Now, in the markets hardest hit around the country this incentive was no doubt a boon for everyone involved, and surely made a dent in some of the bad sales figures.  However, I’ve heard from real estate pros in other markets that weren’t experiencing a double-digit slump (of which Lancaster County is one) and the feedback has been generally “now what?”.  Every year the sales per month follows a predictable curve and the relative sales in a given month to prior years is a decent indicator of the strength of the current market.  Well, here is the last few year’s “pending homes” by month, which will give you an idea of how the tax credit has affected our Lancaster PA real estate market:

Well, it may not be a “massive sales crash” but I can’t help but wonder how many months it will take for new sales to catch up to the traditional cycle.  I heard of people who were planning to buy in August or later who instead moved up to April.  so who will be left for August?

Prediction: If it was a buyer’s market before, it will be even more a buyer’s market this late summer & fall.

BTW, if you haven’t heard, congress has extended the settlement date for those April tax credit sales to September 30th.

]]> http://www.lancasterparealestateblog.com/2010/06/18/what-hath-the-tax-credit-wrought-on-the-lancaster-real-estate-marketfor-2010-that-is/feed/ 1 http://www.lancasterparealestateblog.com/2010/04/02/thing-are-looking-up-for-mortgage-rates-%e2%80%93-expect-steadily-rising-rates-and-volatility-in-the-upcoming-months/ http://www.lancasterparealestateblog.com/2010/04/02/thing-are-looking-up-for-mortgage-rates-%e2%80%93-expect-steadily-rising-rates-and-volatility-in-the-upcoming-months/#comments Fri, 02 Apr 2010 17:45:42 +0000 Jeff http://www.lancasterparealestateblog.com/?p=789 By Ray Smith – Gateway Funding

As of March 31, 2010 the Federal Reserve ended a nearly 15-month-long, $1.25 trillion campaign of buying up mortgage-backed securities (MBS).  The program’s goal was to reduce borrowing costs for homebuyers.

The Fed’s efforts appear to have worked.  Rates were around 6.33 percent when the Fed announced that the program would start in November 2008.  Rates have fallen steadily ever since, hovering near historic lows for many months.  The Fed has officially stalled the program as of yesterday. What can we see as far as interest rates for the upcoming months?

You have probably seen everywhere that rates will rise because of the Fed’s decision to halt MBS purchases.  But why? MBS are tied to the bond market.  The bond market has many private investors who purchase and sell these securities on a daily basis.   In the days and weeks ahead, the private investors left to support new originator loan supply will be looking to find a yield spread level that puts the supply and demand of MBS into equilibrium.  Specifically, these traders will be trying to figure out (as we all are), based on demand from other traders, just how risky mortgage securities will be to buy and sell. MBS investment risk will be higher since the Fed’s exit (in fact the Fed will start SELLING mortgage backed securities!).  To compensate for a higher risk in the mortgage marketplace, investors will demand a greater return.  This greater return will congeal itself via moving rates higher on a gradual scale.  Investors also do not know the exact future of MBS supply so they will be going through a “feeling out” process.

BOTTOM LINE: The Fed’s exit could create higher rates because MBS investors want more for their risk of investing.  The “feeling out” period will make intraday trading volatile because supply and demand could change hands several times during a trading day.

To make things even more complicated, we must also account for economic news that has a firm grip on the movement of mortgage rates.  Things to look out for in the up and coming months are unemployment reports, supply and demand for new homes and jobs reports.  Remember, on a general scale, anytime you see good economic news it is generally bad for home mortgage rates because they are tied to the bond market.  Bonds and stocks have an inverse relationship.

BOTTOM LINE: With all evidence pointing to rates gradually rising, it is best to lock in and forget about it, especially if a settlement is going to occur in the next 30-45 days.  It is not worth the risk to possibly save $12-25 a month when you could lose out on a volatile market.

Actually, there’s a fair amount of good news here:

1) While the number of closings decreased by 6%, the number of pending sales shot up by double that percentage (+12%).

2) The number of new listings jumped up significantly (+16%) from last year Jan/Feb.  More homes for buyers to choose from.

3) Good news for sellers – While the average list price held steady, the average sold price jumped 12% over last year.

4) The average days to sell dropped almost 10% – always good news for everybody.

So how does the emerging 2010 Lancaster PA real estate market fare against history?  Here are two snapshots of home sales:

Pending home sales are up from 2009 as noted above, but remain well below 2007 and even 2008 levels.

Sold homes started out better than last year but February was the lowest number in recent years.

