FIRST THE GOOD NEWS: Lehigh Valley home sales in July were up 21% and in August they were up 14% over the same months last year. The discouraging news for Sellers: prices are down about 6% over last year and 63% of all Lehigh Valley home sales in August were in the $70,000 to $200,000 price range. The supply of Lehigh Valley homes (the “inventory”) has gradually decreased since January, and that’s another positive sign.
From a contractual perspective, underwriting and appraisal issues are becoming a commonplace struggle for buyers and sellers. Having an experienced Realtor to negotiate the 11th hour demands by 3rd party underwriters has become even more of a necessity in this challenging economic and banking environment.
The U.S. housing market has shown notable stability in 2011 compared to the previous two years. Although recent economic indicators have been lower than expected, including a downward revision of GDP and consumer confidence, owning a home is still valued by the majority of Americans. 72% of renters say owning is a top priority for their future, up from 68% a year earlier.
Recent studies have shown that most aspiring homeowners are held back by 2 main factors: funds for a down payment (82%) and confidence in their job security (80%). Federal Reserve Chair Bernanke continues to emphasize the importance of a healthy housing market to a robust national economy. Getting Congress and the President to agree on an effective jobs stimulus package would be a good start.
WANT TO KNOW THE 3 BEST UPGRADES TO HELP YOU SELL YOUR HOME? SEE THIS MONTH’S VIDEO BELOW.
Interest Rates
Mortgage rates hit a new record low in August of 4.15%, 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 be fully 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 will not last forever.
Home Sales
Home sales in July were up by 21% from the same month last year when the expiration of the tax credit resulted in a significant drop in sales. However, they were down 3.5% compared to June. This could be due in part to NAR’s report that 16% of members experienced a contract failure from issues in underwriting and appraisals during July. NAR President Ron Phipps states, “For both mortgage credit and home appraisals, there’s been a parallel pendulum swing from very loose standards, which led to the housing boom, to unnecessarily restrictive practices as an overreaction to the housing correction.”
Home Price
Home prices dipped by less than 1% in July with median home price at $174,000. This is 4.5% below the year-ago level which followed a strong spring season of sales driven by the tax credit. Median home prices remain close to 2002–2003 levels. Distressed sales continue to count for almost 1 in 3 homes sold. The combination of low prices and record-breaking 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 of sales was up slightly during July compared to June. This is in keeping with historical trends, which show that inventory levels typically rise during the summer months. The month’s supply remained 25% below the peak of 12.5 months in July 2010 and 13% above April of 2010 when the home buyer tax credit was in full swing.
Home Updates
As the weather gets cooler, some homeowners could be considering undertaking home renovations or updates before the holiday season. Here are a few findings about updates and home sales:
• Homeowners typically spend considerably more on updates to their home when planning to live in and enjoy it, with an average of nearly $9,000.
• In contrast, they only spend an average of $3,400 when making updates in preparation to sell.
• The most common updates sellers performed before listing were paint, flooring, and light fixtures.
• Although the majority of buyers were least likely to compromise on the location, 16% were least likely to compromise on updates.
• 75% of homes sold were either fairly updated or very updated.
• Sellers began repairing their home 1 to 8 weeks in advance of listing.
Contact Barb Bottitta for any and all of your Lehigh Valley area questions, as well as real estate needs, as I am always happy to help in any way that I can! You can also connect with me on my Facebook Page.
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