We are living in such an amazing time in history! It is incredible that within minutes I can gather all of the information I need to write this blog post! The amount of data that is shared and received on a daily basis is mind boggling. I hear many complaints and the horror stories of what technology has done to us humans and on the flip side I have heard miraculous, emotional stories that bring incredible hope. So I believe the key to technology is how we use it! The beautiful thing about real estate is that technology can’t really touch it! There will always be humans, brick and mortar in real estate! Yes technology assists in the sale and research of home sales but at the end of the day the selling and buying of real estate will involve human interaction! I want to point out 2 things before we get to the point of this blog which is to inform you of what is happening with the Lehigh Valley real estate market. 1. Real Estate is LOCAL-every market is different, national media outlets are the wrong place to gather info in order to make big decisions regarding your home! 2. Everyone has a story- the thing I love the most about being a Realtor is that every person or family I have worked with has a story! There was a distinct reason why they bought and/or sold their home or invested in real estate! So many people are screaming that “NOW” is the time to buy real estate and if you don’t your dumb or not financially savvy! Really? I don’t buy it! It depends on your story! For some of you making a move now would be really advantageous, for some it may be a disaster! Who would know that other than you? What you need is good, local advice based upon your current situation and future goals not a pitch from a sales person looking for the next transaction! Our approach with each of our clients is to listen to your story, determine your goals, and develop a plan to execute those goals.
So let’s take a look at what is going on in the Lehigh Valley housing market. There are roughly 4,400 residential homes for sale. Out of those homes 544 are either potential short sales (seller owes more than the home is worth) or foreclosures (bank owned aka REO properties). These distressed sales do impact the market but are only 10-15% of the inventory so the effect has been minimal. According to Realty Trac foreclosures in Lehigh & Northampton County have been decreasing over the past 6 months, however it is taking banks a very long time to actually foreclose. On average it takes a bank 20-30 months to foreclosure after an initial default by the borrower. I recently met with a customer who sadly was 11 months behind on their mortgage and had yet to receive any notice at all from their bank. My concern is that the Lehigh Valley has not yet realized the full impact of these foreclosures or short sales. I hope I am wrong because foreclosures hurt the housing market and the overall community. Foreclosures typically sell for 30-40% below market prices while short sales sell for typically 10-15% below market. This may be bad news to some but it is great news for others as home affordability is increasing in the Lehigh Valley. The average list or asking price of the 4,400 homes for sale is approximately $200,000 and the average time that they have been on the market is over 6 months. Only 948 homes have sold in the first quarter of 2011. The average sales prices of those homes were $194,000 but the median prices (which more accurately determine the market) were $170,000. The homes that have sold were on the market for an average of 90-100 days. Home prices have fallen over 30% since the peak of the market in mid 2007 and they continue to fall due to over supply and weakened demand. Lehigh Valley home prices have dropped to early 2004 levels. The low demand can be attributed to underemployment and overall consumer confidence. The Lehigh Valley has the second largest unemployment rate in the state next to Wilkes-Barre/Scranton and is now at 8.3% (as of March). This number has decreased over the last year but that has been largely contributed to people leaving the workforce NOT actual hiring taking place. Only 2,100 jobs have been created or added in the past 12 months in the Lehigh Valley.
In summary I don’t anticipate a recovery in housing until late 2013. Recovery to me means price stabilization and/or slight price appreciation and balanced supply and demand. The lack of real data in regards to pending foreclosures and overall confidence in markets (job/stock and bond/real estate/oil/dollar) will keep a lid on housing for quite sometime. However the opportunities that exist for buyers, sellers and investors are enormous! Interest rates are still amazingly low, affordability is high and for the right buyer or seller this is a great market! In order to sell a home in this market you need a marketing team NOT just a “Realtor” who knows how to prepare a contract! Your price must be compelling and the home (in most cases) must be in good condition! Buyers must be up for the challenge of obtaining financing and need to have a decided plan in place prior to shopping for a home! Buyers must also be financially stable and in a good employment position, not just for mortgage qualifying purposes but for income stability purposes in these tough economic times!
If you or a loved one, neighbor or friend needs any advice at all or if you are ready to make a move give me a call at 610-295-5822 or shoot me an e-mail at phil@lvhomestv.com!
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