Expert: Housing market to stabilize
Valley home sales will gain steam, but recovery could take years, forum is told.
Lehigh Valley home sales will increase this year from their anemic pace in 2009, but it will take several years before home values begin appreciating again, a local real estate expert said Tuesday.
Loren Keim, of Century 21 Keim Realtors in Allentown, gave his prediction to 140 people attending the ''Real Estate Today'' program hosted by the Goodman Center for Real Estate Studies at Lehigh University.
There are some 5,000 homes for sale in the Lehigh Valley, and about 500 homes are sold in a good month, which means excess inventory will keep prices in check even as sales increase, Keim said.
''It's going to take years for inventory to be absorbed before we see prices rise again,'' Keim said.
Federal tax credits to encourage home-buying have caused a spike in sales activity this year, but Keim said that pace will likely taper off as the credits expire. He said home showings, an indicator of the number of people house-hunting, are down 70 percent from three weeks ago.
Home buyers had to have houses under contract by April 30 and close the transaction by June 30 to get tax credits.
''What worries me about this is whether or not we stole from the future,'' Keim said.
Population growth will ultimately help the housing market, as friends and family who have doubled up in homes spread back out when they feel more confident about the economy. If interest rates start rising, that could encourage some people to buy as well, he said.
The median price of a home sold in March in Lehigh and Northampton counties was $172,750, according to the Prudential Patt, White Real Estate HomExpert Market Report. That was down 6.6 percent from a year ago, but up 4.7 percent from February. The lower value of homes sold reflects activity in the market among first-time buyers and bargain-hunting investors, who purchase in the lower price ranges.
The local housing market continues to struggle under the weight of foreclosures and high unemployment. Median prices fell in 2008 and 2009, but have shown signs of stabilizing this year.
Freemansburg home builder Frank Alexander, president of Anthony Builders, said he went from building a couple of dozen homes in 2005 and into 2006 to building nothing in 2007 and 2008.
''I got stuck with some high-end townhouses,'' he said, referring to a seven-unit project he built and had planned to sell for $300,000-plus each. ''I still have them. I'm a landlord. I didn't want to be one, but I am.''
He filled them with option-to-buy leases, and his tenants include those who lost homes in foreclosure, Alexander said. He has been in the home construction business in the Lehigh Valley for 36 years. Since he's not building homes, he does mostly home remodeling and renovations, often for parents and children doubling up in a home, he said.
''I think the devaluation of real estate is a huge problem and I don't think anything is going to fix it,'' Alexander said. ''I'm actually telling people to go look at short-sales [where banks let owners sell for less than what they owe] because I can't compete with them.''
spencer.soper@mcall.com
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