Murray Hill Farm Forecast - Quarter 3 - 2007
New Providence - Berkeley Heights - Murray Hill Farm
October is here and change is in the air. Any of you who have been following the real estate market know that the leaves will not be the only thing falling in the next couple months. The media has been pushing the decline of home prices for sometime, yet up until now New Providence, Berkeley Heights, and Murray Hill Farm have been able to dodge this bullet quite. This is due to a number of different aspects including the train line into the city, good schools, and a desirable community environment. Unfortunately our time has come; however, it might not be as bad as you think.
Prior to 2007 many real estate analysts predicted this year to be one of transition. The real estate market is cyclical and due to historically high rates of appreciation, for the past few years, we have now reached a point where salaries have not increased at a proportional rate to homes. Once affordability becomes a problem the market will inevitably slow down, yet this was not the only concern.
Sub-Prime Lending
The majority of home buyers in today’s market rely on a mortgage to finance the purchase. Unfortunately as many of you may already know the mortgage industry faced a crisis this year. Sub-prime lending, a term referring to loans being given to buyers who do not meet the normal industry standards due to any number of different variables, caused many mortgage companies to go out of business. The problem being that many buyers, given sub-prime loans in the past, were financially stretched too thin and were unable to support the homes they purchased. Once all of these mortgages went into default the mortgage companies, brokers, and banks which promoted such lending were faced with a large amount of loss. This was especially true for all of the buyers who purchased homes in the height of the market and may have over paid for their home. These people were unable to afford their loans and the banks were unable to sell the homes for the same value. Both home owners and financial institutions suffered. Once the dust settled those financial institutions who could not afford the loss were forced out of business and the entire industry made standards much stricter. These stricter standards made it even more difficult on the real estate market because many buyers could no longer receive the loans they would have previously been approved for.
The Media Influence
As I mentioned above, the media also played a huge role in damaging the real estate market. Many homeowners listened to the headlines about the real estate bubble bursting and immediately decided to sell as soon as possible. It was this media scare tactic that created a rise in inventory or supply. As basic Economics would suggest this rise in supply coupled with a somewhat consistent demand from buyers forced prices to decline. As more homes entered the market these buyers were given a greater number of options in each price range. This caused buyers to become pickier and take more time to decide on a home then in the past. This time delay caused the average days on market to increase which will always negatively impact prices. As the months continued and this perpetual cycle became more apparent buyers became savvier to the market. Rather then reacting immediately many buyers decided to wait and see how the market responds to a given price. If the market did not respond these buyers would remain patient until the sellers became frustrated and repositioned their homes. Once repositioned to the level of buyer’s perceived value these homes were purchased only to be replaced by the next wave of hopeful sellers.
Seller’s Expectations
The third concern facing today’s real estate market is seller’s expectation. As a homeowner who invested in a property you expect this investment to continuously appreciate from one year to the next. Since the past few years consisted of historically high rates of appreciation many sellers began to expect these increases to continue at these rates. Unfortunately the price change between 2006 and 2007, year to date, has not been as high as many sellers would have liked. This inconsistency caused many sellers to price their home higher then the market would currently yield. Since all sellers universally want the same thing, the most money for their home; it stands to reason that the recent trends have shown many homes are overpriced from the start. Regrettably many Realtors, who should have been advising their sellers against this strategy, have either failed to do so or have been ignored. In both cases these overpriced sellers have been chasing a depreciating market which is extremely detrimental to receiving the top dollar for their home.
As you can see the first three quarters of 2007 have been filled with many obstacles and new challenges for sellers and Realtors to face. The good news is that just because new obstacles exist does not mean that sellers need to suffer in order to sell their home. In fact Murray Hill Farm’s 2007 real estate market has proven to be a micro chasm of what sellers across the area have been facing. Thus understanding this market may help to clarify which approach to selling is successful and which is not. As of October 7th, 2007 there have been three homes sold in Murray Hill Farms in 2007.
Murray Hill Farm - 2007 Year to Date -Sold Homes
12 Timothy Field, listed by Weichert Realtors, was originally priced at $1,175,000. After being repositioned a number of times the home finally went under contract at a listed price of $949,000 in 121 days. It eventually sold at $910,000 with a list to sale price ratio of 77%. The home offered 9 rooms, 4 bedrooms, 2 full and 1 half baths.
10 Farm Gate Road, listed by Burgdorff ERA, was originally priced at $1,310,000. After being repositioned to $1,185,000 the home went under contract after 67 days on the market. The final sales price was $1,185,000 yielding a list to sale price ratio of 90%. The home offered 12 rooms, 5 bedrooms, 3 and 1 half baths.
