Corrections or additions?
This article by Christopher Mario was published in U.S. 1 Newspaper on
April 8, 1998. All rights reserved.
The Housing Boom is Back
Not so many years ago, people who had bought houses
in the Princeton area in the mid-’80s were feeling nervous. The crash
of ’87 followed by the recession of ’91 hit the residential real estate
market hard. Prices dropped. Listings languished. It was the ultimate
buyer’s market, except that buyers were few and far between. Princeton’s
boom years were over — forever, some said.
What a difference a decade makes. Ask any real estate agent today
and you’ll get the same answer: the boom is back, with a vengeance.
Nobody knows why, exactly, but there are plenty of guesses. A strong
economy, a stratospheric stock market, steady corporate growth, the
continuing allure of the Princeton mystique. Whatever the reason,
Princeton-area houses are selling like never before.
Prices are up; supply is down. Million-dollar houses sell in four
days. Half-million dollar houses go to sealed bids and bring in more
than asking price. Manicured mansions sprout "For Sale By Owner"
signs, signs that until recently almost always signaled the weedy
desperation of distressed property owners with unrealistic expectations.
Now the worm has turned beneath the turf of houses large and small,
luxurious and less so: in today’s market, sellers call the shots.
"I’ve never seen anything like it," says Jones Tolland, an
agent with the John T. Henderson Princeton office who has been laboring
in the Princeton real estate vineyard for 10 years. "Properties
come on the market and are snapped up immediately, because there are
buyers waiting for them. We’re even seeing bidding wars, and not just
on the most select properties."
The reason? As Tolland sees it, there are two: corporate expansion
and a great economy.
"The relocation business last year was much stronger than it had
been in years past, and that seems to be continuing," Tolland
says. "Bristol Myers, Merrill Lynch, the University, J and J,
all the big companies in the area are bringing people in. But mostly
I go back to the economy. People look at their brokerage statements,
and everyone’s feeling flush. Most people I talk to are doing their
best ever, whatever it is they do. So I think it’s largely a function
of disposable income. Everyone’s just feeling good."
All of which means buyers are ready, willing, and able. But at the
same time, the supply of available houses is down.
"If you take out the built-to-suits, existing inventory is way
off," Tolland reports. "The flood of listings we usually see
in the spring doesn’t seem to be happening this year, or at least
not yet. And the $500,000 exclusion" — a provision in last
year’s federal tax bill that exempts a married couple’s gain of up
to half a million on a principal residence from federal tax —
"hasn’t had a noticeable effect on people’s decisions to sell,
probably because we’re still not seeing any kind of huge price appreciation
for people who have bought in the last 10 years."
Buyers may not be paying significantly more than they would have a
few years ago, but supply pressures do mean they are willing to consider
houses that in past years they would have rejected immediately.
"People still like new construction; Ettl Farm is a classic example
of people wanting to buy new space," Tolland says, referring to
the Toll Brothers development of big new houses off Rosedale Road
in Princeton, where prices start at $600,000. "Reno buyers are
fewer; most still lean toward new and done. But more people are at
least willing to consider a project today."
Tolland calls this the best market he’s seen in 10 years,
especially in higher-priced houses. And he has the numbers to prove
Tolland has been tracking sales of houses in the Princeton area in
the over-$500,000 range each quarter since 1993. His numbers show
that a very surprising thing has happened in the last three months.
In 1993, just 23 houses went for over $500,000. Over the next few
years, that number rose to 38 in 1994, stepping back again to 25 in
1995, then jumping to 49 in 1996 and 45 in 1997. But in the first
three months of 1998, 64 houses have sold in that price range, more
than the total sold in all 12 months of each of the previous two years.
Which may explain why some owners in two of Princeton’s swankiest
neighborhoods recently decided to throw convention to the wind by
trying to sell their big-ticket houses themselves.
For Jill Jachera and Fernando Guerrero, a married couple who two weeks
ago put a "For Sale By Owner" (FSBO) sign in front of their
four-bedroom, three-and-two-half-baths home at 57 Hodge Road in Princeton,
the equation was simple. High demand plus limited supply equals the
chance to sell their house and walk away with more money in their
"The market is hot," says Guerrero, "and right now there
are no other homes for sale for between $800,000 and $1.4 million"
in the Library/Hodge area of the western Borough, which Guerrero calls
the most desirable part of Princeton. The asking price for 57 Hodge
is $1.2 million. "We are selling in a peak selling period, and
if we can do it with lower transaction costs, that enhances our chance
of striking a deal."
Translation: by cutting out the middleman, or by at least reducing
his take (like most FSBO sellers, the Guerrero/Jacheras will cooperate
with selling agents and are offering a 3 percent commission to any
broker who brings in a buyer), the couple hope to save as much as
$72,000 over what they might have paid in brokers’ commissions with
a traditional professional listing.
"Even with a small brokers’ commission" — and many brokers
today are listing high-end houses on a 5 percent commission, rather
than the usual 6 percent — "you’re talking $50,000 or $60,000,
and that’s real money to everybody," Guerrero says.
But can it work? The Guerrero/Jacheras think so, and they ought to
know: they bought 57 Hodge with no broker involvement whatsoever.
"After we got married in April, 1994, we decided to move to Princeton,"
Jill Jachera says. A dual-career couple with jobs in Philadelphia
and New York, they chose Princeton as an attractive mid-point. "We
were looking for months with a broker, but not finding what we wanted.
