Pennsylvania Mortgage Applicants in Control of Market

The number of new listings for homes in the Lehigh Valley hit an all-time high in May, providing Pensylvania mortgage borrowers with enough selection to be choosier and make offers below asking price.

Prospective buyers are reaping the benefits of lots of homes on the market because they can be choosier and make offers below asking price.

Real estate agents say buyers do not feel the urgency to purchase that they felt two years ago when many homes received multiple offers the day they came on the market. As a result, many sellers find their homes are sitting longer unsold, there are more price reductions and there are fewer bidding wars, which drive up the sales prices.

The number of new listings was about three times the number of homes sold in May. Bethlehem economist Kamran Afshar said the two statistics should be roughly even.

”As the price of housing goes up, everyone and their uncle wants to list their house, even if they really were not planning on leaving,” said Afshar, who publishes the quarterly Lehigh Valley Economic Review. ”You have more houses on the market than otherwise would have been because it is such an attractive market.”

The market for homes in the Valley remains relatively healthy, with prices for existing homes rising 3.2 percent on average last month to $225,000, according to statistics released this month by the Lehigh Valley Association of Realtors.

However, the high number of homes for sale is slowing the pace of transactions, and possibly depressing prices. New listings rose 16 percent last month to 1,864 units, compared with May of 2006, while the number of homes sold fell year-over-year for the 12th month in a row.

Afshar said the number of listings likely reflects some duplication. He said when the housing market begins to soften, people often list homes with multiple real estate agents if they are unable to find a mortgage loan applicant quickly.

Last month, there were about 3,400 homes listed by real estate agents for sale, or about 1,000 more than the number of real estate agents who work in the Valley.

”Buyers are finding more inventory from which to choose. They are not making their decision as quickly as they did before, and that’s why now you will find more listings on the market,” said Rosemary Scardina, chief executive director of the Realtors’ association.

The slowing pace of sales and the more modest appreciation in May are a continuation of trends that started last year as the booming housing market of 2004 and 2005 began to fade.

Home sales fell last year for the first time in at least 10 years. New listings outpaced home sales by nearly two-to-one last year, according to the Realtors’ association.

Average prices for existing homes have risen 10 percent or more for each of the past four years. The market has been lifted by strong demand from buyers moving to the Valley from more expensive towns in New York and the New Jersey housing market. The newcomers consider the Valley’s home prices a bargain, particularly since they often keep their old, high-paying jobs.

Real estate agents say the market remains robust for homes in downtown Allentown and Bethlehem, as well as for suburban properties that are priced at $250,000 or less. But higher-end homes are taking much longer to sell, compared with past years. According to the association’s multiple listing service database, there are more than 1,000 homes for sale that are priced between $300,000 and $400,000.

The average price of a new four-bedroom home last month was $378,000, based on 16 sales. That’s down 16 percent from last year. Nationally, about 60 percent of builders - an all-time high - are offering incentives to buyers in an attempt to reduce the number of homes that sit unsold, according to the National Association of Home Builders.

The Lehigh Valley Builders Association said nearly all builders doing business locally have experienced slower demand. Some of the national builders with subdivisions in the Lehigh Valley have had to offer incentives here. The local association does not publish statistics.

Scardina of LVAR said the high price of gas may be affecting the migration of New York and New Jersey buyers. She said prospective home loan buyers from those two states are still looking at homes here, but it’s unclear if they are buying at the same rate.

Other statistics from LVAR’s May report:

• The number of pending sales, or homes that are under contract but have not closed yet, rose 4 percent to 706 in May, compared with April. Pending sales are an important measure of the market because they give an indication of future sales activity.

• The number of days homes stayed on the market rose seven days to 51 last month. While it’s an increase, real estate agents say the market remains healthy when homes sell in 60 or fewer days.

SOURCE: The Morning Call