October 2016 Calendar of Events for Weichert, Realtors Vienna Office
Weichert Princeton March 2016 Market Update Seminar
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Transcript of Weichert Princeton March 2016 Market Update Seminar
Princeton Area Real Princeton Area Real EstateEstate
Market UpdateMarket UpdateJoshua D Wilton
Managing BrokerWeichert 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 SalesJanuary 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 Forward5 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 Forward5 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 Forward5 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 Forward5 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 exceed30 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 Forward5 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 Trend15 Largest Job Markets
Job Change: Nov 2014 – Nov 2015Added+61,90+61,9000 JobsNew York +1.8%
Philadelphia +1.3%
2016 Market Trend15 Largest Job Markets
Ranked by Unemployment Rate4.8
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 MarketsCity Centers/Close-In Suburbs
Sales Office Absorption Rates 1/01/2016Jersey City/Downtown, NJ 1.79Jersey City/Exchange Place, NJ 1.70Hoboken, NJ 1.60Bayonne, NJ 3.50Chatham, NJ 3.08Madison, NJ 1.22Summit, NJ 3.43Short Hills, NJ 1.74Maplewood, NJ 1.89Westfield, 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 Sales2015
The New Jersey MarketThe Statewide Picture
Source: NJAR 10K Research
Days on Market2015
The New Jersey MarketThe Statewide Picture
Source: NJAR 10K Research
Average Sales Price2015
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
I can do my own local research online…
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 TrendsSource: 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 CountySingle Family Market
Source: NJAR 10K Research DataSource: NJAR 10K Research
Mercer CountyCondo/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
HopewellTrain
Schools
Lifestyle
Affordability
Source: NJAR 10K Research DataSource: NJAR 10K Research
Hopewell Twp Market ActivitySingle Family HomesAverage Sale Price
2012 2013 2014Source: TrendMLS
2015
Hopewell Twp Market ActivitySingle Family Homes
Average Days on Market
Source: TrendMLS
2012 2013 2014 2015
Hopewell Twp Market ActivitySingle Family Homes
List to Sale Price Ratio
Source: TrendMLS
2012 2013 2014 2015
Hopewell Twp Market ActivityCondos & Townhouses
Average Sale Price
Source: TrendMLS
2012 2013 2014 2015
Hopewell Twp Market ActivityCondos & Townhouses
Average Days on Market
Source: TrendMLS
2012 2013 2014 2015
Hopewell Twp Market ActivityCondos & TownhousesList to Sale Price Ratio
Source: TrendMLS
2012 2013 2014 2015
Source: NJAR 10K Research DataSource: NJAR 10K Research
LawrencevilleTrain
Schools
Lifestyle
Affordability
Source: NJAR 10K Research DataSource: NJAR 10K Research
Source: NJAR 10K Research DataSource: NJAR 10K Research
Lawrenceville Market ActivitySingle Family HomesAverage Sale Price
2012 2013 2015Source: TrendMLS
2014
-36.9%vs 2014
Lawrenceville Market ActivitySingle Family Homes
Average Days on Market
Source: TrendMLS
2012 2013 20152014
Lawrenceville Market ActivitySingle Family Homes
List to Sale Price Ratio
Source: TrendMLS
2012 2013 20152014
Lawrenceville Market ActivityCondos & Townhouses
Average Sale Price
Source: TrendMLS
2012 2013 20152014
-27.7%vs 2014
Lawrenceville Market ActivityCondos & Townhouses
Average Days on Market
Source: TrendMLS
2012 2013 20152014
Lawrenceville Market ActivityCondos & TownhousesList to Sale Price Ratio
Source: TrendMLS
2012 2013 20152014
Source: NJAR 10K Research DataSource: NJAR 10K Research
West WindsorTrain
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 ActivitySingle Family HomesAverage Sale Price
2012 2013 2014 2015
West Windsor Market ActivitySingle Family Homes
Average Days on Market
2012 2013 2014 2015
West Windsor Market ActivitySingle Family Homes
List to Sale Price Ratio
2012 2013 2014 2015
West Windsor Market ActivityCondos & Townhouses
Average Sale Price
2012 2013 2014 2015YTD as of 7/21/15
West Windsor Market Activity Condos & Townhouses Average Days on Market
2012 2013 2014 2015
