1Barb Bottitta CSR, GRI, ABR, SRS, SRES
Lehigh Valley Real Estate Today
The Numbers That Drive U.S. Real Estate
1. Home Sales
2. Home Prices
3. Inventory
4. Mortgage Rates
5. Affordability
2
In Q3 2010, all 50 states experienced a decrease in sales …
TX
UT
MT
CA
AZ
ID
NV
OR
IA
COKS
WY
NM
MO
MN
NE
OK
SD
WA
AR
ND
LA
IL
FL
GAAL
WI
VAIN
MI
MS
KY
TN
PA
NC
SC
WV
NJ
ME
NY
VT
MD
NH
CT
DE
MARI
AK
HI
Below 10%
Below 20%
Home Sales Direction
(Year-Over-Year Change)
OH
Source: National Association of REALTORS®
Below 30%
Below 40%
3
In Q4 2010, all states except for Virginia experienced an increase in
sales …
TX
UT
MT
CA
AZ
ID
NV
OR
IA
COKS
WY
NM
MO
MN
NE
OK
SD
WA
AR
ND
LA
IL
FL
GAAL
WI
VAIN
MI
MS
KY
TN
PA
NC
SC
WV
NJ
ME
NY
VT
MD
NH
CT
DE
MARI
AK
HI
OH
Source: National Association of REALTORS®
Sales Increased
Sales Decreased
Home Sales Direction
(Year-Over-Year Change)
4
5
Average Lehigh Valley Sale Price (In $100Ks)
Over the last 2 ½ Years, the average sale price peaked at $211,00 in June 2010, but dropped back to $200K or lower
for all of 2011, before it jumped back over that mark to $206,000 this past June.
0
50
100
150
200
250Ja
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bM
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May Jun Jul
Aug
Sept Oc
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-Jan
11-F
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-Mar
11-A
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-May
11-Ju
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-Jul
11-A
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-Sep
11-O
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-Nov
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-Jan
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-Mar
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-May
12-Ju
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$206K
Statistics from LVAR
Average Sale Price = Total Price of all properties sold, divided by the number of sales
$200K$211K
Monthly Lehigh Valley Home Sales
6
Units
7
Average Lehigh Valley SalesApril 2010 through June 2012
Statistics from LVAR
8
Lehigh Valley Absorption Rates April 2010 through June 2012
Months
Statistics from LVAR
9
Lehigh Valley Absorption Rates bySchool District, June 2012
Statistics from LVAR
0%
2%
4%
6%
8%
10%
12%
'89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 11
Mortgage Rates (30-Year Fixed)
Source: Freddie Mac
Mortgage rates averaged 4.69% in 2010, an all-time low since Freddie Mac started tracking in 1971… and they’ve just kept going down, setting record lows for 6 consecutive months.
10.3%
6.0%
5.0%
3.56%
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Affordability (In Thousands)
Given the historical rate of home appreciation rates, home prices are a huge bargain. Are 2010 homes undervalued by18%?
0
50
100
150
200
250
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
Source: National Association of REALTORS®
Historical appreciation rate = 4%$153K
$222K
$173K
$211K
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Affordability: Let’s put this in perspective …1989 2010 2011
Bread $0.67 $2.49 $2.78
Gas (gal.) $0.97 $2.73 $2.84
New Car $15,350 $28,400 $30,000
Existing Home $94,000 $173,000 $166,100
Mortgage Rate 10% 4.69% 4.45%
Monthly Payment $825 $896 $837
In 1981, home mortgage payments were 36% of family income.
In 1989 – 24% and in 2011 – 13%12Source: Keller Williams
International
Barb’s Top 10 Things You Should Know about Real Estate
10. Distressed Properties: Short Sales and Bank Foreclosures (REOs) are not for everyone:
Hurdles to overcome:• “As is” property condition• Increased paperwork & complexity• Increased chance for multiple offers• Bank REO process is long & arduous• Buyer probably is not getting a “steal”• Buyer must be “patient”
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#9 - “Aging in Place”
Did you know?
• Half of older women age 75+ live alone.
• Persons reaching age 65 have an average life expectancy of an additional 18.1 years.
