Activity in the residential home-sale market in the Greater Lehigh Valley has blossomed.
Buyers have entered the market, hoping to capitalize on low interest rates and prices. Consumer confidence is on the rise and in some markets it does not take long for listings to sell – leading to concerns about lack of inventory.
“I do see definitely an upswing in activity both in residential and commercial,” said Clay Mitman, broker and owner of Prudential Paul Ford Realtor, Easton. “We’re seeing a lot of investors in the marketplace who are buying multi-family properties.
“They are seeing they can get a fairly decent return on their investment and they feel at the prices they are buying right now, it’s a stable, solid investment.”
For the region, home sales totaled 1,366 in June for an increase of 6.9 percent over total sales in May. This follows a 15-percent hike in sales in May over April.
After the instability of foreclosures and short sales over the past few years, there is a different mindset in today’s home buyers, Mitman said.
“Prior to the real estate recession, people were buying for what they wanted,” he said. “It was maxing out their income, buying as expensive as they could.
“Now I see people buying a little more conservatively. ‘What do I need? What can I get by with? How can we buy with one income versus two?’ That’s a big switch.”
That switch and rising interest rates also could affect the market’s recovery.
“I am cautiously concerned about the interest rates going up,” Mitman said. “There are different markets around the country that have rebounded very quickly so the increase in interest rates will help temper those markets a little bit.
“We haven’t had that experience of having an overactive market, so the interest rates going up I do believe [will] have a little bit more of an effect on us here. I’m cautiously hopeful it doesn’t slow things down.”
Things slowed down a little bit last month in nearby Carbon County, but one agent now sees a substantial increase in activity.
“It really got busy after the beginning of the year,” said Ann Velopolcek, real estate agent with Kohler-Marvin Realty, Lehighton. “Things have slowed down a little bit like around the time of graduations and weddings, but it seems to be picking up again.”
Despite the spurts of activity, Velopolcek sees promise.
“We are a little low on inventory but other than that everything looks upbeat,” she said. “We believe we finally have seen the bottom of the market, pricewise. With the interest rates bouncing up a little bit, people who were waiting – like they always do – for the bottom are realizing that it has come and gone. So before interest rates go any higher, we’re starting to see more buyers in the market.”
More buyers may jump into the market as interest rates start to inch upward after a long stretch of the federal government artificially holding rates down to spur economic activity.
“Right now, the federal government has been carrying the economy for a while and obviously the results have been positive,” said Ravi Romano, co-owner of RE/MAX Ridge Real Estate, with offices in Warren County, N.J. “It kept interest rates low, kept people at work.
“We don’t know what’s going to go forward if the easing is eased. What’s going to happen in the future, your guess is as good as mine.”
While the future remains unclear, present activity reflects confidence and potential.
“It continues to be a strong market,” Romano said. “We haven’t seen a real appreciation of prices, but we certainly have stabilized the prices and have seen a dramatic increase in buyers and contracts.
“It’s beyond seasonal. People had been putting it off. When the news started to come out that perhaps interest rates may be going up, which of course they have, and they decided to maybe get off the fence and make a move.”
Buyers also began making their moves in the Poconos.
“Starting in January, the phone started to ring,” said Kris Leshanski, associate broker with Park Avenue Realtors Inc. in Stroudsburg. “We’re seeing results. Things are going under contract. Things are being listed; things are being sold. Buyers are getting into houses.
“We have more interested buyers now, maybe because they see that the rates are going up.”
That movement created both lower inventories and higher optimism in the Poconos.
“We don’t have a lot of inventory, but we are listing and we are seeing everything getting sold,” Leshanski said. “It’s not sitting there like it was before. People are being more reasonable now with the pricing. If they are going to sell, they have to be realistic; otherwise, it’s going to sit there.”
Realistically, one Schuylkill County agent sees more of the same market conditions experienced over the past few years.
“As far as the number of sales, we are in this pattern that we were last year, the year before,” said Kent Hatter, broker with RE/MAX Five Star Realty in Orwigsburg. “It seems like this is possibly our new average. Our average sales price in Schuylkill County has stayed relatively the same. It’s always hung from $85,000 to $90,000, in that vicinity.”
Hatter saw the number of units sold drop since the peak but believes the threat of rising interest rates may boost future sales.
“Interest rates have risen,” he said. “[The feds] are still pumping money and it’s going to keep the rates down. Once that ends, they are going up. Even though rates have gone up, if people are thinking about it, they can still catch on the tail end of really low interest rates and a good opportunity to buy a home.”
Hatter expects home sales volume to remain similar to those seen in 2012.
Lagging sales are not a problem for one agent in Berks County.
“Over the past 18 to 24 months, it has been much better,” said Brad Weisman, real estate agent with Coldwell Banker Select Professionals, Wyomissing. “People are feeling more confident about their jobs, their lives and where they are going to be in the next five years.”
While activity has improved, home sale prices have not.
“The appreciation hasn’t happened yet because there’s a certain amount of reduction of inventory that has to happen in order for prices to start going up,” Weisman said. “In certain areas, we may have seen a little bit of increase in pricing. As a whole, I don’t see a huge amount of appreciation yet.”
But that could change as inventories begin to dwindle and demand grows.
“I think it’s going to stay on the same path it’s been on, and I think next year is probably when we are going to probably see more of the appreciation that will be something we can see on paper,” Weisman said. “Right now, it’s just stabilizing and different areas are starting to see more competition.
“We are starting to see multiple offers coming in here and there. There are still a lot of short sales and foreclosures that have to be taken care of before things will be completely back to normal.”