January Market Update Seminar Offers analysis of the Princeton & Greater Princeton, NJ real estate markets & effective strategies to

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The market update presentation for January 2010.

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Page 1: January 2010 Market Update Seminar

Weichert, Princeton Office January Market

Update Seminar

Offers analysis of the Princeton & Greater

Princeton, NJ real estate markets & effective

strategies to buy and sell.

Page 2: January 2010 Market Update Seminar

Presented by:

Joshua D Wilton

Broker/ Sales Rep.

Weichert Realtors

Princeton, NJ

O 609-921-1900

www.weichert-princeton.com

www.facebook.com/weichertprinceton

Page 3: January 2010 Market Update Seminar

Presented by:

The presentation will be posted on the

following site immediately after today’s

session to the following site.

Will be available for downloads thru Monday.

www.weichert-princeton.com

www.facebook.com/weichertprinceton

Page 4: January 2010 Market Update Seminar

Agenda

1. The Market

2. Strategies for Buying

3. Strategies for Selling

Page 5: January 2010 Market Update Seminar

Agenda

1. The Market:

- The National Economy a

Year Ago…

Page 6: January 2010 Market Update Seminar

‘The U.S. economy is experiencing its worst recession in decades. Jobs and wealth are falling at a rapid pace, driving families more quickly into default, foreclosure, and bankruptcy. This crisis is precipitated by a sharp

drop in consumer spending, as well as a decline in business investment and the fact that the United States continues to import more than it exports. The only sector of the economy that can turn the situation around is the federal government, but irresponsible management in the past has created large, looming deficits that will

make it harder to design the necessary stimulus and economic recovery package.1. GDP growth turns negative. The gross domestic product declined at an annual rate of 0.5 percent in the

third quarter of 2008—the largest decline since the third quarter of 2001. The drop in growth followed a 3.8% decline in consumer spending—the largest decrease since the second quarter of 1980. Spending on homes also

declined by 16.0% in the third quarter of 2008, marking the 11th quarterly decline in a row and the longest continuous decline in residential real estate spending since the 11th quarter period that ended in March 1958.

2. Job losses accelerate. The U.S. economy lost 2.6 million jobs in 2008, including 524,000 jobs in December. Fifty-nine percent of job losses came during the last quarter.

3. Unemployment rates reflect broad labor market recession. The unemployment rate was 7.2% in December 2008—the highest level since January 1993. The African-American unemployment rate stood at

11.9%, the Hispanic unemployment rate at 9.2%, and the unemployment rate for whites at 6.6% in December 2008.

4. The job market recession is the most severe in decades. The labor market shrunk by 1.9% over the course of 2008—the fastest decline during the 12 months after a recession started since the recession that started in May 1960. The unemployment rate rose 2.3% during the first 12 months of the recession—the fastest such

increase since the recession that started in January 1970.5. Wages have temporarily outgrown inflation. Factoring in inflation, hourly wages were 2.3% and weekly wages were 3.3% higher in November 2008 than in December 2007. These increases followed lower prices in

November 2008 and are unlikely to continue.6. Benefits decreased before the crisis. The share of private sector workers with a pension dropped from

50.3% in 2000 to 45.1% in 2007, and the share of people with employer-provided health insurance dropped from 64.2% in 2000 to 59.3% in 2007.

Source: Americanprogress.org

Page 7: January 2010 Market Update Seminar

8. The housing crisis deepens. New home sales in November 2008 were 35.3% lower and existing home sales were 10.6% lower than a year earlier. Median sale prices for new homes dropped by 11.5% and those for

existing homes by 13.2% during the same time. It would take more than 11 months to sell all houses on the market at the current rate of new home sales. This has been true for four months in a row now, making this the

worst new home sales market since the Census Bureau collected these data in 1963.9. Homeowners lose wealth. The values of all homes fell by $656 billion in the third quarter of 2008 after accounting for inflation, and they were 13.6% or $2.4 trillion lower than a year earlier, making it the largest

such drop since the Federal Reserve collected these data in 1952. Home equity as a share of home values also fell to a record low of 44.7% in the third quarter of 2008.

10. Mortgage troubles mount. One in 10 mortgages is delinquent or in foreclosure. The share of mortgages that were delinquent during the third quarter of 2008 was 7.0%, and the share of mortgages that were in

foreclosure was 3.0%. The share of new mortgages going into foreclosure stayed at its record high of 1.1% in the third quarter.

11. Families feel the pressure. Credit card defaults rose to 5.6% of all credit card debt by the third quarter of 2008—an increase of 35.4% from the fourth quarter of 2007.