10 Baldwin Drive, which I listed, was originally priced at $1,075,000. We did not need to reposition because we received an offer after 29 days which we negotiated and accepted. The final sales price was $1,025,000 yielding a list to sale price ratio of 95%. This home offers 9 rooms, 3 bedrooms, 2 full and 1 half baths.
In addition to the three homes sold, in 2007, our development currently has three homes actively listed.
Murray Hill Farm Active Listing as of October 7, 2007
8 Baldwin Drive, currently listed with Prudential, has been on the market for 175 days. It was originally priced at $989,000, yet has been twice repositioned and is currently listed for $924,900. Although yet to be sold the original list price to current list price ratio is at 94%. This home offers 9 rooms, 4 bedrooms, 2 full and 1 half baths.
14 Baldwin Drive, currently listed with Lois Schneider, has been on the market for 117 days. It was originally priced at $989,000, yet has been repositioned and is currently listed for $939,000. Although this home is also yet to be sold the original list price to current list price ratio is at 95%. This home offers 11 rooms, 5 bedrooms, 3 full and 1 half baths.
12 Farm Gate Road, currently listed with RE/MAX, has been on the market for 114 days. It was originally listed at a price of $1,139,000 and has yet to be repositioned. This home offers 9 rooms, 5 bedrooms, 2 full and 2 half baths.
To better understand the Murray Hill Farm community real estate market trends you must also comprehend the Berkeley Heights and New Providence real estate trends. This will provide a measure by which to compare the statistics relevantly.
Murray Hill Farm Listings Vs. The Berkeley Heights Real Estate Market
Year to date, the Berkeley Heights real estate market has produced 116 sold homes. These 116 sold homes have had an average list price of $625,111. After sitting on the market for an average of 78 days these homes have sold for an average sales price of $608,013. This means that the list to sale price ratio for the entire Berkeley Heights’ market equals approximately 97%.
In addition to analyzing the entire Berkeley Heights’ real estate market it is also important to analyze the sold Berkeley Heights’ homes within the $850,000 to $1,500,000 price range. Remember this is where all of the Murray Hill Farm homes were positioned. This price range yielded an average list price of $1,105,940 with an average days on market of 129 days. The average sales price was $1,062,500 meaning that the list to sales price ratio equated to 96%.
The active Berkeley Heights’ market, within the $850,000 to $1,500,000 price range, is composed of 13 homes. The average list price is $1,121,384 and on average each home has been listed for 95 days.
In the past 10 months only 1 Murray Hill Farm listing was located in Berkeley Heights. 12 Farm Gate Road, currently still active, has already surpassed the average active home’s days on market by nearly 20 days. Listed at $1,139,000 this home has also been priced above the average list price for active and sold homes, as well as above the average sales price of homes sold.
Part of understanding why some homes sell and others do not can be clarified by looking through the eyes of a buyer. When a buyer is faced with the decision of purchasing a home in Berkeley Heights and can afford a home in the range of $850,000 to $1,500,000 he/she will have 13 homes to choose from. If this buyer is market savvy he/she would never purchase a home for full asking price if that home was on the market for longer then the average days on market because this means that other buyers did not perceive value. Once again basic economics would prevail and a buyer would realize that a lack of demand will equate to a lower price.
One more point that is important to grasp is that many sellers believe that this buyer should offer a low offer if they love the house. This concept might seem like a good one, yet in reality most buyers will not. The reason they will not is because an overpriced home will be compared to homes in the price range specified by the list price. This means that the home will consistently show poorly in comparison to the other homes buyers see. For instance, pretend the Smiths decided to sell their home. If the Smiths price the home at $1,200,000 when the home should really be priced at $999,000 there will be a problem. Every buyer who previews homes in the $1,100,000 to $1,200,000 range will most likely feel that the Smith’s home is the worst option because it does not offer $1,200,000 value. The buyers who would find value in this home may not be seeing the home because it is priced out of their range. This means that the buyers looking for $1,200,000 homes will have no interest and buyers looking for a home in a lower price range may never preview the home. It becomes a difficult situation for the sellers to overcome when it could have been easily avoided by correct pricing.
Murray Hill Farm Listings Vs. The New Providence Real Estate Market
Year to date, the New Providence real estate market has produced 120 sold homes. These 120 sold homes have had an average list price of $606,040. After sitting on the market for an average of 62 days these homes have sold for an average sales price of $589,581. This means that the list to sale price ratio for the entire market equals approximately 97%.
In addition to analyzing the entire New Providence real estate market it is also important to analyze the sold New Providence homes within the $850,000 to $1,500,000 price range. As I mentioned above, this is where all of the Murray Hill Farm homes were positioned. This price range yielded an average list price of $1,053,636 with an average days on market of 51 days. The average sales price was $1,018,775 meaning that the list to sales price ratio equated to 97%.
