Home sales in the region in January increased by a modest 2.9 percent when compared to January 2013 – despite the brutal weather that featured snow- and ice-storms.
But the bad weather certainly is affecting inventory.
“The number of houses for sale compared to last year in January 2013 has gone down a little bit,” said Jeff Martin, real estate agent with Century 21 Gold, Exeter Township, Berks County. “The weather has impacted the market a little bit in terms of people not getting out there and doing things as quickly as they might have in the past.
“I do anticipate that … especially [in] March, inventory is definitely going to start to shoot up again because there will be more listings coming on the market and there will be more buyers in the marketplace.”
In the Greater Lehigh Valley, 861 homes were sold in January, an increase of 24 sales over the previous January.
Martin expects the residential sector to experience difficulties from factors other than weather during the coming season.
“We do anticipate that interest rates are going to creep up this year from historical lows, which lowers the overall buying power of the marketplace to some extent,” he said. “The lending requirements continue to get more difficult.
“So as buyers go to apply for financing, there are even more hoops they will need to jump through in 2014 than in the past.”
Experts expect additional lending restrictions effective Jan. 1 designed to protect consumers to make it more difficult to secure qualified mortgages. Despite the difficulties, Martin expects to sell more houses this year and possibly see a small increase in average sales prices as inventory falls.
“There’s going to be more buyers entering the marketplace,” he said. “The buying marketplace has confidence. They will be willing to spend more money. If there are fewer houses, that ultimately will drive up prices a little bit.”
Average sales prices for homes sold in the Lehigh Valley in January grew by 6.3 percent, or $11,039, compared to January 2013 sales.
“Since January, I definitely see an improvement,” said Anthony Ramos, real estate agent with Century 21 Ramos Realty, Bethlehem. “I see prices going up ever so slightly because of supply and demand.
“I still see a lot of foreclosures on the market, a lot of bank-owned property, short sales. Once that number decreases with foreclosures, then we can see a greater rise in home prices. But there are still a lot out there that are keeping the prices low.”
Low prices have sparked interest from buyers. According to Ramos, a recent open house attracted more than the usual number of potential buyers, prompting a full-price bid on the home.
“I think the reason why is because the house was in move-in condition and priced correctly,” he said. “I haven’t seen that in a long time.”
Ramos also sees an increase in inquiries as people upgrade and first-time homebuyers enter the market.
“People were just waiting,” he said. “Historically, this time of the season is when people, especially first-time homebuyers, get their tax returns and they think about purchasing. But a lot of people are calling the office anticipating the tax return and they were going to use that as a down payment to buy a home.”
Debt doesn’t seem to be a problem for many second- and vacation home buyers on the northern end of Carbon County. The county saw a 36.4 percent increase in home sales, jumping from 22 homes sold in January 2013 to 30 this January.
“Overall, it’s trending up as far as where we are in the Jack Frost/Big Boulder area,” said Rick Cordisco, co-owner and associate broker of Pocono Mountains Lake Realty, Jim Thorpe. “A lot of it is consumer confidence. … I think 95 percent of our homes are second homes.
“Those people are taking advantage of the interest rates and low prices and they are just going to keep continuing to buy. In my area, it’s a great investment area. It’s a vacation hot spot for all four seasons.”
According to Cordisco, year-long weekend, week and seasonal rental demands continue to fuel investment buying.
“Interest rates are still low,” he said. “The prices have bottomed and now are trending slightly upward. Before they miss out on the great buys, they are trying to put that whole perfect storm together. I guess they are confident enough to jump in now.”
Sales were flat in Warren County, N.J., in January.
“It’s very slow right now, primarily because of the weather,” said Gloria Decker, managing partner with Realty Partners, Phillipsburg, N.J. “Once the weather changes and we start to get into spring, the people who normally look to sell will start to sell, and the people who like to buy and be settled in, especially those with family, before the new school year, will be out looking.”
Decker anticipates continued improvement in the residential market once the snow abates.
“Interest rates are still low,” she said. “The prices are still very good, especially if you are buying, and I anticipate that it will pick up.”
Decker sees short sales continuing – keeping prices from appreciating – but she doesn’t expect any significant increase or decrease in sales prices despite the low housing inventory. She also sees renewed investor interest in multifamily units.
One Schuylkill County broker expressed concern about the future.
“The banks and FHA [Federal Housing Administration] have dropped the qualification ratio, which is going to make it a little tougher,” said Charlotte A. Stoudt, broker with Charlotte A. Stoudt Realty, Orwigsburg. “They dropped it to 43 when before it was 49. That’s going to make it a little tougher for people to qualify for mortgages.”
For those seeking loans, the costs of principal interest, insurance and tax on the property – as well as other debts such as student loans and car payments – cannot exceed 43 percent of the borrower’s gross income.
“There are people who just won’t qualify for mortgages,” Stoudt said. “I don’t think that it’s going to affect the prices because there will be people there who can qualify. What’s happening is it really is knocking out the lower and the middle guy because it’s pretty hard to keep that ratio, that 43 percent.”
Demand for year-round rentals has returned to the Poconos, maybe in part because of those tighter lending restrictions.
“People are renting,” said Kris Leshanski, associate broker of Park Avenue Realtors Inc., Stroudsburg. “We went through a little while where we didn’t hear about rentals, but now we are hearing. People are calling. Yearly rentals … in a house and apartment, not vacation rentals.”
Leshanski doesn’t anticipate prices changing, a factor she believes will fuel continued interest from buyers.
“Business has definitely picked up from a couple years ago,” she said. “People are still buying. We saw it starting last January and it has continued. We are seeing multiple offers, which we hadn’t seen in a while.”