A Message from Lawrence F. Flick, IV, Chairman and Chief Executive OfficerPrudential Fox & Roach, REALTORS®and The Trident Group

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The Chairman’s Report

FALL/WINTER 2011 REGIONAL EDITION: NORTHERN DELAWARE

Has There Ever Been a Better Time?There is a time for everything, including buying ahome. But how do you know if the time is right foryou? Your answers to the following questions can helpdetermine if the timing is good for you:

• Would a different home better meet your needsunder your present personal circumstances?• Do you feel secure in your job?• Would you like the security of a long terminvestment?• Do you like to save money?• Would you like more control over your future?

If you answered mostly “yes,” then the time to buy ahome is now. In fact, there has never been a better timeto buy than now. Low house prices and the lowestmortgage rates since the 1950’s have converged to createan unprecedented opportunity.

Will prices continue to fall? It’s hard to tell. Twoindustry sources, Moody’s Analytics and Local MarketMonitor, have conflicting forecasts:

Based on this information, it’s hard to judge which wayprices will go. Personally, I believe it will be somewherebetween these two forecasts. We might wonder, if pricesdo go down wouldn’t it be better to wait before buyinga new home?

Well, yes, and no. Home prices are bumping along thebottom. Yes, they may go down a bit more, so if we

Forecast Change in House PricesNorthern DE

Year Moody’s Local MarketAnalytics Monitor

2012 0 -6%2013 +6% -4%2014 +9% -1%

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…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.

could be certain that mortgage interest rates would stayat the extreme lows we see now, then yes, theoretically itmight make sense to wait. But, and this is an importantconsideration, we have not seen mortgage rates this lowsince the 1950’s! As our economy improves — and itwill— rates will go up as well. If they rise by 1% fromwhat they are now, they would still be considered low,but not the historic lows they are now. Understandingthe risk of waiting is essential to a thoughtful decision,because today’s record low interest rates meanappreciably lower monthly payments. Not just fornow, but with each mortgage payment made monthafter month, year after year.

So, the question is: Do we wait and take a chance onperhaps getting a lower price on a house next year, ordo we buy now and lock in at today’s interest rates andpay lower monthly payments for the long haul?

No one can really know that a market has hit bottom.Perhaps the best thing about making a move nowrather than waiting for another year is that you canbegin living in a home that genuinely meets yourcurrent needs and desires sooner than later.

A Time for Selling?

Just as there is a time for buying, there is a time forselling. If you would like to sell your home, does itmake sense to wait out the market and hope for anupward trend in prices? Not necessarily. Even if pricesdo begin to nudge upwards, they will not risedramatically over the next several years. If you’ve beenholding off waiting for things to change, it’s not likelyto happen soon. Now may be the best time to sell.

If you want to sell your home, pricing is of the utmostimportance. Homeownership remains a great long-terminvestment, but it’s important to recognize that priceshave come down since the peak of the market.

Knowing exactly how much prices have changed foreach property is difficult – every community is different.Here are a few examples of average price declines sincethe market’s peak:

City of WilmingtonTrolley Square and Highlands . . . . . . . . . . .-22%

GreenvilleStonewold . . . . . . . . . . . . . . . . . . . . . . . . . . .-9%

HockessinCharter Oaks . . . . . . . . . . . . . . . . . . . . . . . .-17%Hockessin Chase . . . . . . . . . . . . . . . . . . . . .-21%Pierson’s Ridge . . . . . . . . . . . . . . . . . . . . . . . .-4%

MiddletownBackcreek . . . . . . . . . . . . . . . . . . . . . . . . . . .-25%

NewarkMiddle Run Crossing . . . . . . . . . . . . . . . . . .-18%

North WilmingtonEdenridge . . . . . . . . . . . . . . . . . . . . . . . . . . .- 9%Chalfonte . . . . . . . . . . . . . . . . . . . . . . . . . . .-13%Graylyn Crest N & S . . . . . . . . . . . . . . . . . .-10%Surrey Park . . . . . . . . . . . . . . . . . . . . . . . . .-20%

A property’s condition also matters. A sales associatetold me recently that she compares houses on themarket to contestants in a beauty pageant. The propertyin the best condition at the right price will win thecrown, or shall I say attract the buyer.

Is this the right time for you?

Only you can decide. Your Prudential Fox & Roachsales associate can help you make the most thoughtfuland well researched decision. And if you are buying ahome, your Trident mortgage consultant will addressyour specific needs and circumstances.

I wish you all the best!

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Perhaps the best thing about making a move now rather than waitinganother year is that you can begin living in a home that truly meets

your current needs and desires sooner than later.

Even if prices do begin to nudge upwards,they will not rise dramaticallyover the next several years.

Lawrence F. Flick, IVChairman and Chief Executive OfficerPrudential Fox & Roach, Realtors® and The Trident Group

Case-Shiller® Home Price Index: Single-Family Aggregate Index, (Index, 2000Q1=100), SASource:Fiserv, FHFA, Moody's Analytics 10/7/11Wilmington, DE-MD-NJ Metro Area Counties: New Castle DE, Cecil MD, Salem NJ

Change in Home PricesWilmington AreaSince 2000: up 57% Since Peak: down 20.7%

An Independently Owned and Operated Member of the Prudential Real Estate Affiliates, Inc.

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AN INDEPENDENT VIEW

Kevin C. Gillen, Ph.D. is aResearch Fellow withUniversity of Pennsylvania’sInstitute for Urban Researchand a Vice-President withPhiladelphia-based EconsultCorporation. His quarterlyreport on the Philadelphiahousing market regularlyreceives widespread mediacoverage, and he has been

quoted in the Wall Street Journal, the NY Times, thePhiladelphia Inquirer and Philadelphia Magazine.

As an economist who writes and speaks frequentlyabout our region’s housing market, I’m asked if Icould deliver some good news for a change. I oftenrespond with, “Sure: the good news is that the badnews is a lot worse everywhere else!”

Outside of our area, the typical U.S. home hasdepreciated in value by more than 30 percent sincethe bursting of the housing bubble, according toCase-Shiller’s 20-City composite house price index.That is a larger decline than what was even seenduring the Great Depression. But here in our area,

the average home has fallen in value by onlynine percent, according to the Federal HousingFinance Agency (FHFA); less than a third of thenational decline.

Of course, price deflation puts homeownersunderwater: owing more money on their mortgagesthan what their houses are currently worth. Currently,about a quarter of all U.S. homeowners are in such asituation, according to research by Zillow. In ourarea, only about eight percent of homeowners are insuch a situation. Not only is this significantly lessthan the national average, but only three states(NY, OK and ND) can claim a lower percentage ofnegative equity than us.

Where there is negative equity, there are foreclosures.According to RealtyTrac, one in every 570 Americanhouseholds received a foreclosure notice last month.In the hard-hit Sunbelt states of California, Nevada,Arizona and Florida, the number is one in every 242households. In our area? Only one in every 1,166households received a foreclosure notice last month.Even in the hardest-hit county of Philadelphia, thenumber is one in every 800 housing units; still wellabove the national average.