Good News for Berks County Real Estate; the number of sales continued to rise with March having 764 settled units. That is nearly 90 more than March 2012 and 170 more than March 2011.
The average settled price is going up a little bit, the median has dropped a little bit and homes are averaging a little over 90% of the listed price. The average number of times properties have been sold has more than doubled between December of 2012 through March of 2013.
The $100,000 – $199,000 price range continues to be the top price range in Berks County at this time, which probably reflects a lot of first time homebuyers getting into the market. The inventory in Berks County has fallen as of March by almost 1,000 properties from 2 years ago. Yes, activity in Berks is coming along nicely.
The full starts for the first quarter of 2013 are in and uploaded to our website. You can view all the information by going to http://www.c21gold.com/market_report/
The recent information for housing outlook is very much contingent on whether buyers are going to be able to afford to buy homes. It is neat that in February, there were 236,000 jobs created when the expected was only 165,000. One of the important things however is that the labor force participation rate (LFPR) is continuing to decrease and is now at its lowest level since 1981. The LFPR calculation is that if you are 16 years old and not in the military then you either have a job or you don’t.
The housing market continues to increase and in just one month from December to January it increased .7% and if we compare it to last year it was up 10%. Even though that happens the federal government is continuing their bond purchase program known as Quantitative Easing. The government is saying that the intention is not to cut back on monthly purchasers of mortgage backed securities until unemployment improves so as a result that should keep our mortgage rates low. Also, important is the fact that consumer confidence continues to remain high. Overall this is very good news for real estate and we expect the market in our area to increase slowly.
Last week President Obama was reelected to a second term and all indications show quantitative easing will continue in order to help the labor market and the economy improve. The number of job openings increased by 2% from September of 2011 so that we can actually believe that the labor market is moving a bit in the right direction. We know that tax cuts for individuals and for various businesses are due to expire. Taxes pertaining to President Obama’s healthcare law will start going into effect. We expect that spending cuts will occur and long term jobless benefits will expire. These things will push the country towards a recession. What that means for home loan rates is that investment dollars will move from stocks into bonds and thereby will keep home loan rates low. One of the areas that we do have to monitor carefully is inflation. Inflation will tend to increase mortgage rates as a the value of fixed investments like bonds decrease.
The good news is here the real estate market has clearly turned around. Indications are that by the end of the year the market will have gone up 8% and it is expected to continue to rise next year. It is also expected that approximately ½ to a point increase to our Gross Domestic Product should help our entire country. Of course one of the problems is that things are a bit spotty and we here in Berks County are not enjoying quite as big a rise as some of the other areas. Nevertheless, clearly we are realizing more sales right here in Berks.
Some of the sales have resulted in people with money investing in homes for rentals. Because of the difficulty many people have in meeting the more stringent requirements of lenders, there are more people that need to rent thus the rental business is increasing. We here at Century 21 Gold manage almost 200 rental units for landlords.
Not all news is good news however because the Gross Domestic Product which we have just seen the final numbers for the 2nd quarter of this year came in at a dismal 1.3%. This downward trend is certainly a negative that coupled with the durable good orders also being down means a bounce back is not expected.
For the above reasons the government recently invested money in the bond market in order to try to stimulate the economy and more jobs. This is referred to as QE3 meaning it is in the 3rd quarter.
Please remember that when we have a bit of negative news as far as the economy is concerned our money seems to flow out of investments such as stocks into bonds including mortgage bonds which are linked to the home loan rates. When mortgage bonds go up, that encourages more money to be invested in those bonds and as a result the mortgage rates stay low. As the country recovers we can see the opposite flow from bonds which will mean that rates will go up. Very clearly this is a great time to purchase a home. There is lots of inventory and the rates are down so that you can expect more home for your money. If you have been waiting for a purchase you need to invest now while the rates are near the bottom and not wait until they start rising.
Last week the Federal Government announced that they would provide what they call “QE3” which stands for quantitative easing. What that means is that the Federal Government will buy treasuries and bonds with the goal that it would stimulate our economy. They are trying to lower the unemployment rate which will also somewhat increase inflation which has been relatively low. Our housing and labor markets have been struggling and the government is also offering to buy nearly 800 billion dollars worth of mortgage bonds in the next 12 months. This is meant to keep rates at a near record low which they feel will strengthen our economy overall by strengthening the housing market. It will continue to be a good time to consider purchasing a new home or refinancing the one that you have. The mortgage bond prices soared last week which should make sure that at least for some period of time you will have opportunity to refinance or purchase a new home and be able to expect good rates. More homes sold mean more people investing in their purchases. New decorating means more paint, more carpeting, more construction, more lawnmowers, more fencing etc which will hopefully mean more demand for products which in turn will mean more jobs, more employment and more taxpayers instead of tax users.
According to our Association of Realtors, who actually looks at trends around the country, we are seeing that in some areas of the country there is not enough of an inventory to meet the demand. In other words, the market is changing somewhat from a buyer’s market to a seller’s market.
Here in Berks we are not seeing that change at this point, however for properties that are priced right coming on the market (especially those in better than average condition), sales are becoming more rapid. The biggest challenge that we face revolves around sellers expecting to get a higher price for their home than what their home will appraise.
When sellers over price their home, even if they can find a buyer who is willing to pay the price, most buyers can’t get approved for a mortgage on those homes. No bank or mortgage company will approve loans for homes where the price that the buyer is willing to pay is greater than the appraised value. The home is the equity that backs up the loan. If banks did loan more money than what the value of the home is, there would be customers who would later decide to walk out on their loan and the bank would be stuck then with a property that does not have enough value to cover that loan. The bank would also have additional legal expenses and expenses to resell the property, which leads to even greater loss. Savvy sellers simply to do not price their home above what it can appraise for.
If you are unsure what your home is worth, or to see if now is the time to put your home up for sale, please call us at 610-779-2500 or 610-921-2400. You can even fill out our online form and we will prepare a FREE market analysis report for you showing the value of your home. You can access that form here.
The month of June was a very good one for Berks County real estate. We had a 26% increase over June of 2011 in terms of properties that went under contract and a 4% increase in properties settling. Our inventory in Berks County is down about 800 properties in comparison to June of 2011 with 3,221 properties presently on the market. Year to date there have been approximately 150 more properties settling this year when compared with year to date 2011. While the average price is down about $2,000, the median price is up $2,000. This is all good news for the Berks County real estate picture. While we could hope that things would be even better, we are at least in a positive upswing.