So we decided to drive around and identify homes that were interesting
to us. We took down the addresses and sent out a flyer that said we
were a young professional couple ready, willing, and able to close
within 30 days."
The couple sent out about 30 flyers, and in response got a lot of
calls from brokers, but none from owners. Then, after about a month
had passed, the owners of 57 Hodge called to ask if the couple were
still interested in buying. The closing was 27 days later.
"It worked for us, and we got a good deal," Jachera says.
"Without brokers’ commissions, it was easier for us and for them
to agree on a price that worked for all of us."
It’s one thing to sell a house on your own to someone who sends you
a flyer, but another thing entirely to put out the sign, take the
calls, conduct the tours. The job isn’t really all that onerous, Jachera
"A lot of people have taken the fact sheet, and we’ve received
15 or 20 calls and had two showings," Jachera reports. "It’s
not such a huge incremental burden. When I had a broker" —
the couple briefly listed their house with a broker in the fall, taking
it off the market in just four weeks — "I still had to take
calls from her, make appointments, clean the house, almost everything
I have to do now."
All of which can start to get real old real fast, according to Rafe
Sharon, who has had a FSBO sign in front of his house at 20 Haslet
Avenue in the Institute area of Princeton for less than a month.
"We’ve been overrun. It’s a stampede," Sharon says of the
constant parade of potential buyers (and Nosy Parkers) through the
five-bedroom, three-and-two-half-baths, Rolf Bauhan-designed house
he shares with his wife, Lorna, and their children. Asking price:
"It was fine until I got the flu, but then I needed a break,"
says Sharon, a principal in Kehrt Shatken Sharon Architects in Princeton,
who spent last week recuperating at his summer house in Sussex County.
Still, he wouldn’t sell a house any other way.
"As much as I respect the real estate community, if I can sell
a house by myself, I’d just as soon pocket the money," Sharon
says, combining directness with diplomacy. "And if a realtor brings
me a buyer, I have no problem paying them 2.5%."
If it sells, Sharon’s Haslet Avenue house will be the sixth FSBO he’s
sold in Princeton in 17 years. He offers himself as living proof that
"My house on Newlin," also in the Institute area, from which
Sharon moved to Haslet Avenue, "I put it in the Town Topics Wednesday,
put out the sign Thursday, and accepted an offer on Sunday," he
says. "This one is going on a little longer. I’ve been thinking
I should give out headphones like at museums for all the sightseers.
I will say that I’ve found that as you get into higher-priced homes,
it’s more painful to do a FSBO."
And riskier, too, according to Robin Wallack, an agent with Gloria
"I don’t dispute that it sometimes works, but I do think it’s
a bad idea," Wallack says of the FSBO route. "You sell a house
with a realtor for the same reason you go to a professional for any
service in which you want top quality. We prescreen. We don’t leave
surprises to the end. And in an area like Princeton, most reputable
buyers go to agents, so it’s also an issue of exposure to the market."
And then there’s the question of security. Wallack, who is consistently
among the top real estate agents in Princeton by dollar volume, thinks
the risks outweigh the benefits. "Strangers in your home unaccompanied
by a licensed, fingerprinted agent who knows the background and credentials
of his or her clients? I wouldn’t do it," Wallack says. "Can
you keep more money if you sell yourself? Absolutely. But I wouldn’t
want people going through my house who I don’t know except from a
phone call. I’d rather they were brought by a qualified, reputable
agent. Selling your house yourself is a much riskier exercise."
Another risky exercise, as Wallack sees it, is putting too much faith
in statistics. As the accompanying graphs show, pretty much every
available indicator suggests that the Princeton-area real estate market
is booming. Sales are up, prices are up, sales prices as a percentage
of asking prices are up. Is the market hot? Definitely, Wallack says.
But all those numbers can be misleading.
"Looking at those statistics, be careful," Wallack warns,
based on 20 years’ experience in Princeton real estate. "Maybe
the reason so many more houses are selling now for over $500,000 is
that a house that sold a few years ago for $475,000 is now selling
for $525,000. Maybe the reason prices seem to be up is that there’s
not as much bargaining going on and people are making full-price offers,
which may or may not continue, depending on supply. Numbers can tell
you pretty much anything you want them to if you look at them long
More significant than past statistics, according to Wallack, are the
everyday events that make up the Princeton real estate market.
"We’re seeing multiple offers, full price offers, houses selling
in a day," she says. "It’s happening in every price range,
both outside and in town. It’s comparable to the kind of market we
had in ’85, ’86."
Wallack agrees with Henderson’s Jones Tolland that demand is strong.
But even more significant to the state of today’s market, as Wallack
sees it, is supply. "There’s not enough inventory," she says.
"There’s been consistently low inventory across the board all
winter. And we’re still waiting for the usual big spring market. Especially
in West Windsor, there’s nothing. So I think that higher prices are
a result of buyers getting nervous about their ability to find anything
better, so they are willing to take what they like right away. My
best advice to buyers these days is this: if you like it, don’t wait."
All of which makes for a seller’s market. Whether the events of the
first three months of 1998 will translate into higher prices long
term, however, remains to be seen. "Everything is cyclical,"
Wallack says. "Look back and you see a pattern, and now we’re
on the high end. But that can change."
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