Real Estate Information Archive

As we enter the second week of February 2010, there seems to be one subject besides real estate and that is global warming; and that debate whether there is global warming continues incessantly. Who is right or who is wrong on this issue will be determined in the future. With respect to real estate, I think that I am more right than wrong with my opinions in the past and what I see going forward, at least in the Central Pennsylvania marketplace. Comparing January 2009 with January 2010, the number of sales have decreases by 14%, and I know that does not look like a rebounding market that I have characterized in previous letters. But I will say that we experienced a similar result when comparing January 2008 and 2009, and we still were down for the year 2009, though not anywhere near the January numbers and I still anticipate that 2010 will be a positive year, although only slightly. And the January average sales price comparison is much improved over 2009 albeit down 7%.

Why didn’t we see more of an improvement or a continuation of the progress in the latter part of 2009? Three factors: 1) being that the Home Buyer Tax Credit extension didn’t occur until mid November, 2): the holiday season was upon us and in many instances buyers have traditionally slowed down their buying habits during December and January; 3) the weather, need I say anything more after 30+ inches of snow within the last five days!!

Moving forward, what is the most likely scenario that I anticipate? We will see a slow improvement in the number of home sales in the area and a slight increase in the average sales price as we go through 2010. Part of the increase will be due to the tax credit that presently has a date of April 30, 2010, in which buyers can qualify for the tax credit and with a closing date of June 30, 2010. I have been asked about an extension beyond April of this year and my response is that anything is possible in Washington, DC, but it is highly unlikely. Improvement will also come from buyers who do not want to rent any longer, sellers that want to either downsize or need a larger home and those who want to take advantage of the low mortgage interest rate that we continue to experience and we all should be aware that the low interest rate environment cannot continue forever. As I said in one of my recent posts, a 1% difference on a mortgage rate can increase your mortgage payment by almost $90.00 a month on a mortgage of $150,000. Yes, things will improve on a slow and steady pace, and when we see an overall increase in the economic climate the activity will improve even more, but do not anticipate a return to three or four years ago with substantial price appreciation because it is not going to happen.

It is my intent to give you the best of what I see in the market in order to assist you in making a real estate purchase; and please remember each sale is different even though there may be two homes that are exactly alike. Such factors as condition and buyer or seller motivation are two that come to mind. So if you are considering a purchase or a sale please contact me at Don@DonRoth.com or visit my web site www.DonRoth.com and view the search listings tab. Hope that we can say that the past week has been a global warming anomaly and we will see plenty of sunshine for a while.

The first quarter of 2009 showed some stability in the real estate market when compared to the similar period in 2008. Although the number of transactions are down by 20% and the average sales price declined by 3%, these numbers are an improvement with respect to the declines that we experienced in the last quarter of 2008. The average sales price overall declined from $184,860 to $178,519 and the average sales price in March 2009 declined from $187,896 to $183,638. The average days on market increased slightly in both periods and it is returning to what I would call more normal times of the late 1990’s and the early 2000’s.

One of the most striking changes is the percentage of loans being initiated by FHA and VA. This percentage increased from 35% in 2009 from only 14% in 2008. This is a good indication since both entities have stepped up to the plate when conventional lending sources were not available, and this trend will continue for a while longer.

But there is some very good news in the market today. 30 year conventional first mortgage rates are still near 5% and, at least in the short term, that should be the going rate. Also, lenders are really attempting to assist buyers in this market to find a mortgage program that fits the borrowers’ requirements. And although the above quarterly sales numbers to many look bleak, the number of pending sales has increased by about 20% since the end of 2008. And although we haven’t completely turned the corner, it is my opinion that we are beginning to see that both buyers have a vehicle to purchase a home at very attractive interest rates and sellers are going to experience more potential buyers for their homes going forward this year.

Below is information on selected municipalities in the region and is reflective of only residential properties and does not include land, investment or commercial properties.

Information received from the Central Penn Multi List and deemed to be correct. The information on the sales has been selected from Dauphin, Cumberland and Perry Counties and portions of Lancaster, Lebanon and York Counties.