For the second straight month, the Greater Lehigh Valley residential real estate market showed signs of cooling off.
Throughout the region, closed sales dropped by 3.4 percent, with 58 fewer homes sold last month compared to October 2017. Brisk activity continued as homes sold on average 16 days more quickly while new listings grew by 150 – 7.1 percent. Average sale prices rose 6.6 percent, to $173,545, $10,705 higher than last October.
Lehigh and Northampton counties’ closed sales remained relatively flat, with a 0.4 percent increase, while pending sales and new listings grew by 7.8 and 11.6 percent, respectively.
“With interest rates increasing just a little bit, buyers are starting to take stock of the inventory that’s available, decide whether they want to continue now to search for a home or whether they are going to wait until later,” said Joe Corcoran, partner at Keller Williams Real Estate – Northampton County, Bethlehem.
Corcoran attributes the slowdown to a number of factors, including escalating prices scaring buyers away, discomfort and frustration with bidding wars, and potential sellers choosing to stay put and remodel instead.
“As people put in the new kitchen, bathroom, carpet or whatever, they are more comfortable in their homes,” he said.
Yet Corcoran sees movement among multi-family households created during the downturn when parents and children moved in with each other.
“Now that the economy is better and people are feeling better about the economy, they are starting to split up those households,” he said. “You also see a lot of people who are millennials who graduated maybe five or six years ago who were in apartments who are feeling more comfortable with home ownership. The other side of it is we also have the boomers who are deciding to downsize from the big house now that the kids are gone.”
NEW LISTINGS WANTED
Berks County saw a 1.9 percent bump in new listings, but a 1.4 percent drop in closed sales and a 6.7 percent decline in pending sales.
Despite the uptick in new listings, it is not enough, some Realtors said.
“We need inventory,” said Carlton Wolfinger, real estate agent with John Monaghan Group of Kutztown Realtors. “That could be another part of the issue.”
Wolfinger expects prices to remain steady but believes both inventory and prices will grow next spring.
“I think prices are going to go up a little,” he said. “That could be an issue because I think rates are going to go up so that could keep things pretty much right where they are right now.”
While Carbon County saw a 10.8 percent drop in October closed sales, activity continued as pending sales grew by 5.1 percent and new listings increased by 35.2 percent.
“It’s been an amazing year,” said Ron Dunbar, a broker with Bear Mountain Real Estate in Jim Thorpe. “A lot of houses have sold at numbers I never thought you would see. It slowed down but we’re still actively listing and selling. Last week we sold four or five. That’s not high but for the middle of November, that’s good.”
The market also sees high demand for rental properties.
“Out the mountain here, people are looking for rentals and there are no houses,” he said. “There’s no inventory. They want to rent, they want to get into a house but can’t find it. If you put a house on the MLS to rent, people are all over it.”
People were all over properties in Warren County, New Jersey. October activity resulted in a slight increase in closed sales – 0.7 percent – as well as a 14.3 percent jump in pending sales. New listings also grew by 7.9 percent.
“It’s all over the place, to be quite honest,” said Mary M. Malone, a real estate agent with Coldwell Banker Residential Brokerage in Clinton, New Jersey, who sells many properties in Warren County. “March and April it was really busy. Then interest rates started to rise over the summer and it slowed down quite a bit, not a lot but enough.”
Malone expects to continue seeing brisk activity for homes listed slightly below market value and those with no need for repairs.
“People are still buying, which is good, even though they may qualify at a different level, a different price range than a year ago,” she said. “Inventory is increasing so again that makes it more of a buyer’s market. I do see a transitioning to more homes on the market, less buyers but I don’t see it slowing down tremendously.”
RECOVERY FROM CRASH
The residential marketplace in the Poconos also slowed down, experiencing a 9.7 percent drop in closed sales and a 10.4 fall in pending sales October over October. Yet new listings grew 10 percent.
Despite today’s higher sales prices, they reflect a return to what values were prior to the market crash, said Davis R. Chant, chairman of Davis R. Chant Realtors in Milford, Pike County. He also sees the return of buyers from New York and New Jersey as new tax laws and lower taxes make Pennsylvania more appealing.
“I see the energy that’s in the market around us in New York or New Jersey and I would just say that we’re going to continue to have activity,” he said.
In Chant’s 54 years in business, he has seen many peaks and valleys in residential real estate.
“We’re just starting to climb out of the valley,” he said. “We’re nine, ten years into that valley. It will be a gradual climb and that’s what we see here. I think next year is going to be good.”