12. Business investment declines. Business investment declined by 1.7% in the third quarter of 2008—the largest decline since the first quarter of 2004. Business spending on equipment and software also dropped for

the third quarter in a row, the longest such decline since the first quarter of 2002.13. The trade deficit remains high. The trade deficit stood at 4.9% of GDP in the third quarter of 2008.

Despite declining slightly, the trade deficit remains at a historically high and ultimately unsustainable level.14. Large deficits are looming. Following years of fiscal and economic mismanagement, the federal

government’s deficit is expected to reach $1.2 trillion in 2009, even before a necessary economic stimulus has been enacted.

Source: Americanprogress.org

Page 8: January 2010 Market Update Seminar

‘Congrats! You Just Lived Through the Worst Stock

Market Drop Since the Depression’-about.com

Source: Autodata

We Survived…

Page 9: January 2010 Market Update Seminar

‘TARP…BAILOUTS…

CREDIT CRUCH…“TBTF”

RECESSIONISTA…CREDIT DEFAULT SWAP’

Source: Autodata

We learned a new vocabulary…

Page 10: January 2010 Market Update Seminar

Source: yahoo finance

5 Year Picture of the DOW…

Page 11: January 2010 Market Update Seminar

WSJ estimates over $8.4 trillion lost in the stock market crash.

Source: wsj

Page 12: January 2010 Market Update Seminar

From the end of 2006 through March 31, it says, the total market value of U.S. household real estate

fell from $21.9 trillion to $17.9 trillion. That's about 18%. (The lost

wealth works out at just over $13,000 for every person in the

country.)Source: wsj

Page 13: January 2010 Market Update Seminar

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LASST34000003

The consequences…

Page 14: January 2010 Market Update Seminar

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LASST34000003

The consequences…

Page 15: January 2010 Market Update Seminar
Page 16: January 2010 Market Update Seminar

What about the Real Estate Markets….?

Page 17: January 2010 Market Update Seminar

A real estate market correction was taking shape the summer

of 2001…Inventory was growing…Rates were edging up…

Contracts were slowing…

Page 18: January 2010 Market Update Seminar

Unsold Inventory from the MLS in Weichert Market Areas10/20/2003 thru 9/14/2009

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ASHBY TOTAL DOEPPER TOTAL BIXON TOTAL MCDONALD TOTAL PREVETE TOTAL WATERS TOTAL WILLIAMS TOTAL

9/13/0432,893

9/12/0538,513

9/11/0683,739

9/17/07*91,009

9/15/0891,267

*added Waters & Williams Region to Totals

9/14/0983,431

Listings from the MLS in Weichert Market AreasListings from the MLS in Weichert Market Areas

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.

Variance % 2009 from 2008NY (Ashby) -9.26%CT (Doepper) +1.44%Passaic/Hudson/Bergen NJ (Bixon) +.32%Western Central NJ/Lehigh Valley PA (McDonald) +.32%Northern and Central NJ (Prevete) +.28%Eastern Central/Shore Points NJ (Waters) +.08%Southern NJ (Williams) -.03%

Page 19: January 2010 Market Update Seminar

123 Any street, Princeton, NJ

• First Time home buyers were priced out of the market

• Financing was too available (ie ‘subprime’)

• Banks made bad bets (ie that home prices would continue to

rise)Lehman, Merril, over 300+ fail• Credit freeze, affects ‘main street’

business…

Page 20: January 2010 Market Update Seminar

A long term outlook in Mercer County…

Source: NAR, November 2008 Forecast

Page 21: January 2010 Market Update Seminar

Long Term Supply …

Source: NAR, November 2008 Forecast

Richardson Commercial

Page 22: January 2010 Market Update Seminar

NJ Housing Permits

Source: CensusSource: Census

In thousand units

Page 23: January 2010 Market Update Seminar

Long Term Demand in Mercer County …

Source: NAR, November 2008 ForecastSource: https://edis.commerce.state.nc.us/docs/countyProfile/NJ/34021.pdf

(Mercer County) Population & Growth Population Annual Growth Rate2013 Total Population 383,677 0.6%2008 Total Population 371,963 0.7%2000 Total Population 350,761

Page 24: January 2010 Market Update Seminar

Long Term Demand in Mercer County …

Source: NAR, November 2008 ForecastSource: https://edis.commerce.state.nc.us/docs/countyProfile/NJ/34021.pdf

Estimated Pop. by Age Pop by Age, % Est.2013 Median Age 392008 Median Age 382000 Median Age 362008 Total Pop 0-19 98,816 26.6%2008 Total Pop 20-29 49,307 13.3%2008 Total Pop 30-39 49,497 13.3%2008 Total Pop 40-49 58,288 15.7%2008 Total Pop 50-59 51,605 13.9%2008 Total Pop 60+ 64,450 17.3%

Page 25: January 2010 Market Update Seminar

Fast Forward to today…Have we hit the bottom of the market yet…?!?!?!?