The active New Providence market, within the $850,000 to $1,500,000 price range, is composed of 7 homes. The average list price is $935,985 and on average each home has been listed for 101 days.
In the past 10 months 5 Murray Hill Farm listings were located in New Providence. Since 3 of them have already sold let us focus on the remaining 2 which have not. Although a seller’s motivation, specific home characteristics, and marketing techniques all play an intricate role in the sale of a home there comes a time when price needs to be closely analyzed.
What I mean to say is that a seller and his/her Realtor need to identify which homes in a given market place are the competition. Once these homes are identified it is the job of this Realtor to make the listed home more desirable then this competition. In a development like Murray Hill Farm buyers interested in our area will consider the entire active Murray Hill Farm market as viable options. This means that as a Murray Hill Farm listing it is crucial to position yourself better then other Murray Hill Farm listings.
For example, consider the buyer who purchased 12 Timothy Field Road. This listing was active during the same time as 8 Baldwin Drive, which is still currently active. If 8 Baldwin Drive had decided to make the price of their home more desirable then 12 Timothy Field the likelihood of a buyer choosing 12 Timothy Field would be much lower. In fact, the difference could have meant the sale of 8 Baldwin Drive instead of 12 Timothy Field.
I recognize that there is a price variation between what 8 Baldwin Drive is currently asking and what 12 Timothy Field Road decided to accept. To refresh your memory, 12 Timothy Field Road sold for $910,000 and 8 Baldwin Drive is priced at $924,900. This difference is a key to understanding price and its importance. Both 12 Timothy Field Road and 8 Baldwin Drive were very similar in regards to the features they offered. Any buyer who entered either home would certainly consider the other as well. Let us logically consider the implications of allowing a home similar to your own sell before your home. There are two distinct problems that immediately occur.
The first problem is that you lost a potential buyer who was not only willing, but did purchase. Qualified buyers who are ready and able to buy are something every seller needs. Losing this potential buyer is somewhat devastating.
The second, and probably most important, aspect to consider is the new bar set by the home which sold. Buyers are smart in today’s real estate market. Many buyers follow the community real estate statistics of the towns they plan on entering for months before ever even stepping foot in a home. These educated buyers recognize that 12 Timothy Field Road was a great comparison for 8 Baldwin Drive. Since 12 Timothy Field Road sold for $910,000 many buyers would no longer be willing to pay $1 more then $910,000 for 8 Baldwin Drive. In the mind of these buyers, 12 Timothy Field Road was chosen over 8 Baldwin Drive for a reason. It is this mentality that creates issues for the home still active.
Before we move on, I just want to clarify one point. 8 Baldwin Drive may receive more then $910,000 because, as you may know, the real estate market is unpredictable. Regardless of the final selling price for 8 Baldwin Drive the theory is what is important. It may not be an exact science, yet the fact remains that the majority of homes which fail to attract that buyer will suffer in the long run. If nothing else, the excess days on market will inevitably lead to a lower sales price. I do, however, wish 8 Baldwin Drive the best of luck as they truly are a good family.
Personally, I feel that focusing on pricing mistakes can be detrimental at times because it only tells half of the story. Understanding how correct pricing is beneficial is truly what sellers need to comprehend. It is this strategy that is most successful at bringing the seller top dollar. In this past year I was fortunate enough to represent the only Murray Hill Farm listing which sold under the average days on market for New Providence and without having to change our price. 10 Baldwin Drive not only sold in 29 days, but was also the highest sales price for a three bedroom home in New Providence history. Being a Murray Hill Farm listing certainly helped our situation, yet at the time we were listed we were facing a good amount of competition. In fact, both 12 Timothy Field Road and 10 Farm Gate Road were both listed at the same time. Thus, it was imperative that we remained the most competitive value on the market. We did this by pricing the home correctly, utilizing the best marketing techniques available, and home staging. It was these three aspects that worked together to gain maximum exposure and inevitably sell the home.
The Future of Murray Hill Farm Real Estate
As you know, no one can predict the future or guarantee the prediction’s validity. This includes real estate professionals who study the market. The only thing we, as professionals, can do is make educated theories about the market and its forecast. With this being said, I feel it is my duty to share with you some of the theories currently being discussed among real estate analysts. It is important that you understand what the real estate experts are thinking rather then just reading the media hype.
