The U.S. housing market has shown increased stability in home sales during 2011 compared to the previous year. Nationally home prices are up 18% since their low in February. That’s good news and hopefully it means the Lehigh Valley rebound is not be far behind.
Locally, the number of sales of homes for the first 6 months of 2011 as compared with 2010 are down 20%. The average sales price for the same period is down 6%. Our average sales price compared to list price for homes in the first 6 months of 2011 was at 95% compared with 97% in 2010.
Uncertainty about government spending and about what is to come and how it will impact various industries will cause some potential sellers to play it safe and stay out of market right now. Meanwhile, buyers continue to benefit from very favorable buying conditions and we are working with many who are out there looking for the right house.
The Barb Bottitta Team was very busy in May and June, and although things have slowed down during the heat of the July and August vacation season, we’ve got a number of active buyers and sellers who are working with us, so we’re looking forward to a good Fall market.
If you know anyone who has questions about the Lehigh Valley housing market or who may be thinking about buying or selling, please encourage them to give us a call at 610-398-8408 – WE LOVE YOUR REFERRALS.
Be sure to check out our 2 minute video about the benefits of buyer pre-approval.
Interest Rates
Mortgage rates remain at record lows after steadily declining in May, primarily due to uncertainty in the global and domestic economies. While these incredible rates represent a significant savings for home buyers, experts note that for the benefits to fully be realized, lending conditions must loosen to enable more buyers to take advantage of them. As overall economic activity gets back on track, rates will likely rise to keep inflation in check. In other words, the window of opportunity for buyers to lock in these historically low interest rates may not remain open much longer.
Home Sales
Home sales in June were down 8.8% compared to the same month last year when the impact of the tax credit was at its peak. Compared to the previous month, however, sales held relatively steady at 0.8% below May’s numbers. NAR Chief Economist Lawrence Yun cites an unusually high number of contract cancellations the month before as an explanation for the slight easing of sales in June.
Home Price
For the first time in a year, home prices are up year-over-year and month-over-month. This marks only the fourth time that prices have increased since June 2006. Home prices rebounded 8.9% in June with median home prices rising to $184,300. This is 0.8% above the year-ago level. Median home prices remain close to 2003-2004 levels. The combination of low prices and historically low interest rates means that home affordability is extremely favorable.
Inventory
The supply of homes measured in months on the market at their current pace was up during June compared to May. This is keeping with inventory levels typically rise during the summer months. Month’s supply remained 24% below the peak of 12.5 months in July 2010 and 14% above April of 2010 when the home buyer tax credit was in full swing.
Debt Ceiling Deal
After a drawn-out debate between the House and the Senate, Democrats and Republicans; Congress and the President reached a deal on August 2, 2011, to raise the debt ceiling. Because of the decision and the additional borrowed funds, the United States is safe from defaulting on its debt and will be able to pay its bills. The deal includes the following:
Immediately cuts spending by $917 billion and raises the debt ceiling by $400 billion. It will raise the ceiling by another $500 billion in February, providing funds through early 2013.
Creates a joint committee of twelve members from the House and Senate that will make recommendations for $1.5 trillion in deficit reduction measures, and if the plan is rejected by Congress, several automatic spending cuts will take effect.
Requires Congress to vote on adding a balanced budget amendment to the constitution, which would mandate that future spending cannot exceed revenues. If it passes, the debt ceiling can be raised by $1.5 trillion. If not, then it can only be raised by $1.2 trillion.
Lack of concrete details about how the deficit will be reduced sets the stage for continued political debate in the coming months and years. And with the U.S. securities AAA rating being threatened with a downgrade, the credit agencies will watch carefully to ensure Congress takes action to steer the country in a financially solvent direction. A downgrade would result in higher interest rates, making it more expensive for consumers and the government to borrow money.
Bottom line: crisis averted-it’s business as usual for now, but this is not the last to be heard regarding U.S. deficit and debt levels. Some reports indicate that this may change the game in Congress from “spend, spend, spend” to “cut, cut, cut.”
How does this real estate market update impact any plans you have to buy or sell a home?
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