Despite the typical seasonal drop in home sales in January, real estate professionals throughout the Greater Lehigh Valley see positive signs of a shifting market for 2013.
“As far as the residential market, year-to-date sales, pending sales and affordability index, they are up over the same time last year, which is definitely a good thing,” said Kim Lucas-Mantz, 2013 president-elect for the Lehigh Valley Association of Realtors and real estate agent with Coldwell Banker Heritage Real Estate, Bethlehem.
According to Lucas-Mantz, closed sales rose about 2.3 percent, pending sales jumped 30.7 percent and inventory dropped 16.8 percent comparing January 2012 with January 2013.
“Inventory is decreasing quite a bit,” she said. “So it looks like we are having a little bit of a shift in the market. It’s been a very, very good buyer’s market. There’s a decrease on home prices though it has risen slightly and it’s still affordable for homebuyers today.”
Historic low interest rates and low home prices – in part from foreclosures and short sales – create more affordable options for potential homebuyers.
“Right now [foreclosures] are still coming, not as much as they were,” said Lucas-Mantz. “Once we have purged that inventory — I think what’s going to happen — the market will then start to turn around and come back to more of a norm.”
What was the norm in the past may not be normal moving forward, according to one industry professional.
“Over the last six months or so, the number of homes for sale has gone down, which is actually a good thing because there were too many houses at one point in time for the amount of buyers in the marketplace,” said Jeff Martin, real estate agent with Century 21 Gold, Exeter, Berks County. “That has been trending down while the number of homes that are going under contract have continued to increase over the last six to eight months as well. The combination of those two things has led to average home prices finally leveling out a little bit here in our area. Depending on the direction of the economy, the next year or two will dictate whether that stays consistent or not.”
CONSUMER CONFIDENCE ON UPSWING
Martin believes consumer confidence in the economy has grown, contributing to renewed interest and willingness to spend and buy homes. That confidence has helped reduce the foreclosure inventory, setting the stage for an improved market in the future.
One Carbon County agent already sees an improved market.
“The real estate market definitely is better,” said Pam Gothard, broker with Gothard Realty, Lehighton. “I see things are starting to look positive. We are busier; more people [are] looking. Prices are stable now.”
Gothard said 2012 was her best year in business, a factor she contributes in part to a focus of assisting sellers with short sales and foreclosures. “It’s a different type of real estate [market] today than it was before,” said Gothard. “You are working with sellers that are in trouble financially. Some of those sellers don’t realize they can do a short sale on their house.”
Gothard sees the foreclosure inventory moving and believes that may contribute to a good year in 2013.
“It’s more of a normal market. That craziness we had was not normal.”
What appears normal after an overabundance of foreclosures into the real estate market in recent years is a slow return to a healthy market as well as higher demand for rentals.
“Right now we have such a high supply of foreclosures, I don’t see it rebounding for the next few years until we get all of those cleared up,” said Thomas Schatzman, real estate broker with Country Squires Realty, Stroudsburg, Monroe County. “We are doing a tremendous amount of rentals probably because of the market being flooded with foreclosures. If we don’t rent them within two weeks, it’s real unusual.”
Despite the higher demand for rentals, Schatzman remains optimistic about future activity.
“Looking back over the past several years, I definitely see there is more activity in the market,” he said. “Foreclosures, they are definitely a factor in the market. On the positive side, I do see a lot more buyers out there, which is a good indication to me that the market is changing to the up side. Even though they buy foreclosures, it’s one less foreclosure out there.”
The foreclosure market has also put downward pressure on home prices, making it more difficult for potential buyers to get appraisals high enough to secure adequate financing.
“What I’m seeing is the difficulty in closing a property,” said Gloria Decker, managing partner of Realty Partners, Phillipsburg, in Warren County, N.J. “Short sales are a real problem but also just for people to get their appraisals done and for the appraised value to come in to cover the cost of the home. It’s affecting the closing of a sale. Days on market are much longer.”
‘EVERY YEAR, IT’S GOING TO GET BETTER’
Yet Decker holds cautious optimism for improvement in the residential market.
“My office did fairly well in 2012 … at least as good, if not a little better, than 2011,” she said. “Every year, it’s going to get better.”
Another agent in nearby Schuylkill County also sees a shifting market.
“I’m seeing that it’s starting to open up,” said Charlotte A. Stoudt, broker with Charlotte A. Stoudt Realty, Orwigsburg. “It seems like there is more activity than there was, more activity than last January, for sure. I do think it’s coming around.”
Stoudt believes foreclosures and short sales continue to affect sales in the market.
“The biggest problem is getting people qualified,” she said. “The foreclosures are moving because of the prices. Then what you are seeing is a lot of people who want to sell but they owe more than their house is worth, so you are looking at short sales. They are still there.”
Some fence-sitters continue to drag their feet, uncertain about whether to jump in.
“We’re just in the throes of it where we almost have to wait and see what’s happening in the spring here,” Stoudt said. “It seems like there is a little more activity but it’s hard to tell at this point. But I am optimistic. Schuylkill County always rebounds and I think we are on our way there.”