Home Sales Up in ‘09 But Prices Still Down
A tax credit for first-time home buyers helped prop up the Lehigh Valley housing market in 2009, marginally increasing sales from their sluggish pace in the previous year. But prices continued to fall as most buyers were interested in low-priced homes and more homes went into foreclosure.
The trend of increasing sales and falling prices will continue before prices bottom out in the second half of the year, said Ryan Sweet, an economist with MoodysEconomy.com. Helping boost sales is increasing home affordability, a more stable job market and an expanded tax credit available to first-time and existing home buyers, he said.
While sales will increase, prices still have a little room to fall. The median house price will probably bottom in the second half of this year, but steady house price appreciation will not happen until the second half of 2011 and into 2012. There were 5,723 homes sold in Lehigh and Northampton counties in 2009, up 1.4 percent percent from the previous year, according to Prudential Patt, White Real Estate’s HomExpert Market Report.
The median home price was $180,000, down 7.7 percent from 2008 and the second-straight year of falling prices, according to the report. It took an average of 75 days to sell a home in 2009, up from 66 days a year earlier, according to the report. But the average monthly inventory in 2009 was 5,492 homes, down 8.5 percent from a year earlier. For the month of December, 395 homes were sold in both counties, up 2.4 percent from the previous year. The median sale price in December was $180,000, up 2.6 percent from a year earlier.
The housing market is a key indicator of the region’s overall economic health. Household wealth rises and falls with the housing market, influencing consumer confidence and spending decisions, economists say. For most homeowners, their home is their largest investment. Government incentives to stabilize the housing market are working. November, which is ordinarily a slow month for sales, was the busiest month in 2009 with 618 homes sold. That’s because first-time home buyers rushed to beat a deadline to qualify for a tax credit worth up to $8,000.
The tax credit was scheduled to expire at the end of November. But President Barack Obama signed a bill that month that extends and expands the tax credit. Now, buyers who have owned their current homes for at least five years are eligible for tax credits of up to $6,500. First-time home buyers, defined as anyone who hasn’t owned a home in the last three years, still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30 and close by June 30. The expansion and extension of the tax credit should help stabilize prices because there will be more sales of higher-priced home.
The previous tax credit rewarded first-time home buyers only. That buyer was really targeting below $275,000. With the expanded credit rewarding move-up or empty-nest purchasers, we’re hopeful to see additional transactions at a higher price point. But there are more things for prospective home buyers to consider than tax incentives. The Lehigh Valley’s unemployment rate was 9.3 percent in November, with 38,700 residents out of work, according to the latest data available. That’s close to a 40-year high for the region.
And foreclosures continue to climb. There were 2,633 foreclosure notices filed in Lehigh and Northampton counties in 2009, up 81 percent from 2008. High unemployment means more homeowners are having trouble paying their mortgages and are unable to sell the house for what they owe, which pushes them into foreclosure. Those factors will continue to discourage most people from selling their home to buy a new one, even though the government is providing incentives, said Stephen Thode, a finance professor and director of the Murray H. Goodman Center for Real Estate Studies at Lehigh University in Bethlehem. ”There has to be sufficient motivation to put your house on the market and look for another house, and it’s just not there for most people right now,” Thode said. ”In this economy, most people are thinking, ‘Where I am right now is not so bad.’ They’re more concerned with preserving what they have than in moving up to something better.”
Therefore, as the number of foreclosures on the market continues to rise, it continues to create investment opportunities for the serious real estate investor. For additional foreclosure information, see my website for more related articles:
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Related Foreclosure Websites:
How to Buy $1 Million Homes for $1,995
Build a Fortune With Real Estate Foreclosures and Short Sales
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