What about home prices versus history?  I’ve got that for you too:

What I want you to see in this chart is the 12-month average prices (the Orange and Blue lines).  Note that the sold price has been climbing for three straight months after a continuous decline since 2007.  This is good news and I think a key indicator of the health of the Lancaster homes market.  Also see that the list price has seemingly bottomed out and is starting to rise again, which is good news for sellers.

So, there is good reason (based on facts) to say that, as of March 2010, the Lancaster PA real estate market is not in decline but staging a sales and price rally.  If you’re looking to buy now is really a great time to do it: low rates and the tax credits which run through April.   Call me at 717-799-0851 or visit my Facebook page for the latest comments on the market.

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For Lancaster PA homes for sale click here. Jeff Geoghan is a top real estate expert in Lancaster County, PA, and an involved community member. Jeff’s work has been featured in the Lancaster Newspapers, WGAL Channel 8, PA Business Journal, CNN Money and Wall Street Journal. Jeff’s blog on Lancaster County and its homes is nationally-featured. Contact Jeff for more help with your Lancaster PA Real Estate needs. Jeff is also a photographer – view some of his lancaster pa photography portfolio. Comments are welcome!

Eleven more months to go in 2010 – and studies show that as many as three out of five of us will have already broken our New Year resolutions.  That said, maybe your own resolutions need a tweak or two.

Stephen Covey demonstrates in his book, The 7 Habits of Highly Effective People, that those who win in life begin with the end in mind.  Said differently, if we want to be successful in life, we need to know what we’re aiming for.  This is the reason why I’m personally such a fan of goals and resolutions, even if we find ourselves not meeting all of them.

When it comes to finances, goals are critical.  Retirement goals, education goals, freedom from debt goals, lifestyle goals – these are what puts a purpose behind our money and our income.  We want our money to accomplish something, right?  And it’s with this mindset that I’d encourage you to consider setting a 2010 financial goal for your home.

This goal is going to be highly individualized for your unique situation.  Maybe you’re just starting out on your own, and you want to save a certain thousand dollars to use as a down payment on your home.  Or maybe you’re outgrowing your first home, and you want to pay down the mortgage to a certain point that you have so much equity to use for your next home.  Or maybe you’re near the end of your mortgage and if you hit it hard enough, you’ll be able to knock it out a few years early.  Or perhaps it’s time to explore that rental property you’ve been contemplating and you want to have the home purchased by the end of the year.

In business school one learns about setting SMART goals.  Be Specific with the 2010 home goal.  Set a certain dollar or percentage amount that is Measurable.  Be realistic and make the goal Attainable.  Envision the accomplishment of this goal and be sure it’s Rewarding to you in its fulfillment.  And set a specific date you want to achieve this goal to make it a Timely one.

Determine your end result – and put it in writing.  Print multiple copies and go to Staples and get them laminated.  Hang them everywhere.  For me personally, I have my 2010 goals hung in my car, in my office, as my bookmark, and in the shower.  “Out of sight out of mind” the saying goes – so keep your 2010 home goal in front of you.

We’ve got 11 months to the end of year – let’s try to be the minority and achieve what we set before ourselves.

The person or entity behind these marketing campaigns are most often real estate speculators – folks who have taken a course in buying homes for “pennies on the dollar” etc etc.  Some have been doing this for years and have amassed small fortunes in rental properties or “rehabs”.  They know that in order to get your attention, they need to catch you before you talk to a real estate professional and get a market analysis done on your home – hence the brightly colored signs everywhere.  While there shouldn’t be anything inherently illegal about such operations, the possible risks and trade-offs to a home seller deserve serious thought.

Some of these real estate speculators even have websites, which is a good thing because then you can ask specific questions about their claims before making a decision.  One of their major claims is that their method is substantially better than working with a real estate professional – cheaper, and faster.  I’m sure that many of these people are well-meaning but the “facts” I’ve seen thrown out there are often misleading at best.  Let’s look at a few of them:

Claim: Selling your home with a real estate agent will take months, maybe a year – we can buy your home right now.

Reality: The location and condition determines the value of a property.  When a seller refuses to take the advice of a local professional (Zillow does not count) and sets too high a price given it’s condition and location, it’s going to sit.  Very often the fault lies with the seller and not the agent (which is not to say that there aren’t agents who still drastically misprice homes).  The market tells everybody exactly what it thinks of a price within only a few weeks – are there any showings?  If the seller isn’t willing to make price changes then a trade-off is made; a higher price for a quicker sale.

Most speculators are working with a line of credit and can generally make an offer to close quickly without any financing contingencies.  On the other hand, their offer price will almost certainly be far below the value of recent comparable sales adjusted for your property.  On a $100,000 home at market value, that could be as low as $60,000.  For the speculator, it’s all about the upside on the resale.  They are living by the maxim that “you make your money when you buy it”.

