In a recent realtor research piece regarding Berks County we are finding that our prices are actually above the level from 12 months ago.  On average in Berks County homes have appreciated 1.7% this year and 4.5% over the last 3 years.  This is in contrast to the total US where over the last 3 years homes have actually dropped 22.1%. 

The reality is then that in Berks County we have had a modest improvement in equity as opposed to the decline of the national market.  The most difficult concerns are the job losses in Berks County which will decrease the demand for housing.  The good news is that lay offs in Berks County are declining which could help buyer confidence.

Reading’s unemployment situation is worse than the national average.  For those that want a complete report we offer the following report.  Click on the link below to view our comprehensive report.

 http://www.c21callfirst.com/files/misc/reading_market_2010.pdf

Real Estate | Comments (0)

‘It seems we’re at a fork in the road: will housing finally begin to recover or is there more trouble ahead?’

National and local commentators seem to be filled with welcome optimism regarding the recovery of the economy and its impact on housing markets. New home sales were up 14.8 percent in April for the second straight month and sales were nearly 50 percent higher year-over-year, according to CNNMoney.com. Toll Brothers, a major builder of residential communities, is reportedly buying large amounts of land in anticipation of a better future for home building.

It’s also widely reported that new jobs are being created. This aids in strengthening demand for real estate.  A recent report of nearly 100 economists agreed that the economic recovery is underway and housing may show signs of recovery by 2011.

But there is reason to be cautious. The very same news outlet, CNN.com, also ran a piece called “Think Housing is Recovering?  Think Again.” It seems we’re at a fork in the road: will housing finally begin to recover or is there more trouble ahead?

Despite all of the good news for housing, one major problem remains — the huge inventory of housing already on the market and the expected additions to it. Many widely cited economists expect further price reductions where supply is an issue. Moody’s Economy.com predicts an average price decline of an additional 10 percent in 2010.  Those raising concerns indicate that the misleading indicators showing strong recoveries in March and April stem from the now- expired tax credits and current low interest-rate levels.

It’s an empirical fact that sales drop off directly after the expiration of tax credits. It happened with the “cash for clunkers” program and it’s expected to happen in residential housing. The increase in activity is stimulated by the government program, not necessarily in the form of additional purchases, just accelerated ones. In the period which follows the program, there are fewer purchasers left since they moved faster to get the rebate. Thus, the expectation is for a sluggish second half of 2010 in housing markets.

In addition, we continue to see low mortgage rates, typically a sufficient condition for strong housing demand. But not in this recession. The Fed finished purchasing mortgages and mortgage-backed securities this spring and the conventional wisdom is that this has kept interest rates lower than they would have been without the program. Yet the number of borrowers seeking a mortgage has fallen to its lowest level since May 1997.

As a result of these two factors — tax credits and artificially low interest rates – the Federal Housing Administration’s (FHA) David Stevens noted on CNNMoney.com, “This is a market purely on life support sustained by the federal government.”  Without a reduction in unemployment or growth in household income, house prices will remain flat or perhaps “double dip” (i.e., a new round of price declines will occur after recent months of stabilized prices).    

Meredith Whitney, a highly visible New York banking analyst, predicts that prices will be falling again due to the tremendous pressure from additional foreclosures coming in the months ahead.  Moody’s predicts 1.9 million foreclosures in 2010 and more than a million in 2011. With the inventory already on the market, prices cannot be expected to rise. Also, with the recent rising optimism sellers are reportedly ready to come back to the market, a trend that will further dampen.

We can hope that the housing market in the future will be different than it is now but it will take some time. Slow growth with high unemployment is like this.

Real Estate | Comments (7)

Have you signed an agreement of sale before April 30^th and are you eligible for either the $8000 or $6500 tax credit?  I believe that congress will approve an extension for settlement from June 30^th to September 30^th.  That does not mean that people are still going to be able to buy a home and receive the credit, but only those that had the agreement in and signed by both parties prior to April 30^th will be eligible.

Have you or anyone you know finding difficulty in settling before the June 30th deadline due to mortgage companies being overwhelmed?

Real Estate | Comments (4)

not a lot in Pennsylvania.  This defective drywall emits noxious fumes that corrode pipes and air conditioning coils.  The government has now determined that the cost of replacing the drywall and repairing damaged pipes and appliances can be taken as a casualty loss.  While this does not mean that anyone is getting a free ride who had to suffer because their home was built utilizing this drywall, but at least the money recouped in the loss can pretty much cover in most cases the cost of replacement and making the home safe for families.

Real Estate | Comments (0)

After a real boom in sales for March and April and folks wanting to take advantage of the federal tax credits, the new mortgage applications sank about 27% to be the lowest in about three years.  This was actually not unexpected as there was such a surge of new homebuyers coming into the market who stepped up their home search to take advantage of the home buyer’s tax credits.  In order to take advantage of them the agreement of sale had to be executed prior to May 1, 2010 and settlement has to occur prior to July 1, 2010. 

As Spring arrives it is expected that home sales will go up.  There are certainly lots of opportunities to purchase homes at this time.  The interest rates have in general gone down and there is enough inventory of homes for buyers to make a wise purchase.  We have to believe that our market here in Berks County will see a steady increase.

Continued unemployment and belt tightening in our country as well as in our area continues to keep some people out of the market place.  As the economy recovers and more and more people have confidence in our economy, we expect that the home purchases in our area will increase.

 I will continue to keep you informed as the market grows and changes.

Real Estate | Comments (0)