Source: NAR, November 2008 Forecast

Page 26: January 2010 Market Update Seminar

Source: yahoo finance

1 Year Picture of the DOW…

Page 27: January 2010 Market Update Seminar

Where is the bottom of the market?“The effects (of foreclosures) are continued declining

prices….probably another 5-8%* to the bottom.  As for the effect of foreclosure pricing, all of these problems are

causing home prices to go lower than is necessary from an affordability perspective.

  That’s because everyone is now worrying about job security. 

As a result, the recovery will take place at a faster pace once it gets started.”

– Jeff Otteau (otteau.com- January 2009)

Page 28: January 2010 Market Update Seminar

““Everything I am Everything I am seeing tells me we seeing tells me we have arrived at the have arrived at the

bottom of the market, bottom of the market, specifically in the specifically in the

popular and popular and affordable price affordable price

ranges.”ranges.”J. Weichert

6/2009

‘Real Estate is a Bottom up market…’

Page 29: January 2010 Market Update Seminar

Source: otteau.com

Page 30: January 2010 Market Update Seminar

Months Supply of Lower Priced Single Family Homes Falling

Price Category August 2008 August 2009

$99,999 or less 6.8 4.3

$100,000 to 249,999 7.8 4.9

$250,000 to $499,999 10.2 6.4

$500,000 to $749,999 14.0 10.0

$750,000 to $999,999 16.5 10.5

$1,000,000 to $1,999,999 19.8 15.2

$2,000,000 or greater 32.0 31.7

All Single-family 10.0 8.2

Source: NAR (Unpublished data)

Page 31: January 2010 Market Update Seminar

Statistically speaking, there are grounds for modest optimism that prices will trend upward in the near

future, said the market analyst Jeffrey Otteau, whose Otteau Valuation Group continuously tracks sales

data in 21 counties for real estate companies.Mr. Otteau cited one recent report indicating that New Jersey was one of a half dozen “breakout”

states in which prices had already begun to creep up in the second half of 2009. That report came from

the Federal Housing Finance Agency, which indexes purchase prices of homes with mortgages guaranteed

by Freddie Mac and Fannie Mae.Looking at data from the entire period of the slide — the start of 2006 through the third quarter of 2009 —

Mr. Otteau concluded that the state’s residential market “didn’t get hammered all that bad” compared

with the nation at large, and was likely to recover faster.

Optimism About the New Year…Optimism About the New Year…-nytimes.com-nytimes.com

Page 32: January 2010 Market Update Seminar

NJ 2008 v 2009 SalesNJ 2008 v 2009 Sales

Page 33: January 2010 Market Update Seminar

State Housing SupplyState Housing Supply

Page 34: January 2010 Market Update Seminar

Local Inventory Trends.Economics 101:

As supply goes up, prices go ___.

Source: NAR, November 2008 Forecast

Page 35: January 2010 Market Update Seminar

Princeton Boro Inventory Trends: 3 Year Snapshot

Page 36: January 2010 Market Update Seminar

Princeton Twp Inventory Trends: 3 Year Snapshot

Page 37: January 2010 Market Update Seminar

Lawrence Inventory Trends: 4 year View

Page 38: January 2010 Market Update Seminar

Hopewell Inventory Trends: 4 year View

Page 39: January 2010 Market Update Seminar

Ewing Inventory Trends: 4 year View

Page 40: January 2010 Market Update Seminar

West Windsor Inventory Trends: 4 Year View

Page 41: January 2010 Market Update Seminar

Plainsboro Inventory Trends: 4 year View

Page 42: January 2010 Market Update Seminar

Closed Homes Snapshot:2007 2008 2009

Princeton Boro

87 72 61

Princeton Twp.

211 163 157

West Windsor

371 299 303

Lawrence 383 285 305

Hopewell 226 191 153

Plainsboro 273 214 231

Page 43: January 2010 Market Update Seminar

Town 08

Inven.

Count

08

Pending

Sales

(prev. 30 days)

08

Absorp.

Rate

09

Inven.

Count

09

Pending Sales

(prev. 30 days)

09

Absorp. Rate

(months)

10

Inven.

Count

10

Pending Sales

(prev. 30 days)

10

Absorp.

Rate(months)

Pton. Boro 35 3 11.6 39 4 9.6 29 1 29

Pton.