Claim: A real estate agent is going to mislead you as to what you’re actually going to make on the sale.  We, on the other hand, are honest with our offer terms.

Reality: Untrue and in fact bordering on slanderous.  Most brokerages require full disclosure at the time of the listing presentation of the cost breakdown.  For a seller, closing costs almost always will be the broker commission plus 1% transfer tax – that’s it.  One can’t forget that real estate brokers are LICENSED by their respective states and subject to censure, fines and imprisonments for illegal actions including fraud.  Also, any Realtor is subject to the Ethics code of the National Association of Realtors and take that responsibility seriously.

Real estate speculators, on the other hand, are not subject to ethical or legal standards of conduct.  In fact, there is no requirement for them to even hold a real estate license that would put them under state law.  Their contract paperwork will likely be homemade and cast distinctly in their favor by an attorney.  Be sure to read every paragraph carefully.  A question to ask a speculator right up front is whether they have a real estate license of their own – that way at least you can use the licensing law against them should a problem arise.  If they do renovations then they should also be able to produce a contractor’s license on many states.

Claim:  The buyer will make you pay for repairs and other “defects” – but we won’t.

Reality: It’s all buried in the reduced offer price.  In fact, in the absence of a professional home inspection, a speculator can literally make up a number to “take into account” repairs & defects.  I would suggest that getting any property issues out in the open via a licensed third party, and then accounting for those issues within the context of the contract through addendums provides critical insulation from litigation for both parties, not to mention the peace of mind for the seller that nothing will come back to haunt them.

Claim: Fast cash!  Quick Settlement!

Reality: This claim is actually right on.  What they won’t claim is the best price for your home, though…they’re banking on you wanting to sell fast rather than to sell for the most.

If you’re seriously considering talking to a real estate speculator, be sure you a) have exhausted all your options to sell at market price, and b) are able to verify their claims and track record.  As with most things in life, it’s all about the trade-offs.  One of my economics professors once said “there’s no such thing as a free lunch”.  Just remember that when you’re tempted by those yellow signs  promising the moon…

Let’s take a look:

The short answer – a bit of a whimper.  Both sales and prices fell just short of 2008 numbers, which given our last few months was a bit disappointing.  Average days on the market for home listings was down 7 percent, which combined with an 8% drop in expiring listings were bright spots in an otherwise lackluster December.

Looking at the past 3 years of home sales, we see how December 2009 fared:

Following the red line, we see that home sales in 2009 were trending well against past years up until December, where they fell below both 2008 and 2007.  Note where the January numbers start (at the left of the chart).  We started 2009 at about 175 homes sold – it will be interesting to see what happens with January 2010.

I am preparing a comprehensive home sales annual report for 2009 which will be available to my clients and the media.  If you are interested in a copy of the report, which will go into more detail regarding sales trends and examine sales, prices and many other metrics by town & school district, please leave me a contact or email.

What’s going to happen in 2010 Lancaster Real Estate action?  Look for my upcoming 2010 real estate predictions in this space.

For the last 4 months home sales have outpaced 2008 levels, which is not surprising considering the financial mess we were in last fall.  Home sales have been running at 2007 levels Since September, which was before the mess.  In November 423 homes sold in Lancaster County.

As a measure of confidence in the market, we look at new listings of homes to see what the trend is like.  As you can see from the red line (2009), new listings plummeted in November as they do every November.  This year, we were ahead of 2008 but not 2007.  At least the numbers are back to following the typical seasonal curve…

So things look better than last year, no doubt.  The average list price fell again, to $211,568 in November – that’s because Realtors and sellers are finally on track reducing those prices to reflect a bit of reality and the seasonal slowdown.  In fact, all the numbers indicate a nice stabilization of the home market in Lancaster County over last year’s low points.

For a review of the price ranges of homes selling in Lancaster PA check out my October Lancaster Home Sales Review post…

What’s up with home sales in Lancaster County, Pennsylvania?  October 2009 was the first month of our fourth quarter and there are some new developments.   I’m here to tell you…Home sales figures in October looked fairly good compared to 2008, as has been the case throughout the summer and fall of 2009.  Closings were up 35% and contracts on homes were up 18%, two key indicators of market activity.  New listings were about the same and expired listings tailed off 6% versus last year, respectively.

Thankfully, average home prices in Lancaster County remained down slightly for October 2009.  Why do I say thankfully?  Because the sooner we bottom out the better.  The seasonally-adjusted home sales price is down $183,584 for Lancaster County, off about 6.5% from December 2007.

