RISMEDIA, April 12, 2007-(MCT)-The average price of an existing home in the Lehigh Valley fell slightly in March as the rising number of houses for sale gave buyers more choices and power to negotiate prices.
Prices for existing homes, or resales, fell about 1% to $213,000 last month, compared with the year before, and were down 4% compared with February.
At the same time, the number of properties listed for sale rose 31%, compared with February, according to statistics released this week by the Lehigh Valley Association of Realtors.
The large inventory of available homes has concerned economists, who say the law of supply and demand may slow the rate of appreciation and depress prices.
The high number of homes on the market has been a boon for prospective buyers, who have the freedom to be choosier when they look at homes and make offers below asking price.
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.
Similar trends have continued during the first quarter of this year. In March, the number of homes sold fell for the 10th month in a row, declining 16%.
The total number of homes for sale last month in the Valley was up 45%, compared with the same period in 2006.
The 2,750 homes on the market in March outstrips the number of real estate agents represented by the Lehigh Valley Association of Realtors.
Real estate agents say the market is healthy when the number of new listings coming on the market is about equal to the homes that receive signed sales contracts. But now, new listings far outweigh homes that go to contract, according to Jeffrey Burnatowski, a broker with ReMax Real Estate in Allentown.
From Monday to Tuesday in the Lehigh Valley, for example, there were 137 new listings. But only 45 homes went to contract, and 34 sold, according to data from the Realtors association that's available to real estate agents.
Sellers, by most accounts, have been slow to grasp the shift.
"A lot of them think we are still in 2005," said Burnatowski, who's been a real estate agent since 1983. "There are only so many buyers out there. And there are so many properties continuing to come on the market."
The Lehigh Valley remains attractive to home buyers, particularly those relocating from New Jersey, where houses still cost much more.
Properties priced under $250,000 continue to sell briskly here. Most homeowners make money when they sell.
However, real estate agents say the market is calming after a feverish period in 2004 and 2005. Average prices for existing homes have risen 10% or more in each of the past four years. Since 2000, average prices have shot up about 70% here.
Anyone who bought a home in Lehigh and Northampton counties in 2000 for $150,000 now has a property worth $270,000, assuming it appreciated at the average rate.
Typically, homes in the Lehigh Valley appreciate about 5% a year.
It's unclear if home prices will continue to rise at double-digit rates for an unprecedented fifth consecutive year in 2007.
Home prices shot up 11% in February, but year-to-date, the average price of an existing home has risen just 3%, compared to last year.
Economists at Moody's Economy.com have predicted the rate of appreciation will slow in the Valley for the balance of the year, until prices stabilize next year. The Realtors association does not release a forecast, but some real estate agents have predicted prices will increase slightly or remain flat.
The peak selling period, which typically takes place in late spring and summer, remains ahead.
Copyright © 2007, The Morning Call, Allentown, Pa.
Distributed by McClatchy-Tribune Information Services.
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