Twp.87 16 5.4 87 6 14.5 77 3 25

W. Windsor 100 11 9.09 96 7 13.7 76 18 4.2

Lawrence 173 15 11.5 158 10 15.8 188 19 9.8

East Windsor 171 24 7.1 159 11 14.4 139 15 9.2

Ewing 244 23 10.6 198 12 16.5 204 18 11.3

Hopewell Twp. 140 21 6.6 97 11 8.8 123 14 9

Cranbury 19 2 9.5 25 0 99 25 0 99

Plainsboro 77 19 4.05 66 4 16 49 6 8.1

Montgom 99 6 16.5 83 4 20.7 81 4 20.2

Cum. 1145 140 8.1 1008 69 14.6 991 98 10.1

Page 44: January 2010 Market Update Seminar

1. Real Estate is Local

Top Five Rules for Understanding the Real

Estate Market:

2. Real Estate is Local

3. Real Estate is Local

4. Real Estate is Local5. Real Estate is Local

Page 45: January 2010 Market Update Seminar

1. Understand the Local Market That You are Buying into…

Page 46: January 2010 Market Update Seminar

Market Absorption Scale(Absorption Rate in Months)

5-6 months absorption rate indicates a normal market.

Page 47: January 2010 Market Update Seminar

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

Princeton Boro:

All Styles 29 1 29 4 3 3 10% 1 3 4

Pton -Boro Condo/ Thouses 5 0 99 1 1 0 0 0 0 1

Pton-Boro

Single Family 24 1 24 3 2 3 13% 1 3 3

Pton Twp: All Styles 77 3 25.6 17 14 12 16 9 3 14

Pton Twp: Condo/ Thouses 7 0 99 4 4 3 43 1 1 7

Pton Twp:

Single Family 70 3 23.3 13 10 9 13 8 2 7

Page 48: January 2010 Market Update Seminar

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 Styles76 18 4.2 15 (3) 18 23.7 13 5 21

West Windsor Condo/ T.Houses

18 3 6 8 5 5 5 27 8 1

West Windsor

55+12 0 99 - - - - - - -

West Windsor

Single Family

46 15 3.0 7 8 13 28.2 5 4 20

Lawrence: All Styles

188 19 9.8 33 14 23 12.2 14 6 25

Lawrence:

Condo/

THouses

63 8 7.8 17 9 12 19 3 3 14

Lawrence:

55+24 0 99 - - - - - - -

Lawrence:

Single Family

91 11 8.2 16 5 11 12.0 11 3 11

Page 49: January 2010 Market Update Seminar

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 Styles204 18 11.3 31 13 23 11.2 33 1 16

Ewing : Condo/ T.Houses

36 5 7.2 3 (2) 4 11.1 3 0 2

Ewing 55+: 4 0 99 - - - - - - -Ewing:

Single Family

164 13 12.6 28 15 19 11.5 30 1 14

East Windsor:

All Styles

139 15 9.2 20 5 20 14.3 21 6 18

East Windsor:

Condo/ THouses

79 11 7.1 14 3 13 16.4 18 5 9

East Windsor:

55+

13 0 99 - - - - - - -

East Windsor: Single Family

77 4 11.8 6 2 7 14.9 3 1 9

Page 50: January 2010 Market Update Seminar

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

Robbinsville

All Styles 83 8 10 17 9 11 13% 5 4 12Robbinsville

Condo/ T.Houses 45 4 11 11 7 8 17% 1 2 5Robbinsville

55+ - - - - - - - - - -

-38 4 9.5 6 2 3 7% 4 2 7

Hightstown Boro: All Styles 46 5 9 2 (3) 1 2% 8 2 3

Pennington18 2 9 2 0 4 22 3 0 2

Hopewell Boro:

All Styles 13 0 99 4 4 1 7 1 0 0

Page 51: January 2010 Market Update Seminar

Towns Active Listings

Pending in Last 30 Days

Absorption Rate in Months

=Ag

New Listings in 30 Days

Net Gain (Loss) to Market

Listings Reduced in 30 Days

% of Invent. Reduced

e

Expired Listings

W/drawn Listings

Closed Listings

Hopewell Twp.