We had seen a surge of new listings against 2008 since July, but that came to a screeching halt in October as new listings fell to a three-year low.  

The price range breakdowns historically are as follows in the chart.  Homes selling between $100,000 and $200,000 make up over 50% of the market alone.  Homes priced over $300,000 are in decline.

Overall I think October showed that the market rally continued.  November historically shows a big falloff in sales, though, so we’ll be looking to see how the tax credit news affects things this year.

As always, if you have market questions or would like data for specific locations let me know – I’d be happy to help.  And of course if you’re ready to buy or sell please consider our professional real estate services – call us first!

]]> http://www.lancasterparealestateblog.com/2009/11/17/lancaster-pa-real-estate-market-october-2009-snapshot/feed/ 5 http://www.lancasterparealestateblog.com/2009/10/15/lancaster-pa-home-sales-hold-their-own-september-2009/ http://www.lancasterparealestateblog.com/2009/10/15/lancaster-pa-home-sales-hold-their-own-september-2009/#comments Thu, 15 Oct 2009 18:37:16 +0000 Jeff http://www.lancasterparealestateblog.com/?p=397 September 2009 Summary

Home sales in Lancaster County fell from August levels but did not drop appreciably from numbers posted in recent months, posting 423 in September, the same amount as in September 2007.  The average sales price continued it’s slide from July highs to reach $181,435 in September.  The sustained sales numbers combined with the falling average sold price is likely a result of the push to encourage first time home buyers to take avantage of the expiring $8,000 Federal tax incentive.

Expanded Home Sales Report for September 2009

What’s the latest news on home sales in Lancaster County, Pennsylvania?  If you’re interested, you’ve come to the right place!

The county saw what amounts to a nice month, all things considered.  Home sales rebounded strongly against last year, with many industry pros pointing to the last-minute efforts to encourage first time homebuyers to take advantage of the federal tax “credit” (check in the mail), that is set to expire at the end of November.  More about home sales in the next post…  Other highlights would be the big drop in expiring listings – looks like sellers are hanging in there as school starts.  Average days on market for home sales was up almost 25% and is appoaching 3 months!  Hopefully that trend won’t continue.

Prices…ah, prices.  As you can see the average sold price was down 4% over last year.  Translated, that means that a home that would have sold for $200,000 last September would now sell for $192,000.  One thing’s for sure, prices have not gone up so don’t bother going that route…  The average list price dropped six percent over September 2008.  I think sellers (and agents) are getting the picture and making corrections.

Looking at the historical price chart, we can see that the home sales price (in green) has been sharply on the decline since July.  My “SASP” price (“Seasonally Adjusted Sales Price” – 12 month averaged) has been steadily on the decline as well, down exactly 6% since I started measuring it at the beginning of 2008.  How far will it fall?  Seasonally-Adjusted Listing prices have started trending downwards as well (the Orange line), which is good news in my opinion.  The sooner we get to the bottom, the better.

Lancaster County new residential listings have been on the climb all year from a 3 year low in January 2009.  We’re now back at 2007/2008 levels for September.  This means that sellers are getting off the fence and perhaps some shadow inventory (see my recent post on shadow inventory) is hitting the market.

One last chart – monthly sold homes in Lancaster County have been running at lower levels than previous years but are not tailing off just yet.  As you can see from the chart above, we’re still tracking well (again, this is most likely driven by the lower price ranges affected by the first time buyer push right now).  That also explains the falling average price.

If you have any questions feel free to ask them!

Overall, we had a good month!  Pendings and Closed home numbers are way up.  New listings held steady, which we really needed to keep the supply down as long as possible while sales crawl back up.  I’m particularly happy to the see the prices coming down (correcting slowly).  After many months of higher average days on market for sold homes, the number came sharply down to 2008 levels.  All good!

I tried to highlight the same timeframes for the last 2 years so you can see the curves.  For example, last year the sales were already tailing off after peaking in June 2008 (pink line).  This year, although far off 2007 levels, the home sales numbers are behaving more “normally”.  The big question is “what will happen in the fall?” when the bottom fell out last year…

My two little bubbles show my thoughts on the average new listing an ultimate sales prices – the Seasonally-adjusted numbers (12 months rolling average) are both on the decline, in my opinion nicely correcting downwards.  Overall, countywide, we’ve only seen less than 10% average price declines in sold homes.

Let’s look to see how September shapes up – I’ll be posting that one pretty soon since I’m interested to see what happened!

On another note, Sheriff Sales in Lancaster County are up 20% over 2008 (as of the already-posted November sale).  Where will that go?