The continued trend of low inventory has buyers acting fast and paying more.
That’s what’s happening in the residential real estate industry in the Greater Lehigh Valley the first half of 2017 and beyond.
“When you talk with Realtors, they will tell you that the first six months of last year versus the first six months of this year are dramatically different in the activity that we’re seeing as agents,” said Clay Mitman, broker/owner of Berkshire Hathaway HomeServices/Paul Ford Realtors, Easton. “All of a sudden everything just clicked in, and we’re seeing properties coming on the market for higher prices and selling much quicker.”
Closed sales for the year through June 30 grew 3.8 percent – 341 more homes sold than the first half of 2016. (In June itself, closed sales were flat when compared to last June, with 2,075 sales compared to 2,081 in June 2016.)
For the half-year, average prices for homes sold grew from $152,784 to $159,980, a 4.7 percent jump year over year.
Slim pickings and millennials entering the market were catalysts for homes selling nearly 20 days more quickly than a year ago, down from an average of 101 to 81.2 days regionwide.
And, new construction appears to be making a comeback in some areas.
“We’re still seeing sales growth yet again this year, still in the double digits,” said John Kruk, president of the Warren County Board of Realtors and broker/owner at Re-MAX Town and Valley, Hackettstown.
“More and more homes are selling. … Not only are the houses selling, they are selling fast, and that all indicates our low inventory.”
Real estate agents across the region see improved activity.
“The market is definitely improving,” said Chad Fritzinger of Koehler-Marvin Realty, Lehighton. “Prices are starting to increase slowly.”
For the first half of 2017, the Lehigh Valley (Lehigh and Northampton counties) sold 150 more homes, a 4 percent increase, at an average of 12 days faster than a year ago.
“We’re seeing from $150,000 to $350,000 as just the area where we can’t keep quality properties on the shelf,” Mitman said. “They come on and go under contract very quickly.”
His last three listings sold in days.
“We’re seeing a tremendous amount of buyer confidence,” he said. “Lenders are starting to be a little bit more cooperative with things, but we are still struggling with appraisals.”
Mitman also sees the resurgence of New York and New Jersey buyers and other activity not seen for some time.
“It’s been a long, long time since I’ve seen new construction so busy and so active,” he said. “When I see new construction doing well, that to me is an indicator that the rest of my market economy is going to continue to do as well. I’m very optimistic.”
UPTICK IN PRICES
Although the number of Berks County closed sales dropped 0.5 percent, average sale prices grew by 2.4 percent year over year. Average days on market fell by 33 days.
“Tight inventory has really created a bigger demand for the listings, which accounts for the prices going up, and it also accounts for quicker days on the market,” said Ed Jenkins, regional vice president of Coldwell Banker Residential Brokerage for Central Pennsylvania, Wyomissing.
“As soon as listings are put on the market, they are going off the shelf, so to speak, because buyers have such a decreased number of listings to choose from on the market these days, which is also causing multiple offers on properties.”
Jenkins sees a number of factors contributing to the existing three-month supply of inventory, including a lack of choices for potential move-up buyers and little new construction.
“Because builders have not been able to either get financing for spec homes or decent prices for homes to make it profitable to build, they haven’t been building to create the additional inventory,” he said.
MILLENNIALS FINALLY BUYING
Warren County saw closed sales jump by 20.2 percent, or 117 more homes sold the first half of 2017. The county saw a 1.4 percent drop in average sale prices, falling from $218,490 to $215,324.
“If you put something on the market that’s priced right, it flies off the market,” Kruk said. “Millennials are finally buying. A lot of them weren’t just buying into the whole homeownership mentality and the American dream, and had visions of living in Hoboken. Now they are realizing North Jersey is still the place to be.”
Cash buyers also see opportunity.
“We’re seeing more cash buyers than we have in the past,” Kruk said. “That’s generally a good thing for the local economy. When people have that kind of high assets and they purchase something out here, that generally does more than just generate revenue for the housing industry, but all the other supporting industries [such as] furniture, contractors, improvements.”
DECIDING TO BUILD
Carbon County saw a 3.4 percent drop in overall sales in the first half while average sales prices grew 13 percent.
“I do see a very low inventory, which is causing the prices to rise a little bit,” Fritzinger said. “If there’s a good home that has good quality, it’s selling very quickly. There are a lot of buyers who have been looking for months and just can’t find anything.”
Fritzinger also sees a reduction in the gap between listing and sale prices.
“Sellers are seeing a lot more money for their house,” he said. “… I’m starting to see some lot sales coming as well because people aren’t finding what they want and [are] deciding to build. I am super happy about that because that’s the start of everything. That’s an excellent trend coming around.”
THIRD BEST YEAR
The Poconos (Monroe County), saw 6 percent growth in the number of closed sales, with 89 more homes sold than in the first half of 2016. Average sold prices appreciated by $13,320 – 10.8 percent – rising to $136,941.
“We’re going to have our third best year ever this year in 32 years, so it’s good,” said Bob Brown, president of RGB Custom Builders, Marshalls Creek. “… We still have a long way to go to get back up to where we were in 2007, 2008, but, little by little, prices in resales are definitely going up.”
Brown, who builds custom homes as well as buys, remodels and sells existing homes, sees challenges on both sides.
“New construction is very hard because now the cost to build a home has gone up virtually every single year since 2008,” he said. “… The No. 1 issue right now with new construction is getting the appraisals to come in.”
MORE BUYERS THAN INVENTORY
In the first half, Schuylkill County saw a 1.3 percent gain on the number of closed sales and a 5.6 percent jump in average sales price. Homes sat on the market a week less.
“There are more buyers than available homes. Qualified buyers [are] ready to buy,” said Kent Hatter, broker with Re/Max Five Star Realty, Orwigsburg. “When the house came up in their price range, there were three or four offers on the home.”
Hatter said the residential market has reached a needed stability and equilibrium after the roller coaster ride of the past decade.
“This is our new normal,” he said. “A house isn’t a stock or a bond. It’s shelter and may be a long-term asset. With houses, the market is better when it’s stable for everybody.”