All Styles 123 14 9 6 (8) 16 13% 14 8 13Hopewell Twp. Condo/ T.Houses 10 1 10 0 (1) 1 10% 2 0 1Hopewell Twp.:

55+ 2 0 99 - - - - - - -

Hopewell Twp. Single Family 113 13 9 6 (7) 15 13% 12 8 12

Hamilton: All Styles 462 30 15 67 37 54 12% 63 20 42Hamilton:

Condo/ THouses 97 12 8 26 14 13 13% 11 7 17

Hamilton:

Single Family 334 18 19 41 23 41 12% 52 13 25

Hamilton: 55+31 0 99 - - - - - - -

-

Page 52: January 2010 Market Update Seminar

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

PlainsboroAll Styles

46 9 8.1 13 7 16 38% 12 2 6

Plainsboro

Condo/ THouses

29 4 7.2 11 7 7 23% 8 2 4

Plainsboro

55+7 0 99 0 0 3 42% 2 0 0

Plainsboro

Single Family

14 2 7 2 0 6 42% 2 0 2

Cranbury:

All Styles25 0 99 0 0 1 3 2 0 1

Cranbury:

55+2 0 99 0 0 0 0 0 0 0

Cranbury: Single Family

23 0 99 0 0 1 4 2 0 1

Page 53: January 2010 Market Update Seminar

Towns Active Listings

Pending in Last 30 Days

Absorption Rate in Months

g

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

169 13 13 37 24 23 14% 21 4 1

South BrunswickCondo/ T.Houses

36 8 4,5 13 5 8 22% 8 0 0

South Brunswick

55+

31 0 0 9 9 4 12% 2 0 0

South Brunswick

Single Family

102 5 20.5 15 10 11 11% 11 4 1

Monroe:

All Styles 428 30 28.8 79 49 65 15% 62 7 5Monroe:

55+ 268 24 12 54 30 44 16% 40 5 2

Monroe:

Single Family 160 6 26.5 25 19 21 13% 22 2 3

Page 54: January 2010 Market Update Seminar

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

196 21 9 54 3 22 11% 21 18 36

South Brunswick

Condo/ T.Houses

61 10 6 27 17 8 13% 6 8 16

South Brunswick

55+

30 1 30 2 1 3 1% 2 3 3

South Brunswick

Single Family

105 11 9.5 25 14 11 10% 13 7 21

Monroe:

All Styles471 30 16 107 77 57 12% 62 4 57

Monroe:

55+302 27 13 70 43 36 12% 26 3 44

Monroe:

Single Family

168 13 13 37 24 21 13% 36 1 12

Page 55: January 2010 Market Update Seminar

Market Absorption Scale(Absorption Rate in Months)

5-6 months absorption rate indicates a normal market.

Page 56: January 2010 Market Update Seminar

Absorption Rate by Price Range

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.

Page 57: January 2010 Market Update Seminar

Sample Market Absorption RateSample Market Absorption Rate

107 current active listings

4 reported sales in last 30 days

=

24.3months absorptionrate

Anytown., NJ

5-6 Months Market Absorption Rate indicates a normal market.

Page 58: January 2010 Market Update Seminar

58Market Scale for Supply & Market Scale for Supply & DemandDemand

High Supply/Low Demand Low Supply/High DemandNormal

Ma

rke

t A

bso

rpti

on

in M

on

ths 1

2

3

4

5

6

7

8

9

10

11

12

No

rma

l

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.

Page 59: January 2010 Market Update Seminar

Source: otteau.com

Page 60: January 2010 Market Update Seminar

West Windsor Absorption Rate By Price

Towns Active Listings Pending in Last 30 Days

Absorption Rate in Months

0-$500

46 6 7.6

$500-750k 24 3 8

$750-999 8 3 2.6

$999 + 4 0 99

Page 61: January 2010 Market Update Seminar

Understand the Market That You are Buying/ Selling in…

I want to live/ sell in Princeton…..

Page 62: January 2010 Market Update Seminar

Market Absorption Scale(Absorption Rate in Months)

5-6 months absorption rate indicates a normal market.

Page 63: January 2010 Market Update Seminar

Hopewell Twp.Hopewell Twp.

120 current active listings

14 reported sales in last 30 days

=

9months absorptionrate

5-6 Months Market Absorption Rate indicates a normal market.

All Prices: All StylesAll Prices: All Styles

Page 64: January 2010 Market Update Seminar

Hopewell Twp.Hopewell Twp.

62 current active listings

7 reported sales in last 30 days

=

8.8months absorptionrate

5-6 Months Market Absorption Rate indicates a normal market.

0-$600, All Styles0-$600, All Styles

Page 65: January 2010 Market Update Seminar

Hopewell Twp.Hopewell Twp.

7 current active listings

4 reported sales in last 30 days

=

1.75months absorptionrate

5-6 Months Market Absorption Rate indicates a normal market.

0-$600k0-$600kTownhousesTownhouses

Page 66: January 2010 Market Update Seminar

Hopewell Twp.Hopewell Twp.

30 current active listings

0 reported sales in last 30 days

=

99months absorptionrate

5-6 Months Market Absorption Rate indicates a normal market.

