Happy New Year to all. As I report on the real estate market in the region, I think most of us know that to say that it was a challenging year would be an understatement. In many of the areas throughout the U.S., the real estate market continues to be under siege. In Pennsylvania and especially the Greater Harrisburg area, we have fared much better, and there are signs that stabilization and improvements in the market are becoming a reality. When comparing 2009 to 2008, we saw the number of homes sold decrease by 44 sales, which is a very minor percentage in the real estate market. Yes, the average sales price of homes declined by approximately 5% when compared to 2008, but the month to month decline in sales prices was most significant in the earlier months of 2009.

Why do I anticipate an improvement for 2010? Well, one reason is that interest rates are still very attractive, although there is every indication that mortgage interest rates will climb higher as we go through 2010. The impact on mortgage payments is evidenced below for a $150,000 mortgage amortized over 30 years.

Interest Rate Monthly Principle & Interest Payment
5% $805.23
5.5% $856.68
6% $899.33


Pretty substantial increase in the cost of a mortgage, isn’t it? We can say it is only a 1% increase in rates, but is actually a 20% increase in the cost of your housing payment. Something to keep in mind is that a rate increase has the effect of reducing the price of a home a buyer could afford. But there is still more positive news for the real estate market. First of all, the first time home buyers credit of up to $8000 is still available for contracts written by April 30, 2010 and closed by June 30, 2010. Also, the other home buyer credit of $6500 is also available under the same time guidelines (more about that in a separate article). Second, there is plenty of quality, well priced homes available for sale, and in my opinion, the asking prices for homes to a great extent is more in line with the market expectations at this time. Maybe I see the glass half full, but I do expect more positive real estate news being disseminated in the coming months; at least in our area.

Average Sales Price: 2008 vs 2009
West Shore
School District
Days on Market
Camp Hill
Cumberland Valley
West Shore
East Pennsboro
East Shore
Central Dauphin
Derry Township
Lower Dauphin
Steel High
Susquehanna Township


As we can see, the average sales price in some areas differ from year to year. Although I did not drill through the numbers, my opinion is that there have not been as many expensive homes that have sold. With the availability of the tax credit in 2009, many buyers took advantage of that, and in many cases, we had a higher number of those homes selling in 2009. Also, we did not escape the foreclosure and short sale experience in the area, but the impact was substantially smaller than in other areas of the country. No one likes to see those types of transaction, but unfortunately that is the world we live in right now and those transactions will have some impact on our market going forward.

Lastly, VA and FHA loans are having a bigger impact on the market, partially due to the credit crisis and also because of the changing lending environment we are experiencing. The percentage of those loans went from 22% in 2008 to 36% in 2009. These are still quality loan products and they do not have the negative connotation from previous years. If you would like more specific information on any area, please contact me at 717-579-2879 or email at Don@DonRoth.com. And if you would like to search available homes for sale please go to www.DonRoth.com and click on the search button. Again, wishing you all a Happy and Prosperous New Year.