The numbers are in – and they signal a strong real estate recovery in the Greater Lehigh Valley.
In the region, the number of homes sold jumped by a healthy 26.9 percent between 2011 and 2013, growing from 11,623 to 14,753 homes sold last year. Year over year, 2013 saw an increase of 1,702 more homes sold in the region when compared to 2012, a boost of 13 percent.
Even December 2013 itself was a banner month, as the sales figure of 1,164 units was a hefty 20.7 percent increase over the previous December.
What’s fueling that activity?
“People are feeling better about the economy,” said Kimberly Lucas-Mantz, president of the Lehigh Valley Association of Realtors and real estate agent with Coldwell Banker Heritage Real Estate, Bethlehem. “Interest rates are still low. They are increasing slightly, so maybe that is creating some urgency among buyers.”
That urgency may continue into 2014 as dwindling inventory may limit choices. “[Inventory] is a challenge,” Lucas-Mantz said. “Members are reporting there are multiple offers on properties. It seems to be within certain types of properties, certain areas.”
Changes in residential mortgage regulations over the recent past also may account for some of that urgency.
“The lending industry has tightened up with all the foreclosures and short sales and the economy,” Lucas-Mantz said. “It was and it continues to be a tight lending market.
“Lenders are trying to come up with different programs that will continue to stimulate the economy [and] put buyers into homes – but making sure that they do it to qualified people that can afford it so we don’t have the problems that we do currently and through really doing responsible lending.”
The Berks County economy got a nudge as residential units sold grew 18.6 percent from 3,160 homes sold in 2011 to 3,749 in 2013. Average sales prices grew by about 6 percent during that time, a figure that some believe signals a healthy recovery.
Peter Champagne, past president of the Reading-Berks Association of Realtors, said that 2013 “for many of us was a really good year. Interest rates stayed down. Confidence was back up a little bit and we were heading on the right track.
“People are actually selling their homes, not just getting in and testing the market,” said Champagne, a broker with Keller Williams Realty Elite, West Lawn. “Everything is going in the right direction, as long as we don’t have any surprises.”
Those surprises could include market changes created by updated qualified mortgage lending regulations.
“I think there are restrictions coming that are going to affect some of the government financing, your FHA and such,” Champagne said. “It may slow [the market] down a little bit.”
A lack of inventory also could slow the market.
“What I’m noticing, we have less inventory here in Berks than we have had in the last few years,” Champagne said. “It seems to keep declining. Right now it’s low. I could use all the listings I could get right now. I couldn’t say that two years ago.”
Two years ago looked relatively the same as today in Carbon County’s residential housing industry. While the number of residential units sold grew 17.9 percent from 308 homes sold in 2011 to 363 in 2013, the average home sale price dropped less than 1 percent during that period.
“Carbon County real estate has held pretty consistent throughout all the years,” said James Zurn, president of the Carbon County Board of Realtors and associate broker with Cedar Creek Real Estate, Albrightsville. “It doesn’t seem like we are affected as much with the home sales as we are with the prices. The market dictates the price.”
According to Zurn, Carbon County tends to not see the big ups and downs experienced in larger areas such as the Lehigh Valley. Yet he believes the market will recover.
“For a while we were in an area where people were worried about their jobs, worried about the economy,” he said. “It seems they have a little bit more confidence. Even though the economic indicators aren’t there, there does seem to be a little bit more stability, a little more confidence. People have learned to adjust and live with the economic times we are in.”
Growing property taxes also represent a factor one real estate agent believes deters significant home sale growth in the Poconos.
“Right now the holding cost of the house is more than what the mortgage payment would be,” said Eileen Chaladoff, past president of the Pocono Mountains Association of Realtors and real estate agent with Prudent Real Estate Associates, East Stroudsburg. “Your taxes are more than your mortgage. You’re paying $800 a month taxes and association fees, and your mortgage is $500. It’s crazy because the interest rates are so low; that’s why your mortgage payment is nice and affordable. But when you factor in your taxes, it blows people out of the water.”
Between taxes and rising gasoline prices, commuters from the east that previously made up a large sector of the Pocono market now hesitate before moving into Pennsylvania. Yet demand for homes continues.
The Poconos saw a 33.5 percent growth in the number of homes sold: 1,512 in 2011 to 2,019 in 2013. Yet during that same period, the average sales price has fallen about 4.5 percent.
“Prices went down and time on the market went a little shorter,” Chaladoff said. “The reason being is foreclosures and short sales, that’s what sold. We will still continue to see the increase of units but the prices will not go up until all these units are depleted.”
Prices appreciated modestly in Schuylkill County’s residential market.
“Things are improving,” said Michael Wozniski, president of the Schuylkill County Board of Realtors and real estate agent with Prudential Landis Homesale Services, Schuylkill Haven. “We have never had a big fluctuation in the Schuylkill market. Our numbers stay fairly consistent.”
Wozniski believes the slow but steady growth represents a good trend.
“People are getting immune to what’s happening and just moving on and not letting the economy stop them from buying homes,” he said.
“It has gone on so long now. People are definitely more cautious in overspending. They are being more realistic with what they should be purchasing rather than what they want to purchase.”
According to Wozniski, new home starts remain relatively stagnant in the county.
Buyers saw bargains in Warren County, N.J., where the number of residential units sold grew 36.9 percent, from 780 in 2011 to 1,068 in 2013. The average sales price appreciated only 3.3 percent during that period, yet one real estate agent expects continued but slower activity moving forward.
“I don’t think the rate of increase [in units] is going to continue,” said John Kruk, president of the Warren County Board of Realtors and broker with Re/Max Home Values 4, Hackettstown, N.J. “We attribute it to the improvement of the economic situation in the region.”
Kruk believes the decline of the westward migration from the major metropolis areas in the East will continue to slow.
“In Warren County, the growth is manageable and healthy,” he said. “We like the numbers we are seeing and we hope to continue to be a destination for folks escaping higher priced areas of New Jersey but still wanting to stay in the Garden State.”