999+999+Single FamilySingle Family

Page 67: January 2010 Market Update Seminar

2. ‘I am going to time the Market and buy/ sell at the time when

inventory & buyer count is in my favor…’

Source: MLS

Page 68: January 2010 Market Update Seminar

Source: MLS0

20

40

60

80

100

120

140

160

180

1/7/2007 4/1/2007 6/24/2007 9/23/2007 12/16/2007

Gross # of Guests 2009

Weekly Guests Thru the Weichert Princeton Open Houses, 2007

Page 69: January 2010 Market Update Seminar

Source: MLS

Inventory Levels, Princeton Twp. New Jersey, 2009

Page 70: January 2010 Market Update Seminar

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 bids…

Source: MLS

Page 71: January 2010 Market Update Seminar

Source: trend mls

Relationship of Price Reductions to ‘Pending Sales’

0

10

20

30

40

50

60

70

Princeton Pendings

Princeton Price Reductions

Page 72: January 2010 Market Update Seminar

Town by Town Analysis 9/21/09Towns Active

ListingsPending 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

196 21 9 54 3 22 11% 21 18 36

South Brunswick

Condo/ T.Houses

61 10 6 27 17 8 13% 6 8 16

South Brunswick

55+

30 1 30 2 1 3 1% 2 3 3

South Brunswick

Single Family

105 11 9.5 25 14 11 10% 13 7 21

Page 73: January 2010 Market Update Seminar

Source: trend mls

Relationship of Price Reductions to ‘Pending Sales’

0

10

20

30

40

50

60

70

Princeton Pendings

Princeton Price Reductions

Page 74: January 2010 Market Update Seminar

Source: trend mls

Relationship of Price Reductions to ‘Pending Sales’

0

20

40

60

80

100

120

West Windsor Pendings

West Windsor Reductions

Page 75: January 2010 Market Update Seminar

Source: trend mls

Relationship of Price Reductions to ‘Pending Sales’

0

10

20

30

40

50

60

70

80

90

100

Lawrence Pendings

Lawrence Reductions

Page 76: January 2010 Market Update Seminar

Seeing the Opportunity.Seeing the Opportunity.

Page 77: January 2010 Market Update Seminar

Seeing the Opportunity.Seeing the Opportunity.

Q. If this were 2005, where would you place the Price and Rate dots?

Prices Rates

High

Mid-Range

Low

A. In 2005, the V would look somewhat like this one, where prices were on the high end of the scale and rates were in the lower range.

Page 78: January 2010 Market Update Seminar

Seizing the Opportunity.Seizing the Opportunity.

In recent history, there has never been an opportunity like this, with low prices and low rates. In real estate, this circular area at the bottom of the V is called the “Buying Zone” – it’s an unbelievable time to buy.

Prices Rates

High

Mid-Range

Low

Page 79: January 2010 Market Update Seminar

Jeff Smith,

Gold Services Manager/ Loan Officer

Financial Benefits and Financial Benefits and Process of Home-Process of Home-

Ownership.Ownership.

Page 80: January 2010 Market Update Seminar

‘I don’t want to buy a house and then watch it drop in value!’

Page 81: January 2010 Market Update Seminar

 Purchase Price $329,000 Loan Amount $317400

Down Payment $11,515 Monthly P&I $1802

Appreciation/Depreciation Home Value1st Year -3% $319,1302nd Year 0% $319,1303rd Year 1% $322,3214th Year 3% $331,9905th Year 5% $348,5905 Year Appreciation/Depreciation $19,500

Tax Benefit  Vs Paying Rent @

$1600/mo1st Year $5,000 $19,2002nd Year $5,000 $19,2003rd Year $5,000 $19,2004th Year $5,000 $19,2005th Year $5,000 $19,2005 Year Total $25,000 $96,000

Total Gain $44,200Create Equity

v Pay Rent

Page 82: January 2010 Market Update Seminar

+ The Amortization Schedule on a Loan

Yearly Schedule of Balances and PaymentsYear

Beginning Balance

Payment Principal InterestCumulative

PrincipalCumulative Interest

Ending Balance

2010 $315,646.96 $21,625.92 $4,374.96 $17,250.96 $6,128.00 $24,508.72$311,272.0

0

2011 $311,272.00 $21,625.92 $4,621.30 $17,004.62 $10,749.30 $41,513.34$306,650.7

0

2012 $306,650.70 $21,625.92 $4,881.98 $16,743.94 $15,631.28 $58,257.28$301,768.7

2

2013 $301,768.72 $21,625.92 $5,157.36 $16,468.56 $20,788.64 $74,725.84$296,611.3

6

2014 $296,611.36 $21,625.92 $5,448.28 $16,177.64 $26,236.92 $90,903.48$291,163.0

8

= Total 5 Year Gain: $59,922

Page 83: January 2010 Market Update Seminar

A Great Time to Buy a A Great Time to Buy a HomeHome

First-time homebuyers can receive a tax credit up to $8,000!