• The 85+ population is projected to increase from 4.6 million in 2002 to 9.6 million in 2030.
• Median # of years home owners are staying in their homes has increased from 8 to 10 yrs
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#8 – Today’s Agent must be “tech savvy”Info Sources Used in Home Search
2009 2010
Internet 90% 89%
Real estate agent 87 88
Yard sign 59 57
Open house 46 45
Print newspaper advertisement
40 36
Home book or magazine 26 23
Home builder 18 16
Relocation company 4 3
Television 8 7
Billboard 6 5Every source was used less except one
– the Realtor! 15Source: Keller Williams
International
#7 – Down payments of 5% or less have not disappeared
• Both first-time and repeat buyers are putting less than 20% down, even though a down payment of 20% will typically provide the best financing terms.
• 68% of first-time buyers and 28% of repeat buyers had a down payment of 5% or less in 2011.
16Source: Keller Williams International
#6 – Yes, it’s still the economy
• Employment will remain a challenge over the next few years, which impacts the market by tempering GDP and holding back demand for home buying.
•To get back to 6% unemployment, 13.3 million jobs need to be added over the next
3 years. That’s 400,000 jobs/month
17Source: Keller Williams International
The Four Keys to Housing Recovery
18Source: Keller Williams International
#5 – Condition is the key for serious buyers
• Homes in better condition sold for an average of 96% of list price compared to 92% of list price for homes in poorer condition.
• The most common updates:•Paint 44%•Floorings 25%•Lighting Fixtures 20%
19Source: Keller Williams International
#4 – Staging is well worth the effort
• Staged Homes sell faster.
• Staged homes get higher offers.
• Staged houses look better in the MLS pictures, getting more potential buyers to actually come see the house in the first place.
• Staged houses have an edge over competing properties, and the staging can often sway the final decision.
20Source: HomeStaging.com
#3 – Mortgage Pre-approval is a “must”
• Pre-approval for buyers is the norm in today’s market – 64% of buyers get pre-approved by mortgage brokers or banks
21Source: Keller Williams International
#2 – Price it right the first time!
• For the 48% of sellers who set their listing price according to their agent’s interpretation of the market value of their house:
• Sold faster – 56 days compared to 105 • Sold for 6.7% higher list-to-sell ratio• Experienced fewer price reductions
(4 to 6 weeks between price reductions of between $5,000 and $15,000
22Source: Keller Williams International
Barb’s Top 10
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1.
2. Price it right the first time!
3. Buyers should be pre-approved.
4. Staging is well worth it.
5. Condition is key for Buyers.
6. Lower unemployment is key to the housing recovery.
7. Down payments of 5% are still feasible.
8. Your Realtor should be “tech savvy”.
9. Aging in Place – the senior market.
10. Short Sales & Foreclosures.
#1 – “The end is in sight” – we have “hit bottom”
• We have been in a Buyer’s Market for the last 6 years because: home prices have been low, Mortgage rates are at an all-time low and Inventory has been high.
•Prices have stabilized (we’ve had our pricing correction), it doesn’t seem likely that interest rates can go any lower & we are reaching an inventory balance.
24Source: Keller Williams International
Thank You! – Questions?
Slides & absorption graphs for all LV School Districts available at www.LVhomeExpert.com/Rotary
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First-Time Home Buyers
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Info Sources Used in Home Search2009 2010
Internet 90% 89%
Real estate agent 87 88
Yard sign 59 57
Open house 46 45
Print newspaper advertisement
40 36
Home book or magazine 26 23
Home builder 18 16
Relocation company 4 3
Television 8 7
Billboard 6 5
Every source was used less except one – YOU!27
What Buyers Want Most from Agents
Help with the price negotiations
14%
Help buyer negotiate the terms of sale
12%
Help with paperwork
10%
Determine what comparable homes
were selling for6%
Help determining how much home buyer can afford
3%
Help find and arrange
financing2%
Other3%
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2005 2009 2010
Good financial investment 94% 87% 85%
Better than stocks * 54 47
About as good as stocks * 26 30
Not as good as stocks * 7 9
Not a good financial investment 1 3 4
Don’t know 5 10 11
Buyer’s View of Home as a Financial Investment
29
2011