Has There Ever Been a Better Time to Buy a Home? Regional Edition: Northern DE (c) Prudential Fox and Roach, REALTORS®

1. The Chairman’s Report
A Message from Lawrence F. Flick, IV, Chairman and Chief Executive Officer
Prudential Fox & Roach, REALTORS® and The Trident Group
FALL/WINTER 2011 REGIONAL EDITION: NORTHERN DELAWARE
Has There Ever Been a Better Time?
There is a time for everything, including buying a Will prices continue to fall? It’s hard to tell. Two
home. But how do you know if the time is right for industry sources, Moody’s Analytics and Local Market
you? Your answers to the following questions can help Monitor, have conflicting forecasts:
determine if the timing is good for you: Forecast Change in House Prices
Northern DE
• Would a different home better meet your needs
under your present personal circumstances? Year Moody’s Local Market
Analytics Monitor
• Do you feel secure in your job?
• Would you like the security of a long term 2012 0 -6%
investment? 2013 +6% -4%
2014 +9% -1%
• Do you like to save money?
• Would you like more control over your future?
Based on this information, it’s hard to judge which way
If you answered mostly “yes,” then the time to buy a prices will go. Personally, I believe it will be somewhere
home is now. In fact, there has never been a better time between these two forecasts. We might wonder, if prices
to buy than now. Low house prices and the lowest do go down wouldn’t it be better to wait before buying
mortgage rates since the 1950’s have converged to create a new home?
an unprecedented opportunity. Well, yes, and no. Home prices are bumping along the
bottom. Yes, they may go down a bit more, so if we
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2. could be certain that mortgage interest rates would stay So, the question is: Do we wait and take a chance on
at the extreme lows we see now, then yes, theoretically it perhaps getting a lower price on a house next year, or
might make sense to wait. But, and this is an important do we buy now and lock in at today’s interest rates and
consideration, we have not seen mortgage rates this low pay lower monthly payments for the long haul?
since the 1950’s! As our economy improves — and it
will — rates will go up as well. If they rise by 1% from No one can really know that a market has hit bottom.
what they are now, they would still be considered low, Perhaps the best thing about making a move now
but not the historic lows they are now. Understanding rather than waiting for another year is that you can
the risk of waiting is essential to a thoughtful decision, begin living in a home that genuinely meets your
because today’s record low interest rates mean current needs and desires sooner than later.
appreciably lower monthly payments. Not just for A Time for Selling?
now, but with each mortgage payment made month
after month, year after year. Just as there is a time for buying, there is a time for
selling. If you would like to sell your home, does it
make sense to wait out the market and hope for an
upward trend in prices? Not necessarily. Even if prices
do begin to nudge upwards, they will not rise
dramatically over the next several years. If you’ve been
holding off waiting for things to change, it’s not likely
to happen soon. Now may be the best time to sell.
If you want to sell your home, pricing is of the utmost
importance. Homeownership remains a great long-term
investment, but it’s important to recognize that prices
have come down since the peak of the market.
…today’s record low interest rates mean appreciably lower monthly payments.
Not just for now, but with each mortgage payment
made month after month, year after year.
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3. Even if prices do begin to nudge upwards,
they will not rise dramatically
over the next several years.
Middletown
Change in Home Prices
Backcreek . . . . . . . . . . . . . . . . . . . . . . . . . . .-25%
Wilmington Area
Newark
Since 2000: up 57% Since Peak: down 20.7% Middle Run Crossing . . . . . . . . . . . . . . . . . .-18%
North Wilmington
Edenridge . . . . . . . . . . . . . . . . . . . . . . . . . . .- 9%
Chalfonte . . . . . . . . . . . . . . . . . . . . . . . . . . .-13%
Graylyn Crest N & S . . . . . . . . . . . . . . . . . .-10%
Surrey Park . . . . . . . . . . . . . . . . . . . . . . . . .-20%
A property’s condition also matters. A sales associate
told me recently that she compares houses on the
market to contestants in a beauty pageant. The property
in the best condition at the right price will win the
crown, or shall I say attract the buyer.
Is this the right time for you?
Case-Shiller® Home Price Index: Single-Family Aggregate Index, (Index, 2000Q1=100), SA
Source:Fiserv, FHFA, Moody's Analytics 10/7/11
Wilmington, DE-MD-NJ Metro Area Counties: New Castle DE, Cecil MD, Salem NJ Only you can decide. Your Prudential Fox & Roach
Knowing exactly how much prices have changed for sales associate can help you make the most thoughtful
each property is difficult – every community is different. and well researched decision. And if you are buying a
Here are a few examples of average price declines since home, your Trident mortgage consultant will address
the market’s peak: your specific needs and circumstances.
City of Wilmington I wish you all the best!
Trolley Square and Highlands . . . . . . . . . . .-22%
Greenville
Stonewold . . . . . . . . . . . . . . . . . . . . . . . . . . .-9%
Hockessin
Charter Oaks . . . . . . . . . . . . . . . . . . . . . . . .-17% Lawrence F. Flick, IV
Hockessin Chase . . . . . . . . . . . . . . . . . . . . .-21% Chairman and Chief Executive Officer
Pierson’s Ridge . . . . . . . . . . . . . . . . . . . . . . . .-4% Prudential Fox & Roach, Realtors® and The Trident Group
Perhaps the best thing about making a move now rather than waiting
another year is that you can begin living in a home that truly meets
your current needs and desires sooner than later.
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4. AN INDEPENDENT VIEW
Kevin C. Gillen, Ph.D. is a the average home has fallen in value by only
Research Fellow with nine percent, according to the Federal Housing
University of Pennsylvania’s Finance Agency (FHFA); less than a third of the
Institute for Urban Research national decline.
and a Vice-President with
Philadelphia-based Econsult Of course, price deflation puts homeowners
Corporation. His quarterly underwater: owing more money on their mortgages
report on the Philadelphia than what their houses are currently worth. Currently,
housing market regularly about a quarter of all U.S. homeowners are in such a
receives widespread media situation, according to research by Zillow. In our
coverage, and he has been area, only about eight percent of homeowners are in
quoted in the Wall Street Journal, the NY Times, the such a situation. Not only is this significantly less
Philadelphia Inquirer and Philadelphia Magazine. than the national average, but only three states
(NY, OK and ND) can claim a lower percentage of
As an economist who writes and speaks frequently negative equity than us.
about our region’s housing market, I’m asked if I
could deliver some good news for a change. I often Where there is negative equity, there are foreclosures.
respond with, “Sure: the good news is that the bad According to RealtyTrac, one in every 570 American
news is a lot worse everywhere else!” households received a foreclosure notice last month.
In the hard-hit Sunbelt states of California, Nevada,
Outside of our area, the typical U.S. home has Arizona and Florida, the number is one in every 242
depreciated in value by more than 30 percent since households. In our area? Only one in every 1,166
the bursting of the housing bubble, according to households received a foreclosure notice last month.
Case-Shiller’s 20-City composite house price index. Even in the hardest-hit county of Philadelphia, the
That is a larger decline than what was even seen number is one in every 800 housing units; still well
during the Great Depression. But here in our area, above the national average.
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