The overall consensus is that the entire east coast real estate market will be depreciating for at least the next year. New Jersey will be consistently depreciating at a rate of .5% every month. This means that in a year’s time we may see a 6% decline in home prices. The good news is that areas along the train line may never see the same depreciation due to the influx of buyers from the city. New York City sellers are still being blessed with an appreciating market. This means that they will be receiving more for their condos, townhouses, and homes when they sell. As buyers migrate west on the train line towns such as Short Hills, Summit, New Providence, and Berkeley Heights will still remain desirable.
This desirability will certainly help sellers in New Providence, Berkeley Heights, and Murray Hill Farm to prosper in the future, yet be clear to understand that this prosperity will rely on smart decision making. Those sellers considering a sale in the next year may best be served selling immediately. For those who decide to wait, the future is uncertain. What is certain, however, is that buyers will always be buying. The difference being, these future buyers will be more sophisticated, better informed, and more reluctant to make emotional decisions. This is why Murray Hill Farm sellers need to account for these buyers and prepare accordingly. Correct pricing is crucial, yet you must also remember to choose an agent and company which can provide you with the best odds of success.
The Murray Hill Farm’s Webpage
As your neighborhood specialist, I recently decided to further distinguish myself from the crowd of agents claiming to focus on the real estate needs of the Murray Hill Farm community. For the past year I have been developing a personal website dedicated to answering all of the questions buyers and sellers may have about real estate. Included in the many features of my site there is a page completely focused on Murray Hill Farm. This page serves a dual purpose. First, it is a benefit to our homeowners who are curious about learning more about the Murray Hill Farm’s real estate market and community history. It includes market statistics, past Farm Forecasts, and a breakdown of the year’s listings for anyone interested.
The second purpose it serves is to inform potential buyers about our community. My site currently receives over a thousand visitors a week who will have the opportunity to learn of what we have to offer. In fact, an article I wrote about “The Real Estate Buying Process” was recently selected and featured on Realtor.com; the most popular real estate site in the world. Through Realtor.com’s endorsement I was able to build my daily traffic to much greater levels.
I have also begun to use this increased traffic to help expose my listings to a larger buyer pool. As recent as last week I decided to test my site’s ability to create buyer interest. I promoted an open house, I was hosting, for a listing I currently have in Summit on the blog section of my site. I simply described the home, invited anyone interested to join me, and gave directions on how to find the home. My open house received over twenty couples and three Realtors with qualified buyers. It happened to be the highest turnout out for any Summit home hosting an open house for the past weekend based on my office’s statistics. Although this was nice to know, I was more excited by the fact that 5 out of the 20 couples found out about the home through my website. This means that 25% of my seller’s open house exposure would have been lost had they not listed with me.
I truly do pride myself on getting my sellers the most money in the shortest amount of time. If thinking outside of the box is necessary to accomplish that goal, I am willing to sacrifice my own time and effort to succeed. As my business, reputation, and personal website grow, so too does my ability to provide my clients with the best value around. I would greatly appreciate it if you took the time to visit my site because I feel it can be extremely beneficial to you. I also feel it would help answer any questions you may have about my ability and overall expertise. I am not a part time agent who happened to get lucky with a Murray Hill Farm listing. My statistics have outperformed the market because I am a full time expert in my field who is dedicated to educating my clients by first becoming educated myself.
In addition to personally developing a highly successful webpage from scratch, I have also become an Accredited Staging Professional and E-Pro. Both of these designations allow me to help my seller’s homes stand out from their competition. As an Accredited Staging Professional, I am able to provide my sellers with a full analysis of how they should prepare their home to sell. As an E-Pro, I have been trained to become an expert in internet advertising. This enables me to take advantage of the fastest growing source of where buyers come from. The internet has become the key to successful home marketing; consequently, as an E-Pro, I am at the cutting edge of my profession.
I hope this Farm Forecast has been both educational and interesting for you to read. I also hope that you enjoy the Murray Hill Farm web page I’ve designed in addition to the rest of my website. I would greatly appreciate any feedback you may have and look forward to speaking with you soon. Have a great day.
The link to my website is:
http://www.michaelpennisi.com/
The link to the Murray Hill Farm portion of the site is
http://www.MichaelPennisi.com/Murray-Hill-Farms.asp
The link to my real estate blog is:
If you are interested in receiving periodic market statistics and updates about Murray Hill Farm, Berkeley Heights, and/or New Providence please either send an email to Michael-Pennisi@Burgdorff.com or call me at (908)656-3858.
For those who choose to send me an email please make sure to include your name, address, phone number, e-mail address, and any questions you may have. I would also be happy to provide you with any other information you are interested in. Once again, I look forward to hearing from you soon.
Sincerely,
Michael Pennisi
http://www.michaelpennisi.com/ The key to your dream home
All information taken from the Garden State MLS. Information deemed reliable yet not guaranteed.
Copyright Michael Pennisi 2007