NEW TAX CREDITCurrent homeowners may be eligible for a tax credit up to $6,500!

Page 84: January 2010 Market Update Seminar

Tax Credit OverviewTax Credit Overview• In 2008, Congress created a tax credit for first-time

homebuyers.

• The tax credit was extremely successful in generating home sales and stimulating the overall economy.

• Realizing the importance of homeownership for individuals and the greater economy, the government enhanced and extended the homebuyer tax credit.

• On Nov. 6, President Obama signed a bill that extended the existing tax credit for first-time buyers and created a new provision for eligible move-up buyers.

Page 85: January 2010 Market Update Seminar

The The NEWNEW First-Time Buyer Tax First-Time Buyer Tax CreditCreditAmount 10 percent of the cost of the home, not to exceed $8,000

PropertyAny home that will be used as a principal residence including single-family homes, condos, townhomes and co-ops; not to exceed $800,000

Refundable

Reduces income tax liability for the year of purchase

Income Limit

Adjusted gross income of $125,000 for single or $225,000 for joint tax returns INCREASED (Effective Nov. 7, 2009)!

First-Time Must not have owned a principal residence in three years prior to purchase

Limitation If home is sold within three years of purchase, entire amount of credit is recaptured

Effective Date

Purchases with closing/settlement between Nov. 7, 2009, and June 30, 2010 EXTENDED!

DeadlineWritten binding contract on or before April 30, 2010, with closing/settlement by June 30, 2010 EXTENDED!

Page 86: January 2010 Market Update Seminar

The The NEWNEW Current Homeowner Current Homeowner Tax CreditTax Credit

Amount Up to $6,500

Eligibility Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years

Purchased Home

Any home that will be used as a principal residence including single-family homes, condos, townhomes and co-ops; not to exceed $800,000

Refundable

Reduces income tax liability for the year of purchase

Income Limit

Adjusted gross income of $125,000 for single or $225,000 for joint tax returns

Recapture If home is sold within three years of purchase, entire amount of credit is recaptured

Effective Date

Purchases with closing/settlement between Nov. 7, 2009, and June 30, 2010

Deadline Written binding contract on or before April 30, 2010, with closing/settlement by June 30, 2010

Page 87: January 2010 Market Update Seminar

Tax Credit FAQsTax Credit FAQs

Page 88: January 2010 Market Update Seminar

What Are the Deadlines What Are the Deadlines for Claiming the Credit?for Claiming the Credit?

• A written binding contract to purchase must be in effect no later than April 30, 2010.

• The purchase transaction must close byJune 30, 2010.

Page 89: January 2010 Market Update Seminar

What if You ExceedWhat if You Exceedthe Income Limits?the Income Limits?

• Individuals with adjusted gross income of up to $125,000 and married couples with income up to $225,000 can claim the full credit.

• The amount of the tax credit decreases as incomes reach the maximum limits of $145,000 for singles and $245,000 for couples.

• Singles earning more than $145,000 and couples earning more than $245,000 are not eligible for the credit.

Page 90: January 2010 Market Update Seminar

What Properties are What Properties are Eligible?Eligible?

• To claim the tax credit, the property must be used as a principal residence. This is generally considered to be the home where you spend 50 percent or more of your time. It can be a condo, single-family detached home, co-op, townhouse or something similar.

• The home must be located in the United States.

• Vacation homes and rental properties are not eligible.

• For new construction, the purchase date is the date you occupy the home. As a result, you must move in by June 30, 2010, to claim the credit.

Page 91: January 2010 Market Update Seminar

When Can You Claim the When Can You Claim the Credit?Credit?

• Buyers purchasing homes on or before Dec. 31, 2009, may claim the credit on their 2009 tax returns.

• Buyers purchasing in 2010 will have the option to:

– Claim the credit on their 2009 return, even if the purchase is completed after Dec. 31, 2009;

– File an amended return for 2009 if their purchase is completed after April 15, 2010; or,

– Claim the credit on their 2010 tax returns.

Page 92: January 2010 Market Update Seminar

Any Other Any Other Questions?Questions?

Page 93: January 2010 Market Update Seminar

How much house can I really afford?

Page 94: January 2010 Market Update Seminar

• The first step is to meet with me!

