Berks County has been lagging slightly behind the nation during the economic expansion, particularly in housing, but there is a silver lining, according to a regional economic analyst.
Keith P. Aleardi, president and chief investment officer for Lancaster-based Fulton Financial Advisors and Clermont Wealth Strategies, told an audience this month at the fourth annual Berks County Real Estate & Development Symposium, that Berks’ housing market is undervalued compared to other parts of Pennsylvania.
“That has created greater opportunity for people to come into the community and find housing here at a much more affordable rate,” Aleardi said at the symposium, held at the DoubleTree by Hilton Reading Hotel
The symposium, which featured a roster of regional real estate experts and developers, is a program of Lehigh Valley Business.
Although the local economy lags behind the national economy, it has some strengths, such as low cost of living and strong health care. Berks is also showing growth in employment, manufacturing and construction of multifamily housing, he said.
“Where there’s affordable housing, that creates greater opportunity and actually creates some diversity in industry in the region,” Aleardi said.
“I think that hasn’t happened in the past, but creates some opportunity in the future,” he said.
‘THE SEVENTH INNING’
Aleardi gave an overview of the national economy, which he said was past the mid-point of an expansion that began in 2009, the second longest in the country’s history.
“We are in the seventh inning, or so,” he said.
“We are not at the point of recession, but I do believe the length between now and a potential slowdown is starting to accelerate,” Aleardi said.
“Long term, I do think we are in for a slowdown and I think that will come in 2020. However, I don’t think it’s going to be terrible. We might even have a recession, defined by two negative quarters,” he said.
Aleardi said the economy is still growing.
“Even if we see a recession in 2020, it’s not going to be like those we experienced in 2000 and 2008,” he said.
The current expansion has achieved about 23 percent cumulative growth, which Aleardi said was one of the worst. A typical expansion lasts about two or three years and yields about 25 percent cumulative growth.
But there is good news from the current expansion, he said. Interest rates have been low for many years, household debt is at near all-time lows and household net worth is at near all-time highs.
And business confidence hasn’t been this high since the second quarter of 2005, Aleardi said.
“There’s a good story in the corporate sector,” he said.
“Corporate spending has been rising moderately as a percentage of GDP [gross domestic product]. We see a lot more share buy-backs than we expected in the last couple years,” Aleardi said.
“The labor market is fantastic, unemployment is at 3.9 percent,” he said, but wage growth has been low, while prices have risen steadily.
HOME SALES OFF
The slight decline of home sales nationally and in Berks due to insufficient inventory was a topic of discussion among some of the speakers.
The country needs about a six month supply of about 1.5 million more homes to keep up with demand, Aleardi said.
Another speaker, Dave Mattes, a Realtor with Re/Max of Reading in Wyomissing, said it has been difficult for people to find homes in Berks, so homes are selling faster and at higher prices than in 2017.
“It’s a seller’s market,” Mattes said.
About 4,900 homes have been sold in Berks so far this year, compared to 5,117 at this time last year, he said.
But inventory is low, with about 3.1 months-worth of homes available for sale this year compared to 12 to 14 months in 2011.
The fact that Berks’ economy lags behind other regions, particularly the neighboring Lehigh Valley, presents opportunities for warehouse developers because land is less expensive and there is more of it, said speaker Matt Clymer, senior vice president of MRP Industrial in West Chester, Chester County.
After looking at other sites in Pennsylvania, MRP chose Shoemakersville as the site of a distribution center known as the Hamburg Logistics Park. Three buildings encompassing three million square feet are under construction on the 150-acre former golf course and farm.
“Berks County really did present an opportunity for development that was unique,” Clymer said.