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Homebuyers Typically Out In Force During September

Economist: September is a good time to buy a home in PA region

Sept. 24, 2015

By JON HARRIS The Morning Call - Tribune News Service

Jonathan Smoke, or DJ Smokey Smoke -- as the chief economist referred to himself at one point, visited Pennsylvania's Lehigh Valley on Wednesday and dropped some knowledge on about 115 real estate professionals.

His message: September could be the perfect time to buy a home.

"If you're a frustrated buyer that hasn't been able to find that home, this month literally is quite possibly the best month that we will have for the next decade to buy a home," said Smoke, who is based in Washington.

His reasoning? Potential buyers will have more choices this month and, since school has started, about one-third of the market is no longer actively browsing properties, which means less competition.

Oh, and the rate for a 30-year fixed-rate mortgage remains under 4 percent.

That was just one conclusion Smoke drew during his one-hour presentation at the Greater Lehigh Valley Realtors Association's Residential Real Estate Summit on Wednesday at the Best Western Hotel & Conference Center in Hanover Township, Northampton County.

Smoke first covered the national context, touting the pace of job creation and how that has correlated to an increase in home sales so far this year. The Lehigh Valley, he said, is "mirroring" many of the national trends. Smoke said the national and local housing markets are firmly in recovery.

Through August in the Lehigh Valley, closed sales are up nearly 15 percent, the median sales price is up about 3 percent to $175,000 and homes are spending fewer days on the market, according to data from the local Realtors group.

The strength of the Lehigh Valley's current market, Smoke said, is related to affordability. The housing affordability index -- a higher number means greater affordability -- in the Lehigh Valley is 193 so far this year, up from 190 last year, according to Realtors group data.

As such, Smoke said, the Lehigh Valley's home ownership rates are better than the national figure.

"What people can buy here, they get more with their money," Smoke said.

From a analysis of deed transfers, Smoke said Greater Lehigh Valley median sales prices remain 12 percent beneath the peak.

Loren Keim, president of Century 21 Keim Realtors who participated in a panel discussion before Smoke's keynote presentation on Wednesday, said the local housing market is normalizing.

"Inventory is going to have to come down a little bit more, the number of sales are going to have to come up a little bit more before I think we actually hit the recovery," Keim said. "But we're getting there."

In August, there were 767 sales in the Lehigh Valley and inventory was recorded at 4,136. By comparison, in August 2006, Keim said there were 2,500 properties on the market and approximately 1,000 were sold in that month.

For the home price to really increase in the Lehigh Valley, Keim said inventory will need to get below 3,200 -- a baseline he's observed over the last 15 years.

"As the inventory level drops, it eventually leads to price increases, which we're heading for," he said.

Across the country, Smoke said, inventory has been declining on a year-over-year basis. While the Lehigh Valley's inventory drop has been "more pronounced," Smoke estimated that the area has more than enough to support sales.

"But the key question is going to be, 'Is it in the right place? Is it in the right price points?'" Smoke said.

The right place right now is in Bath.

According to Smoke's analysis of the hottest zip codes, based on supply and demand, Bath leads the pack in the Lehigh Valley, followed by Nazareth and Macungie. Over the next five years, Smoke expects Breinigsville to see the most significant household growth.

Before concluding his presentation, Smoke, by this point DJ Smokey Smoke, played four songs he expects to be popular over the next 12 months. For each song, he tied it back to real estate -- his way of ending on a positive note.

"What I want that song to do is plant itself in your ear, and I want you to remember me and what I had to say about that song and how it relates to real estate, so that this has lasting power," Smoke said.

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