Establish Establish YourYour Buying Buying PowerPower

Page 95: January 2010 Market Update Seminar

Factors to consider Factors to consider when buying and when buying and

selling…selling…

Source: MLS

1. Inventory(supply and 1. Inventory(supply and demand)demand)

2. Interest Rates2. Interest Rates

Page 96: January 2010 Market Update Seminar

Interest Rates Remain Interest Rates Remain LowLowAverage Annual Rate (30-year fixed rate mortgage)

5%

7%

9%

11%

13%

15%

17%

19%

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Year

Percent

Source: Freddie Mac

Page 97: January 2010 Market Update Seminar

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

Page 98: January 2010 Market Update Seminar

‘Great speech but does it really work?

Page 99: January 2010 Market Update Seminar

We know the best way to evaluate pricing

Does this really work?

Page 100: January 2010 Market Update Seminar

We know the best way to evaluate pricing

Does this really work?

Page 101: January 2010 Market Update Seminar

22. . The Effect of The Effect of StagingStaging on the on the

Value of a HomeValue of a Home..

Page 102: January 2010 Market Update Seminar

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.

Page 103: January 2010 Market Update Seminar

The Way You Live In Your Home…

Page 104: January 2010 Market Update Seminar

… And The Way We Market And Sell A House Are Two Different

Things.

Page 105: January 2010 Market Update Seminar

“The Investment in Home Staging

is Always Less than Your First Price Reduction!”

Page 106: January 2010 Market Update Seminar

Buyers Only Know What They See …

Page 107: January 2010 Market Update Seminar

… Not The Way It Is Going To Be.

Page 108: January 2010 Market Update Seminar

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.

Page 109: January 2010 Market Update Seminar

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.

Page 110: January 2010 Market Update Seminar

The average marketing

time of an ASP Staged vs. non-Staged home is 80%

less.

Page 111: January 2010 Market Update Seminar

3.3.The Effect of ‘The Effect of ‘Pre-Pre-Inspection’Inspection’ on the Sale of on the Sale of

YourYour Home. Home.

Page 112: January 2010 Market Update Seminar

What is

‘Pre-Inspection?’

Page 113: January 2010 Market Update Seminar

Home 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.  

Page 114: January 2010 Market Update Seminar

PRE-LISTING Home Inspection

DOESN’T THE BUYER DO THE HOME INSPECTION?

Page 115: January 2010 Market Update Seminar

All Negotiations, including real estate, are all about negotiation and control.

Who is in control?

Right Price

Right Staging

All Repairs are done in advance.

Offer a Home Warranty to the buyer..

Page 116: January 2010 Market Update Seminar

PRE-LISTING Home Inspection

Data on where most sales fall apart: attorney review, home inspection.

Fall Thru Percentage 2007: 26%Fall Thru Percentage 2008: 10.2%.

Page 117: January 2010 Market Update Seminar

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.

Page 118: January 2010 Market Update Seminar
Page 119: January 2010 Market Update Seminar
Page 120: January 2010 Market Update Seminar

Reality of today’s market is that you will see the return on your investment not in an inflated sales price but in retaining the highest percentage of your list price and staying on the market the fewest # of days.

Please consult with your Realtor & staging professional as to which improvements you should finish to make your home the most salable.

Page 121: January 2010 Market Update Seminar

Weichert Family of Companies

What will a real estate company

do for me?

Page 122: January 2010 Market Update Seminar

Making Your Purchase as Making Your Purchase 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.

Page 123: January 2010 Market Update Seminar

• Time is money.

The Weichert The Weichert DifferenceDifference

• Stress kills.

• Time is life.

Page 124: January 2010 Market Update Seminar

Educate You.

Negotiate on your behalf.

Offer advice on due diligence.

Manage all aspects of the transaction

process.

What Will a Weichert Agent Do for Me?

Page 125: January 2010 Market Update Seminar

We’re Here to HelpWe’re Here to Help

The Entire Process is reviewed by Legal Council.

Page 126: January 2010 Market Update Seminar

Become a Fan!

www.facbook.com/weichertprinceton

www.slideshare.net/jdwilton

Presentation available at all 3 sites, download file through Monday.

Page 127: January 2010 Market Update Seminar

Resource and website list:

Realtor.org

http://www.facebook.com/pages/

NAR-Research/73888294183#

Remodeling.com

Page 128: January 2010 Market Update Seminar

Resource and Website Resource and Website ListList

http://www.realtor.org/research/research/housinginx Remodeling.com

www.Otteau.com

www.Pre-listing-inspection.com

Page 129: January 2010 Market Update Seminar

Resource and Website Resource and Website List:List:

www.Housemaster.com

www.Stagingshoppingcenter.com

Page 130: January 2010 Market Update Seminar

Resource and website Resource and website list:list:

www.Stagedhomes.com

www.realestatestagingassociation.com

www.foreclosurepoint.com

www.realtytrac.com

Page 131: January 2010 Market Update Seminar

Happy Thanksgiving!Happy Thanksgiving!