West Windsor Market ActivityCondos & 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
RobbinsvilleTrain
Schools
Lifestyle
Affordability
Source: NJAR 10K Research DataSource: NJAR 10K Research
Source: NJAR 10K Research DataSource: NJAR 10K Research
Robbinsville Market ActivitySingle Family HomesAverage Sale Price
2012 2013 2014 2015Source: Trend MLS
Robbinsville Market ActivitySingle Family Homes
Average Days on Market
2012 2013 2014 2015Source: Trend MLS
Robbinsville Market ActivitySingle Family Homes
List to Sale Price Ratio
2012 2013 2014 2015Source: Trend MLS
Robbinsville Market ActivityCondos & Townhouses
Average Sale Price
2012 2013 20142012 2013 2014 2015Source: Trend MLS
Robbinsville Market Activity Condos & Townhouses Average Days on Market
2012 2013 2014 2015Source: Trend MLS
Robbinsville Market ActivityCondos & Townhouses List to Sale Price Ratio
2012 2013 2014 2015
Source: Trend MLS
Source: NJAR 10K Research DataSource: NJAR 10K Research
South BrunswickTrain
Schools
Lifestyle
Affordability
Source: NJAR 10K Research DataSource: NJAR 10K Research
Source: NJAR 10K Research DataSource: NJAR 10K Research
South Brunswick Market ActivitySingle Family HomesAverage Sale Price
2012 2013 2014
Source: Middlesex MLS
2015
South Brunswick Market ActivitySingle Family Homes
Average Days on Market
Source: Middlesex MLS
2012 2013 2014 2015
South Brunswick Market ActivitySingle Family Homes
List to Sale Price Ratio
Source: Middlesex MLS
2012 2013 2014 2015
South Brunswick Market ActivityCondos & Townhouses
Average Sale Price
Source: Middlesex MLS
2012 2013 2014 2015
South Brunswick Market ActivityCondos & Townhouses
Average Days on Market
Source: Middlesex MLS
2012 2013 2014 2015
South Brunswick Market ActivityCondos & TownhousesList to Sale Price Ratio
Source: Middlesex MLS
2012 2013 2014 2015
Source: NJAR 10K Research DataSource: NJAR 10K Research
PrincetonTrain
Schools
Lifestyle
Affordability
Source: NJAR 10K Research DataSource: NJAR 10K Research
Princeton Market ActivitySingle Family HomesAverage Sale Price
2012 2013 2014Source: TrendMLS
2015
Princeton Market ActivitySingle Family Homes
Average Days on Market
2012 2013 2014Source: TrendMLS
2015
Princeton Market ActivitySingle Family Homes
List to Sale Price Ratio
2012 2013 2014Source: TrendMLS
2015
Princeton Market ActivityCondos & Townhouses
Average Sale Price
2012 2013Source: TrendMLS
2013 2015
Princeton Market ActivityCondos & Townhouses
Average Days on Market
2012 2013 2014Source: TrendMLS
2015
Princeton Market ActivityCondos & TownhousesList to Sale Price Ratio
2012 2013 2014Source: 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
2016Top Seller Negotiating Strategy…
1.Price it Right2.Pretty it Up3.Fix it First4.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
Princeton36 Mercer St.
The Price Trend Analysis suggested Market Value of $1.250 I recommended listing at $1.1 million
Princeton36 Mercer St.
• Pre-inspection• Staged*
• Right Pricing
Sold for $1.350 million, cash in 7 days. No contingencies.
62 MaidenheadListed at $629,000
Comparable property had sold previous at $6408 offersPending
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 SellerOur 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
2016Top 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 WindsorListed at $749,000
7 offers
2 Weeks LaterExact Comp
Listed $759,0005 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
Financing Financing What You Need to KnowWhat You Need to Know
Jennifer HaydenGold Services Manager
NMLS #4384Weichert Financial Services
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 RatesFreddie 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 HaydenGold Services Manager Weichert Financial Services
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
Making Making Your Purchase as 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.
Thank you for your time today
Resource and Website Resource and Website ListListwww.trendmls.com
www.realtor.orgwww.njar.comwww.Otteau.comwww.Pre-listing-inspection.comwww.Housemaster.comwww.Stagingshoppingcenter.comwww.realtytrac.comwww.njar.com/10kwww.keepingcurrentmatters.comhttps://education.state.nj.us/pr/